Western Midstream Partners
Annual Report 2020

2020 Annual ReportABOUT WESFARMERS 

ABOUT THIS REPORT

From its origins in 1914 as a Western 
Australian farmers’ cooperative, Wesfarmers 
has grown into one of Australia’s largest 
listed companies. With headquarters in 
Perth, Wesfarmers’ diverse businesses in this 
year’s review cover: home improvement, 
outdoor living and building materials; general 
merchandise and apparel; office and 
technology products; manufacturing and 
distribution of chemicals and fertilisers; 
industrial and safety product distribution; and 
gas processing and distribution. Wesfarmers 
is one of Australia’s largest private sector 
employers with approximately 107,000 team 
members and is owned by more than 
487,000 shareholders.

This annual report is a summary  
of Wesfarmers and its subsidiary  
companies’ operations, activities and 
financial performance and position as at 
30 June 2020. In this report references to 
‘Wesfarmers’, ‘the company’, ‘the Group’, 
‘we’, ‘us’ and ‘our’ refer to Wesfarmers 
Limited (ABN 28 008 984 049), unless 
otherwise stated.

References in this report to a ‘year’ are  
to the financial year ended 30 June 2020 
unless otherwise stated. All dollar figures 
are expressed in Australian dollars (AUD) 
unless otherwise stated.

References to AASB refer to the 
Australian Accounting Standards Board 
and IFRS refers to the International 
Financial Reporting Standards. There 
are references to IFRS and non-IFRS 
financial information in this report. 
Non-IFRS financial measures are 
financial measures other than those 
defined or specified under any relevant 
accounting standard and may not be 

directly comparable with other 
companies’ information. Non-IFRS 
financial measures are used to enhance 
the comparability of information 
between reporting periods (such as 
pre-AASB 16 financial information). 
Non-IFRS financial information should 
be considered in addition to, and is not 
intended to be a substitute for, IFRS 
financial information and measures. 
Non-IFRS financial measures are not 
subject to audit or review.

All references to ‘Indigenous’ people are 
intended to include Aboriginal and/or 
Torres Strait Islander people.

Wesfarmers is committed to reducing  
the environmental footprint associated 
with the production of this annual report 
and printed copies are only posted to 
shareholders who have elected to receive 
a printed copy. This report is printed on 
environmentally responsible paper 
manufactured under ISO 14001 
environmental standards.

Contents

OVERVIEW

Group structure 

Our primary objective 

The year in review 

Performance overview 

Chairman’s message 

Managing Director’s report 

Supporting our community 

Leadership Team 

OPERATING  
AND FINANCIAL  
REVIEW

Operating and financial review 

Bunnings 

Kmart Group 

Officeworks 

Chemicals, Energy and Fertilisers 

Industrial and Safety 

Other activities 

Group sustainability performance 

Climate-related financial disclosures 

Independent Limited Assurance Statement 

GOVERNANCE

Board of directors 

Corporate governance overview 

DIRECTORS’  
REPORT

Directors’ report 

Remuneration report 

FINANCIAL  
STATEMENTS

Financial statements 

Notes to the financial statements 

SIGNED  
REPORTS

Directors’ declaration 

Independent auditor’s report 

SHAREHOLDER  
AND ASX  
INFORMATION

Five-year financial history 

Shareholder information 

Investor information 

Corporate directory 

Wesfarmers businesses 

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 Wesfarmers 2020 Annual Report

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Wesfarmers 2020 Annual Report2Group structureOverview(50%)(50%)(24.8%)(50%)(50%)(4.9%)(50%)(75%)OfficeworksBunningsCorporateOther activitiesKmart GroupIndustrial  and SafetyChemicals, Energy and FertilisersOur primary objective To deliver a satisfactory return to shareholders.engaging fairly with our suppliers, and sourcing ethically and sustainablysupporting the communities  in which we operatetaking care of  the environmentacting with integrity and  honesty in all of our dealingsanticipating the needs of our customers and delivering competitive goods and serviceslooking after our team members and providing a safe, fulfilling work environmentWe believe it is only possible to achieve this over the long term by: Wesfarmers 2020 Annual Report3Overview

The year in review

Revenue

Net profit after tax

Dividends per share

$30.8b
10.5%

From continuing 
operations

Salaries and 
wages

$4.8b

$1.70

Including $0.18 special 
Coles selldown dividend

Fully franked

$1.6b

From continuing  
operations, down 16.4%

$2.1b

From continuing  
operations, excluding 
significant items, up 8.2%

Government taxes 
and other charges

Community 
contributions

$1.0b

Includes  
discontinued  
operations

$68m

Direct and indirect 
community 
contributions

Safety

23%

reduction in total 
recordable injury 
frequency rate

TRIFR 10.4 on 
continuing operations

Indigenous team 
members

Waste

1,858
11.5%

12%

increase in recycling

5%

reduction in landfill

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Wesfarmers 2020 Annual Report

COVID-19 and the Australian bushfires had a significant impact on our 
customers, team members and the communities in which we operate.

Group 
The financial result is a testament to the dedication 
of team members and leaders across all businesses 
in responding to the challenges presented by 
COVID-19 and the Australian bushfires.

Bunnings
Strong sales and earnings growth demonstrated 
the resilience of the operating model and ability 
to adapt to customers’ changing needs.

Kmart Group
Actions taken to accelerate the growth of Kmart 
and address Target’s performance, with a pleasing 
performance from Catch since acquisition.

Officeworks  
Strong sales growth both in stores and online, 
and solid earnings growth, supported by a focus 
on price, range and service across every channel.

Chemicals, Energy and Fertilisers
Solid operating performance with increased plant 
availability and continued improvements in safety.

Industrial and Safety
Earnings impacted by continued investment in 
customer service and digital systems at Blackwoods, 
and lower revenue at Workwear Group.

 Wesfarmers 2020 Annual Report

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Overview

Performance overview

Wealth creation and value distribution1

$19.3b Payments to suppliers

$ 4.8b Employees (salaries, wages and other benefits)

Wealth creation

$31.7b

Value distribution

$9.1b

$3.3b Payments for rent,  
services and other external costs

1  Numbers are presented on a post-AASB 16 Leases (AASB 16) basis and include discontinued operations.

$1.0b Government (taxes and other charges)

$0.1b Lenders (finance costs)

$1.9b Shareholders (dividends)

$1.3b Reinvested in the business

Group performance

Key financial data 

Results from continuing operations

Revenue

Earnings before interest and tax

Earnings before interest and tax (after interest on lease liabilities)

Earnings before interest and tax (after interest on lease liabilities) (excluding significant items)1

Net profit after tax

Net profit after tax (excluding significant items)1

Basic earnings per share (excluding significant items)1

Results including discontinued operations2

Net profit after tax from discontinued operations

Net profit after tax
Net profit after tax (excluding significant items)1,3

Return on average shareholders' equity (R12) (excluding significant items)1,3

Cash flow and dividends including discontinued operations

Operating cash flows

Operating cash flows (after lease cash flows)

Net capital expenditure

Acquisitions

Free cash flows

Free cash flows (after lease cash flows)

Equity dividends paid

Operating cash flow per share

Free cash flow per share

Dividends per share 

Balance sheet and gearing 

Total assets

Net debt4

Shareholders' equity

Gearing (net debt to equity)

Post-AASB 16 
2020

Pre-AASB 16 
2020

Reported
2019

30,846 

30,846 

27,920 

2,744 

2,507 

2,942 

1,622 

2,083 

184.2

75 

1,697 

2,075 

22.1

4,546 

3,597 

568 

988 

5,188 

4,239 

1,734 

401.9

458.7

170.0

2,530 

2,529 

2,964 

1,638 

2,099 

185.6

75 

1,713 

2,091 

21.1

3,597 

3,597 

568 

988 

4,239 

4,239 

1,734 

318.0

374.8

170.0

2,974 

2,974 

2,974 

1,940 

1,940 

171.5

3,570 

5,510 

2,339 

19.2

2,718 

2,718 

827 

17 

2,963 

2,963 

3,628 

240.3

262.0

278.0

25,425 

(85)

9,344 

(0.9) 

19,068 

18,333 

(85)

9,877 

(0.9) 

2,500 

9,971 

25.1

$m

$m

$m

$m

$m

$m

cents

$m

$m

$m

%

$m

$m

$m

$m
$m
$m
$m
cents

cents

cents

$m

$m

$m

%

1  2020 excludes the following significant items pre-tax (post-tax) from continuing operations, $525 million ($437 million) non-cash impairment in Kmart Group, $110 million 
($83 million) restructuring costs and provisions in Kmart Group, $310 million ($298 million) non-cash impairment in Industrial and Safety, offset by a gain of $290 million 
($203 million) on the sale of 10.1 per cent of the interest in Coles and a gain of $220 million ($154 million) on the revaluation of the remaining 4.9 per cent interest in Coles. 
Discontinued operations includes significant items of $83 million from the finalisation of tax positions on prior year disposals.

2  Discontinued operations relate to Curragh Coal Mine, BUKI, Bengalla, KTAS, Quadrant Energy and Coles.

3  2019 excludes the following significant items pre-tax (post-tax), $2,319 million ($2,264 million) gain on demerger of Coles, $679 million ($645 million) gain on disposal of 

Bengalla, $267 million ($244 million) gain on disposal of KTAS, $138 million ($120 million) gain on disposal of Quadrant Energy and $146 million ($102 million) provision for 
Coles supply chain automation.

4  Excludes lease liabilities.

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Wesfarmers 2020 Annual Report

The Group delivered a solid trading performance while supporting customers, team members and the 
community through a year that was significantly disrupted by COVID-19 and the Australian bushfires.

Each of the Group's businesses remained focused on long-term value creation despite the uncertain 
operating environment during the year.

Divisional performance

Bunnings

Revenue

Earnings before tax

Segment assets

Segment liabilities

Capital employed R121

Return on capital employed R121

Cash capital expenditure 

Kmart Group

Revenue

Earnings before tax

Segment assets

Segment liabilities

Capital employed R121

Return on capital employed R121

Cash capital expenditure 

Officeworks

Revenue

Earnings before tax

Segment assets

Segment liabilities

Capital employed R121

Return on capital employed R121

Cash capital expenditure 

Chemicals, Energy and Fertilisers

Revenue

Earnings before tax

Segment assets

Segment liabilities

Capital employed R121

Return on capital employed R121

Cash capital expenditure 

Industrial and Safety

Revenue

Earnings before tax

Segment assets

Segment liabilities

Capital employed R121

Return on capital employed R121

Cash capital expenditure 

Post-AASB 16 
2020

Pre-AASB 16 
2020

 14,999 

 14,999 

 1,826 

 8,163 

 6,062 

 3,146 

58.0

511

 1,852 

 4,958 

 2,510 

 2,997 

61.8

511

Reported
2019

 13,166 

 1,626 

 5,118 

 1,983 

 3,220 

50.5

 470 

Post-AASB 16 
20202

Pre-AASB 16 
20202

Reported
20193

 9,217 

410

 5,725 

 4,518 

 2,011 

20.4

142

 9,217 

413

 3,275 

 1,750 

 1,978 

20.9

142

 8,713 

 550 

 3,755 

 1,476 

 1,872 

29.4

 207 

Post-AASB 16 
2020

Pre-AASB 16 
2020

Reported
2019

 2,787 

197

 1,819 

 1,028 

976

20.2

40

 2,787 

190

 1,538 

683

969

19.6

40

 2,314 

 167 

 1,531 

 559 

 980 

17.0

 42 

Post-AASB 16 
2020

Pre-AASB 16 
2020

Reported
20194 

 2,085 

394

 2,450 

 458 

 1,942 

20.3

110

 2,085 

393

 2,429 

 432 

 1,941 

20.2

110

 2,078 

 438 

 1,563 

 392 

 1,358 

 32.6 

 58 

Post-AASB 16 
20205

Pre-AASB 16 
20205

Reported
2019

 1,745 

 39 

 1,585 

 543 

 1,448 

2.7

59

 1,745 

 40 

 1,445 

 376 

 1,447 

2.8

59

 1,752 

 86 

 1,752 

 348 

 1,475 

 5.8 

 83 

$m

$m

$m

$m

$m

%

$m

$m

$m

$m

$m

$m

%

$m

$m

$m

$m

$m

$m

%

$m

$m

$m

$m

$m

$m

%

$m

$m

$m

$m

$m

$m

%

$m

1  Capital employed excludes right-of-use assets and lease liabilities.

2  The 2020 earnings before tax for Kmart Group exclude pre-tax impairments of the 
Target brand name and other assets of $525 million and restructuring costs and 
provisions of $110 million.

3 

4 

Includes KTAS.

Includes Quadrant.

5  The 2020 earnings before tax for Industrial and Safety excludes pre-tax 

impairments of $310 million.

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Overview

Chairman's 
message

The 2020 financial year will be remembered as one of the most 
challenging of the last half century, with bushfires ravaging large 
parts of Australia’s eastern states over summer and the 
COVID-19 pandemic resulting in widespread shutdowns  
of community activities around the world from March.

In the circumstances, Wesfarmers performed very well.  
Some of our businesses recorded reduced profits as a result  
of restricted trading but others, specifically Bunnings and 
Officeworks, were able to remain open in Australia and, despite 
incurring higher costs dealing with the pandemic, increased 
their profitability; and the Chemicals, Energy and Fertilisers 
business continued its record of returning solid profits.

Net profit after tax (NPAT) fell from $5.5 billion to $1.7 billion  
but pleasingly, profit from continuing operations excluding 
significant items rose eight per cent from $1.9 billion to 
$2.1 billion. The NPAT results in FY2019 and FY2020 were 
both affected by substantial significant items – in FY2019 by 
large accounting gains on the demerger of the Coles business 
and the sale of some businesses; and in FY2020 by profits  
on the sale of 10.1 per cent of Coles Group Limited (Coles), 
impairments of Target, and the Industrial and Safety assets  
and provisions for the restructuring of Target, including the 
conversion of many Target stores to Kmart. 

The directors determined to pay a final, fully-franked dividend 
of 77 cents per share plus a special, fully-franked dividend  
of 18 cents per share, the latter reflecting the after-tax profit 
on the sale of a 10.1 per cent interest in Coles, with resulting 
total dividend payments over the full year of $1.70 per share.

These dividends resulted, as usual, in the paying out of a  
high proportion of profit, consistent with the company’s 
ongoing policy of distributing its available franking credits  
to its shareholders. We do that on the basis that these  
credits are of no value to the company but of real value  
to our shareholders. At times like the present where we are 
effectively debt-free, this is easily accommodated from a cash 
flow perspective; but even when debt levels are higher, the 
policy is readily accommodated through the application of our 
dividend investment plan. Given the minimal discount required 
to achieve significant reinvestment, any share price dilution 
from that process is negligible and overall, our shareholders 
are better off than they would be with lower dividends.

Over recent years much has been said and written about  
the need for companies to consider the interests of all 
stakeholders, not just their shareholders. As we have made 
very clear, that has always been Wesfarmers’ philosophy. 
While we are very clear that providing satisfactory returns  
to our shareholders is our primary purpose, we have always 
qualified that by pointing out that we could never achieve  

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Wesfarmers 2020 Annual Report

that objective over the long term if we did not protect and 
enhance the interests of our other stakeholders – our team 
members, customers and suppliers – and if we did not take 
care of the environment or support the communities in which 
we operate. The bushfires and the COVID-19 pandemic gave 
us the opportunity to put those words into action.

Responding to the bushfires, we supported team members 
with volunteering leave, including to work with the Rural Fire 
Service (RFS), Country Fire Service (CFS), Country Fire 
Authority (CFA), State Emergency Service and Army Reserve. 
Across the Group, Wesfarmers committed $1.5 million to 
support fire-affected communities including through the 
Business Council of Australia’s Community Rebuilding 
Initiative. In local communities, as fires burned, our 
businesses supported the RFS, CFS and CFA with donations 
of protective clothing, hoses, buckets, and the like, and then 
as the recovery commenced, we supported community 
organisations such as the Red Cross, The Smith Family and 
The Salvation Army with critical supplies like toiletries, 
nappies, air mattresses, clothing and water.

With regard to the COVID-19 pandemic, we demonstrated 
our commitment to live up to those principles. Our 
management team played a very significant role developing 
COVID-safe work practices to protect the health and safety  
of team members and customers. They also provided 
practical advice to governments on how to reduce the 
potential damage of imposing too-drastic shutdowns on  
our businesses – damage arising from the resulting lack of 
availability of essential products and from the effects of 
widespread unemployment and the economic downturn. 

When trading restrictions were imposed, we incurred substantial 
extra costs to keep our team members and customers safe; we 
continued to pay our rent and to pay our suppliers on time; and 
we extended additional financial support to our community 
not-for-profit partners which found their revenues drying up. 
Because of our strong balance sheet and the support of our 
customers, we were able to do this in our Australian operations 
without recourse to the Federal Government’s JobKeeper 
program. In New Zealand, where the shutdowns were severe 
and our stores were closed, any government support was 
passed straight through to our affected employees. Finally,  
after the close of the 2020 financial year, we announced that 
during the six-week lockdown of our businesses in Victoria,  
we would continue to pay team members in full, who are 
permanent, or who work more than 12 hours a week as  
casuals, if there is no meaningful work for them.

One concerning issue that arose during the last year, that 
went to the heart of our reputation was the discovery of wage 
and salary underpayments, initially in the Industrial and Safety 

 Wesfarmers 2020 Annual Report9Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewdivision and subsequently, on investigation, in some of our other businesses. This issue has affected numerous small, medium and large employers nationally this year and illustrates the challenges all companies face under Australia’s extremely complex industrial relations system. As an example, in our Industrial and Safety division, we were dealing with over 50 separate awards and agreements in trying to identify where errors might have occurred. I believe we acted swiftly and in accordance with the principles espoused above to identify the errors, resolved  to compensate affected current and former team members extending over 10 years rather than the required six, added interest to payments or superannuation shortfalls and we are implementing fixes to overcome any systems shortcomings  to prevent any continuation of the problem.While the bushfire and COVID-19 initiatives involved substantial costs, we consider them more as investments – investments in our people and other stakeholders which will enhance the reputation and welfare of the company over the long term. Importantly, we were able to bear them because  of our conservative approach to balance sheet management. The COVID-19 pandemic has illustrated once again how essential that is, if a company is to continue to operate successfully during downturns.It is fair to say that at the time of writing this report, we are faced with a more uncertain outlook than at any time within the Board or management’s experience. Within Australasia, where our principal businesses operate, many borders are closed, varying trading restrictions have been imposed, the economy is in recession and unemployment has risen substantially. It is clear that in the absence of an effective vaccine for the coronavirus, random infection outbreaks will continue to occur and governments will respond by imposing  restrictions of some sort. Amongst all of the challenges facing our societies at the present time, our greatest concern should be about unemployment. Losing a job and remaining out of the workforce for a lengthy period can be personally devastating, resulting in mental and physical health issues, family breakdown and descent into poverty and it is becoming apparent that this burden is falling disproportionately on young people and women. That is what has motivated us to provide team members with support and continued income, including during the Victorian lockdown. The financial assistance provided by the Australian and state governments in cases where employers did not have the capacity to do so has been vital, but this can only be a short-term measure. In the longer term, we have to make sure jobs are created by developing a more productive, competitive economy. Governments and opposition parties have to put politics aside and work together to remove the impediments to higher productivity – impediments like our overly complex industrial relations system, our inefficient taxation system and burdensome regulations. In the absence of that, we will be faced with a future of high unemployment, high government deficits and, in due course, the very damaging effect of higher interest rates. As far as your company is concerned, more productive economic settings would allow us to make more investments, employ more people and make an even larger contribution to the Australian and New Zealand economies. In the meantime, we are comforted by the fact that our balance sheet is in good shape and that we have a management team well equipped to handle whatever challenge is thrown up. Our business heads continue to look for ways to enhance and expand their activities and at a group level we are as busy as ever looking for opportunities to explore new directions for the company. I take this opportunity, on behalf of my fellow directors, to thank our outgoing director, Diane Smith-Gander AO, for  her outstanding contribution to the Board and the company over the last eleven years. Diane has had a wealth of experience over the course of her career – from her banking and management consulting days to her numerous board and chair roles in for-profit and not-for-profit organisations – and that experience showed in the way she conducted herself on our Board: ready and able to provide wise counsel to management, independent minded and focused at all times on the company and our stakeholders’ interests. Diane has been recognised nationally for her constant advocacy for the engagement of women in executive roles and for gender equality. We shall greatly miss her contribution around the board table.The Board is currently in the process of identifying potential new directors – one to replace Diane and a second to fill a skills gap in the digital space which we identified in our latest board evaluation process; and we hope to be in a position  to conclude that over the next few months. The Board started the 2020 financial year with a new Company Secretary in Aleks Spaseska but an opportunity and need in the Kmart Group resulted in her taking on the role of Chief Financial Officer of that division later in the year. We wish Aleks well in that critical role and were very pleased to be able to appoint Vicki Robinson as her replacement in March. Vicki has had extensive experience as a senior lawyer in the Corporate Solicitors’ Office over her 17 years with the Wesfarmers Group. In closing I pay tribute to our dedicated team members,  led by Chief Executive Officer Rob Scott. The last year has thrown up enormous and unique challenges to all of them and they have responded in a truly outstanding way, with great dedication and effort. They are a wonderful team.MICHAEL CHANEY AOChairmanOverview
Overview
Overview

Managing 
Director’s 
report

It is my pleasure to provide this update on the performance  
of Wesfarmers in 2020. 

Without doubt, FY2020 was an extraordinary and challenging 
year for the Group, our team members and the community. 

More than ever, all that we have achieved, including our strong 
financial results, is testament to the dedication of our talented 
and committed team members and leaders, working across 
our businesses in Australia and internationally. 

Particularly in the second half of FY2020, our world and all  
our lives changed profoundly. Much of Australia was heavily 
affected by the summer’s catastrophic bushfires. I was 
extremely proud of the many ways our businesses provided 
support – when communities were in danger and then in the 
aftermath as the recovery commenced. In many locations,  
that recovery is only just beginning.

Shortly after the bushfires, we faced the complex and evolving 
challenges of COVID-19. The impact on lives, wellbeing, jobs 
and the economy is well known and is continuing to unfold. 
Our businesses and their teams have responded to these 
challenges in the most remarkable way, with empathy, 
professionalism and determination. If there was a positive to 
take out of this terrible time, it is our capacity to respond rapidly 
to changes in our environment and to demonstrate the value 
we provide to the communities in which we operate. 

Most importantly, our businesses have developed and 
implemented COVID-safe ways of operating – which has 
enabled them to remain trading in most regions, keeping our 
team employed and supporting our customers and suppliers. 
Our businesses provided leadership and developed fact-based 
strategies, especially for the retail sector, around COVID-safe 
operations. From the standpoint of managing the spread of 
COVID-19, we made a valuable contribution to the public 
health effort. We introduced paid pandemic leave which 
enabled team members to isolate at home if unwell or pending 
test results, without loss of pay, and we provided support  
to our more vulnerable team members to stay at home. 

The efforts in recent years to invest in and improve our digital 
offer to customers has started to pay off and in FY2020, 
Wesfarmers’ businesses generated e-commerce sales  
of over $2 billion. This is another example of how the 
Wesfarmers model enables our businesses to adapt and 
evolve to changes in markets and customer demand.

Our performance
The Group’s continuing businesses generated NPAT growth  
of 8.2 per cent (excluding significant items in the prior year), to 
$2.1 billion. Bunnings, Kmart, Officeworks and Catch delivered 
strong sales growth for the year. Earnings in Bunnings and 

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Wesfarmers 2020 Annual Report

Officeworks were particularly strong and demonstrated the 
ability of these businesses to rapidly adapt to the changing 
needs of their customers. 

Bunnings achieved strong sales and earnings growth as 
customers spent more time at home and undertaking projects 
at home. Throughout the year, Bunnings continued to execute 
its strategic agenda and to accelerate the development of its 
digital offer. During the COVID-19 period, the Australian rollout 
of Click and Deliver was completed, the New Zealand 
e-commerce platform was launched and the innovative  
Drive and Collect offering was developed.

Kmart Group’s revenue from continuing operations increased 
7.2 per cent over the year, however earnings were impacted  
by significant items (largely associated with the restructure  
of Target) and payroll remediation costs. 

Pleasingly, Kmart recorded solid revenue and earnings growth, 
reflecting a consistently strong performance for most of the 
year and a more volatile fourth quarter, impacted by COVID-19. 
Earnings were affected by additional costs associated with 
online fulfilment and COVID-19 and adverse exchange rate 
movements. In Kmart, technology is playing an increasingly 
important role, improving our customer proposition and 
delivering operational efficiencies. 

The financial performance of Target has been unsatisfactory 
and the business was loss-making in FY2020. In May 2020, 
we announced a number of actions to address structural 
challenges, simplify Target’s operating model and deliver more 
value from the store network. These actions will also accelerate 
the growth of Kmart. Target remains a much-loved brand and 
will continue to operate as a standalone business, prioritising 
online growth and improving the product offer in the destination 
categories of soft home and apparel.

Officeworks performed strongly in FY2020, with earnings 
increasing by 13.8 per cent, driven by strong sales growth  
in stores and online. In the second half, we saw significant 
demand for technology, office furniture and learning and 
education products, as people spent more time working  
and learning from home. 

Wesfarmers Chemicals, Energy and Fertilisers (WesCEF) 
delivered another pleasing result, with revenue in line with the 
prior year. The Chemicals and Fertilisers businesses benefited 
from strong demand from key customers, while the Energy 
business recorded a decline in revenue due to lower prices  
and lower sales volumes. 

The performance of Industrial and Safety was below 
expectations, with the division also reporting an impairment to 
its carrying value. The result reflects a weaker performance of 
Blackwoods in the first half and lower customer demand in 

 Wesfarmers 2020 Annual Report11Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewWorkwear Group in the second half, due to COVID-19. To address these issues, we are investing in customer service, digital capabilities and a new enterprise resourcing planning system in Blackwoods. Investment and portfolio actions During the year, we invested around $1.9 billion in existing and new businesses. In August 2019, we completed the acquisition of Catch Group Holdings Limited (Catch) which brought highly complementary skills in digital retail and fulfilment and a growing e-commerce marketplace to our Group. During the year, Catch made good progress, with gross transaction value increasing almost 50 per cent since acquisition. Importantly, our digital capabilities have been accelerated  and continue to complement our store network as most online customers also enjoy our in-store experience. In September 2019, we acquired Kidman Resources  Limited (Kidman) which will allow us to leverage our  chemical processing capabilities within WesCEF into the growing market for high-quality lithium hydroxide. With  this acquisition, Wesfarmers is a 50 per cent joint venture partner in the Mt Holland lithium project which includes the construction of a mine and concentrator at Mt Holland and  a lithium hydroxide refinery in Kwinana. The Mt Holland lithium project presents a world-class opportunity to develop an integrated large-scale, long-life and high-grade operation  in Western Australia. While relatively small in the context of the broader Group, Catch and Kidman are good examples of our disciplined approach to capital allocation and consistent with our objective of deploying capital where we expect to generate attractive returns to shareholders over time.In addition to our acquisitions, the Group invested around $900 million in our existing divisions, largely to support the continued expansion of the Bunnings store network. In the second half of FY2020, the Group also sold a 10.1 per cent interest in Coles through two separate transactions, delivering a pre-tax gain on sale of $290 million. The partial sale of the Group’s interest in Coles crystallised an attractive return for shareholders and provided increased balance sheet strength during a time of significant uncertainty.Our people Wesfarmers is one of the largest private sector employers  in Australia with around 107,000 team members across our businesses, in Australia and overseas. It was pleasing to see a significant improvement in the Group’s safety performance with the total recordable injury frequency rate across the Group's continuing operations 23 per cent lower than last year. However, whenever there are injuries in  the workplace, we still have work to do.In March 2020, we announced changes to the leadership structure of our industrial businesses, with WesCEF and Industrial and Safety becoming standalone businesses. As part of this change, David Baxby stepped down as Managing Director of Wesfarmers’ Industrials division. Over three years, David played an important role supporting a number of growth initiatives across the group. Tim Bult was appointed Managing Director of Industrial and Safety, bringing significant operational and commercial experience to this role. Tim has served in various leadership positions throughout the Group over the last 20 years. Tim  and Ian Hansen, the CEO of WesCEF, have both joined the Wesfarmers Leadership Team and are making a valuable contribution. During FY2020, while Sarah Hunter was on parental leave, Officeworks’ Chief Financial Officer Michael Howard served  as Acting Managing Director of that division. Michael’s tenure included the summer during which our businesses responded to the Australian bushfires and the initial months of our COVID-19 response. He led Officeworks with great distinction in challenging times. We are fortunate to be able to draw upon talented executives like Michael. As the Chairman noted, Vicki Robinson was appointed Executive General Manager, Company Secretariat during the year, and is also making a valuable contribution to the Wesfarmers Leadership Team.OutlookThroughout FY2020, we have been guided by our corporate objective – to deliver a satisfactory return to shareholders over the long term. We recognise we can only achieve this if we continue to anticipate the needs of our customers, look after our team members, treat suppliers fairly, contribute positively  to the communities in which we operate, take care of the environment and act with integrity and honesty in all of  our dealings. Our objective and values, including our focus on the long  term, will continue to guide the decisions in the period ahead including our ongoing response to the challenges presented  by COVID-19. Without doubt, COVID-19 and its economic impact will continue to be felt for a long time including in customer demand, our operations and across the broader economy.  For the first time in almost 30 years, Australia is in recession. Without question, the income and fiscal support provided by federal and state governments to individuals and businesses, including through JobKeeper, have played a critical role in supporting jobs and households. The Group’s retail businesses will maintain their focus on meeting changing customer needs and delivering even greater value, quality and convenience. Recent investments in digital capabilities will continue and are expected to improve our customer value proposition, expand our addressable markets and deliver operating efficiencies. Consumers spending more time at home may support demand in some of the Group’s businesses, although retail sales will also be affected by any trading restrictions and the gradual removal of stimulus, particularly if unemployment remains elevated. The performance of the Group’s industrial businesses will continue to be subject to international commodity prices, foreign exchange rates, competitive factors and seasonal outcomes. Importantly, our portfolio includes diverse, cash-generative businesses with leading market positions. The Group’s strong balance sheet means we remain well-positioned to deal with  a range of economic conditions.The Group will also continue to develop and enhance its portfolio, building on its unique capabilities and platforms to take advantage of growth opportunities within existing businesses, recently acquired investments and to pursue transactions that create value for shareholders over the long term.Finally, I would like to again acknowledge the efforts of each and every one of our team members for their contribution during an exceptionally difficult year. We know that the future will continue to present challenges, but I am confident that we will rise to these and that Wesfarmers’ best years lie ahead. ROB SCOTT Managing DirectorOverview

Supporting our community

COVID-19 response

Wesfarmers’ response to the challenges presented by 
COVID-19 reflects the hard work and dedication of our 
107,000 team members and leaders to support our 
customers, suppliers and local communities. 

Across the Group, our response to COVID-19 was motivated 
by Wesfarmers’ core values and focus on the long term. This 
motivation helped our businesses adapt quickly to the diverse 
challenges of evolving customer needs, deep business 
uncertainty and rapidly changing state and federal 
government restrictions. 

As we continue to respond to COVID-19, Wesfarmers  
will prioritise the safety of its customers and team members. 
Our retail divisions will remain focused on meeting changing 
customer needs and delivering even greater value, quality and 
convenience, including with additional online and contactless 
Click and Collect options. Recent investments in our digital 
capabilities are expected to support further enhancements  
to the customer value proposition, expansion of addressable 
markets and deliver operating efficiencies.

A focus on team member safety and support 

Our focus during COVID-19, has been to protect the health, 
safety and wellbeing of our team members and customers, while 
supporting government efforts to limit the spread of the virus. 

Among our retail businesses, these included measures  
to support physical distancing, the introduction of Perspex 
‘sneeze screens’, increased cleaning in addition to ‘deep 
cleans’, limiting customer numbers in-store and restricting 
in-store activities like fitting rooms, cafes and playgrounds. 
Across all our businesses and distribution centres, new 
processes were put in place including workforce planning to 
prevent overlap of team rosters and greater use of personal 
protective equipment.

The Group provided two weeks of paid pandemic leave to 
permanent and casual team members required to self-isolate 
or care for others. In August 2020, with growing evidence  
of anxiety among team members in Victoria, we committed  
to pay full-time, part-time and casual team members  
(working more than 12 hours a week), during the Victorian 
lockdown. These and other measures give income and job 
security to team members at highly uncertain times, easing 
the impact of COVID-19 on them and their families, while 
ensuring a safe operating environment for other team 
members and customers.

12

Wesfarmers 2020 Annual Report

Importantly, we are increasing our focus on team member 
wellbeing and mental health. We have expanded access to 
our employee assistance programs to include the families of 
team members and we introduced additional protections for 
our most vulnerable workers including team members over 
the age of 70.

Responding to changes in customer 
shopping and demand 

Anticipating the needs of our customers and delivering 
competitive goods and services has been a critical challenge. 

As stay-at-home restrictions were introduced, our customers 
spent more time working, learning and relaxing at home. This 
change saw increased demand in some product categories, 
particularly for Bunnings and Officeworks. Bunnings focused 
on products to allow work around the house and garden, 
providing valuable physical and wellbeing benefits to people 
required to stay at home. In some categories, Officeworks 
experienced significant increased demand for technology and 
home office furniture, as people set up home offices, and for 
education ranges, especially during school closures. All of our 
businesses saw unprecedented demand across safety, 
cleaning and hygiene product ranges. In some categories, 
including apparel, we also saw declines in customer demand.

Our teams worked hard to minimise any temporary availability 
issues, caused by significant variation in demand across 
certain product categories. In-store retail sales were affected 
by significant volatility in foot traffic, driven by government 
restrictions and physical distancing requirements. As 
customers shopped online, our e-commerce sales grew  
by 60 per cent during FY2020, excluding Catch. In-store 
processes were changed to support the implementation  
and uptake of Click and Collect across our networks.  
Our businesses led the design and launch of contactless 
Drive and Collect, and our investment in digital capabilities 
helped to keep shopping environments safe for team 
members and customers.

Supporting vulnerable communities 

Recognising the challenge that COVID-19 presents to the 
more vulnerable members of our community, our retail 
divisions introduced new ways to shop. Dedicated phone-
shopping services were established for Australians who could 
not shop online. The phone lines provided assistance to 

customers shopping online for the first time, guiding them 
through the online shopping experience - a service 
predominantly used by older Australians.

Working with our suppliers 

Throughout the year, Wesfarmers continued to engage fairly 
with our suppliers, sourcing ethically and sustainably despite 
the challenges of COVID-19. 

The Group maintained business continuity and payment 
terms with suppliers. In cases of hardship we supported 
suppliers through accelerated payment, acknowledging the 
critical role that our suppliers play in helping us meet the 
needs of customers.

Supporting the communities in which  
we operate

Throughout the year, we continued to support our 
community partners. Across the Group, in FY2020 we 
made around $68 million in contributions to community 
partners, both directly and indirectly.

This year, our Wesfarmers Arts partners have cancelled 
seasons, closed their doors to the public and drawn upon 
often limited reserves, to keep paying the staff and artists 
critical to their future. Through the crisis, we stood  
alongside many of our arts partners, helping them remain 
viable by providing additional COVID-19 funding, including 
Western Australian Symphony Orchestra, West Australian 
Ballet, West Australian Opera and Musica Viva Australia.  
All were significantly impacted by COVID-19 restrictions,  
as usual cash flows stopped when stages went dark and 
galleries closed. 

While sausage sizzles planned for the first weeks of 
COVID-19 were cancelled, Bunnings donated more than 
3,000 gifts cards worth $500 each to help community 
groups with their fundraising. As restrictions ease, 
community sausage sizzles are resuming, initially in the 
Northern Territory, Western Australia and New Zealand. 

Supporting the government response 

Wherever possible, Wesfarmers worked closely with the 
federal and state governments to support their response  
to COVID-19. We shared our COVID-safe operating 
procedures to help other businesses adopt best practice 
COVID-safe measures and we worked collaboratively to 
progress the COVID-safe re-opening of the economy. 

Wesfarmers did not receive material government support 
payments and is not currently part of the Federal 
Government’s JobKeeper program. The Group received 
approximately $40 million in wage subsidies outside of 
Australia, almost exclusively in New Zealand, where the 
government mandated temporary store closures and 
trading restrictions. These payments were passed on to 
team members and represented less than one per cent  
of total team member payments made during the year.

Without doubt, government stimulus designed to provide 
income support to households and businesses has 
positively supported the economy, and our retail sales. 
These measures have been essential to the Australian 
economy, providing job security for millions of Australians 
and income support for hundreds of thousands impacted 
by COVID-19. 

COVID-19 continues to present significant uncertainty for 
the broader economy, affecting both customer demand and 
the way we operate our businesses. As we move forward, 
Wesfarmers will continue to respond to the challenges of an 
evolving economic and social landscape.

Bushfire response

Wesfarmers team members were shocked and saddened by 
the devastating bushfires that gripped Australia with extreme 
intensity, from early November until February. The bushfires 
impacted our businesses, teams and local communities 
where we operate, initially in Queensland and northern  
New South Wales and then across New South Wales, 
Victoria, the Australian Capital Territory and South Australia. 

Perhaps most importantly for fire-affected areas, our 
businesses performed a critical service making goods available 
in very difficult circumstances, ensuring supply of essential 
products, when and where needed. This timely, local support 
to fire-affected communities distinguishes the contribution 
made by Wesfarmers businesses, and was achieved by 
working closely with suppliers and logistics partners. 

Over the summer, Blackwoods supplied respirators, meeting 
demand from customers like the Rural Fire Service (RFS),  
the Army and local councils, often in unlikely locations like 
Canberra, when air quality was among the worst in the  
world. Bunnings donated and sold firefighting and recovery-
related equipment to the RFS and the Country Fire Service 
– equipment like protective clothing, hoses, buckets, rakes, 
marquees and torches, both as fires burned and supporting 
the recovery. Kmart, Target and Officeworks donated and 
made critical supplies available to support the relief effort 
– things like toiletries, nappies, air mattresses, blankets, 
clothing, water, boxes and power cords. 

Throughout the crisis, team member safety has been a primary 
focus. Around 20 stores closed for a period including in 
Batemans Bay, Ulladulla, Nowra, Bega, Merimbula, Cooma, 
Tumut, Port Macquarie, Bairnsdale and Canberra – with 
Bunnings Batemans Bay closed for six days. Stores were 
closed for many reasons including approaching fire (like 
Bunnings Batemans Bay, pictured below, on New Year’s Eve), 
on account of dangerous conditions (such as embers in 
carparks), poor air quality and to enable team members to 
return home before road closures. When air quality was 
poorest, some of our businesses provided team members with 
masks at work and for their commute, and team members 
with respiratory illnesses were encouraged to stay home. 

With the fires extinguished, focus turned to the wellbeing  
of team members. Senior executives visited stores and  
teams in fire-affected areas to thank and support our  
teams. Counselling has been offered in some stores and  
team members have been reminded about our Employee 
Assistance Program services. Where an individual’s annual 
leave was impacted by the fires, we have reversed that leave. 
Across the Group, team members took volunteering leave to 
support organisations including the RFS, the State Emergency 
Service and the Army Reserve. To support the relief and 
recovery task, Wesfarmers also committed $1.5 million across 
the Group, supporting a range of community partners and 
organisations in fire-affected communities. 

 Wesfarmers 2020 Annual Report
 Wesfarmers 2020 Annual Report

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Overview

Leadership Team

Rob Scott 
MANAGING DIRECTOR  
WESFARMERS

Anthony Gianotti
CHIEF FINANCIAL OFFICER  
WESFARMERS

Maya vanden Driesen
GROUP GENERAL COUNSEL  
WESFARMERS

Rob was appointed Managing Director of 
Wesfarmers in November 2017 following his 
appointment as Deputy Chief Executive Officer  
in February 2017. 

Rob joined Wesfarmers in 1993, before moving into 
investment banking, where he held various roles in 
Australia and Asia. He re-joined Wesfarmers in 
Business Development in 2004, was appointed 
Managing Director of Wesfarmers Insurance in 
2007 and then Finance Director of Coles in 2013. 
Rob was appointed Managing Director, Financial 
Services in 2014 and then Managing Director of the 
Wesfarmers Industrials division from August 2015 
to August 2017.

Rob holds a Master of Applied Finance degree from 
Macquarie University and a Bachelor of Commerce 
degree from the Australian National University. He 
has a Graduate Diploma in Applied Finance and 
Investments, is a qualified Chartered Accountant 
and has completed the Advanced Management 
Program at Harvard Business School.

Anthony was appointed Chief Financial Officer  
of Wesfarmers in November 2017.

Anthony joined Wesfarmers in 2004 in Business 
Development and in 2005 was appointed Manager, 
Investor Relations and Business Projects. In 2006, 
he was appointed Head of Business Development 
and Strategy of Wesfarmers Insurance, then its 
Finance Director in 2009 and Managing Director  
in 2013. In August 2015, Anthony was appointed 
Finance Director of the Wesfarmers Industrials 
division and its Deputy Managing Director in 
February 2017.

Anthony holds a Bachelor of Commerce from  
Curtin University and a Graduate Diploma in 
Applied Finance and Investments. He is a qualified 
Chartered Accountant and has completed the 
Advanced Management Program at Harvard 
Business School.

Maya was appointed Group General Counsel of 
Wesfarmers in January 2015. Prior to this, Maya 
held a number of senior roles in the company 
including Legal Counsel – Litigation, Senior Legal 
Counsel and General Manager Legal – Litigation.

Maya holds Bachelor of Jurisprudence and 
Bachelor of Laws degrees from The University  
of Western Australia (UWA) and was admitted to 
practise as a barrister and solicitor in 1990. Prior  
to joining Wesfarmers, Maya practised law at 
Parker & Parker and Downings Legal.

Maya is a Graduate of the Australian Institute  
of Company Directors and sits on the Executive 
Committee of the GC 100, representing the  
General Counsel of Australia’s top 100 ASX-listed 
companies within the Association of Corporate 
Counsel (Australia). She is also a member of the 
UWA Law School’s Advisory Board and has been  
a Director for the Committee for Perth since 
January 2016.

Ed Bostock
MANAGING DIRECTOR  
BUSINESS DEVELOPMENT 
WESFARMERS

Ed joined Wesfarmers as Managing Director, 
Business Development in October 2017.

Before joining Wesfarmers, Ed worked in the 
private equity industry for more than 16 years, 
including the last 10 years with global investment 
firm Kohlberg, Kravis & Roberts. Ed has managed 
investments across a broad range of industries 
including healthcare, financial services, technology 
and media.

Ed holds a Bachelor of Science from the University 
of Melbourne and a Graduate Diploma in Applied 
Finance and Investment.

Vicki Robinson
EXECUTIVE GENERAL MANAGER 
COMPANY SECRETARIAT  
WESFARMERS

Vicki was appointed Executive General Manager, 
Company Secretariat in March 2020 and is the 
Company Secretary of Wesfarmers. Prior to this, 
Vicki was General Manager, Legal (Corporate) and 
has played a key role in many of Wesfarmers’ key 
mergers and acquisitions over the years. Vicki joined 
Wesfarmers in July 2003 as a Legal Counsel with the 
Corporate Solicitors Office. In 2007, Vicki moved to 
the role of General Manager for enGen, and returned 
to the Corporate Solicitors Office in 2009.

Vicki holds Bachelor of Laws (Honours) and 
Bachelor of Commerce degrees from The University 
of Western Australia and was admitted to practise 
as a barrister and solicitor in 1999. Vicki chairs the 
Advisory Board of Curtin University Law School and 
is a member of the Advisory Council of the Curtin 
Faculty of Business and Law.

Sarah Hunter
MANAGING DIRECTOR  
OFFICEWORKS

Sarah was appointed Managing Director, 
Officeworks in January 2019. Prior to this,  
Sarah was Demerger Program Director at Coles, 
overseeing the demerger from Wesfarmers in 
November 2018. Sarah joined Coles in 2010,  
and held various senior positions across finance, 
strategy, convenience, liquor and supermarket 
operations. 

Before joining Coles, Sarah worked in the  
United Kingdom for more than 10 years, holding  
a number of senior commercial positions in  
banking and airports. 

Sarah holds a Bachelor of Commerce from 
Bond University, a Graduate Diploma in Applied 
Finance and Investment from the Financial Services 
Institute of Australasia and a Masters of Commerce 
from the University of New South Wales. She  
is also a Fellow of the Association of Chartered 
Certified Accountants, a Fellow of the Financial 
Services Institute of Australasia, a member of the 
Australian Institute of Company Directors and  
a member of Chief Executive Women.

14

Wesfarmers 2020 Annual Report

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Michael Schneider
MANAGING DIRECTOR  
BUNNINGS GROUP

Ian Bailey
MANAGING DIRECTOR  
KMART GROUP

Michael was appointed Managing Director, Bunnings 
Australia and New Zealand in March 2016 and 
Managing Director, Bunnings Group in May 2017. 
Michael joined Bunnings in 2005, and prior to this he 
held a range of senior operational, commercial and 
human resource roles across regional and national 
markets, both in retail and financial services. 

Michael holds a Bachelor of Arts degree from the 
University of New South Wales and has completed 
the Advanced Management Programme at INSEAD, 
and the Advanced Strategic Management Program 
at IMD.

Ian was appointed Managing Director, Kmart in 
February 2016 and assumed the responsibility for 
leading the Kmart Group division (encompassing 
the Kmart, Target and Catch businesses) in 
November 2018. Prior to this, Ian was Kmart’s Chief 
Operating Officer where he was instrumental in 
Kmart’s turnaround. 

Ian’s experience, both national and international, 
covers a number of industries including retail, 
professional services, consulting, technology  
and healthcare in positions that include general 
management, sales, business development and 
project management. 

Ian holds a Bachelor of Science degree in Civil 
Engineering and has completed the Advanced 
Management Program at Harvard Business School.

Tim Bult
MANAGING DIRECTOR  
WESFARMERS INDUSTRIAL AND SAFETY

Tim was appointed Managing Director of 
Wesfarmers Industrial and Safety in April 2020. 
Having joined Wesfarmers in 1999, Tim worked  
in commercial and business development roles 
within the Wesfarmers Energy division, before his 
appointment as General Manager of Wesfarmers 
Kleenheat Gas in 2005. In 2006, he was  
appointed Managing Director of Wesfarmers 
Energy, and was Executive General Manager, 
Business Development from 2009 to 2015. Tim  
was appointed Director, Associate Businesses and 
International Development of Wesfarmers in 2015 
and in 2018 was appointed Project Director for the 
demerger of Coles. In 2019, he was appointed 
Director, Associate Businesses and Corporate 
Projects at Wesfarmers.

Tim has a Bachelor of Engineering (Mech, Hons)  
and a Master of Business Administration from The 
University of Western Australia and has completed 
the Advanced Management Program at Harvard 
Business School. 

Naomi Flutter
EXECUTIVE GENERAL MANAGER  
CORPORATE AFFAIRS 
WESFARMERS

Naomi joined Wesfarmers as Executive General 
Manager, Corporate Affairs in August 2018. Prior  
to that she worked for Deutsche Bank for 20 years, 
in roles including head of the Global Transaction 
Banking division for Australia and New Zealand and 
head of the Trust and Agency business across Asia. 

Naomi has honours degrees in Economic History 
and Law from the Australian National University and 
a Masters of Public Policy from Harvard University's 
John F Kennedy School of Government. Naomi 
currently serves on the Council of the Australian 
National University where she is the Pro Chancellor. 

Jenny Bryant
CHIEF HUMAN RESOURCES OFFICER 
WESFARMERS

Jenny was appointed as Chief Human Resources 
Officer of Wesfarmers in October 2016 and in 
addition to her human resources responsibilities 
leads the Wesfarmers Advanced Analytics team. 
Jenny joined Wesfarmers in 2011 as the Human 
Resources Director for Coles and held this role until 
2015 when she took on the role of Business 
Development Director, Coles.

Her previous work experience encompasses 
Mars, Vodafone and EMI Music in a number of 
global roles in operations, sales and marketing 
and human resources.

Jenny holds a Masters of Arts (MA) with honours 
from Cambridge University. In March 2020, Jenny 
was appointed as a Director of the flybuys joint 
venture with Coles Group Limited.

Ian Hansen
CHIEF EXECUTIVE OFFICER 
WESFARMERS CHEMICALS,  
ENERGY & FERTILISERS

Ian was appointed as Chief Executive Officer  
of Wesfarmers Chemicals, Energy & Fertilisers in 
July 2017. Prior to this, Ian was the Chief Operating 
Officer of that business. From October 2007 to 
July 2010 he was the Managing Director of the 
Chemicals and Fertilisers division.

During Ian's more than 30 years with Wesfarmers, 
he has held a wide range of operational and 
commercial management roles in both the 
chemicals and fertilisers area of Wesfarmers, 
having responsibility for the activities of ammonia, 
ammonium nitrate, sodium cyanide and industrial 
chemicals businesses, as well as fertiliser sales, 
distribution, supply chain and manufacturing.

Ian has a Bachelor of Science (double chemistry 
major) and has undertaken postgraduate business 
studies. He is also a graduate of the INSEAD 
Advanced Management Programme. 

 Wesfarmers 2020 Annual Report

15

 
 
 
 
 
 
 
 
 
 
 
At Wesfarmers, our primary objective is to deliver satisfactory returns to shareholders through financial discipline and quality management of a diversified portfolio of businesses. A key focus of the Group is ensuring that each of our divisions has a strong management capability that is accountable for strategy development and execution, as well as day-to-day operational performance. Each division is overseen by a divisional board of directors that includes the Wesfarmers Managing Director and Chief Financial Officer, and is guided by our Group-wide operating cycle and governance framework.This operating and financial review sets out the Group’s objective, strategies and values. It also outlines a review of our operational performance for the 2020 financial year, as well as summarising the Group's risks and prospects. The 2020 financial performance is also outlined for each division, together with a summary of its competitive environment, strategies, risks and prospects. Operating and financial reviewWesfarmers 2019 Annual Report14OPERATING AND FINANCIAL REVIEWWesfarmers’ primary objective is to deliver satisfactory returns to shareholders through financial discipline and exceptional management of a diversified portfolio of businesses. A key focus of the Group is ensuring that each of its divisions has a strong management capability that is accountable for strategy development and execution, as well as day-to-day operational performance. Each division is overseen by a divisional board of directors or a steering committee that includes the Wesfarmers Managing Director and Chief Financial Officer, and is guided by a Group-wide operating cycle and governance framework.This operating and financial review sets out the Group’s objective, values, growth enablers and strategies. It also outlines a review of operational performance for the 2019 financial year, as well as summarising its risks and prospects. The 2019 financial performance is also outlined for each division, together with its competitive environment, strategies, risks and prospects. This year, I am pleased that we have expanded our sustainability disclosures in this annual report and will shortly launch a new, dynamic sustainability portal - together replacing our annual sustainability report. The review should be read in conjunction with the financial statements, which are presented on pages 111 to 160 of this annual report.On behalf of the Board,  I’m very pleased to present the operating and financial review of Wesfarmers for shareholders.Above: Anthony Gianotti in the Wesfarmers corporate office with The Wesfarmers Collection of Australian Art, PerthSeen here: JUDY WATSON | Stake | 2010 | pigment, acrylic, acquarelle and chinagraph pencil  | 209cm x 195cm ©Judy Watson/Copyright Agency 2018ANTHONY GIANOTTI – Chief Financial OfficerANTHONY GIANOTTI Chief Financial OfficerThe Group’s statutory results for the year reflect the adoption of AASB 16 Leases (AASB 16) for the first time. Wesfarmers has applied AASB 16 since 1 July 2019 under the ‘modified retrospective approach’, which does not require historical periods to be restated. To facilitate  a comparison to the prior corresponding period,  pre-AASB 16 financial information, a non-IFRS measure, has also been presented in this operating and financial review and is the focus of performance commentary.This year, I am pleased to report that our retail businesses are accelerating plans to reduce their Scope 1 and 2 emissions, targeting net zero emissions by 2030. Emissions in WesCEF, and Industrial and Safety present a greater challenge to abate and our aspiration is to achieve net zero Scope 1 and 2 emissions in these businesses by 2050. There is further information in our climate-related financial disclosure section on page 68.The review should be read in conjunction with the financial statements, which are presented on pages  117 to 164 of this annual report.Operating (cid:190)(cid:287)(cid:221)(cid:927)(cid:389)(cid:287)(cid:190)(cid:287)(cid:215)(cid:259)(cid:190)(cid:280)(cid:927)reviewOperating and financial reviewWesfarmers 2020 Annual Report16The Wesfarmers Way

From our origins in 1914 as a Western Australian 
farmers’ cooperative, Wesfarmers has grown into one 
of Australia’s largest listed companies and private 
sector employers, with approximately 107,000 team 
members and more than 487,000 shareholders.
Wesfarmers’ diverse businesses in this year’s review 
cover: home improvement; apparel and general 
merchandise; office supplies; chemicals, energy and 
fertilisers; and industrial and safety products and 

services. Wesfarmers’ businesses predominantly 
operate in Australia and New Zealand with the portfolio 
including some of these countries’ leading brands.
The Wesfarmers Way is the framework for the 
company’s business model and sets out our core 
values and value-creating strategies, which are directed 
at achieving the Group’s primary objective of providing 
a satisfactory return to shareholders.

OUR OBJECTIVE

To deliver a satisfactory  
return to shareholders

VALUE-CREATING STRATEGIES

Strengthen existing 
businesses through 
operating excellence 
and satisfying 
customer needs 

Secure growth 
opportunities 
through 
entrepreneurial 
initiatives

Renew the 
portfolio through 
value-adding 
transactions

Ensure 
sustainability 
through 
responsible 
long-term 
management

CORE VALUES

Integrity

Openness

Accountability

Entrepreneurial  
spirit

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Performance measuresGrowth in TSR relies on improving returns from invested capital relative  to the cost of that capital and growing the capital base at a satisfactory rate  of return on capital (ROC)1.Given a key factor in determining TSR performance is the movement in Wesfarmers’ share price, which can be affected by factors outside the control of the company (including market sentiment, business cycles, interest rates and exchange rates), the Group focuses on return on equity (ROE) as  a key internal performance indicator.While ROE is recognised as a fundamental measure of financial performance at a Group level, ROC has been adopted as the principal measure of business unit performance. ROC focuses divisional businesses on increasing earnings and/or increasing capital productivity by managing existing assets efficiently, as well as making an adequate return on any new capital deployed.Minimum ROC targets for each division are set based on their pre-tax cost of capital, while satisfactory ROC targets are established based on the Group’s ROE targets, which are reviewed annually with reference to the performance of the broader market.1  Pre-AASB 16 RoC is calculated as EBIT / capital employed. Post-AASB 16 RoC is calculated as EBT / capital employed, where capital employed excludes right-of-use assets and lease liabilities.Our objectiveThe primary objective of Wesfarmers is to provide a satisfactory return to shareholders. The measure used by the Group to assess satisfactory returns is total shareholder return (TSR) over the long term. We measure our performance by comparing Wesfarmers’ TSR against that achieved by the broader Australian market.Operating and financial reviewWesfarmers 2020 Annual Report18Approach to delivering satisfactory returns to shareholders

The Group seeks to:

•  continue to invest in Group businesses where capital investment opportunities exceed return requirements;
•  acquire or divest businesses where doing so is estimated to increase long-term shareholder value; and
•  manage the Group’s balance sheet to achieve an appropriate risk profile, an optimised cost of capital and flexibility to take 

advantage of opportunities as they arise.

Cash flow  
generation

- Drive long-term earnings 

growth

- Manage working capital 

effectively

- Strong capital expenditure 

processes

- Invest above the cost of capital
- Maintain financial discipline

In generating cash flow and 
earnings, the Group seeks to employ 
excellent management teams who 
are empowered to drive long-term 
earnings growth. This is achieved 
through deploying best practice 
principles in operational execution  
and maintaining a long-term focus  
in regards to strategy and growth. 
The Group continuously looks to 
improve the working capital efficiency 
of all of its businesses. In addition, 
the Group ensures strong discipline 
in relation to capital expenditure 
investment decisions.

Balance sheet  
strength

- Diversity of funding sources
- Optimise funding costs
- Maintain strong credit metrics
- Risk management of maturities

Delivery of long-term 
shareholder returns

- Improve returns on invested 

capital

- Efficient distribution of franking 

credits to shareholders

- Effective capital management

The Group endeavours to achieve 
a cost of capital advantage while 
maintaining balance sheet strength 
and flexibility in order to be able to act 
when opportunities arise.
This includes maintaining access to 
diverse sources of funding, including 
bank facilities and global bond 
markets, and optimising funding costs.
The Group maintains strong credit 
metrics, in line with strong investment 
grade credit ratings, supported 
by good cash flow generation and 
disciplined capital management.
Risk is managed by smoothing debt 
maturities over time, limiting total 
repayments in any given year.

With a focus on generating strong cash 
flows and maintaining balance sheet 
strength, the Group aims to deliver 
satisfactory returns to shareholders 
through improving returns on invested 
capital. Recognising the value of 
franking credits to shareholders, 
Wesfarmers also seeks to distribute 
these to shareholders. Depending 
upon circumstances, capital 
management decisions may also be 
taken from time to time where this 
activity is in shareholders’ interests.

Approach to capital allocation

The Group evaluates a broad range of investment opportunities, including:

Existing  
portfolio

- deploying capital in its existing 
portfolio to build businesses 
with unique capabilities and 
platforms in expanding markets

Adjacent  
opportunities

- leveraging existing assets and 
capabilities to take advantage 
of adjacent opportunities

Value-accretive 
transactions

- disciplined investments in 

opportunistic and value-accretive 
transactions through various 
ownership models (e.g. minority 
interest, full control, partnerships)

Importantly, in assessing these opportunities the Group applies a long-term horizon to investment decisions and remains 
very disciplined in its approach to evaluating opportunities with the most important criteria being whether the investment  
is going to create value for shareholders over time.

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Operating and financial review

Our value-creating strategies

Consistent with the Wesfarmers Way, the Group's primary objective to provide a satisfactory return to shareholders 
is driven by four overarching strategies. These are:

Operating excellence - strengthening existing businesses through operating excellence and satisfying customer needs;

Entrepreneurial initiative - securing growth opportunities through entrepreneurial initiative;

Renewing the portfolio - renewing the portfolio through value-adding transactions; and

Operating sustainably - ensuring sustainability through responsible long-term management.

OPERATING EXCELLENCE

Our achievements

Our focus for the coming years

•  Continued improvements in our 

customer offers, including reinvesting 
in value to drive business growth and 
improving merchandise ranges

•  Provided even greater value for 

customers by lowering prices following 
productivity gains

•  Further investment in our digital offer 
across all divisions and significant 
expansion of the Group’s online 
transaction capabilities 

•  Focused on production plant efficiency 
and maintaining and growing customer 
relationships in our industrial businesses

•  Made further operational productivity 
improvements and reduced costs 
across our businesses

•  Bunnings will maintain its focus on 
driving long-term value creation by 
strengthening the customer offer, 
creating better experiences for 
customers and the wider community, 
expanding digital capabilities, growing 
the store network, and broadening 
commercial markets while maintaining 
cost discipline

•  Kmart will focus on investing for 

future growth through the ongoing 
development of technology capabilities 
and investing in store network changes, 
including the conversion of Target 
stores and the new K Hub small format, 
to unlock further scale efficiencies to 
underpin Kmart’s future growth 

•  Target will continue to improve its offer 
and digital capabilities while managing 
its remaining lease portfolio to achieve 
optimal commercial outcomes for the 
Kmart Group

•  Catch will continue to focus on growth 

and improving its customer value 
proposition through broadening its 
range, and leveraging assets across  
the Wesfarmers Group

•  Officeworks will continue to drive 

growth and improve productivity. Key 
focus areas include continuing to grow its 
every-channel offer, leveraging the data 
and analytics platform and increasing 
awareness of the Geeks2U offer

•  WesCEF will focus on maintaining 

strong operational performance across 
existing businesses, considering 
investments in adjacent projects such 
as the Mt Holland lithium project, and 
investing in innovative products 

•  Industrial and Safety will continue 

to work on improving business 
performance through enhancing the 
customer value proposition as well as 
continued investment in data, digital  
and its core systems

ENTREPRENEURIAL INITIATIVE

Our achievements

•  Innovation and extension of retail 

channels including Drive and Collect  
at Officeworks and Bunnings, and 
Catch Click and Collect at selected 
Target stores

•  Investment in the Group’s digital 

capabilities including the accelerated 
development of the digital agenda 
at Bunnings and upgrades to online 
functionality in Officeworks and  
Kmart Group

•  Optimisation and investment in retail 

store networks including the launch of 
the K Hub small format stores in Kmart 
through the conversion of selected 
Target Country stores

20

Wesfarmers 2020 Annual Report

•  Expanded use of data analytics to 

optimise chemical plant performance

•  Continued to better leverage Group 

data, supported by ongoing investment 
in the Advanced Analytics Centre

•  Continued format innovation across 
the retail businesses, including the 
acquisition of Adelaide Tools to provide 
a specialised offer for trade customers

Our focus for the coming years

•  Continue to reinforce entrepreneurial 

initiative

•  Leverage assets and digital expertise 
across the Wesfarmers Group to 
broaden multi-channel offerings across 
the retail businesses 

•  Continue to invest in data capabilities  

to embed the use of advanced analytics 
in everyday decision-making 

•  Further optimisation and investment in 

retail store networks, including applying 
the learnings from the Anko trials in the 
United States to the new K Hub stores

•  Align future growth opportunities with 
our target of net zero for Scope 1 and 
2 emissions for our retail businesses 
by 2030

Our achievements• Acquired Catch, an exciting adjacent opportunity for Wesfarmers and the Kmart Group, which will support the development of Kmart and Target’s omni-channel and fulfilment capabilities• Acquired Kidman, and with it a 50 per cent interest in the Mt Holland lithium project, a globally significant lithium deposit. With its joint venture partner, Wesfarmers plans to construct a mine, concentrator and lithium hydroxide refinery, drawing on WesCEF’s deep expertise in chemicals processing• Acquired Adelaide Tools, delivering more choice and convenience for Bunnings’ specialist trade customers • Sold a 10.1 per cent interest in Coles, enhancing the Group’s balance sheet and crystallising an attractive return  for shareholdersOur focus for the coming years• Maintain a strong focus and capability to evaluate growth opportunities where long-term shareholder value can be created• Consider innovative investment approaches to complement traditional growth models and provide future optionality• Maintain a patient, disciplined and broad scanning approach to investment opportunities• Apply rigorous due diligence and post-acquisition integration processes• Maintain a strong balance sheet to enable the Group to act opportunistically• Consider opportunities to divest assets either in full or in part, where long-term shareholder value can be createdOur achievements• Further strengthened the Group’s balance sheet• Continued to improve our safety performance, with a 23 per cent reduction in Group TRIFR • Maintained a strong focus on the development of leaders and the  broader team • Continued to promote diversity in our workplaces, with 11.5 per cent more self-identified Indigenous team members compared to the prior year • Managed talent development and succession in collaboration with our businesses to identify and develop succession options, focusing on critical roles and talent• Continued to support the communities in which we operate, with indirect  and direct contributions of more  than $68 million made in the 2020 financial year• Continued focus on delivering progress against the Group’s Climate Change Policy and the development of net zero targets and aspirations• Maintained strong focus on our divisional ethical sourcing programs to increase supply chain transparency and identify, report, and remediate instances of unethical behaviour in our supply chainOur focus for the coming years• Maintaining balance sheet flexibility to allow the Group to withstand a range of economic conditions while continuing to support its operating activities and pursuit of investment opportunities • Continue to provide appropriate governance structures to safeguard future value creation • Continue to foster a more inclusive work environment, reflecting all facets of diversity including gender, ethnicity, indigeneity, thought, experience, religious beliefs, education, age, disability, family responsibilities, sexual orientation and gender identity• Seek to achieve greater gender balance of all teams throughout the Group. Gender balance is defined as a minimum of 40 per cent of either gender• Continue to look after the physical and mental health, safety and development of our people• Continue to focus on minimising our environmental footprint, implementing our climate change strategy and progressing towards meeting our net zero emission reduction targets and aspirations • Contribute positively to the communities in which we operate • Continue to focus on ethical sourcing and modern slavery risk in supply chains, striving to eradicate the exploitation of vulnerable people• Build further awareness of the circular economy into all businesses • Increase focus on reconciliation and engagement with Indigenous peopleOPERATING SUSTAINABLYRENEWING THE PORTFOLIO Wesfarmers 2020 Annual Report21Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewOutstanding peopleWesfarmers seeks to be an employer of choice. Striving to attract a diverse group of outstanding people and utilising their individual talents is one of the most essential elements in achieving sustainable success. Wesfarmers recognises that while great assets and strategies are important, it is people who drive outcomes.Empowering cultureWesfarmers recognises that an empowering culture is essential to engendering accountability for delivering the results agreed upon through the Group’s corporate planning framework. Wesfarmers uses stretch targets in objective setting  and encourages team members to  be proactive in driving value creation  in their businesses.InnovationWesfarmers strives to develop a  culture that encourages innovation, and rewards entrepreneurial initiative and creativity.Robust financial capacityBy maintaining a strong balance sheet, the Group aims to provide a competitive cost of, and access to, capital in order to allow the Group to invest in its existing portfolio of businesses and to act when value-creating opportunities present themselves.Each strategy is underpinned  by the Group’s well established strategic planning framework. A key attribute of this approach is the maintenance of a long-term focus and acting sustainably in the creation of value and the management of businesses.At a divisional level, detailed strategies are developed specific  to the opportunities to improve each of our individual businesses. Divisional strategies are discussed within their respective summaries, starting on page 28.A core attribute of the Wesfarmers operating model is that each  of our businesses operates with  a high degree of autonomy.  Rather than mandating detailed strategies or implementation  plans, the Group aims to ensure that the following six key enablers are in place in our businesses, with a goal of driving operating performance to best practice.Social responsibilityRespect for team members, customers and suppliers and a relentless focus on providing safe workplaces are fundamental to the way that Wesfarmers operates. Wesfarmers’ social and environmental responsibility extends to maintaining high standards of ethical conduct, human rights, reducing our impact on the environment and community contribution.Commercial excellenceWesfarmers seeks to ensure that  it employs strong financial discipline in all of its decisions across the Group. Wesfarmers has a clear bias towards promoting strong commercial capability across its leadership base.Wesfarmers 2020 Annual Report22Core valuesUnderpinning all of the Group's strategies and ways of working.Openness -Openness and honesty in reporting, feedback  and ideas -Accepting that people make mistakes and seeking to learn from themIntegrity -Acting honestly and ethically in all dealings -Reinforcing a culture of doing what is right Accountability -Decision-making to divisions -Accountability for performance -Protecting and enhancing our reputationEntrepreneurial Spirit -Adopt an owner mindset  -Encourage our teams to identify opportunities and apply commercial and financial acumen  to support calculated risk-taking -Encourage our teams to take the initiative and pursue new and innovative ways of delivering value Wesfarmers 2020 Annual Report23Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewOperating and financial review

Year in review

Overview

The Group reported a statutory net 
profit after tax (NPAT) of $1,697 million 
for the full-year ended 30 June 2020, 
on a post-AASB 16 basis1. NPAT 
from continuing operations, excluding 
significant items, increased 8.2 per cent 
to $2,099 million. The Group’s result 
included a loss from significant 
items and discontinued operations 
of $386 million ($435 million pre-tax) 
primarily relating to restructuring actions 
in Kmart Group, non-cash impairments 
in Target, and Industrial and Safety, 
partially offset by gains on sale and 
revaluation of the Group’s investment in 
Coles. Statutory NPAT of $5,510 million 
in the prior year included $3,570 million 
relating to gains on the demerger 
of Coles and divestments of other 
businesses, as well as earnings from 
these discontinued businesses.
It was pleasing to have reported a solid 
trading performance while supporting 
customers, team members and the 
community through a year that was 
significantly disrupted by COVID-19  
and the Australian bushfires. 
During the year, Wesfarmers completed 
the acquisition of Kidman and Catch. 
The Group also took actions to maintain 
significant balance sheet flexibility in 
response to the high level of uncertainty 
associated with COVID-19, including the 
sale on 30 March 2020 of a 5.2 per cent 

Net profit after tax
(excluding significant items)

$2,075m

Return on equity
(excluding significant items)

22.1%

Post-AASB 16
FY20  2,075

Pre-AASB 16
FY20  2,091

FY19  2,339

FY18  2,772

FY17  2,873

FY16  2,353

Post-AASB 16
FY20 

22.1

Pre-AASB 16
FY20 

FY19 

FY18 

FY17 

FY16 

21.1

19.2

11.7

12.4

9.6

24

Wesfarmers 2020 Annual Report

interest in Coles for pre-tax proceeds of 
$1,062 million, net of transaction costs. 
This followed the sale on 18 February 
2020 of a 4.9 per cent interest in Coles 
for pre-tax proceeds of $1,047 million, 
net of transaction costs. The total full-
year dividend of 170 cents per share 
includes a fully-franked special dividend 
of 18 cents per share, reflecting the after-
tax distribution of profits on the partial 
sale of the Group’s interest in Coles.
In May 2020, the Group outlined plans 
to accelerate the growth of Kmart and 
address the unsustainable financial 
performance of Target. The Kmart 
Group result includes pre-tax significant 
items of $635 million, relating to the 
conversion of Target stores to Kmart 
stores and associated actions to 
simplify the Target business.
Further detail on divisional financial 
performances are outlined in pages  
28 to 59.

Operating cash flow

Operating cash flows of $3,597 million 
were 32.3 per cent higher than the 
prior year. The result was driven by a 
strong increase in divisional cash flow, 
reflecting favourable but temporary 
working capital movements across 
the retail businesses. The Group 
recorded a working capital inflow of 
$723 million for the year as a result 
of unusually high customer demand 

associated with COVID-19 at the end 
of the period, resulting in lower than 
usual inventory balances and higher 
payables balances. Operating cash 
flows in the prior period included 
operating cash flows from Coles and 
other discontinued operations. 

Capital expenditure

Gross capital expenditure from 
continuing operations of $867 million 
was in line with the prior period. 
Proceeds from property disposals 
of $299 million were $198 million 
below the prior year, reflecting lower 
property recycling activity in Bunnings. 
The resulting net capital expenditure 
of $568 million was $205 million, or 
56.5 per cent, higher than the prior year. 

Free cash flow

Free cash flows of $4,239 million were 
43.1 per cent higher than the prior year, 
reflecting the increase in operating 
cash flows, and $2,109 million in net 
proceeds from the partial sale of the 
Group’s investment in Coles, offset by 
$1.0 billion in acquisition consideration 
associated with Kidman and Catch. 
Free cash flows in the prior period 
included proceeds from the divestment 

1  All other commentary in the operating financial 

review section of the annual report is focused on 
results excluding the impact from the adoption of 
AASB 16 in order to facilitate comparison to the 
prior period.

Earnings per share
(excluding significant items)

183.4 cents

Free cash flow

$5,188m

Post-AASB 16
FY20  183.4

Pre-AASB 16
FY20  184.9

FY19  206.8

FY18  245.1

FY17  254.7

FY16  209.5

Post-AASB 16
FY20  5,188

Pre-AASB 16
FY20  4,239

FY19  2,963

FY18  3,422

FY17  4,173

FY16  1,233

  FY20 EXCLUDING SIGNIFICANT ITEMS
  EXCLUDING SIGNIFICANT ITEMS 
  REPORTED

•  2020 excludes post-tax significant items including: 
$520 million of non-cash impairments, write-offs 
and provisions in Kmart Group, $298 million 
non-cash impairment of WIS, $203 million gain 
on sale of the 10.1 per cent interest in Coles and 
$154 million revaluation of the retained interest, 
and includes a benefit of $83 million from the 
finalisation of tax positions on prior year disposals.
•  2019 excludes post-tax significant items including: 

$2,264 million gain on demerger of Coles, 
$645 million gain on sale of Bengalla, $244 million 
gain on sale of KTAS, $120 million gain on sale of 
Quadrant Energy and $102 million provision for 
Coles supply chain automation.

•  2018 excludes post-tax significant items  

including: $300 million non-cash impairment of 
Target, $1,275 million relating to discontinued 
operations which includes the $953 million 
(£544 million) non-cash impairment of BUKI, 
$70 million (£40 million) store closure provision 
in BUKI, $375 mllion (£210 million) loss on sale 
relating to BUKI and $123 million gain on sale of 
the Curragh Coal Mine.

•  2016 excludes post-tax significant items including: 
$1,249 million non-cash impairment of Target; 
$595 million non-cash impairment of Curragh Coal 
Mine; and $102 million of restructuring costs and 
provisions to reset Target.

of Bengalla, Quadrant, and Tyre and 
Auto Pty Ltd (KTAS), as well as the 
operating cash flows from the divested 
businesses and Coles.

Balance sheet

The Group recorded a net cash 
position of $471 million as at 
30 June 2020, comprising interest-
bearing liabilities, excluding lease 
liabilities, net of cross-currency swap 
assets and cash at bank and on 
deposit, compared to a net financial 
debt position of $2,116 million as at 
30 June 2019. The net cash position 
reflects the strong operating cash flow 
performance during the year, as well 
as the proceeds from the sale of the 
Group’s 10.1 per cent interest in Coles.

Debt management  
and financing

The Group’s financing strategy is to 
diversify its funding sources, pre-fund 
upcoming maturities and maintain  
a presence in key markets.
In response to the high level of 
uncertainty associated with COVID-19, 
Wesfarmers took various actions to 
further strengthen the Group’s balance 
sheet, including extending its available 
committed debt facilities by $1.95 billion 
to $5.3 billion. The extension of debt 
facilities was secured at acceptable 
terms, with pricing well below the 
Group’s current overall cost of debt.
Other finance costs decreased by 
$42 million to $133 million, reflecting a 
decrease in the effective cost of debt 
and lower average debt balances.
The Group’s ‘all-in’ effective borrowing 
cost decreased 0.2 percentage points 
to 4.93 per cent and its strong credit 
ratings remained unchanged, with a 
rating from Moody’s Investors Services 
of A3 (stable) and rating of A- (stable) 
from Standard & Poor’s.

Impact of AASB 16 leasing 
standard

Wesfarmers has applied AASB 16 
from 1 July 2019, using the ‘modified 
retrospective approach’, which 
does not require historical periods 
to be restated. On application of the 
standard, the Group recorded on its 
balance sheet right-of-use assets of 
$6,352 million and lease liabilities of 
$7,275 million, deferred tax assets 
of $222 million, and derecognised 
$183 million of lease-related provisions, 
with a net impact of $518 million 
recognised as a leasing reserve and 
resulting in a reduction in total equity.

Broadly, the adoption of AASB 16 
results in a reduction of occupancy 
expenses which is offset by an 
increase in depreciation on the 
right-of-use asset, and an increase 
in interest on lease liabilities. The 
adoption of AASB 16 also results in 
a reclassification of cash flows from 
operating cash flows (rental payments) 

to financing cash flows (repayment of 
lease liabilities). There is no net impact 
on reported total net cash flows from 
the adoption of AASB 16.
Further information on the impact of 
AASB 16 is provided with the financial 
statements, which are presented on 
pages 117 to 164 of this annual report.

Group capital employed

Year ended 30 June1

Inventory
Receivables and prepayments
Trade and other payables
Other
Net working capital 

Property, plant and equipment
Mineral rights
Goodwill and intangibles
Other assets
Provisions and other liabilities

Total capital employed 

Net financial debt2
Net tax balances
Net right-of-use asset/(lease liability)

Total net assets 

Post-AASB 16  
2020
$m

Reported 
2019
$m

 3,844 
 1,261 
 (4,008)
172
 1,269 

 3,623 
 813 
 3,814 
 1,804 
(1,698) 

 9,625 

471
278
(1,030) 

 9,344 

 4,246 
 1,203 
 (3,620)
266
 2,095 

 3,877 
-
 4,076 
 3,550 
 (1,484)

 12,114 

 (2,116)
 (27)
 -  

 9,971 

1  Balances reflect the management balance sheet, which is based on different classification and groupings 

than the balance sheet in the financial statements. 

2  Net financial debt is net of cross-currency interest swaps and interest rate swap contracts. Excludes lease 

liabilities. Net cash position expressed as a positive.

Cash capital expenditure
(From continuing operations)

Year ended 30 June

Bunnings

Kmart Group

Officeworks

WesCEF

Industrial and Safety 

Other

Gross capital expenditure

Sale of PP&E

Net capital expenditure

Net capital expenditure in discontinued operations

Group (including discontinued)

Gross capital expenditure

Sale of PP&E

Net capital expenditure

2020
$m

511

142

40

110

59

5

867

(299)

568

-

867

(299)

568

2019
$m

470

205

42

58

83

2

860

(497)

363

464

1,356

(529)

827

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Operating and financial review

Year in review

Dividends

A key component of TSR is the 
dividends paid to shareholders.
The Group’s dividend policy considers 
available franking credits, current 
earnings and cash flows, future cash 
flow requirements and targeted credit 
metrics.
The Board has determined to pay a 
fully-franked final ordinary dividend of 
77 cents per share, taking the full-year 
ordinary dividend to 152 cents per 
share. The directors also determined 
to pay a fully-franked special dividend 
of 18 cents per share, reflecting the 
distribution of after-tax profits on the 
sale of the Group’s 10.1 per cent 

interest in Coles during the period, 
bringing the total full-year dividend to 
170 cents per share. The final dividend 
and special dividend will be paid on 
1 October 2020 to shareholders on the 
company’s register on 26 August 2020, 
the record date for both dividends. 
Given the preference of many 
shareholders to receive dividends in 
the form of equity, the directors have 
decided to continue the operation 
of the Dividend Investment Plan 
(the ‘Plan’). The allocation price for 
shares issued under the Plan will be 
calculated as the average of the daily 
volume weighted average price of 
Wesfarmers shares on each of the 15 
consecutive trading days from and 

including the third trading day after the 
record date, being 31 August 2020 to 
18 September 2020.
The last date for receipt of applications 
to participate in, or to cease or 
vary participation in the Plan, was 
27 August 2020. No discount will 
apply to the allocation price and the 
Plan will not be underwritten. Shares 
to be allocated under the Plan will 
be transferred to participants on 
1 October 2020. Given the Group’s 
strong credit metrics, any shares to  
be issued under the Plan will be 
acquired on-market and transferred  
to participants. 

Significant balance 
sheet flexibility  
with net cash of  
$471 million

Fixed financial obligations

Operating leases1 

Bank facilities & bonds 

$8.5b

$2.3b

Dividends per share
(includes special dividends)

170 cents

300

250

200

150

100

50

0

FY202  

152

FY193   178

FY18  

FY17 

FY16 

223

223

186

16

17

18

19

20

  ORDINARY DIVIDENDS     

  SPECIAL DIVIDENDS

Other finance costs ($m)  
and weighted average  
cost of debt (%)

Debt maturity profile ($m)

TSR4: Wesfarmers and ASX100
(last 10 years)

  FINANCE COSTS (LHS) FY20
  FINANCE COSTS (LHS) 
  WEIGHTED AVERAGE COST OF DEBT (RHS)

  BANK FACILITIES
  CAPITAL MARKETS
  CASH AT BANK AND ON DEPOSIT

  WESFARMERS LIMITED TSR INDEX
  ASX100 ACCUMULATION INDEX

350
300
250
200
150
100
50
0

16

17

18

19

20

7
6
5
4
3
2
1
0

0

(1,200)

(2,400)

(3,600)

20

21

22

23

500

400

300

200

100

50

10

11

12

13

14

15

16

17

18 19

20

1  Represents future undiscounted minimum rentals payable under non-cancellable operating leases. Post-AASB 16 undiscounted lease liability totals $8.2 billion.

2  Excludes a fully-franked special dividend of 18 cents per share, relating to the distribution of the after-tax profit on the sale of the Group's 10.1 per cent interest  

in Coles during the period.

3  Excludes a fully-franked special dividend of 100 cents per share, paid on 10 April 2019.

4  Assumes 100 per cent dividend reinvestment on the ex-dividend date, and full participation in capital management initiatives (e.g. rights issues and share 

buybacks). Source: Bloomberg.

26

Wesfarmers 2020 Annual Report

!

RISK

Wesfarmers recognises the 
importance of, and is committed 
to, the identification, monitoring 
and management of material risks 
associated with its activities across  
the Group.
The following information sets out 
the major Group-wide risks. These 
are not in any particular order and 
do not include generic risks such 
as changes to macro-economic 
conditions affecting business and 
households in Australia, which would 
affect all companies with a large 
domestic presence and which could 
have a material effect on the future 
performance of the Group. During 
the 2020 financial year, the world 
was confronted with the impacts of 
COVID-19. The Wesfarmers Group 
is actively managing the continued 
impact and uncertainty of COVID-19 
by understanding and managing the 
effects it has on the key risks set out 
below. COVID-19 is therefore not 
included as a separate risk. 
In line with the prior year, increased 
information on climate-related risks 
is provided on pages 68 to 78 of this 
annual report.

PROSPECTS

The continued impact of COVID-19 
on customer demand, operations 
and the broader economy present 
significant uncertainty for the Group’s 
businesses. While consumers 
spending more time at home is 
likely to support higher demand in 
some of the Group’s businesses, 
retail sales will be impacted by any 
further trading restrictions and the 
gradual removal of government 
stimulus measures, including early 
superannuation access, should 
unemployment remain elevated. 
Retail sales may also be impacted 
by some customer purchases in the 
2020 financial year being brought 
forward from the 2021 financial year.
The Group’s businesses expect to 
continue to incur additional operating 
costs as they prioritise the safety of 
customers and team members in a 
COVID-19 environment.
Despite this uncertainty, the Group’s 
portfolio of cash-generative 
businesses with leading market 
positions is well-placed to deliver 
satisfactory shareholder returns over 
the long term. Given Wesfarmers’ 
strong balance sheet, and the 

Further information on risk 
management, including policies, 
responsibility and certification, can be 
found on page 86 of this annual report 
and in the corporate governance 
section of the company’s website at 
www.wesfarmers.com.au/cg

•  Breaches of the Group’s Code of 

Conduct

•  Failure to source goods or services 
in an ethical and responsible manner

•  Serious injury, safety or 
environmental incident 

Regulatory

•  Non-compliance with applicable 
laws, regulations and standards
•  Adverse regulatory or legislative 

change

Financial

•  Currency volatility
•  Adverse commodity price 

movements

•  Reduced access to funding

Strategic

•  Increased competition
•  Ineffective execution of strategy
•  Loss of key management personnel
•  Damage or dilution to Wesfarmers’ 

reputation or brands

•  Digital disruption to industry 

structures

Operational

•  Loss of critical supply inputs or 

infrastructure, including IT systems

•  Loss of privacy or data breaches
•  Business interruption arising from 

industrial disputes, work stoppages 
and accidents

•  Risks inherent in distribution and 

sale of products

diversity and resilience of the Group’s 
portfolio, it remains well-positioned 
for a range of economic conditions.
The Group’s retail businesses will 
maintain their focus on meeting 
changing customer needs and 
delivering even greater value, quality 
and convenience for customers. 
Recent investments into Group 
and divisional digital capabilities 
will continue and are expected 
to support enhancements to 
the customer value proposition, 
expansion of addressable markets 
and delivery of operating efficiencies.
Subsequent to the end of the 
financial year, Wesfarmers concluded 
the strategic review of Target. The 
review determined that the best 
commercial outcome is for Target to 
continue to operate as a stand-alone 
business within the Kmart Group. 
The strategy for Target will continue 
to prioritise online growth, with a 
focus on improving the product 
offer in the destination categories of 
soft home and apparel. In addition, 
a disciplined approach to capital 
allocation will result in a progressive 
reduction in the size of the store 
network over time.

The performance of the Group’s 
industrial businesses will continue 
to be subject to international 
commodity prices, foreign exchange 
rates, competitive factors and 
seasonal outcomes. While demand 
from key end-markets is expected 
to remain robust, earnings in the 
WesCEF business are expected to 
be impacted by weaker energy prices 
and lower margins in explosive grade 
ammonium nitrate.
Actions have been taken to address 
the unsatisfactory performance in 
Target, and Industrial and Safety,  
and the Group will remain focused 
on the successful implementation of 
these actions. 
The Group will continue to develop 
and enhance its portfolio, building 
on its unique capabilities and 
platforms to take advantage 
of growth opportunities within 
existing businesses, recently 
acquired investments and to pursue 
transactions that create value for 
shareholders over the long term.

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Operating and financial review

Bunnings

Founded in 1886 in Western Australia, 
Bunnings opened its first warehouse 
in Sunshine, Melbourne in 1994. 
Bunnings is the leading retailer of home 
improvement and lifestyle products in 
Australia and New Zealand and a major 
supplier to project builders, commercial 
tradespeople and the housing industry. 

Throughout COVID-19, Bunnings 
continued to service the needs 
of its customers in the rapidly 
changing environment, ensuring a 
reliable supply of key products for 
both DIY and trade customers."

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YEAR IN REVIEW

Revenue

$14,999m

2020 14,999

2019

2018

2017

2016

13,166

12,544

11,514

10,575

Key financial indicators

EBT

$1,826m

2020

1,826

2019

2018

2017

2016

1,626

1,504

1,334

1,213

Post  
AASB 16

Pre  
AASB 16

PROSPECTS

For the year ended 30 June

2020

2020

2019

2018

2017

2016

Revenue ($m)

14,999  14,999 13,166  12,544 11,514 10,575

Earnings before tax ($m)

1,826 

1,852 

1,626 

1,504

1,334

1,213

Capital employed (R12) ($m)

3,146 

2,997 

3,220

3,045

3,192

3,312

Return on capital employed (R12) (%)

Cash capital expenditure ($m)

58.0

511

61.8

511

50.5

49.4

470 

497 

41.8

367

36.6

533

PERFORMANCE DRIVERS 

Revenue for Bunnings increased 
13.9 per cent to $14,999 million. Total 
store sales growth of 14.7 per cent  
was achieved during the year, and  
store-on-store sales also increased 
14.7 per cent. Bunnings recorded 
earnings of $1,852 million, an increase  
of 13.9 per cent on last year.

The Australian bushfires and COVID-19 
had a significant impact on Bunnings’ 
operations and the communities it serves. 
The strength of the full year earnings 
result reflects the continued execution of 
the strategic agenda as well as increased 
demand for Bunnings products in 
Australia, and in New Zealand following 
the reopening of temporarily closed stores 
due to government-mandated trading 
restrictions. Bunnings responded to this 
changing environment by adapting its 
operations and accelerating its digital 
innovation to ensure that customers  
could safely get access to the products 
they need. 

While disciplined cost control remained a 
focus throughout the year, approximately 
$20 million was invested in additional 
cleaning, security and protective 
equipment to operate safely in response 
to COVID-19. In addition, costs of 
approximately $70 million were incurred  
in the second half as a result of trading 
restrictions in New Zealand, the 

permanent closure of seven New Zealand 
stores and the accelerated rollout of the 
online offer. 

A number of initiatives were introduced 
to enhance the customer experience 
both in store and online, and increase 
convenience for customers, including  
a fully-transactional website across 
Australia and New Zealand, the rollout  
of Click and Deliver, a contactless Drive 
and Collect service and the release of  
a Product Finder App.

For commercial customers, Bunnings 
introduced a digital self-checkout option 
via mobile for PowerPass customers, 
and completed the acquisition of 
Adelaide Tools, which will enable 
Bunnings to deliver even more choice 
and convenience for trade customers.

Return on capital increased from 
50.5 per cent to 61.8 per cent, 
reflecting earnings growth as well  
as the continuation of the property 
recycling program, disciplined capital 
management and favourable but 
temporary working capital movements 
prior to the end of the year.

At the end of the year, there were 
274 warehouses, 68 smaller format 
stores, 30 trade centres, as well  
as six Adelaide Tools stores in the 
Bunnings network.

Across Australia and New Zealand, 
Bunnings remains focused on driving 
growth through our strategic pillars  
of price, range and service. 

We are continuing to create better 
experiences for customers and bringing 
them more value and convenience.

A broader addressable market across 
home and lifestyle and commercial offers 
many opportunities for further growth in 
both consumer and commercial markets, 
with new category opportunities and 
tailored product ranges to suit the needs 
of customers.

While the outlook remains uncertain, 
Bunnings’ trading performance in the 
2021 financial year is expected to 
moderate following the extraordinary 
growth in the second half of 2020,  
which in part reflects customer 
purchases brought forward from the 
2021 financial year.

Bunnings will continue to accelerate the 
development of its digital offer, working 
hard to make sure our customers 
continue to have a great experience 
both in-store and online. With a 
fully-transactional offer now available 
across Australia and New Zealand, 
more digital initiatives will be rolled out 
to engage both retail consumers and 
commercial customers.

We will also maintain our strong 
commitment to cost control, 
strengthening the core of the Bunnings 
business and continuing to invest in 
service, value and growth initiatives.

As always, the community remains at the 
heart of who we are and what we do, and 
Bunnings will continue to support the 
communities where our stores operate. 

I would like to thank our team and our 
suppliers for their hard work and 
commitment to meet the needs of our 
customers during a challenging year.

Michael Schneider
MANAGING DIRECTOR
BUNNINGS GROUP

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Operating and financial review

Bunnings

OUR BUSINESS

OUR MARKET

Bunnings caters for retail and 
commercial customers across the home 
and lifestyle market in Australia and 
New Zealand, operating from a network 
of large warehouse stores, smaller 
format stores, trade centres, and frame 
and truss sites, as well as online.

Bunnings is expanding its brand  
reach across its market through the 
opening of new stores, flexible formats, 
digital innovation and commercial 
relationships. The focus is on creating 
value for customers and delivering the 
best offer everywhere, be that digital, 
in-home, in-store or on-site.

Bunnings is the leading retailer of home 
improvement and lifestyle products in 
Australia and New Zealand, and a major 
supplier to project builders, commercial 
tradespeople and the housing industry.

Bunnings is focused on creating value 
for its customers over the long term, 
based on four interlinked principles: a 
winning offer to customers; an engaged, 
focused and committed workforce; 
business behaviour that builds trust; 
and sustainable satisfactory  
shareholder returns.

Bunnings employs more than 
48,000 team members across Australia 
and New Zealand and its stores stock 
more than 45,000 products, with an 
expanded offer available through a 
special-order range both online and 
in-store, as well as through trusted 
sellers as part of Bunnings’ online 
marketplace, Bunnings MarketLink.

Bunnings is expanding 
its brand reach across 
its market through the 
opening of new stores, 
flexible formats, digital 
innovation and commercial 
relationships. The focus 
is on creating value for 
customers and delivering 
the best offer everywhere, 
be that digital, in-home, 
in-store or on-site.

30

Wesfarmers 2020 Annual Report

SUSTAINABILITY

People

Team members are the most important 
part of the Bunnings business and their 
safety and wellness remains the highest 
priority. During the year, there was a four 
per cent reduction in the number of 
injuries recorded and an eight per cent 
reduction in the Total Recordable Injury 
Frequency Rate (TRIFR). 

Key safety initiatives included leveraging 
the Bunnings internal social media 
platform, Workplace, to consult and 
engage with the team and share 
learnings across the business, as well  
as improving the performance of safety 
reporting for sites. 

Throughout the year, cross-functional 
learning teams were introduced to review 
serious incidents and a critical risk 
program began, with assessment, 
analysis and verification across each 
critical risk commencing.

Wellness was a key focus during the year 
with trials conducted on a wellbeing app 
and on-site wellbeing champions. Best 
care for the team was strengthened with 
the release of 12 new ‘mind matters’ 
cards focusing on mental health and 
wellbeing.

COVID-19 presented new challenges 
requiring rapid changes to ensure the 
safety and wellbeing of the Bunnings 
team and customers. Changes were 
made to operational activities, layouts  
of stores, and systems and processes  
to ensure the business could continue  
to safely trade during the pandemic. 

A dedicated ‘Stronger Together’ online 
Workplace group was created to provide 
additional mental health resources  
to support team members during the 
challenges of COVID-19.

Safety performance
(from continuing operations)

TOTAL RECORDABLE INJURY 
FREQUENCY RATE (TRIFR)1

10.3

2020 

2019 

2018 

2017 

2016 

10.3

11.2

11.6

18.92

22.62

1  TRIFR is the number of lost time and medical 
treatment injuries per million hours worked.
2  Prior to 2018, Bunnings reported an all injury 
frequency rate (AIFR) which is the number of 
'all' injuries per million hours worked.

The next financial year will see a focus on 
harnessing the knowledge and feedback 
of the Bunnings team, implementing 
controls to reduce critical risks, and 
broadening wellbeing support for the team.

Bunnings revised its Inclusive Leadership 
Awareness training program to focus on 
practical solutions, the benefits of diverse 
and inclusive teams, unconscious biases 
and benefits of workplace flexibility.  
The program has been run with over  
350 complex managers, operations 
managers and store support leaders.

Community

During the year, Bunnings stores helped 
raise and contribute almost $43 million 
through more than 72,000 community 
activities. 

In November 2019, Bunnings team 
members in Australia hosted a national 
sausage sizzle to raise funds for those 
impacted by recent bushfires and the 
continued drought. More than $600,000 
was raised and contributed to GIVIT,  
which facilitate donations of items for 
people in need. 

Team members across Australia and 
New Zealand also hosted sausage sizzles 
in January 2020, to raise funds for those 
affected by the Australian bushfires. More 
than $850,000 was raised and donated 
to the Australian Red Cross Disaster 
Relief and Recovery Fund.

Bunnings supported FightMND  
(a fundraising organisation to find a  
cure for Motor Neurone Disease) with  
Big Freeze beanies sold in all Australian 
stores and online. The business also 
hosted the Bunnings Warehouse Big 
Freeze Facebook event contributing 
$500,000. In total, $1.3 million was 
raised and contributed to FightMND.

Community contributions
(from continuing operations)

 DIRECT

 INDIRECT

$42.9m

2020 

9.4  33.5

2019 

2018 

2017 

2016 

5.4  44.6

5.0  41.7

4.4  38.8

3.7  34.2

While traditional areas of community 
support were temporarily unavailable  
due to COVID-19 restrictions, Bunnings 
adapted quickly to find innovative ways of 
connecting with the community. To ensure 
groups who had sausage sizzles planned 
during the first weeks of lockdown could 
find new ways to fundraise, donations of 
a $500 gift card were made to more than 
3,000 community groups representing  
an investment of over $1.7 million. 

As local community activities were 
paused, Bunnings instead made the 
unprecedented move to provide an 
additional $1.3 million in direct 
community contributions to charities 
including The Good Friday Children’s 
Hospital Appeal, The Sydney Children’s 
Hospital Gold Telethon Appeal, 
Hummingbird House, The Salvation 
Army Red Shield Appeal, as well as 
Lions groups across Australia and  
New Zealand.

Bunnings team members were also  
keen to maintain their support of local 
community groups and an internal 
competition was launched, with 
engaging team-based challenges. 
Winning teams received a donation  
to contribute to a local charity of the 
team’s choice, resulting in more than  
180 community groups who will receive 
contributions of over $1.0 million  
to assist vulnerable communities. 

In total, over $4.0 million will be 
contributed for COVID-19 support for  
the community. Once government 
restrictions are eased, Bunnings looks 
forward to resuming its grassroots 
approach to community involvement and 
fundraising in a safe and measured way.

Waste
(from continuing operations)

 RECYCLED

 DISPOSED

61.8 kt

2020  32.8  29.0

2019 

31.0  27.8

2018 

25.7  34.1

2017 

27.9  28.4

2016 

42.0  31.1

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Operating and financial review

Energy efficiency

Bunnings continued to work towards  
its target of reducing emissions by 
10 per cent by 30 June 2025, based  
on a 2018 baseline that factors in 
continuing growth of the store network.

Since the end of the 2020 financial year, 
Bunnings accelerated its plans to reduce 
emissions, targeting net zero Scope 1 and 2 
emissions by 2030. Bunnings continued to 
increase the generation of renewable power 
via solar photovoltaic (PV) installations 
across the network. During the year, 35 
sites had solar PV systems installed with  
67 sites in total completed at 30 June 2020. 
A further 25 systems are scheduled for 
completion in the next financial year, as  
well as expanding solar capability to 10 
pre-2018 installed smaller systems. 

To accelerate energy efficiency across the 
store network, LED lighting is a standard 
inclusion for all newly built Bunnings stores 
and stores are being gradually retrofitted 
across the existing network. As at the end 
of the financial year, 149 warehouses,  
12 smaller format stores and three trade 
centres were using LED lighting. On a 
like-for-like basis, LED lighting has been 
shown to reduce energy consumption  
by more than 20 per cent per store.

During the year, daylight and motion 
sensor technology was trialled  
in conjunction with LED lighting,  
indicating energy consumption  
savings of 25 per cent. Daylight and 
motion sensors are to be integrated  
into selected future LED upgrades  
across the network. 

Responsible sourcing 

Bunnings’ robust ethical sourcing and 
modern slavery framework continued to 
underpin its operations. Bunnings reported 
168 critical breaches across 39 suppliers in 
FY2020. Although Bunnings reported more 
breaches than the prior year, its risk profile 
remains the same and is supported by 
continuous improvement in reporting.

Bunnings strengthens its long-term 
commitment to timber sourcing 

For almost two decades, Bunnings 
has committed to ensuring all timber 
and wood products are sourced from 
legal and well-managed forests. 

In line with this commitment, it has 
had a zero-tolerance approach to 
illegally-logged timber since 2001, 
and has supported numerous 
sustainable timber initiatives, 
including the World Wildlife Fund 
(WWF) Global Forest Trade Network. 
With support from WWF in 2017, 
Bunnings delivered the first Forest 
Stewardship Council (FSC) certified 
range of Merbau decking and 
screening products to customers 
across Australia and New Zealand. 

Established in 2003, the Bunnings 
Responsible Timber Sourcing Policy 
was revised in August 2018, to 
include a commitment that all timber 
in products originating from natural 
forests will originate from third-party 

certified forests (e.g. FSC or PEFC) 
by December 2020. 

Bunnings continued to work with 
suppliers to assist in the transition 
from demonstrated progress to  
full certification to ensure the 
long-term efforts and commitment  
to responsibly sourced timber  
is maintained.

Bunnings also collaborated with  
the Australian and New Zealand 
timber industries in a trans-Tasman 
sustainable forest management 
standard reference committee,  
which will support sustainable forest 
management in both countries. As 
part of this collaboration, Bunnings  
is supporting the review of the 
Responsible Wood Sustainable 
Forest Management Standard 
(AS 4708) for wood and wood 
products sourced from sustainably 
managed forests in both countries.

Greenhouse gas emissions
(from continuing operations)

Ethical sourcing audit 
program findings

SCOPE 1 & 21

262.6  ktCO2e

2020 

262.6

2019 

2018 

2017 

2016 

269.5

259.7

250.1

251.1

1  Scope 1 and 2 data includes emissions for 

businesses where we have operational control 
under the NGER Act, and our emissions in  
New Zealand.

32

Wesfarmers 2020 Annual Report

196

NUMBER OF SUPPLIERS COVERED  
BY THE AUDIT PROGRAM1

Suppliers part of the audit program  
but not audited during the financial year2 

Suppliers audited during the financial  
year with no critical breaches 

Suppliers audited during the financial  
year with critical breaches identified3 

106

51

39

1  There were 196 active suppliers in the 
audit program as at 30 June 2020.
2  The supplier may be audited every  

two years if it had no previous findings.

3  In FY2020, there were 168 critical 
breaches across 39 suppliers.

STRATEGY

Bunnings provides its customers with the widest range of home improvement and lifestyle products and is committed to 
delivering the best service supported by our policy of lowest prices every day. Bunnings sets out to attract high-quality team 
members and to provide them with a safe and rewarding working environment.

Growth 
strategies

More customer 
value

Better customer 
experiences

Greater brand 
reach

Achievements

Focus for the coming years

 – New 'Lower Price' action drove more unit sales
 – Strong investment in price 
 – More products at lower price 365 days – not just as 

promotional buys

 – Re-invest in price by simplifying processes and lowering costs 
 – Bring lowest prices to life
 – Create more value for customers on products that matter  

most to them

 – Launch of the 'Do More Spend Less' campaign

 – Deliver low prices through lowering the cost of goods

 – Accelerated digital offer
 – Consistency in service basics lifted
 – Improved stock availability
 – Greater product and project knowledge
 – Further enhancements to PowerPass trade accounts
 – More team member experts to provide specialist advice

 – Opened 17 new trading locations, including six Adelaide 

Tools stores and one replacement store
 – Significantly expanded digital ecosystem
 – Online and digital strategy
 – Existing store reinvestment

 – Better customer experiences and deeper engagement: digital,  

in-store, in-home and on-site

 – Build on our range of services, both in-store and online
 – Make it easier for customers
 – Create great experiences for customers 

 – Network expansion opportunities
 – Targeted store reinvestment
 – Adelaide Tools growth opportunities

Deeper 
commercial 
engagement

 – Created more value and deeper relationships
 – Leveraged the network for customer convenience – 

stores and trade centres

 – Continue to leverage core strengths of a total market capability: 

stores, trade centres, in-field and digital

 – Wider market focus to expand selling opportunities

 – Improved service with more localised engagement
 – Over 500 dedicated trade-focused team members
 – Adelaide Tools acquisition
 – Expanded range for trade customers 

More 
merchandise 
innovation

 – Expanded ranges across many product categories
 – Further product and project innovation with wider ranges, 

new products and more in-store displays

 – Launched online marketplace, Bunnings Market Link
 – Products merchandised by product type not brand for 

ease of shop 

 – Creating, leveraging and responding to lifestyle trends, technology 

trends and environmental and economic changes

 – Development and implementation of services that complement the 

core DIY offer

 – Provide more inspiration, innovation and information
 – Expand online offer
 – Rework space to make way for new categories and ranges

RISK

Bunnings recognises that taking appropriate business risks is a critical aspect of generating acceptable business returns.  
In doing so, it seeks to appropriately manage risks to minimise losses and maximise opportunities.

Risks deemed unacceptable in terms of the business’ risk appetite are subject to appropriate control and mitigation measures  
to reduce the negative impact on the business.

The level of controls implemented is commensurate with the impact (likelihood and consequence) on the business from the risk 
occurring.

Bunnings is actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas as well as by 
managing the direct implications identified below.

Risk

COVID-19

Mitigation

 – Continued focus on providing a COVID-safe environment for team members, customers and suppliers
 – Active monitoring of changing consumer behaviour to ensure that customer expectations continue to be met
 – Proactive management of inventory position to accommodate increased volatility in demand

Safety

 – Continued focus on safety including targeted in-store awareness campaigns

Talent recruitment  
and retention

 – Strategies directed at creating and maintaining status as an employer of choice
 – Succession planning, retention and development plans

New and existing 
competitors

 – Relentless focus on strategic pillars of ‘lowest price, widest range and best service’
 – Ongoing strategies to increase customer centricity and deepen customer engagement

Reputation

 – Strong culture of ‘doing the right thing’
 – Focus on ethical sourcing and product standards
 – Ongoing regulatory compliance training

Data and IT security

 – Strategy built around protection, detection and responding to threats
 – Market leading technology to protect against cyber incidents
 – Strong internal processes to protect and control data access

 Wesfarmers 2020 Annual Report

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Wesfarmers 2020 Annual Report34Operating and financial reviewKmart GroupThe Kmart Group comprises Kmart, Target and Catch and operates 522 stores across Australia and New Zealand and employs more than 45,000 team members. The Group is committed to providing a satisfying shopping experience for its customers both  in stores and online. In a volatile year, which included  the challenges of COVID-19,  Kmart Group remained focused on continuing to serve our customers when they needed us most,  keeping our team and customers safe, and putting our business in  a strong position for the future.”YEAR IN REVIEW

Revenue

$9,217m

2020

9,217

2019

2018

2017

2016

8,713 

8,837 

8,528 

8,646 

EBT

$410m

2020

2019

2018

2017

2016

410 

550 

660 

543 

275 

Key financial indicators

Post  
AASB 16

Pre  
AASB 16

For the year ended 30 June

20201

20201

2019

20182

2017

20163

PROSPECTS

Revenue ($m)

9,217 

9,217 

8,713 

8,837

8,528 

8,646 

Earnings before tax ($m)

410

413

550 

660 

543 

275 

Capital employed (R12) ($m)

2,011 

1,978 

1,872

2,013

2,253

3,629

Return on capital employed (R12) (%)

Cash capital expenditure ($m)

20.4

142

20.9

142

29.4

32.8

207 

293 

24.1

225

7.6

292

1  The 2020 earnings before tax for Kmart Group excludes pre-tax impairment of the Target brand name 
and other assets of $525 million and restructuring costs and provisions of $110 million, and includes 
$9 million of payroll remediation costs relating to Target.

2  The 2018 earnings before tax for Kmart Group excludes the pre-tax non-cash impairment of $306 million 

for Target.

3  The 2016 earnings before tax for Kmart Group includes $145 million of cash restructuring and provision 

costs to reset the Target business, but excludes the non-cash Target impairment of $1,266 million.

PERFORMANCE DRIVERS 

Kmart Group’s revenue from continuing 
operations increased 7.2 per cent to 
$9,217 million for the year. Excluding 
significant items and payroll remediation 
costs, earnings from continuing operations 
of $422 million were 21.9 per cent below 
the prior year. Significant items incurred 
during the year related to actions taken  
to accelerate the growth of Kmart and 
address the unsatisfactory performance  
of Target, and included $525 million of 
pre-tax, non-cash impairments and 
$110 million of restructuring costs and 
provisions. Target also incurred $9 million 
in payroll remediation costs. 

Kmart’s total sales increased 
5.4 per cent for the year and comparable 
sales increased by 4.3 per cent. Kmart 
recorded solid earnings for the year 
despite challenging retail conditions, cost 
inflation due to the implementation of the 
new enterprise agreement, higher 
shrinkage and unfavourable foreign 
exchange movements impacting the 
result relative to the prior year. Kmart’s 
earnings for the year also reflected 
investment of approximately $30 million 
associated with the development of its 
retail technology and digital capabilities, 
including investment in Anko. 

Target’s total sales decreased 
2.6 per cent for the year and comparable 
sales decreased by 0.8 per cent. Target 
recorded a loss for the year, with earnings 

impacted by lower sales as well as higher 
levels of clearance activity due to 
COVID-19. These impacts more than 
offset the continued focus on cost control 
in the business. 

A strategic review of Target was undertaken 
during the year, resulting in a significant 
restructure to simplify its operating model 
and reduce its cost base. The review 
determined that Target should continue to 
operate as a largely stand-alone business 
within the Kmart Group, while executing the 
previously announced network reductions.

Physical distancing measures and an 
increased preference for customers to 
shop online resulted in significant growth in 
online sales of 136 per cent for Kmart and 
116 per cent for Target in the second half.

During the year, Kmart opened nine new 
stores, closed one store and completed 
14 store refurbishments, while Target 
closed six stores. 

Catch generated revenue of $364 million 
in the period since acquisition. Gross 
transaction value increased 49.2 per cent 
in the period since acquisition with strong 
growth in both in-stock and marketplace 
offerings, and ongoing growth in Club 
Catch subscriptions. Since acquisition, 
Catch has invested in marketing and 
capabilities, and implemented a number 
of customer-driven initiatives to leverage 
the Wesfarmers Group.

In an uncertain and volatile environment, 
Kmart Group is well-positioned for the 
future. While anticipating customer 
demand will continue to be difficult in the 
near term, the business will remain focused 
on the customer value proposition and 
delivering sustainable long-term returns. 

Kmart will focus on investing for future 
growth, including developing technology 
capabilities and re-platforming the 
website, as well as the successful 
conversion of Target stores, including  
the new K Hub small format.

Implementing the Target restructuring  
will continue next year with a focus on 
improving the commercial viability of the 
smaller and more simplified business. 
Following the completion of the 
announced network changes, the scale 
of the Target business will be significantly 
reduced, thereby decreasing its impact 
on the overall results for Kmart Group. 
Kmart Group expects to convert up to 
40 large format Target stores to Kmart 
stores and additional 50 Target Country 
stores to K Hub stores. Upon successful 
conversion, the much larger network will 
unlock an additional scale efficiencies  
to underpin Kmart’s future growth. 

Target will continue to improve the offer 
in destination categories and manage  
its remaining lease portfolio to achieve 
optimal commercial outcomes for the 
Kmart Group.

Catch will focus on growing gross 
transaction value by accelerating the 
expansion and improvement of its 
customer value proposition. This will 
require significant investment in 
technology, marketing and capabilities, 
impacting earnings in the 2021 financial 
year. Catch will continue to broaden the 
range of categories and brands available 
in both its in-stock and marketplace 
offerings, and leverage assets across  
the Wesfarmers Group.

Ian Bailey
MANAGING DIRECTOR
KMART GROUP

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Operating and financial review

Kmart

OUR BUSINESS

OUR MARKET

Kmart was established in 1969, with  
the opening of its first store in Burwood, 
Victoria. Kmart operates 239 stores 
throughout Australia and New Zealand, 
offering customers a wide range of 
everyday low-priced products in 
categories such as apparel and  
general merchandise. 

Kmart employs more than 31,000 team 
members, who are focused on the 
Kmart vision of delivering the lowest 
prices on everyday items for Australian 
and New Zealand families.

Kmart operates in the clothing, 
homewares and general merchandise 
retail sector. This sector is competitive 
and comprises department stores, 
specialty retailers and a growing online 
channel. It is also characterised by an 
expanding presence of international 
retailers, an increasing level of  
direct sourcing and online growth. 
Kmart sources from both local and 
international suppliers, with product 
sourcing offices in Hong Kong, China, 
Bangladesh, India and Indonesia.

Kmart’s total sales 
increased 5.4 per cent for 
the year and comparable 
sales increased by 
4.3 per cent. Kmart 
recorded solid earnings 
for the year despite 
challenging retail 
conditions.

36

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Target

Catch

OUR BUSINESS

OUR BUSINESS

OUR MARKET

Catch is an e-commerce marketplace 
which commenced operations in  
2006 and was acquired by Wesfarmers 
in August 2019, bringing highly 
complementary skills in digital retail  
and fulfilment to both Wesfarmers  
and the Kmart Group.

Catch operates an online business 
model offering branded products on a 
first-party basis and a third-party online 
marketplace. Its online operations are 
supported by a leading technology 
platform and data capabilities and three 
fulfilment centres located in Victoria.

Catch operates in the online retail  
market in Australia and New Zealand, 
with the focus of delivering great value 
and savings to customers. The online 
retail sector is highly competitive  
and comprises large multi-national 
businesses and domestic specialty 
online retailers. 

Catch’s team of buyers and marketplace 
sellers search the world for the best 
products from the biggest brands to bring 
our customers anything they want and 
everything they need. From fashion to 
beauty, homewares, sports, technology, 
groceries, health and lifestyle, Catch has 
millions of products at low prices.

Target began as a drapery store in  
1926 in Geelong, Victoria, and has 
since grown to become a national 
apparel and general merchandise 
retailer with stores right across  
Australia. Its objective is to provide 
quality and style at affordable prices. 
Target employs more than 13,000 team 
members across its stores, support 
offices and direct sourcing operations 
– all focused on delivering high-quality 
products with contemporary style.

OUR MARKET

Like Kmart, Target participates in the 
Australian clothing, homewares and 
general merchandise retail sector. 
Target’s strategy is focused around 
delivering elevated style and quality 
through an optimised store network and 
an engaging online proposition. This is 
supported by a strong brand heritage.

 Wesfarmers 2020 Annual Report

37

 
 
 
 
 
 
 
 
 
 
 
Operating and financial review

SUSTAINABILITY

Human rights and 
ethical sourcing

Kmart Group acknowledges its 
responsibility to respect human rights 
and promote environmental sustainability 
within its supply chain. 

During the 2020 financial year, Kmart 
and Target continued their efforts to 
strengthen the Kmart Group Ethical 
Sourcing Program with a focus on 
improving modern slavery risk mitigation 
controls and expanding the program 
beyond the retail merchandise supply 
chain to capture goods not for resale 
and service providers. 

Major achievements included, among 
others, the rollout of the new Kmart 
Group Ethical Sourcing Code and 
accompanying audit program, which 
incorporates new minimum standards  
to mitigate the risk of modern slavery. 

Kmart and Target also endorsed the Call 
to Action COVID-19: Action in the Global 
Garment Industry, which aims to generate 
action across the global garment industry 
to protect workers’ income, health and 
employment, and support employers 
during the COVID-19 crisis. 

The complexity and depth of the Kmart 
and Target supply chains remains a key 
challenge. Accordingly, the focus will be 
on increasing traceability beyond the tier 
one supply chain in the future.

Health, safety  
and wellbeing 

Kmart Group is committed to improving 
the health, safety and wellbeing of team 
members and providing a safe shopping 
experience for its customers. 

Safety performance 
(from continuing operations)

TOTAL RECORDABLE INJURY 
FREQUENCY RATE (TRIFR)1

12.82

2020 

12.82

2019 

2018 

19.4

19.1

1  TRIFR is the number of lost time and medical 
treatment injuries per million hours worked.

2  Includes Catch injuries and hours.

38

Wesfarmers 2020 Annual Report

Kmart finished the 2020 financial year 
with a 35 per cent reduction in its Total 
Recordable Injury Frequency Rate 
(TRIFR) to 13.6, while Target achieved  
a seventh consecutive year of improved 
safety performance with a 26 per cent 
TRIFR reduction to 12.3. Kmart Group 
recorded a combined TRIFR of 12.8.

Earlier this year, Kmart Group 
implemented a comprehensive COVID-19 
risk control strategy in response to 
COVID-19 that enabled all Kmart Group 
sites to provide a safe working and 
shopping environment and comply with 
government restrictions. The strategy 
consists of a range of measures in  
relation to reporting, hygiene measures, 
indoor capacity limits, social distancing 
compliance and consumables supply.

Diversity and inclusion

Kmart Group recognises that a diverse 
and inclusive place to work and shop  
will enable its businesses to build strong 
connections with team members and 
customers, while promoting innovation 
and better business decisions. 

A key strategic priority of Kmart Group is 
to achieve gender balance with a target 
of 40 per cent women, 40 per cent men 
and 20 per cent of either gender or 
gender diverse in leadership roles. In the 
2020 financial year, Kmart experienced 
growth of women in leadership roles 
from 44 per cent to 45 per cent. Target 
also improved its gender balance, with 
women in leadership roles representing 
51 per cent, increasing from 50 per cent 
last year. 

During this year, Kmart Group also 
employed four Indigenous Employment 
Advisors across Queensland, New South 
Wales, Western Australia and Victoria to 
support the meaningful employment of 
Indigenous people. By the end of the 
2020 financial year, there were a total of 
530 Aboriginal and Torres Strait Islander 
team members engaged in active 
employment at Kmart and 178 at Target.

Community

Throughout the 2020 financial year, 
Kmart Group continued to work with 
local communities to meet a diverse 
range of needs with a focus on 
supporting the physical and mental 
wellbeing of young people and their 
families. Kmart Group recognises the 
importance of its community work, 
particularly this year, with the impacts  
of the Australian bushfires on local 
communities and the challenging 
economic conditions the community 
sector face due to COVID-19.

This financial year, Kmart contributed 
directly and indirectly more than 
$7.2 million, Target almost $1.1 million 
and Catch more than $100,000 to 
charities and community groups.

A significant component of these 
donations went towards the Australian 
bushfire relief, totalling over $1.0 million, 
including donations by Kmart, Target  
and Catch and customer donations. 

Kmart Group thanks its customers for 
their generous support of communities 
affected by bushfires and the contributions 
they made to both the Kmart and Target 
Bushfire Relief Appeals.

Waste
(from continuing operations)

Community contributions
(from continuing operations)

 RECYCLED

 DISPOSED

 DIRECT

 INDIRECT

76.1 kt

2020  61.3  14.8

2019 

58.6  16.0

2018 

70.9  24.0

2017 

63.6  25.3

2016 

68.6  21.6

$8.4m

2

2020 

1.9 

6.5

2019 

20181 

1.4 

1.5 

6.0

8.4

20171 

2.2  10.5

20161 

2.2 

9.9

1  Includes discontinued operations.
2  Includes Catch contributions  

(Direct: $50,000 and Indirect: $50,036).

Environment

As a large retailer of products that consume 
natural resources in many steps of the 
production process, Kmart Group has  
a responsibility to use natural resources 
responsibly and source materials in a way 
that minimises environmental impact.

In the 2020 financial year, major 
achievements included:

 − Waste diversion from stores and 
distribution centres across Kmart 
Group improved from 79 per cent  
last financial year to 81 per cent  
this financial year.

 − Electricity use in Kmart Group stores 
(per square metre) was reduced by 
six per cent year-on-year.

 − Kmart Group's membership of 

TechCollect funded the collection 
and recycling of 303,893 kilograms 
of complying e-waste, including 
televisions, computers and  
peripheral devices.

 − Development of new sustainable 

packaging principles and standards 
that align with the Australian 
Packaging Covenant Organisation’s 
Sustainable Packaging Guidelines 
and the Australian Government’s 
2025 goals and national waste policy.

Since the end of the 2020 financial year, 
Kmart Group accelerated its plan to 
reduce emissions, targeting net zero 
Scope 1 and 2 emissions by 2030. 

Kmart Group also publicly committed to 
a number of time-bound environmental 
commitments under the Kmart and 
Target 'Better Together' sustainability 
program relating to energy and climate, 
sustainable materials, waste and the 
circular economy. 

Meeting these commitments will be  
a key focus for the Kmart Group in the 
coming years.

Kmart trials a Quiet Space for customers 

In February 2020, Kmart commenced 
a pilot of an accessibility initiative 
called Quiet Space. This offers 
customers the opportunity to  
shop in a low-sensory environment 
with reduced noise, lighting and 
limited distractions. The introduction 
of Quiet Space has assisted several 
customers to access Kmart stores 
who may react differently to sensory 
information, including people on the 
autism spectrum or with varying 
mental health conditions. Sensory 
information refers to information that 
an individual’s brain collects from the 
surrounding environment, including 
taste, smell, sound, sight and touch. 

Kmart is currently offering the  
Quiet Space trial in 26 stores  
across Australia and New Zealand 
operating from 2 pm to 3 pm and  
6 pm to 7 pm every Wednesday, 
providing an accessible option for 
customers to shop both in and 
outside core business hours.  

Some of the environmental changes 
that occur during a Quiet Space 
session include: dimmed store 
lighting; lower-volume store music; 
registers and phones; minimal use 
of equipment on the shop floor;  
and store signage indicating 
high-sensory areas.

To support Quiet Space, Kmart has 
partnered with the peak autism 
bodies across Australia and New 
Zealand and Kmart’s disability 
employment service partners. Quiet 
Space partners have supported 
Kmart with a range of educational 
resources for leaders and team 
members within participating stores. 

Kmart is currently conducting a 
post-implementation review of the 
pilot and is connecting with each 
partner and their networks to better 
understand the positive impacts and 
opportunities to improve the initiative.

Greenhouse gas emissions
(from continuing operations)

Ethical sourcing audit 
program findings

SCOPE 1 & 21

303.7  ktCO2e

2020 

303.7

2019 

2018 

2017 

2016 

318.6

330.8

360.2

414.2

1  Scope 1 and 2 data includes emissions 

for businesses where we have operational 
control under the NGER Act, other known 
non-reportable Australian-based emissions 
over which we have control, and our 
emissions in New Zealand and Asia.

1,241

NUMBER OF SUPPLIERS COVERED  
BY THE AUDIT PROGRAM1

Suppliers part of the audit program  
but not audited during the financial year2 

186

1  There were 1,241 active suppliers in the 

Suppliers audited during the financial  
year with no critical breaches 

1,021

Suppliers audited during the financial  
year with critical breaches identified3 

audit program as at 30 June 2020.
2  The supplier may be audited every  

two years if it had no previous findings.

34

3  In FY2020, there were 44 critical 
breaches across 34 suppliers.

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Operating and financial review

KMART - STRATEGY

Kmart’s vision is to provide families with everyday products at the lowest prices. Kmart will continue to drive sustainable growth through a focus on 
making Kmart a great place to shop that is simple to run and delivering better products at lower prices. The business is focused on leveraging the 
store network and evolving digital capability to ensure Kmart provides customers with a shopping experience that is seamless between channels. 
The business is focused on improving availability of its products while reducing inventory and is committed to maintaining its price leadership 
position in the market. 

Achievements

Focus for the coming years

Growth 
strategies

A great place 
to shop that is 
simple to run

 – Continued strong growth of the online channel through 

the expansion of the Click and Collect service 

 – Opened nine new stores (including two replacements) 

and completed 14 store refurbishments during the year 
 – Completed a strategic review of Target which identified 
opportunities to accelerate the growth of Kmart Group  
by converting suitable Target stores to Kmart stores
 – Implementation of productivity and cost improvement 

initiatives

Better products  
at even lower 
prices

 – Continued market leadership in perception of lowest price
 – Increased proportion of products sourced through 

strategic relationships with the right factories

 – A rewarding customer shopping experience through all channels
 – Continued development of the online offer while leveraging store 

network infrastructure 

 – Simplifying ways of working in stores and supply chain despite the 

rapid growth of store network

 – Creating value for Kmart Group by converting up to 90 Target stores 
to Kmart stores in the 2021 financial year, including the new K Hub 
small format

 – Ongoing investment in the store network through new store openings 

and refurbishment

 – Leading the lowest price in a highly competitive market
 – Elevating product desirability in the apparel category
 – Profitable growth through increased volumes and improved product 

offering

 – Maintaining strong brand perception for on-trend everyday items
 – Leveraging data insights to drive better decisions

TARGET - STRATEGY

Target is focused on its vision of inspiring families to live better by making it easy for families to afford quality and style.

Target has accelerated its strategy to deliver a more focused product offering, operate a simplified store network, make the end-to-end customer 
journey easy and personalised, irrespective of channel, and ensure the customer experience leverages Target and the Kmart Group’s assets to lift 
digital engagement. 

Target is continuing to reduce complexity and above-store costs to transform its operating model to reflect the smaller store network.

Growth 
strategies

Stabilise 
performance 
following the 
restructure

Achievements

Focus for the coming years

 – Continued improvement of processes and disciplines 

across merchandise and sourcing functions 
 – Stock levels and inventory health well managed 
 – Stock keeping unit rationalisation continued 
 – Quality and style standards reset 
 – Increased focus on fabric mix and sustainability

 – Further simplification of end-to-end operating model and business 

processes

 – More focused offer progressively re-weighted towards apparel, soft 

home and toys 

 – Stronger elevation of quality and style to provide a clearly differentiated 

offer 

Optimise and 
leverage store 
network

 – Following a strategic review, announced a number  

of actions to simplify the business, optimise the store 
network and reduce the cost base 

 – Acceleration of store network plan, focused on creating value for 

Kmart Group with approximately 70 store closures and up to 90 store 
conversions to Kmart stores in the 2021 financial year

 – Reduced average lease tenure and overall lease 

commitments, improving capital structure and flexibility  
of the store network

 – Focus on leveraging the store network to support increased customer 
convenience across all channels (e.g. Click and Collect enhancement) 

Expand and 
enable online

 – Improved availability in store ranges and expansion  

of exclusive ranges 

 – Online fulfilment and leverage distribution centre capacity, including 

automation 

 – Increased store fulfilment 
 – Foundational app improvements 
 – Order management system commissioning

 – Enhanced user digital and in-store experience 
 – Improved website including content and site personalisation 
 – Improved in-store collection experience to drive store traffic 
 – Continued app advancement

CATCH - STRATEGY

Catch’s vision is to be the trusted destination where Australians start their online shopping journey. The business leverages its unique Australian 
brand identity to engage and reward its customers with an emphasis on range, value and the shopping experience. Catch will continue to invest in 
accelerating the expansion and improvement of its customer value proposition. Catch will continue to broaden the range of categories and brands 
available in both its in-stock and marketplace offerings, and leverage assets across the Wesfarmers Group.

Growth 
strategies

Invest in 
technology 
platform and 
fulfilment 
capability

Achievements

Focus for the coming years

 – Continued focus on providing a market-leading, trusted 

and secure online shopping experience 

 – Maintain customer-centric focus with an emphasis on providing  

an engaging and rewarding shopping experience

 – Expanded Catch’s fulfilment centre network with 

significant investments in additional warehouse facilities 
and warehouse automation equipment

 – Improved Catch’s fulfilment capabilities to meet evolving 
customer preferences including the launch of Click and 
Collect via the Target store network

 – Ongoing investment in marketing the Catch website, mobile apps  

and customer loyalty programs

 – Continued development of Catch’s data capabilities to provide  

better customer insights

 – Continued enhancement of customer fulfilment capabilities  
by leveraging the Kmart Group store network infrastructure 

40

Wesfarmers 2020 Annual Report

Growth 
strategies

Achievements

Focus for the coming years

Expand product 
range 

 – Growth in the in-stock product range including 

onboarding an exciting range of market-leading brands 

 – Growth in the third-party seller network including 
onboarding Target to the Catch marketplace

 – Continued expansion of product offer
 – Leveraging data insights to drive merchandising and marketing 

activities

KMART AND TARGET - RISK

Kmart and Target’s risks include foreign exchange rate fluctuations, new market entrants and the expansion of existing competitors, and ensuring 
that its products are sustainably and ethically sourced. Also, implementing the announced actions of the Target strategic review is being undertaken 
in an uncertain and competitive market. 

Kmart and Target are actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas as well as by managing 
the direct implications identified below.

Risk

Mitigation

COVID-19

Competitor 
activity

Exchange rate 
volatility 

Sustainability and 
ethical sourcing

 – Continued focus on providing a COVID-safe environment for team members, customers and suppliers
 – Increased use of digital technologies to reduce supply chain length and increase flexibility
 – Increased stock weights in some product categories to accommodate volatility in customer demand

 – Monitoring of competitor activity and consumer trends
 – Maintaining price leadership position in the market by making use of extensive overseas sourced ranges, in-house design 

capabilities and volume-driven efficiencies

 – Continuing to innovate the store format to improve the customer experience through new layouts and leveraging technology
 – Continuing to improve consistency of product quality
 – Analysis of business performance to identify future opportunity and clarify business proposition and purpose 
 – Online proposition advancement to enhance customer experience, support in-store traffic and leverage the store network

 – Hedging and product and pricing frameworks will be used to effectively manage foreign exchange movements

 – Ongoing improvements to environmental compliance across all factories
 – Updates to Ethical Sourcing Code including integration of strategies to prevent instances of modern slavery 
 – Further expansion of ‘Better Together’ program focused on making a positive difference to our people and our planet
 – Conducted product life cycle assessment for all merchandise as part of development of circular economy strategy

Execution of 
Target review 
outcomes 

Data and IT 
security

 – Clarity of strategy with operational plans and governance related to key strategic initiatives 
 – Effective communication (internal and external) of related action plans 
 – Clear accountabilities, objectives and performance indicators 
 – Business simplification

 – Threat intelligence partnerships in place to monitor evolving cyber threats
 – Dedicated team responsible for operational management and oversight of cyber security
 – Regular oversight provided to executive management to govern cyber security

CATCH - RISK

Catch’s key risks include new market entrants and the expansion of existing competitors and scaling at a sustainable pace to meet growing 
demand. The sector that Catch operates in is becoming more competitive as traditional bricks and mortar retailers increase e-commerce 
investment and existing online competitors invest in growth.

Catch is actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas as well as by managing the direct 
implications identified below.

Risk

Mitigation

COVID-19

Competitor 
activity

Scaling the Catch 
team to service a 
rapidly growing 
customer base

Data and IT 
security

 – Continued focus on providing a COVID-safe environment for team members
 – Increased capacity to accommodate significant growth in demand

 – Monitoring of competitor activity and consumer trends
 – Expanding in-stock and marketplace offerings by utilising Catch’s extensive domestic and international supply chains 
 – Accelerating advertising investment leveraging Catch’s extensive in-house digital marketing expertise
 – Continuing to innovate Catch’s technology platform to enhance customer engagement and promote repeat purchasing behaviour
 – Continuing to maintain high standards of product quality and safety

 – Investing in the development of Catch’s people capability to deliver on its strategic objectives while maintaining high standards  

of customer care and service

 – Recruiting top-tier talent across a range of functions including product sourcing, marketing and technology 

 – Threat intelligence partnerships in place to monitor evolving cyber threats
 – Dedicated team responsible for operational management and oversight of cyber security
 – Regular oversight provided to executive management to govern cyber security

 Wesfarmers 2020 Annual Report

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Playing an important role in supplying essential products and services to enable Australians to work, learn and school from home, and keeping thousands of small and medium-size businesses operating, Officeworks  did everything it could to  support customers stay  safe during COVID-19."Officeworks is committed to making bigger things happen for its customers, team, the community and stakeholders. It operates 167 stores across Australia, a website that is home to more than 40,000 products, a national call centre, and a business team that helps businesses start, run and grow. (cid:100)(cid:387)(cid:215)(cid:225)(cid:360)(cid:294)(cid:322)(cid:276)(cid:326)Operating and financial reviewWesfarmers 2020 Annual Report42O
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YEAR IN REVIEW

Revenue

$2,787m

2020

2,787

2019

2018

2017

2016

2,314

2,142

1,964

1,851

EBT

$197m

2020

2019

2018

2017

2016

197

167

156

144

134

Key financial indicators

Post  
AASB 16

Pre  
AASB 16

For the year ended 30 June

2020

2020

2019

2018

2017

2016

PROSPECTS

Revenue ($m)

 2,787 

 2,787 

 2,314 

 2,142 

1,964 

1,851 

Earnings before tax ($m)

Capital employed (R12) ($m)

197

976

190

969

167 

 156 

144 

134 

 980 

 939 

 980 

 994 

Return on capital employed (R12) (%)

20.2

19.6

17.0

16.6

14.7

13.5

Cash capital expenditure ($m)

40

40

 42 

 45 

 36 

40

PERFORMANCE DRIVERS 

Officeworks delivered revenue of 
$2,787 million for the year, an increase 
of 20.4 per cent on the prior year. 
Earnings increased 13.8 per cent  
to $190 million. 

The safety, health and wellbeing of  
team members and customers remains 
a priority for Officeworks, and during  
the year Officeworks implemented a 
range of additional cleaning and safety 
measures in response to COVID-19.  
In the 2020 financial year, TRIFR 
decreased from 8.5 to 7.9, the safest 
year for its team members under 
Wesfarmers’ ownership.

Providing an easy and engaging 
customer experience remained a strong 
focus throughout the year. This was 
evidenced through Officeworks’ most 
successful back-to-school trading period 
to date, which launched in October 
2019, to attract a new customer group 
and included a redefined offer.

Customers continue to respond 
favourably to Officeworks’ every-
channel strategy, with growth  
achieved in both stores and online.  
New and expanded product ranges, 
enhancements to the Click and Collect 
offer, as well as a continued focus on 
price, range and service was also well 
received by customers.

Earnings growth was underpinned  
by increased demand for products  
to support the needs of Australians 
working and schooling from home,  
as well as the disciplined management 
of the cost of doing business. 

The Geeks2U offer continued to  
grow, with enhancements to the  
offer including remote access and a 
subscription service launched across  
its national store network in the year.

Strong earnings growth, combined  
with working capital benefits from 
unprecedented consumer demand, 
resulted in an increase in return on 
capital of 2.6 percentage points to 
19.6 per cent.

During the year, investment was  
made in Officeworks’ every-channel 
offer, including upgrades to online 
functionality and features, and the 
renewal of 72 stores. The Townsville 
store was expanded in October and is 
now the second biggest Officeworks 
store. At 30 June 2020, there were 167 
stores operating across Australia.

Officeworks will continue to build on the 
positive progress achieved over the past 
12 months, during which we improved 
team member safety, updated nearly  
half our stores, embedded our new  
store Enterprise Agreement, grew the 
Geeks2U offer and recycled 86 per cent 
of our operational waste. 

It is expected that Officeworks will 
continue to play a pivotal role in providing 
essential products and important services 
to Australians as they adjust to new ways 
of working, learning and running their 
businesses in response to COVID-19 
safety measures and restrictions.

Now more than ever we need to listen  
to our customers and continue to be agile 
in our approach to meet their evolving 
needs. We remain focused on delivering 
our strategy and investing in the initiatives 
that will deliver satisfactory returns for 
shareholders over the long term. 

Officeworks built strong momentum in  
the 2020 financial year. The near-term 
outlook is uncertain, with changing 
customer shopping patterns and any 
future COVID-19 measures expected  
to impact trading conditions. Despite an 
uncertain environment, Officeworks is 
focused on remaining agile and adaptable 
to manage changes as they eventuate. 

There are many opportunities, as well  
as challenges, in front of us as we 
accelerate our strategy in the year 
ahead. Our team is passionate about 
helping our customers and our local 
communities to make bigger things 
happen in the 2021 financial year  
and beyond.

Sarah Hunter
MANAGING DIRECTOR
OFFICEWORKS

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43

 
 
 
 
 
 
 
 
 
 
 
Operating and financial review

Officeworks

Officeworks will continue 
to expand its addressable 
market in line with 
customer needs. It plans 
to grow its presence in the 
education market as well 
as evolve its proposition 
for business customers 
and enhance its connected 
home solutions offer for 
consumers. 

OUR BUSINESS

OUR MARKET

Officeworks’ current addressable market 
in Australia is approximately $20 billion, 
which incorporates core office products 
such as paper, pens, ink and toner and 
filing, as well as categories such as 
technology, print and copy, furniture, 
kitchen and cleaning products and 
packaging. Over the past decade, 
Officeworks has expanded its market 
share through range and category 
expansion, and also by introducing new 
solutions for customers. 

Officeworks will continue to expand  
its addressable market in line with 
customer needs and grow its presence 
in areas such as education, its offer for 
business customers and connected 
home solutions for consumers. In total, 
it is estimated that these opportunities 
could more than double Officeworks’ 
potential total addressable market  
to more than $40 billion.

For more than 26 years, Officeworks 
has been passionate about making 
bigger things happen for its customers, 
team, the community and stakeholders. 
As part of Wesfarmers, Officeworks  
is focused on continuing to deliver 
satisfactory returns to shareholders  
over the long term. 

It operates 167 stores across Australia,  
a website that is home to more  
than 40,000 products, a national  
call centre, and a business team that 
helps businesses start, run and grow. 
Officeworks offers customers a wide 
range of office supplies, technology, 
furniture, art supplies, education 
resources and helpful services like Print, 
Copy & Create and tech support through 
Geeks2U – delivering an experience that 
is easy and engaging, no matter how 
customers choose to shop. 

Officeworks is focused on the safety, 
mental health, wellbeing and career 
progression of the more than 8,000 team 
members it employs. It is also dedicated 
to operating in a sustainable manner, 
including building and maintaining 
meaningful connections with the 
communities in which it operates, 
fundraising for its national partners and 
local community groups, continuing to 
reduce its impact on the environment 
and source products responsibly.

44

Wesfarmers 2020 Annual Report

SUSTAINABILITY

People

Officeworks is committed to keeping  
its team and customers safe by creating 
an environment free from harm, which 
includes physical safety as well as 
individual health and wellbeing.

Improvement in Officeworks’ safety 
performance continued during the 
period, with the Total Recordable Injury 
Frequency Rate (TRIFR) reducing to 7.9 
for the 2020 financial year. In real terms, 
this means that over the past 12 months, 
66 team members have reported an 
injury. While one injury is one too many, a 
TRIFR of 7.9 represents a seven per cent 
reduction when compared to last year.

The strategic focus for safety and 
wellbeing was rapidly transformed in  
the second half of the year, as the 
business responded to risks presented 
by COVID-19. Recognising the urgency 
and severity of the risks, Officeworks 
introduced an agile approach in relation 
to protocols for managing exposure to 
COVID-19 that enabled the business  
to adapt as the situation changed to 
prioritise the safety of team members 
and customers. 

In addition to monitoring and adapting  
to the ongoing risks of COVID-19, 
Officeworks will launch ‘Your Best Life’,  
a health and wellbeing strategy, in the 
2021 financial year. The strategy aims  
to encourage team members to take 
time to focus on both their mental and 
physical wellbeing, with programs that 
support the mind, body and soul.

Officeworks values diversity and 
inclusion, including the value it brings to 
the business and the sense of belonging 
team members feel when they are 
accepted and valued at their place  

of work. During the year, Officeworks 
maintained its balanced leadership 
position of 45 per cent.

Connecting with  
our communities

Officeworks is committed to increasing 
connections with communities at a local, 
regional and national level and being a part 
of where we live and work. During times of 
adversity, customers and team members 
have shown that the best outcomes can 
be achieved by working together to create 
meaningful relationships and provide 
support to those who need it most. 

During the 2020 financial year, 
Officeworks, along with its team members 
and customers, contributed a record of 
$5.5 million directly and indirectly to local 
community groups and national partners. 
By continuing to build a closer connection 
with national causes, Officeworks team 
members and customers contributed 
$2.3 million through appeals which have 
provided 2,290 students with a Learning 
for Life scholarship from The Smith Family. 
Officeworks also provided 1,500 literacy 
packs and supported 3,780 Indigenous 
students through the Australian Literacy  
& Numeracy Foundation. 

The 2020 financial year was a particularly 
challenging time for many people and 
organisations around Australia. During 
the devastating bushfires and COVID-19, 
Officeworks was challenged to adapt the 
ways it supported communities, 
including the way fundraising appeals 
were executed. 

In the year ahead, when the community 
will continue to need our support more 
than ever, Officeworks will focus on 
embedding localised engagement 

initiatives to connect with the 
communities where its team live and 
work, while continuing to grow the 
support of national partnerships.

Reducing carbon emissions

Since the end of the 2020 financial year, 
Officeworks accelerated its plans to 
reduce emissions, targeting net zero 
Scope 1 and 2 emissions by 2030. 
Officeworks also has a target to reduce 
carbon emissions by 25 per cent by 
2025, on 2018 financial year levels. 
During the period, Officeworks' progress 
continued, reducing emissions by 
six per cent on the prior year, which 
resulted in a 12 per cent reduction  
on 2018 financial year levels. These 
reductions have primarily been achieved 
through energy efficiency initiatives that 
have the added benefit of reducing 
electricity costs or mitigating price 
increases. 

Officeworks is committed to taking 
meaningful climate action, which includes 
reducing carbon emissions to limit the 
worst impacts of climate change.

Sourcing products and 
services ethically

Global goods and services supply chains 
are complex, often with products or 
components manufactured in countries 
where laws designed to protect workers’ 
rights are inadequate or not enforced. 
Officeworks' Ethical Sourcing Program, 
underpinned by the Ethical Sourcing & 
Modern Slavery Policy, is designed to 
protect and uphold workers’ rights and 
provide customers with comfort that 
goods and services are sourced ethically. 

Safety performance
(from continuing operations)

TOTAL RECORDABLE INJURY 
FREQUENCY RATE (TRIFR)1

7.9

2020 

2019 

2018 

2017 

2016 

7.9

8.5

10.2

11.9

15.9

Community contributions
(from continuing operations)

Greenhouse gas emissions
(from continuing operations)

 DIRECT

 INDIRECT

SCOPE 1 & 21

$5.5m

2020 

2.4 

3.1

2019 

2018 

2017 

2016 

2.6 

2.4 

1.7 

0.3 

1.5

1.3

0.8

0.9

43.2 ktCO2e

2020 

43.2

2019 

2018 

2017 

2016 

45.8

49.1

51.2

56.6

1  TRIFR is the number of lost time and medical 
treatment injuries per million hours worked.

1  Scope 1 and 2 data includes emissions from 

continuing operations for businesses where we 
have operational control under the NGER Act.

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Operating and financial review

During the 2020 financial year, 450 
independent factory audits were reviewed 
with performance rating and approval 
periods assigned based on the number 
and severity of non-conformances 
identified. A total of 39 critical breaches 
were identified across nine suppliers, the 
most common of which related to 
excessive overtime and poor record 
keeping. In these instances, suppliers were 
required to remediate the issue within three 
months and provide supporting evidence. 
Reflecting remediation of previously 
identified critical non-conformances, 
Officeworks identified a relative decrease  
in the number of critical breaches from the 
prior year.

Throughout COVID-19, Officeworks 
maintained communication with 
suppliers and developed a COVID-19 
Ethical Sourcing Supplier Guide to 
support suppliers in understanding key 
risks caused from the pandemic and 
considerations to mitigate these risks. 
This included guidance relating to  
health, safety and hygiene standards. 
With increased production demand 
caused by increased sales, Officeworks 
is continuing to monitor risks associated 
with excessive working hours in addition 
to health and safety standards.

During the period, Officeworks  
engaged a consultancy firm to review  
the effectiveness of its Ethical Sourcing 
program, with outcomes used to  
inform its 2025 Ethical Sourcing and 
Human Rights targets. From next year, 
Officeworks will work more closely  
with direct suppliers to create positive 
outcomes for workers and increase  
the representation of worker voice.

Officeworks makes progress  
on recycling operational waste

Embedding a culture of waste 
avoidance and resource recovery 
reduces environmental impacts  
from waste disposal and makes 
better use of the resources available. 
At the same time, this reduces 
operating expenses associated  
with waste management. 

During the year, Officeworks 
continued to make progress, 
with total waste generation down 
seven per cent and waste sent to 
landfill down 26 per cent on the 
prior financial year. The inclusion 
of non-financial key performance 

indicators into the store teams’ 
balanced scorecards, such as 
store recycling rates, contributed to 
greater accountability that resulted 
in 86 per cent of all waste recycled 
during the 2020 financial year.

As Officeworks continues to work 
towards becoming a zero-waste 
business, the focus next year will be 
to embed a winning formula for best 
practice waste management. This 
formula is best articulated as the 
Four Steps to Less approach, which 
empowers all team members to 
become zero-waste champions.

Ethical sourcing audit 
program findings

590

NUMBER OF SUPPLIERS COVERED  
BY THE AUDIT PROGRAM1

Suppliers part of the audit program  
but not audited during the financial year2 

Suppliers audited during the financial  
year with no critical breaches 

Suppliers audited during the financial  
year with critical breaches identified3 

173

408

1  There were 590 active suppliers in the 
audit program as at 30 June 2020.
2  The supplier may be audited every  

two years if it had no previous findings.

9

3  In FY2020, there were 39 critical 
breaches across 9 suppliers.

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Wesfarmers 2020 Annual Report

Waste
(from continuing operations)

 RECYCLED

 DISPOSED

5.9 kt

2020 

5.1 

0.8

2019 

2018 

2017 

2016 

5.2 

4.4 

4.5 

4.6 

1.1

1.4

2.5

1.9

STRATEGY 

Officeworks is committed to helping make bigger things happen for its customers, team members, the community and 
stakeholders in order to continue to deliver satisfactory returns to shareholders over the long term.

Officeworks will continue to drive growth and productivity by executing its strategy centred around five key areas.

Growth strategies

Achievements

Focus for the coming years

Our team

We are skilled,  
committed and healthy

 – Approval and implementation of new store Enterprise 

Agreement

 – Safest year under Wesfarmers ownership with a  

TRIFR of 7.9

 – Launch Diversity and Belonging program
 – Accelerate investment in health and wellbeing 
 – Grow participation of Aboriginal and Torres Strait Islander 

team members in the workforce

Customer experience

We make things easy 
and engaging

Connecting with  
our communities

We are a part of  
where we live

Operational 
excellence

We strive to do  
things better

 – Introduced new convenient back-to-school solutions 
 – Commenced building data and analytics platform

 – Recycled 86 per cent of all operational waste 
 – Contributed $5.5 million directly and indirectly to local 

community groups and national partners

 – Invested in technology (new people management system)
 – Other systems accelerated by COVID-19

Growing our business

We are ambitious in 
driving growth

 – Expansion of core ranges into new categories
 – Launch of Geeks2U remote access service and  

subscription offer

 – Enhance and accelerate the development of data analytics 

capability and usage 

 – Evolve customer delivery choices 

 – Invest in renewable energy including installing solar panels  

on selected stores

 – Launch the 2025 Positive Difference Plan
 – Increase support for micro, small and medium businesses  

for challenging operating conditions

 – Execute cost of doing business productivity initiatives  

to reduce costs

 – Invest in key technology platforms to improve efficiency  

and reduce risk

 – Evolve business-to-business strategy in line with  

customer needs

 – Complete Print, Copy & Create platform upgrade
 – Drive awareness of the expanded Geeks2U offer
 – Continue store renewal program

RISK

Officeworks recognises that taking appropriate business risks is a critical aspect of generating acceptable business returns.  
We encourage our team to understand risk as it relates to their role, and in doing so we maximise their ability to holistically 
identify and seize opportunities.

Officeworks is actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas as well  
as by managing the direct implications identified below.

Risk

COVID-19

Changing customer 
behaviours

Mitigation

 – Continued focus on providing a COVID-safe environment for team members, customers and suppliers
 – Initiatives for team members to support their financial and mental wellbeing
 – Enhanced communication with customers and proactive management of inventory position to accommodate  

increased volatility in demand

 – Regular reviews of range to ensure it meets the evolving demands and preferences of Officeworks’ customers 
 – Innovation within existing categories and expansion into new service areas
 – Continue development of data analytics to better understand customer needs 
 – Continue focus on improving every-channel model for customers that is easy and engaging
 – Proactive focus on innovative range, service and marketing formats 
 – Strong customer-centric culture that is well embedded throughout the business

Data and IT security

 – Dedicated internal capability focused on IT systems and security 
 – Cyber risk controls embedded and regularly tested
 – Security awareness training program to keep all team members educated and informed
 – Established risk governance framework 

Ethical sourcing and 
sustainability

 – Five-year sustainability strategy (Positive Difference Plan 2025) to identify and mitigate sustainability risks and 

opportunities

 – Responsible sourcing policies supported by investment in detailed compliance programs

 Wesfarmers 2020 Annual Report

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Operating and financial review(cid:26)(cid:255)(cid:225)(cid:286)(cid:259)(cid:215)(cid:190)(cid:280)(cid:326)(cid:851)(cid:927)(cid:36)(cid:287)(cid:225)(cid:322)(cid:247)(cid:366)(cid:927) (cid:190)(cid:287)(cid:221)(cid:927)(cid:56)(cid:225)(cid:322)(cid:334)(cid:259)(cid:280)(cid:259)(cid:326)(cid:225)(cid:322)(cid:326)WesCEF grows a portfolio of leading, sustainable businesses that operate in domestic, national and international markets. Our businesses are recognised as safe, reliable and innovative industry leaders driven by 1,330 diverse and talented team members who are committed to meeting customer needs.CSBP is woven into Western Australia's history, proudly supporting customers for more than 110 years. A focus on diversification and growth has seen CSBP become a leading provider of agricultural, chemical and mining solutions to the agriculture and resources sectors."Wesfarmers 2020 Annual Report48YEAR IN REVIEW

Revenue

$2,085m

2020

2,085

2019

2018

2017

2016

2,078

1,830

1,639

1,820

EBT

$394m

2020

2019

2018

2017

2016

394

438

390

395

294

Key financial indicators

Post  
AASB 16

Pre  
AASB 16

For the year ended 30 June

2020

2020

2019

2018

20171

20162

PROSPECTS

Revenue ($m)

 2,085 

 2,085 

2,078

1,830

1,639

1,820

Earnings before tax ($m)

394

393

 438 

 390 

 395 

 294 

Capital employed (R12) ($m)

 1,942 

 1,941 

 1,358 

 1,407 

 1,443 

 1,554 

Return on capital employed (R12) (%)

Cash capital expenditure ($m)

20.3

110

20.2

 32.6 

 27.7 

 27.4 

 18.9 

110

 58 

 60 

 44 

 60 

1  2017 includes $33 million relating to WesCEF's share of revaluation gains in Quadrant Energy and profit 

on sale of land of $22 million. 

2  2016 includes $32 million of one-off restructuring costs associated with the decision to cease PVC 

manufacturing.

PERFORMANCE DRIVERS 

Revenue of $2,085 million was in line 
with last year, with the Chemicals and 
Fertilisers businesses delivering revenue 
growth, partly offset by a decline in 
Energy revenue. The Energy business 
recorded a 9.4 per cent decrease in 
revenue due to a lower Saudi Contract 
Price (the international benchmark 
indicator for LPG price) and decreased 
sales volumes.

WesCEF generated earnings of 
$393 million, 9.2 per cent below the prior 
year on a continuing operations basis 
driven by lower sales in Energy as well  
as competitive pressures in the Western 
Australian explosive grade ammonium 
nitrate and fertiliser markets. This result 
included $18 million of insurance 
proceeds, and expenses associated  
with the ongoing management of the 
lithium assets following the acquisition  
of Kidman in September 2019.

WesCEF's earnings were influenced  
by a range of different factors across 
each of the individual businesses.  
The Chemicals business was impacted 
by the annualised impact of some 
ammonium nitrate (AN) customers 
rolling onto new pricing under long-term 
contracts, additional costs to refine the 
emulsion product offering and increased 

input costs. The Energy business was 
impacted by the lower Saudi CP which 
was down 17.3 per cent on average 
compared to the prior year due to 
volatility in the oil market and disrupted 
global demand due to COVID-19. The 
Energy business also recorded lower 
LPG export volumes and experienced 
increased competition in the natural gas 
retailing market impacting volumes and 
pricing. While the Fertilisers business 
achieved sales volume growth for the 
period and ensured customer needs 
were met during a difficult period in 
which global supply chains were 
interrupted, earnings were impacted by 
higher operational and logistics costs.

These factors were partially offset  
by sound results in the ammonia and 
sodium cyanide businesses with the 
ammonia plant achieving record 
production and sales volume growth. 
The sodium cyanide plant produced 
strong volumes and was supported  
by robust demand in the gold mining 
sector, as well as lower input costs.  
All chemical plants benefited from 
investment in prior years and a 
continued focus on improving  
plant availability and yield.

Market conditions in WesCEF’s key 
customer segments in the Chemicals 
business remain strong with favourable 
commodity prices in the iron ore and 
gold mining sectors in particular.

Earnings are likely to be impacted by 
increased AN sales to fertiliser and export 
markets with lower explosive sales 
domestically now that the competing 
Burrup plant is operational. The sodium 
cyanide business is expecting strong 
demand.

The Energy business is expected to be 
impacted by weakness in the Saudi CP 
and subdued margins in the natural gas 
retailing market.

Fertilisers volumes and margins remain 
dependent on seasonal outcomes and 
grower sentiment. It is expected that 
increased logistics and input costs will 
remain in the first half of the 2021 
financial year. 

WesCEF is working closely with joint 
venture partner, SQM, and Covalent 
Lithium to finalise project studies to  
deliver a definitive feasibility study on  
the integrated lithium project in Western 
Australia. A final investment decision to 
proceed with the project will be considered 
in the first quarter of calendar year 2021. 

WesCEF is continually working on 
opportunities to better utilise or expand 
its existing operations with targeted 
investments and the use of data and 
analytics. WesCEF is also actively 
working on additional services and 
products to grow with its customers  
and contribute to their success.

Ian Hansen
CHIEF EXECUTIVE OFFICER, 
WESFARMERS CHEMICALS,  
ENERGY & FERTILISERS

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Operating and financial review

WesCEF

OUR BUSINESS

OUR MARKET

WesCEF operates nine businesses in 
Australia across the chemicals, energy 
and fertiliser sectors and employs over 
1,330 team members across its 
production and distribution facilities and 
support offices. During the financial year, 
Wesfarmers completed the acquisition  
of Kidman, demonstrating WesCEF’s 
commitment to grow a portfolio of 
leading, sustainable businesses.

Chemicals includes:

 − CSBP, which manufactures and 

supplies ammonia, AN and industrial 
chemicals primarily to the Western 
Australian resources and industrial 
sectors; 

 − Queensland Nitrates (QNP), CSBP’s 
50 per cent joint venture with Dyno 
Nobel Asia Pacific which manufactures 
and supplies AN to the resources 
sector in the Bowen Basin coal fields; 

 − Australian Gold Reagents (AGR), 
CSBP’s 75 per cent owned joint 
venture with Coogee Chemicals which 
manufactures and supplies sodium 
cyanide to the Western Australian and 
international gold mining sectors; 

 − Australian Vinyls, which supplies PVC 
resin and specialty chemicals to the 
Australian industrial sector; and 

 − ModWood, which manufactures 

wood-plastic composite decking  
and screening products.

Energy includes:

 − Kleenheat, which extracts LPG from 
natural gas and distributes bulk and 
bottled LPG to the residential and 
commercial markets in Western 
Australia and the Northern Territory 

and is a retailer of natural gas to 
residential and commercial markets, 
and electricity to businesses in 
Western Australia; and

 − EVOL LNG, distributes bulk LNG 
primarily to the remote power 
generation market in Western 
Australia.

Fertilisers manufactures, imports and 
distributes phosphate, nitrogen and 
potassium-based fertilisers for the 
Western Australian agricultural sector 
through CSBP. It also provides technical 
support for growers through a network  
of employees and accredited partners  
in regional Western Australia. 

WesCEF continues to invest in emerging 
technology business Decipher, which is  
a technology solution offering services to 
both the agricultural and mining sectors. 
The launch of the integrated modules on 
mine rehabilitation and tailings storage 
management broaden its market.

Covalent Lithium, Wesfarmers’ 
50 per cent joint venture with SQM,  
is currently developing the Mt Holland 
lithium project with a final investment 
decision to be considered in the first 
quarter of calendar year 2021.

50

Wesfarmers 2020 Annual Report

SUSTAINABILITY

People

WesCEF recognises that its success as  
a organisation is closely aligned to the 
success of its people and strives to 
create an inclusive culture that permits 
employees to achieve their best. During 
the year, work continued to improve 
gender balance and Indigenous 
employment through various strategies. 

WesCEF team members operate within  
a high-risk environment and, as a result, 
managing the safety and wellbeing of its 
people within the workplace is a priority. 
WesCEF’s total number of recordable 
injuries this year was 11 compared to  
13 last year and 16 in the 2018 financial 
year, continuing the downward trend. 

During the year, WesCEF continued  
to improve its High Potential Risk 
Management Program aimed at 
preventing incidents that could cause 
serious harm or permanent injury. 
Checklists were developed to support 
in-field safety discussions and ensure 
critical controls are in place before  
work commenced. The program will  
be expanded next year to include 
process safety risks. 

WesCEF also refreshed its safety brand, 
‘Safe Person, Safe Process, Safe Place’, 
to align safety themes and messages 
with key safety competencies and 
business requirements. Communication 
channels to enhance safety messages 
were reviewed, with new initiatives 
developed, such as Leader Conversation 
Guides and safety champions. Safety 
communications will continue to be a  
key focus in the 2021 financial year. 

Supporting communities

WesCEF continues to invest in the 
communities in which it operates to 
support the long-term sustainability of  
its businesses and build its reputation  
as a good corporate citizen. This is 
achieved by supporting activities that 
build community trust and advocacy  
and position WesCEF as an employer  
of choice.

In the wake of the Australian bushfires, 
WesCEF employees donated $16,423  
to the Red Cross Bushfire Disaster 
Appeal. This amount was matched by 
the business, taking the total donation  
to $32,846. 

During the year, WesCEF formed two 
new partnerships focusing on education 
and the environment. Preparation for 
both partnerships began in the 
2020 financial year, but unfortunately 
COVID-19 delayed the start to the 
2021 financial year.

WesCEF and two of its businesses, 
Kleenheat and CSBP, redirected some  
of their community investment funding  
to support the community in other ways 
during the COVID-19 pandemic.

WesCEF committed $10,000 to help 
Indigenous community members in 
Kwinana and Rockingham have access 
to COVID-19 support services, food and 
medical supplies through its partnership 
with the local Indigenous Community 
Health Centre, Moorditj Koort. 

WesCEF also made donations to Western 
Australian food assistance charities, Feed 
the Frontline and Foodbank WA. 

CSBP Fertilisers continued to support 
Lifeline WA, and Kleenheat revised its 
customer rewards program, Kleenheat 
Treats, making it available to everyone 
living in Western Australia and the 
Northern Territory. Over 10,000 people 
were nominated and 2,000 winners 
received a $100 gift card. 

Operating ethically  
and responsibly

WesCEF is committed to the highest 
standards of conduct and ethics in its 
supply chain. WesCEF has developed  
an Ethical Sourcing and Modern Slavery 
Policy which establishes its minimum 
expectations from suppliers in relation  
to labour rights issues. As a result, new 
suppliers are required to complete a 
questionnaire based upon compliance 
with this policy. All new contracts have  
a clause requiring suppliers to agree  
with and adhere to the policy.

WesCEF’s approach to evaluation of 
ethical sourcing and modern slavery 
across its supply chain is risk-based  
and assessed using an internal risk 
evaluation framework. Where a supplier 
is categorised by WesCEF as high risk, 
additional requirements such as audits 
will occur going forward. 

WesCEF commenced the delivery of 
ethical sourcing and modern slavery 
training. To date, 47 WesCEF senior 
managers have completed this training 
with further rollout intended for next year.

Safety performance
(from continuing operations)

TOTAL RECORDABLE INJURY 
FREQUENCY RATE (TRIFR)1

3.3

2020 

2019 

2018 

2017 

2016 

3.3

4.2

5.4

2.2

7.8

Community contributions
(from continuing operations)

 DIRECT

$0.6m

2020 

2019 

2018 

2017 

2016 

0.6

0.4

0.4

0.41

0.3

Waste
(from continuing operations)

 RECYCLED

 DISPOSED

20.0 kt

2020  17.91  2.1

2019 

2018 

2017 

2016 

8.2 

8.0 

4.6 

3.3 

2.8

4.4

2.0

3.2

1  TRIFR is the number of lost time and medical 
treatment injuries per million hours worked.

1  This number has been restated due to a 

review conducted in 2018.

1  FY2020 increase in recycling was due to  
one-off excavation and concrete disposal 
projects undertaken at CSBP Kwinana.

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Operating and financial review

Environmental stewardship

WesCEF is committed to reducing its 
environmental impact and ensuring the 
sustainability of its operations. Since the 
end of the 2020 financial year, WesCEF 
developed its aspiration to achieve net 
zero Scope 1 and 2 emissions in its 
operations by 2050. 

Water security is a business-critical risk 
at its CSBP Kwinana site, with current 
and future threats to availability, reliability 
and cost of traditional water supply 
options. CSBP Kwinana’s water 
consumption increased by 20 per cent 
this year, corresponding with higher 
production in water-intensive processes.

During the year, WesCEF developed a 
long-term water sustainability strategy  
for the CSBP Kwinana site. Available 
water sources and options to improve 
wastewater treatment were assessed, 
including the revitalisation of the site’s 
purpose-built wetlands. The wetlands 
are an important part of CSBP’s 
wastewater management, naturally 
treating approximately 2.5 million litres of 
nutrient-rich wastewater each day. The 
strategy will ensure the site’s long-term 
water supply, plant reliability and effluent 
discharge security, and allow CSBP the 
opportunity to use climate-independent 
water sources. 

A focus area for next year includes the 
potential construction of a wastewater 
recycling plant.

Legacy waste represents an ongoing 
environmental risk due to potential 
impacts on the environment and/or 
neighbours. WesCEF’s contaminated 
sites strategy advanced during the year, 
with investigations completed at CSBP’s 
Dalwallinu, Albany, Geraldton and 
Esperance sites, and progress was 
made at the Bunbury and Kwinana sites. 
A key performance measure for WesCEF 
is waste diversion from landfill, with 
90 per cent of waste recycled or reused 
during the year.

Greenhouse gas emissions
(from continuing operations)

SCOPE 1 & 21

964.7 ktCO2e

2020 

964.7

2019 

2018 

2017 

2016 

897.3

769.8

798.2

808.8

52

Wesfarmers 2020 Annual Report

CSBP’s wetlands rejuvenation improves 
wastewater management

The wetlands at CSBP Kwinana are 
being revitalised as part of a strategy 
to improve the business' wastewater 
management.

The three hectares of purpose-built 
wetlands are an important part of 
CSBP’s wastewater management, 
treating approximately 2.5 million 
litres of nutrient-rich wastewater 
each day. 

WesCEF’s Environmental 
Superintendent Stephanie Felstead 
said that the wetlands naturally treat 
the wastewater. 

“Naturally occurring bacteria live 
around the plant stems and remove 
metals and nutrients before the 
clean water is pumped to the Sepia 
Depression Ocean Outlet via the 
Water Corporation’s discharge line, 
four kilometres offshore,” she said.

The wetlands have been operating 
for 15 years, and over this time the 
treatment of high volumes of 
wastewater has resulted in 
waterlogging and plant degradation. 

CSBP’s wetlands rejuvenation is a 
two-stage project. The first part was 
completed in early 2020 and involved 
upgrading the drainage system and 
replanting 50,000 plants. 

The second part of the project, a 
wastewater recycling plant, is being 
considered in 2021. The plant will 
remove metals from the wastewater 
before directing the clean water 
back to CSBP’s processing plants.

“This will reduce the amount of water 
CSBP uses in its manufacturing 
process, as well as the eventual 
amount of treated wastewater 
discharged off-site,” Stephanie said.

1  Scope 1 and 2 data includes emissions from 

continuing operations for businesses where we 
have operational control under the NGER Act and 
other known non-reportable Australian-based 
emissions over which we have control.

STRATEGY

WesCEF’s vision is to grow a portfolio of leading, sustainable businesses. WesCEF has a high-quality portfolio of assets and seeks  
to leverage these assets and grow through incremental investment and innovation to meet the needs of its customers. WesCEF also 
focuses on investment in adjacent opportunities where it can add value through utilising its manufacturing and processing expertise 
and the capabilities of its people.

Growth 
strategies

Safe person,  
safe process,  
safe place

Achievements

Focus for the coming years

 – Continued multi-year trend of reduction in total recordable frequency injury rate
 – Business-wide safety intervention to empower employees to identify hazards 

and develop action plans to mitigate risks

 – Ongoing commitment to improve safety performance 

and employee safety capability 

 – Continue to track and close out actions from the safety 

intervention 

 – Refine maintenance planning and corrosion control 

across production assets

 – Enhanced cyber security protection

Investing for 
growth

 – Achieved record production rates in the ammonia plant which is benefiting  

from investment and debottlenecking initiatives

 – Record sodium cyanide production
 – Further investment in storage and logistics assets to support fertilisers 

customers

 – Continued expansion of fleet and storage assets to support LNG business
 – Debottlenecking of LNG plant to expand production
 – Completed the acquisition and integration of Kidman Resources 
 – Successful initial drilling campaign with domestic gas explorer in Western 

Australia with support from CSBP funding and offtake agreement

Evolve through 
innovation

 – Utilised data and analytics to increase plant availability
 – Continued investment in Decipher to develop new solutions for a broader 

customer base 

 – Advanced manufacturing technology 
 – Identification of WesCEF innovation pillars – industry 4.0, circular economy  

and carbon impact 

Enhance our 
reputation

 – Implementation of modern slavery and ethical sourcing policy
 – Ongoing community partnerships and grants that focus on Indigenous,  

youth and environmental initiatives

 – Evaluate and implement expansion and debottlenecks 

of existing capacity across chemicals portfolio
 – Investigate developing production capacity in new 

geographies or new products

 – Opportunity to develop the Mt Holland lithium project 
and consider other chemical processing opportunities 
in the growing electric vehicle supply chain

 – Implement a business wide system to enable data-

informed prioritisation of strategic portfolio objectives

 – Explore opportunities in climate change related 

technologies

 – Ongoing focus on regulatory compliance
 – Continued investment in cyber security
 – Continue to deliver on local community investment 
strategies with a focus on science, technology, 
engineering and mathematics (STEM) education  
and environmental responsibility

RISK

The business units manage risk as an intrinsic part of their daily operations and are committed to conducting activities in a way  
that generates growth sustainably and enhances the reputation of WesCEF. Risks deemed unacceptable are transferred (through 
contractual arrangements or insurance), mitigated or avoided.

WesCEF is actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas as well as by 
managing the direct implications identified below.

Risk

Mitigation

COVID-19

 – Continued focus on providing a COVID-safe environment for team members
 – Active monitoring of impact on international supply chains

Serious injury, 
safety or 
environmental 
incident

 – Continue to invest in improving safety culture and performance for the safe operation of facilities and distributing products in a way that 

minimises any adverse effect on employees, contractors, local communities or the environment

 – Maintain a strong focus on operating facilities and distribution systems in a manner which minimises the effect on the environment
 – Deliver High Potential Risk Management Program – by implementing critical control identification and verification, to maintain the core  

safety vision ‘Safe Person, Safe Process, Safe Place’

 – Continue to invest in the wellbeing of our people through the ‘Wellness at WesCEF’ program, including the training of supervisors  

in Mental Health Awareness

Sustained intense 
competition

 – Leveraging data and analytics to improve production efficiency and availability to meet customer requirements
 – Focus on consistently satisfying the needs of customers and continued investment in initiatives that further improve the customer 

experience 

 – Continue to review and expand product and service offering to ensure we can contribute to customers' ongoing success 
 – Positive contributions to the communities in which we operate 

Meeting 
community 
expectations

 – Minimise the risk of modern slavery occurring in our businesses or supply chains
 – Grow workplace diversity with focus on improving gender balance and growing the number of Indigenous employees to reflect the 

communities in which we operate

 – Continue to build partnerships that develop youth in our communities with a focus on STEM education and environmental stewardship
 – Continue to invest in systems and processes to ensure responsible use of data and security of information

 Wesfarmers 2020 Annual Report

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Wesfarmers 2020 Annual Report54Operating and financial review(cid:69)(cid:287)(cid:221)(cid:339)(cid:326)(cid:334)(cid:322)(cid:259)(cid:190)(cid:280)(cid:927)(cid:190)(cid:287)(cid:221)(cid:927)(cid:132)(cid:190)(cid:246)(cid:225)(cid:334)(cid:366)Industrial and Safety is a leading supplier of industrial, safety and workwear products, and services to a wide range of customers, including Australia and New Zealand’s largest corporate and government entities, through four main businesses: Blackwoods, Workwear Group, Coregas and Greencap.During the year, the Industrial and Safety businesses were focused on supporting customers to respond to the Australian bushfires and COVID-19, including sourcing critical products in global shortage, ensuring critical oxygen supply to hospital groups and providing additional risk consulting services.”55YEAR IN REVIEWKey financial indicatorsTim BultMANAGING DIRECTOR,  WESFARMERS INDUSTRIAL  AND SAFETYPROSPECTSMarket conditions in Australia and New Zealand are expected to be uncertain and remain challenging  in the near term.The Blackwoods business will continue to focus on improving the customer value proposition, building on the new regional sales structure implemented in the 2020 financial year which supports an improved customer experience. Blackwoods will also continue investment in data and digital and implementation of the ERP system.It is expected that customer demand  in Workwear Group will continue to be subdued in the near term as a result of COVID-19. The business is focused on new business opportunities, growth from key brands, cost improvement initiatives and continued investment in its digital offering and operating efficiencies.Coregas’ earnings are expected to be impacted by lower demand, along with continued competitive pressures. The business will continue to focus on growth opportunities in healthcare, renewables and other specialist gas adjacencies.The improvement initiatives and investments underway across the division are expected to enhance our businesses’ competitive positions as they seek to increase share in their respective markets.PERFORMANCE DRIVERS Revenue of $1,745 million was in line with the prior year. Blackwoods’ revenue increased on the prior year due to continued growth from strategic customers and the Western Australian region, as well as strong demand for critical products in the second half, including personal protective equipment (PPE), cleaning and hygiene products. This was partly offset by sales declines  in other segments and weakness in New Zealand due to disruption to customers’ normal operations from government measures to contain the impact of COVID-19. Workwear Group’s revenue declined on prior year, primarily due to lower revenues from corporate uniforms in Australia and the United Kingdom as  a result of the impact of COVID-19 on some customer segments including airlines, retail and hospitality. Coregas’ revenue increased due to continued demand in the medical segment. Excluding significant items and payroll remediation costs, earnings of $55 million were 36.0 per cent below the prior year. Blackwoods’ earnings were impacted by continued investment in customer service, as well as investment in digital capabilities including the enterprise resource planning (ERP) system. Workwear Group’s earnings declined on prior year, primarily due  to lower revenues and the prior period benefiting from one-off insurance proceeds. Coregas’ earnings declined primarily due to higher raw material  and freight costs.During the year, Industrial and Safety recorded a pre-tax, non-cash impairment of $310 million in the carrying value of the division, primarily relating to goodwill. The impairment charge reflects the deterioration in economic conditions resulting in lower customer demand in Workwear Group and Greencap, along with uncertainty as to future economic conditions, which impacted the Group’s assessment of the carrying value of the overall Industrial and Safety division. As disclosed at the first-half results, payroll remediation costs of $15 million were also incurred during the year.Revenue$1,745mEBT$39mPost  AASB 16Pre  AASB 16For the year ended 30 June202012020120192018201720162Revenue ($m) 1,745  1,745  1,752  1,750  1,776  1,844 Earnings before tax ($m) 39  40  86  118  115  63 Capital employed (R12) ($m) 1,448  1,447  1,475  1,409  1,363  1,339 Return on capital employed (R12) (%)2.72.8 5.8  8.4  8.4  4.7 Cash capital expenditure ($m)5959 83  50 34521 2020 earnings before tax for Industrial and Safety excludes pre-tax impairments of $310 million, and includes $15 million of payroll remediation costs.2 2016 includes $35 million of restructuring costs associated with the 'Fit for Growth' transformation.20201,74520191,75220181,75020171,77620161,84420203920198620181182017115201663Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverview55Operating and financial review

Industrial and Safety

OUR BUSINESS

OUR MARKET

as well as specialised garments  
to defence and emergency services 
customers in Australia and 
New Zealand. 

Coregas is a supplier of industrial, 
specialty and medical gases in Australia 
and New Zealand, serving customers of 
all sizes through multiple sales channels 
and distribution networks. 

Greencap is a management consulting 
business which has a market leading 
contractor induction digital platform 
called Cm3.

The Industrial and Safety business 
portfolio services customers across 
diverse industries such as construction, 
mining, manufacturing, retail, food and 
beverage, utilities, transport, facilities 
maintenance, health and government. 
The businesses also service a wide 
range of customer groups including 
large corporate enterprises, government 
organisations and small-to-medium 
sized businesses.

Industrial and Safety operates four main 
businesses: Blackwoods, Workwear 
Group, Coregas and Greencap. 

Blackwoods is the largest business  
in terms of revenue and is a distributor  
of tools, safety gear, workwear and 
industrial supplies. It services a wide 
variety of customers of different sizes 
across Australia and New Zealand 
through an extensive supply chain, 
branch network and online platforms. 

Workwear Group is Australia’s largest 
provider of industrial and corporate 
workwear, featuring iconic Australian 
brands Hard Yakka and King Gee. 
Workwear Group also supplies bespoke 
and catalogue uniforms to leading 
airlines, financial services providers, 
retailers and other large corporates 
through NNT and Incorporatewear (UK), 

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SUSTAINABILITY

Safety and wellbeing

The Industrial and Safety division continued 
to drive initiatives to mitigate fatal risk, 
prevent injuries, support operational 
excellence and target team members’ 
physical and psychological wellbeing. 

The division’s Total Recordable Injury 
Frequency Rate (TRIFR) of 4.8 was a 
30 per cent decrease from last year’s rate 
of 6.9. The critical risk review program 
progressed, including developing ‘bow 
tie’ analyses, performance standards and 
verification checklists, which will continue 
into the next financial year. 

To better understand psychological 
health needs, Blackwoods piloted a 
survey. Results have been shared with 
participants and a prioritised action plan 
rolled out. Workwear Group completed  
a psychological harm assessment and a 
gap analysis to assist with benchmarking 
and future program development. 
Coregas rolled out phase two of its 
Safety Refresh and continued to 
implement site operational safety  
review recommendations.

The safety and wellbeing of team members 
is an ongoing priority for the division.

Product safety and 
service quality

The Industrial and Safety businesses  
are committed to providing safe and 
quality products. Due to stringent risk 
reviews, there were no own-brand  
recalls across the division. Blackwoods 
has been developing a cloud-based 
assessment for national brand  
suppliers to further verify compliance  
and risk management protocols. NZ 
Safety Blackwoods is employing a 
dedicated role to ensure quality and 

Safety performance
(from continuing operations)

TOTAL RECORDABLE INJURY 
FREQUENCY RATE (TRIFR)1

4.8

2020 

2019 

2018 

2017 

2016 

4.8

6.9

6.6

8.1

9.2

1  TRIFR is the number of lost time and medical 
treatment injuries per million hours worked.

compliance is well-managed and 
governed. 

Workwear Group implemented a  
training program for offshore suppliers, 
covering compliance to and governance 
of its policies and procedures. Coregas 
team members participated in product 
stewardship training via the Australian and 
New Zealand Industrial Gas Association.

As a technical services business, 
Greencap focuses on service quality  
and its independent accreditation 
program is a key driver in managing 
risks. The annual reaudit program was 
successfully delivered with accreditation 
continuing for Quality Management ISO 
9001 and Environment Management 
System ISO 14001. 

The division will focus on core priorities  
in the 2021 financial year in line with 
strategic business objectives.

Community contributions

Each business makes positive 
contributions to its local community, 
forming strong partnerships spanning  
a range of causes. As a division, over 
$1.0 million was contributed via donated 
stock, financial contributions, corporate 
sponsorships, mentoring and volunteer 
hours and team member donations.

Blackwoods reached a significant 
milestone of $2.0 million raised for the 
Fred Hollows Foundation over the past 
10 years. Donations are generated from 
customers, with a proportion of sales 
from Prosafe-branded products passed 
on to the Foundation. 

Coregas donated over $24,000 during 
the year, supporting the Steve Waugh 
Foundation, Cancer Council and the 
Royal Melbourne Hospital Intensive  

Community contributions
(from continuing operations)

 DIRECT

 INDIRECT

$1.0m

2020 

1.0 

0.0

2019 

2018 

2017 

2016 

1.2 

0.6 

0.0 

0.1 

0.0

0.1

0.0

0.0

Care Unit. Greencap contributed over 
$31,000 via direct and indirect donations 
to the Skyline Education Foundation, 
"the Bernie Banton Foundation, the 
Numeralla-Countegany Rural Fire 
Brigade and other organisations.

NZ Safety Blackwoods donated 
NZ$100,000 to KidsCan and participated 
in volunteer events throughout 
New Zealand. Workwear Group and  
its team members have contributed  
over $98,000 to various organisations, 
including $20,000 to 'Buy A Bale'.

Ethical sourcing  
and human rights

The Industrial and Safety businesses 
maintain strong and respectful supplier 
relationships with products sourced in  
a responsible manner. Each business 
manages its own risk-based ethical 
sourcing strategy.

Blackwoods made progress re-engaging 
existing high-risk suppliers to the Sedex 
Members Ethical Trade Audit four-pillar 
audit framework. Suppliers to 
Blackwoods that are classified as high 
risk and make up more than 90 per cent 
of its total procurement spend are 
managed under the framework and 
internal reaudit program. 

Workwear Group conducted ethical 
sourcing awareness sessions with its 
international suppliers. The business  
also appointed Ethical Sourcing 
Champions within its Australian,  
New Zealand and United Kingdom 
businesses. All own-brand Greencap 
suppliers of goods not for resale are on 
the Sedex platform. Coregas developed 
a suppliers web portal with policies, 
general purchase conditions, and 
completed purchase orders.

Waste
(from continuing operations)

 RECYCLED

 DISPOSED

12.2 kt

2020 

3.5 

8.8

20191 

4.4  10.4

1  Waste not previously reported prior to 2019 
because it was not material to the Group.

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Operating and financial review

A divisional catalogue was also 
developed, listing approved suppliers  
for branded goods not for resale.  
All Australian businesses completed  
a human rights risk gap analysis of  
external cleaning service providers, 
aligning contract, statement of  
work and due diligence processes.

Balance and inclusion

The Industrial and Safety businesses 
strive to create inclusive work 
environments, achieve gender balance 
and promote the inclusion, engagement 
and employment of Indigenous 
Australians. In the division, 44 per cent  
of team members are female, including 
33 per cent in management roles. 
Indigenous team members make up 
2.4 per cent of our Australian workforce 
and Indigenous supplier spend totalled 
more than $1.6 million in the 2020 
financial year. 

During the year Blackwoods released its 
Aboriginal and Torres Strait Islander 
Strategy and Plan 2019-2021, providing 
guidance and allocation of responsibilities. 
Over 100 Blackwoods team members 
attended cultural awareness training, with 
381 additional team members completing 
online Reconciliation Action Plan training. 

Blackwoods and Coregas again hosted 
CareerTrackers interns. Greencap 
conducted a team member survey  
to better understand the diversity of  
its people and inform its Workplace 
Diversity Plan. Workwear Group 
improved its Workplace Flexibility  
and Parental Leave policies. 

With changes to recruitment in place, 
each business is creating more diverse 
and welcoming workplaces and 
reviewing procurement practices to 
increase Indigenous supplier spend.

Blackwoods collaboration delivers  
more than products

Blackwoods and New Start Australia 
have partnered to pilot a same-day 
delivery service for construction and 
infrastructure customers in the 
Sydney region. New Start is our 
Indigenous employment and labour 
hire partner and has been an integral 
part in Blackwoods' Indigenous 
employment program. 

The Blackwoods delivery van has 
been repainted featuring a colourful 
Indigenous design and an 
Acknowledgement of Country for  
all the Indigenous nations where  
we operate across the Sydney 
regions. New Start has provided  
an enthusiastic, experienced, and 
site-inducted Indigenous driver to be 
the face of this innovative program. 

The introduction of a same-day 
delivery service supports our 
customers in the time-critical  
major project sector, provides  
an employment opportunity, and  
proudly showcases Blackwoods’ 
support for Indigenous culture and 
communities. Feedback from large 
construction customers working on 
several high-profile projects has  
been very positive.

Blackwoods is hoping to continue 
the pilot and eventually expand and 
tailor the service offering.

Ethical sourcing audit 
program findings

Greenhouse gas emissions
(from continuing operations)

492

NUMBER OF SUPPLIERS COVERED  
BY THE AUDIT PROGRAM1

Suppliers part of the audit program  
but not audited during the financial year2 

Suppliers audited during the financial  
year with no critical breaches 

Suppliers audited during the financial  
year with critical breaches identified3 

237

232

23

1  There were 492 active suppliers in the 
audit program as at 30 June 2020.
2  The supplier may be audited every  

two years if it had no previous findings.

3  In FY2020, there were 89 critical 
breaches across 23 suppliers.

SCOPE 1 & 21

27.1 ktCO2e

2020 

27.1

2019 

2018 

2017 

2016 

25.9

26.0

29.2

30.0

1  Scope 1 and 2 data includes emissions from 

continuing operations for businesses where we 
have operational control under the NGER Act  
and some of our emissions in New Zealand.

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STRATEGY

Industrial and Safety continues to focus on performance improvement activities and investment in digital capability. Across 
Blackwoods, Workwear Group and Greencap this includes focusing on data, ERP, product and service capabilities, and cost 
improvement initiatives aimed at deepening customer relationships while improving operating efficiencies. Coregas is focused  
on expanding its product offer and renewable opportunities.

Growth strategies

Achievements

Focus for the coming years

Implementation of a 
market-leading offer 
across Blackwoods 
in the Australian and 
New Zealand industrial 
distribution market

 – Implemented new regional sales structure and local 

customer service improving customer net promotor scores

 – Deepening customer relationships and building sales  

force effectiveness

 – Commenced integrated supply program with major 

customer

 – Improved operating efficiency while maintaining supply 

and service levels

 – Strengthened technical specialist capability

 – Product range enhancement
 – Leveraging scale from operations
 – Expansion of technical capabilities and service solutions
 – Implementing a new ERP system and streamlining 

operating processes through data and digital

Digital transformation 
of Workwear Group and 
targeting growth from 
uniforms and key brands

 – Supply chain optimisation progressed 
 – Sourcing rationalisation progressed 

 – Investment in digital transformation 
 – Targeted uniform growth and new business opportunities
 – Growth from key brands
 – Cost improvement initiatives
 – Further refinement of the operating model to improve 

efficiencies 

Grow Coregas market 
share

 – Continued revenue growth, including medical gas offer, 

Blackwoods and Bunnings distribution channels 

 – Geographic expansion within Australia and New Zealand

 – Further expanding product offers such as specialty gases 
 – Adjusting to COVID-19 impacts
 – Renewable opportunities

Expand the online 
capabilities of Greencap

 – Greencap completed the Cm3 acquisition in July 2019 

and significantly grew its user base

 – Position Cm3 as the leading contractor management 

platform in Australia and New Zealand

RISK

As a supplier of industrial, safety and workwear products, the business is exposed to the performance of customers’ industry 
sectors, new and existing competitor activity, as well as macro-economic factors such as capital investment, employment, 
foreign exchange rates and interest rates. 

Industrial and Safety is actively managing the impact of COVID-19 by understanding the effect it has across all key risk areas  
as well as by managing the direct implications identified below.

Risk

COVID-19

Mitigation

 – Continued focus on providing a COVID-safe environment for team members, customers and suppliers
 – Implementation of strategies to provide increased cost structure flexibility to respond to changes in customer demand

Subdued growth and 
margin pressure

 – Build sales force effectiveness in Blackwoods and improve product range enhancement
 – Target new growth opportunities, strengthen brand positioning and execute cost control initiatives in Workwear Group
 – Continue to develop new distribution channels for Coregas and expand speciality gas capabilities
 – Grow Greencap’s digital offer

Growth of new and 
existing competitors, 
including digital market 
entrants

Safety or environmental 
incident

 – Build data and digital capabilities that deepens customer relationships 
 – Continue to optimise range, price and supply chains
 – Further refinement to improve operating efficiencies

 – Continue to focus on quality systems and ensuring compliance with standards 
 – Fully operational safety program including regular monitoring and the continuation of the safety culture 
 – Active safety engagement by senior management

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Operating and financial review

Other activities

Wesfarmers is an investor in Coles Group Limited, flybuys, the BWP Trust, 
Gresham Partners and Wespine Industries.

COLES

BWP TRUST 

WESPINE INDUSTRIES 

The 50 per cent-owned Wespine 
Industries (Wespine) operates a 
plantation softwood sawmill in 
Dardanup, Western Australia. Wespine 
manufactures structural timber used 
in the construction industry along with 
landscaping, packaging and other 
timber products.

Despite Western Australian  
housing approvals remaining at near  
20-year lows, Wespine recorded timber 
sales of $95.7 million for the 2020 
financial year, in line with the prior year. 
Performance was driven by the  
supply of additional volumes to 
customers in the eastern states on  
a lower overall contribution margin. 

Wespine’s recordable injuries declined 
slightly during the period reflecting the 
high level of focus which continues to 
be a priority for management. 

For more information on Wespine, 
please visit www.wespine.com.au

Wesfarmers’ investment in the BWP 
Trust (the Trust) contributed earnings  
of $52 million, compared to $42 million 
last year. 

The Trust was established in 1998 with a 
focus on large format retailing properties 
and, in particular, properties leased to 
Bunnings. BWP Management Limited, 
the responsible entity for the Trust, is a 
wholly-owned subsidiary of Wesfarmers 
Limited. Units in the Trust are listed on 
the Australian Securities Exchange and 
Wesfarmers holds, through a wholly-
owned subsidiary, 24.8 per cent of the 
total units issued by the Trust as at 
30 June 2020. 

The Trust’s portfolio as at 30 June 2020 
consisted of a total of 75 properties. For 
more information on the Trust, please 
visit www.bwptrust.com.au

GRESHAM PARTNERS

Wesfarmers has a 50 per cent 
shareholding in Gresham Partners 
Group Limited, the holding company 
for the Gresham Partners operations. 
Gresham is a leading independent 
financial services business with 
activities in corporate advisory, funds 
management, property, and capital 
solutions. 

For more information on Gresham 
Partners, please visit  
www.gresham.com.au

Coles is a leading Australian retailer which 
sells everyday products including fresh 
food, groceries, household goods, liquor, 
fuel and financial services via its national 
store networks and online platforms. 

In November 2018, the Coles division 
was demerged from the Wesfarmers 
Group, and Coles Group Limited was 
subsequently listed on the Australian 
Securities Exchange. Following the 
listing of Coles, Wesfarmers retained 
15 per cent of Coles’ total shares on 
issue. During the 2020 financial year, 
the Group sold 10.1 per cent of its 
investment in Coles through two separate 
transactions, recording a pre-tax gain on 
sale of $290 million and a further pre-tax 
gain of $220 million on revaluation of the 
Group’s interest in Coles.

As at 30 June 2020, the Group held 
a 4.9 per cent (2019: 15.0 per cent) 
interest in Coles through a wholly-owned 
subsidiary, Wesfarmers' Retail Holdings 
Pty Ltd. 

For more information on Coles’ 
performance during the year, please visit  
www.colesgroup.com.au

FLYBUYS

Wesfarmers owns a 50 per cent 
shareholding in leading loyalty and data 
company flybuys, with Coles Group 
Limited holding the other 50 per cent. 
Formerly part of Coles, following the 
demerger in November 2018 the flybuys 
business was set up as an independent, 
stand-alone business. 

As at 30 June 2020, there were 
6.8 million active households in the 
flybuys loyalty scheme. For more 
information on flybuys, please visit  
www.flybuys.com.au

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Group sustainability performance

Wesfarmers has a long 
track record of reporting 
on our sustainability 
performance. We believe 
sustainability is about 
understanding and 
responsibly managing 
the ways we impact 
the communities and 
environments in which  
we operate. 

We recognise that we can only achieve our 
objective of providing a satisfactory return 
to shareholders over the long term, if we 
take a holistic approach to looking after the 
interests of our stakeholders - our team 
members, our customers, our suppliers - 
acting honestly and ethically in everything 
we do, looking after the environment and 
contributing to the communities where we 
work and operate. 

This section of the annual report provides 
summarised information about nine of our 
ten material sustainability issues with our 
climate-related financial disclosures in the 
following section. Our report is prepared 
in accordance with the Global Reporting 
Initiative. If you would like more information 
including, our 2020 Modern Slavery 
Statement, additional case studies and 
data on our sustainability performance, 
please visit our website  
www.wesfarmers.com.au/sustainability

Safety performance
(from continuing operations) 
Total Recordable Injury Frequency Rate1

10.4

2020 

10.4

2019 

2018 

2017 

2016 

13.5

24.12

28.72

33.62

1  TRIFR measures the number of lost time injuries  

and medical treatment injuries per million  
hours worked.

2  Includes discontinued operations, including Coles.

SAFETY AND WELLBEING

We maintain a relentless focus on providing safe workplaces.

Every team member is entitled to work in 
a safe environment and go home safely at 
the end of their working day. This year, we 
drew on our experience of managing our 
workplaces with a relentless focus on the 
safety of our team members, customers 
and others to support the government and 
community efforts to limit the spread of 
COVID-19. 

We have seen encouraging improvements 
in safety performance this year. To monitor 
safety performance, we use TRIFR (or Total 
Recordable Injury Frequency Rate) which 
shows injuries per million hours worked by 
team members and long-term contractors. 
This year, our continuing operations TRIFR 
decreased by 23 per cent from 13.5 
to 10.4, with improvements across all 

divisions. Workers’ compensation claims 
decreased from 1,750 to 1,632 on a 
continuing operations basis. 

Peak performance

Our objective for our team is peak 
performance, with a focus on having fit, 
healthy and engaged teams across all 
businesses. The key peak performance 
strategy during the year included 
responding to the risks of COVID-19.  
While good progress has been made, 
peak performance initiatives, remain  
key priorities for further development  
over the coming year.

Bunnings rolls out new counterbalance 
forklifts

During the year, Bunnings made  
its biggest financial investment in 
safety to date, with the rollout of 
more than 430 counterbalance 
forklifts, representing an investment 
of over $32 million. 

The forklifts have been customised 
specifically for the Bunnings 
operating environment and have  
a number of world-class safety 
features made possible by new 
technology.

These features include an electronic 
safety brake which automatically 
engages when the forklift is turned 
off, or automatically applies after a 
slight delay, if the driver exits the 
vehicle while it is turned on. 

Special features prevent overloading 
of the forklift, ensures the safe load 
limit cannot be exceeded and 
provides a safer braking system 
when a forklift is on a gradient. 
Operators can adjust the forklift 
tines via controls in the cabin, 
reducing the need to manually move 
them for non-standard pallet loads, 
while the comfort cabin helps 
reduce operator fatigue.

The forklifts were trialled in a 
number of Bunnings stores prior  
to the rollout. Every store team will 
receive training on operating the 
forklifts as they are introduced 
across the network.

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Operating and financial review

Group sustainability performance

PEOPLE – DEVELOPMENT, DIVERSITY AND INCLUSION

We strive to create an inclusive 
work environment, with particular 
attention to gender balance 
and the inclusion of Indigenous 
people. We provide opportunities 
for our team members to 
enhance their job performance 
and develop their careers.

Our greatest competitive advantage is 
our people and we are committed to 
providing opportunities to enhance their 
performance and experiences at work  
and to advance their careers.

Training and development 

Wesfarmers’ businesses provide job 
specific and career development training 
to full-time, part-time and casual team 
members. Training programs available 
include developing team members’ 
technical skills, product knowledge, 
customer service, teamwork and 
leadership capabilities.

Inclusion and diversity

Wesfarmers is committed to providing 
an inclusive workforce where everyone 
feels respected and safe. We believe 
that through diverse and inclusive teams 
we can foster the best talent, harness 
creativity and problem-solving and gain 
insight into our diverse customers, 
stakeholders and the community. This 
drives our performance and enables 
future growth.

Gender balance

We believe gender balance helps us 
to deliver our objective of satisfactory 
returns to shareholders. Gender balance 
at Wesfarmers is defined as a minimum 
of 40 per cent of either gender.

The Wesfarmers Leadership Team  
is balanced with 42 per cent women 
and 58 per cent men, as is our total 
workforce, of 57 per cent women and 
43 per cent men. There is room to 
strengthen gender balance in senior 
executive positions in the businesses 
with women holding 30 per cent of 
positions and men holding 70 per cent 
of positions.

62

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Diversity and inclusion at WesCEF

Wesfarmers Chemicals, Energy and 
Fertilisers (WesCEF) recognises 
that its success as an organisation 
is closely aligned to the success of 
its people and strives to create an 
inclusive culture that permits team 
members to achieve their best. 
WesCEF’s continued commitment 
to diverse and inclusive teams helps 
attract the best talent, facilitates 
creative problem-solving and grows 
connections to diverse customers 
and stakeholders. 

During the year, work continued 
to improve gender balance and 
Indigenous employment through 
various strategies, including 
targeted LinkedIn searches, 
gender-neutral advertising, gender-
balanced shortlisting and promotion 
of flexibility. 

WesCEF also continued its focus 
on building an inclusive culture 
by delivering inclusive workplace 
training to 216 employees and 
updating its parental leave policy  
to increase the number of weeks  
of paid parental leave. 

WesCEF achieved gender balance 
on its executive leadership 
team with 40 per cent female 
representation. However, female 
representation in leadership 
roles decreased from 28.9 to 
27.7 per cent and overall female 
representation dropped from 35.0 
to 34.8 per cent in the last year, 
reinforcing the need for continued 
focus. WesCEF continues to build 
gender balance in non-traditional 
pipelines and 47 per cent of 
apprentices are female. 

Female representation across the Group

Total workforce

Wesfarmers Limited  
Non-Executive 
Directors

Wesfarmers 
Leadership Team

2020

2019

2020

2019

2020

2019

57%
58%

50%
38%

42%
45%

Senior executive 
positions 

All management 
and professional 
positions

2020

2019

2020

2019

30%
27%

36%
36%

Our vision for reconciliation

We commit to strong and respectful relationships with our suppliers.

SUPPLIER RELATIONSHIPS

Our vision for reconciliation is an 
Australia that affords equal opportunities 
to all, including all Indigenous people. 
Wesfarmers will ensure that Indigenous 
people feel welcome in our businesses  
as employees, customers, suppliers  
and visitors. 

Wesfarmers’ Reconciliation Action Plan 
is focused on five core areas.

1.  Sustainable employment

As one of Australia’s largest 
employers, we are continuing to 
provide sustainable employment  
for Indigenous people. As at 
30 June 2020, 1,858 Aboriginal 
and Torres Strait Islander team 
members worked in our businesses. 
This equates to 1.9 per cent of our 
Australian workforce. We recognise 
that we have work to do to achieve 
our target of employment parity 
of three per cent of our Australian 
workforce by 2022.

2.  Career progression 

We are committed to providing 
opportunities to Indigenous people  
to expand their careers.

3.  Indigenous procurement

Supporting Aboriginal and Torres 
Strait Islander businesses is an 
important contributor to the economic 
empowerment of Indigenous people 
with important flow-on effects to 
families and communities. During the 
year, we paid more than $28 million 
to Indigenous suppliers.

4.  Community partnerships

We continue to invest in community 
partnerships that are focused on 
Indigenous affairs and that add value 
to our partner organisations, the 
community and our businesses. 

5.  Celebrating Indigenous culture

Wesfarmers has worked in 
collaboration with Indigenous 
cultural organisations, artists and 
communities for over four decades.

Indigenous team members1

2020 

1,858

2019 

2018 

2017 

2016 

1,6662

1,647

1,342

990

1  From continuing operations.
2  Restated to account for casual team 

members who have worked in the last  
30 days (previously 90 days).

We seek strong and respectful 
relationships with all our suppliers. 
This year we engaged with nearly 
37,000 suppliers and paid them more 
than $19.3 billion. Building strong and 
collaborative relationships with suppliers 
is key to delivering responsibly sourced 
products to our customers. 

Our retailers are focused on engaging 
suppliers to use more sustainable paper, 
timber and cotton because of the impact 
these materials have on the natural 
environment, whether in their production, 
use or disposal.

Responsible timber procurement is a 
key issue for Bunnings. The Bunnings 
Responsible Timber Sourcing Policy was 
revised in 2018 to require all timber in 

products originating from natural forests 
to originate from third-party certified 
forests (e.g. FSC or PEFC) by December 
2020, with FSC preferred in highly 
contentious regions. Bunnings is working 
with suppliers affected by its revised 
timber policy to transition to the new 
requirements. 

Kmart and Target have a longstanding 
commitment towards using 100 per cent 
sustainable cotton (Better Cotton Initiative 
cotton, organic cotton, recycled cotton) 
for own-brand clothing, towels and 
bedding ranges. In the past year, Kmart 
Group extended this commitment by 
introducing time-bound targets for the 
responsible sourcing of a wide range  
of materials.

BOAB to support Aboriginal and Torres Strait 
Islander businesses

Increasing the diversity of our 
supplier base is an important area 
where we can make a real difference 
to the economic prosperity of 
Indigenous people and communities, 
while also enhancing our own 
businesses. Through our BOAB 
(Building Outstanding Aboriginal 
Businesses) Fund, Wesfarmers is 
providing funding and business 

support to Indigenous businesses 
which supply to the Group, to 
support them to develop and  
scale. BOAB funding is linked to 
Indigenous business suppliers 
because we believe that our 
engagement (as a customer or 
counterparty) will deliver ongoing 
income which will help the business 
develop and scale. 

Image: BOAB100 Wesfarmers Centenary sculpture commission – a Wesfarmers and 
Waringarri Aboriginal Arts creative partnership celebrating 100 years of Wesfarmers.

 Wesfarmers 2020 Annual Report

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Operating and financial review

Group sustainability performance

ETHICAL SOURCING AND HUMAN RIGHTS

We strive to source products 
in a responsible manner 
while working with suppliers 
to improve their social and 
environmental practices.

Ethical sourcing has been a key area 
of focus for the Wesfarmers Group for 
almost a decade and COVID-19 has 
highlighted the importance of investing 
in strong, sustainable supply chains 
where ethical sourcing is a priority. In 
early 2020, our divisions recognised the 
impact COVID-19 would have on ethical 
sourcing in their supply chains, including 
worker safety, worker vulnerability and 
the ability of Wesfarmers divisions’ 
ethical sourcing teams to complete in-
person audits of suppliers and monitor 
the remediation of identified critical 
breaches. We put in place measures to 
safeguard human rights to address this.

Our businesses directly source products 
from nearly 37,000 suppliers in more 
than 20 countries. Some of the major 
locations we source from include 
Australia, Bangladesh, Cambodia, 
China, India, Indonesia, New Zealand, 
Pakistan and Vietnam. Our supply 
chains are complex with multiple tiers  
of suppliers in various countries involved 
in the production of many products. 
Our aim is to ensure that human rights 
are understood, respected and upheld 
across our supply chain. Our 2020 
Modern Slavery Statement is available 
on our website.

To mitigate the risk of unethical 
practices in our supply chain, our 
businesses have ethical sourcing 
programs in place that take a  
risk-based approach and consider 
suppliers of products (both goods for 
resale and goods not for resale) and 
services. This risk-based approach 
sees our retail divisions concentrating 
due diligence on suppliers supplying 
own-brand products as well as services, 
both in Australia and overseas.

We recognise that social compliance 
audits can encourage positive 
behaviour among suppliers to safeguard 
human rights, but we recognise that 
a multifaceted approach is required 
to tackle such a complex issue. To 
complement our ethical sourcing audit 
programs, we foster long-term direct 
supplier relationships to help us work 
with suppliers to safeguard human rights.

64

Wesfarmers 2020 Annual Report

Kmart Group takes action to support 
garment industry during COVID-19 crisis

Factory shutdowns and falling 
consumer demand linked to 
COVID-19 has drawn the world’s 
attention to the plight of factory 
workers in the garment industry. 
Kmart Group has been working with 
suppliers on a case-by-case basis 
throughout the crisis to reach fair 
and mutually acceptable outcomes 
in relation to orders. 

In April 2020, Kmart and Target 
endorsed the Call to Action 
COVID-19: Action in the Global 
Garment Industry, which aims to 
generate action across the global 
garment industry to protect workers’ 
income, health and employment 
and support employers during the 
COVID-19 crisis, and establish 
sustainable systems of social 
protection for a more just and 
resilient garment industry. 

Working together with other 
brands, trade unions, international 
organisations, government and other 
key stakeholders, specific measures 
are being developed to deliver on 
these priorities. The working group 
is led by the International Labour 
Organization (ILO) in partnership 
with the International Organisation of 
Employers (IOE) and the International 
Trade Union Confederation (ITUC).

More broadly, Kmart and Target 
have taken a range of COVID-19 
actions in relation to ethical sourcing 
compliance and factory worker 
safety across their supplier base:

 − Due to the factory shutdowns 

and the suspension of third-party 

audit firms, the validity of ethical 
sourcing approvals of factories 
was extended to 30 June 2020. 
Normal audit programs are now 
resuming as factory shutdowns 
lift country by country, with further 
extensions on audit renewal 
provided to some factories in 
Bangladesh and India on a  
case-by-case basis.

 − Workplace safety guidelines 

provided by governments, the 
World Health Organisation (WHO) 
and ILO Better Work Programme 
have been shared with suppliers. 
The Kmart Group ethical sourcing 
team have followed up with 
suppliers to ensure that these 
guidelines are followed, which 
include regular handwashing, 
disinfecting, temperature 
checking and social distancing 
procedures in the factories.

 − Kmart and Target have partnered 
with ELEVATE (sustainability 
and supply chain services 
organisations) to organise a 
COVID-19 webinar for our 
suppliers, focusing on preventive 
health and safety measures for 
factories to implement before 
resuming operation, effective 
worker communication and 
support.

As the COVID-19 pandemic evolves, 
Kmart Group will continue its efforts 
to minimise the impact of the health 
emergency on the workers in its 
supply chain.

DATA AND  
IT SECURITY

PRODUCT QUALITY 
AND SAFETY

We are committed to 
protecting the privacy of 
team members, customers, 
suppliers and stakeholders in 
Wesfarmers and keeping the 
data we hold secure.

Wesfarmers is committed to complying 
with the laws governing privacy and 
data security and acting in an ethical 
manner with honesty, integrity, fairness 
and accountability.

Wesfarmers’ Code of Conduct applies 
to all team members across the 
Group and outlines guiding principles 
on privacy, confidentiality, record 
keeping and the use of, and access 
to, the Group’s assets and information 
systems. The Group also has policies 
relating to privacy and information 
technology. 

Consistent with the Group’s continuing 
focus on accelerating its data and digital 
capabilities, privacy and data security 
are a high priority. 

During the year, the Group continued 
working on enhancing its data privacy 
and security processes. This work 
included a review of privacy law 
compliance and development of data 
ethics principles. It also included 
the strengthening of cyber threat 
detection and response capabilities 
and further development of data 
protection processes including a 
Group risk management solution for IT 
vendors and minimum standards on 
cyber-security. The Group established 
quarterly reporting on cyber-security 
matters to divisional and Group Audit 
and Risk Committees and expanded 
the remit of the Data and Digital 
Steering Committee to include reviews 
of key data analytics projects. The 
Corporate Office conducted cyber-
security training and created new roles 
focused on data management and data 
and digital policy.

In the coming year, the Group will 
continue developing its systems and 
data governance frameworks, including 
in the areas of privacy assessment and 
training, and reviews of data analytics 
projects and data management and 
security.

We are committed to providing our customers with safe products.

All the consumer products we supply 
must be safe and meet consumer 
protections under the consumer laws 
of the countries where we sell them. 
We ensure that all our products comply 
with relevant mandatory standards 
before they are offered for sale. As 
well as safety testing and compliance 
with required standards, our divisions 
implement product recalls where safety 
issues may arise. 

All divisions regularly share learnings 
through the Wesfarmers Product Safety 
Forum which is held quarterly. The 
divisions have conducted extensive 

work to improve their product safety 
frameworks and risk assessment 
processes based on AS ISO 10377 
Consumer product safety – Guidelines 
for suppliers.

In addition, members of our divisions 
closely collaborate with several industry 
organisations and associations to 
remain informed about best practice, 
regulatory updates and emerging 
issues. Our retail divisions support the 
product safety community by actively 
participating in Standards Australia 
committee work.

Officeworks leads the way, developing the 
first national standard for button batteries

In support of button battery safety, 
all Wesfarmers divisions have taken 
active steps to improve the safety  
of consumer products powered  
by button batteries and enhance 
consumer information including the 
damage caused from ingestion. 

Officeworks Product Safety 
Manager, Barbara Geens has 
worked closely with Standards 
Australia to facilitate a forum to 

highlight the problem and to gain 
consensus on the development of 
the first ever national standard for 
button batteries. Barbara has been 
recognised for her contribution with 
the W.R. Hebblewhite Medal, the 
highest honour presented to the 
person who has made the most 
significant contribution to 
standardisation.

 Wesfarmers 2020 Annual Report

65

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Operating and financial review

Group sustainability performance

ECONOMIC AND COMMUNITY CONTRIBUTION

We make a positive 
contribution to the  
communities in which  
we operate.

As one of Australia’s largest private 
sector employers, our impact on the 
economy is significant, supporting 
approximately 107,000 jobs, including 
almost 100,000 in Australia and 
generating a total economic contribution 
of $31.7 billion. This year, we paid 
$19.3 billion to suppliers, $4.8 billion  
in salaries, wages and other benefits  
to team members, $3.3 billion in 
payments for rent, services and other 
external costs and $1.0 billion in taxes 
and other government charges.

Most of our operations, team members, 
shareholders and customers are 
in Australia and our approach to 
community engagement is focused 
largely on supporting organisations 
in the communities in which we 
operate. We believe that a strong 
business environment is underpinned 
by a cohesive, healthy and inclusive 
community.

Community contribution

Reflecting the Group’s divisional 
autonomy, community engagement is 
principally driven and managed by our 
businesses to ensure value is created in 
ways that best address the needs of their 
customers and communities. This year, 
the Group contributed approximately 
$68 million to community organisations  
in Australia, New Zealand and other 
regions where we operate, including  
$25 million in direct social investment  
in community organisations. The Group 
also facilitated indirect contributions from 
customers and team members totalling 
more than $43 million. In the last year, 
indirect contributions were impacted by 
COVID-19, for example the temporary 
suspension of Bunnings community 
sausage sizzles.

Wesfarmers at a corporate level 
partners with community organisations 
in three key areas: medical research 
and wellbeing, education and the arts. 
Across these areas, we also look to 
partner with organisations that have 
significant Indigenous programs, 
including Indigenous-led programs. This 
year Wesfarmers Corporate contributed 
$9.8 million to more than 25 small, 
medium and large community partners.

66

Wesfarmers 2020 Annual Report

The Girls Academy and Clontarf: 
Wesfarmers’ long-term commitment  
to Indigenous education 

Wesfarmers has long been 
committed to improving the 
educational outcomes of Indigenous 
young people. In 2001, we became 
the first corporate partner of the 
Clontarf Foundation, and in the 
19 years that have followed, the 
Foundation has grown from a 
single academy for 25 students at 
the Clontarf Aboriginal College in 
Waterford, Western Australia to an 
organisation that today, caters for 
more than 9,000 young men in 119 
academies, across six states and 
territories. Wesfarmers is proud to 
have been with Clontarf every step 
of the way. 

This year, we expanded our 
commitment to Indigenous education, 

entering into a new partnership with 
the Girls Academy. Our support 
enables the national organisation 
to run its school mentoring and 
leadership program for Indigenous 
girls. Wesfarmers’ Chief Human 
Resources Officer, Jenny Bryant,  
has been appointed to their board.

During the year, more than 330 
Clontarf students and alumni 
were employed at a Wesfarmers 
business in full-time, part-time or 
casual roles. Our partnership with 
the Girls Academy provides similar 
opportunities to Indigenous girls 
and we are planning to increase the 
number of Girls Academy young 
women working in our businesses.

Wesfarmers Arts

Wesfarmers has been a leading 
supporter of arts for more than four 
decades. Our partnerships with a 
diverse range of premier arts and 
cultural organisations in Western 
Australia and nationally reflect our  
belief in the vital contribution that the 
arts make to vibrant communities  
in which creativity and innovation 
flourish. This year, we stood by our 
arts partners during the COVID-19 
crisis, providing significant, targeted 
support to keep artists employed when 
performances were suspended and 
galleries were closed.

Community contributions
(from continuing operations)

 DIRECT

 INDIRECT

$68.1 m

2020  25.0  43.1

2019 

19.9  52.2

20181  86.6  60.9

20171  72.9  59.3

20161  57.8  53.8

1 

Includes discontinued operations,  
including Coles.

WASTE, PACKAGING AND PLASTIC

We strive to reduce our waste to landfill and improve packaging.

Waste

Where possible, our businesses strive 
to divert waste from landfill, recognising 
that this has significant reputational 
and financial costs for their businesses. 
Our retail businesses are signatories 
to the Australian Packaging Covenant 
Organisation (APCO) and report in line 
with its targets annually. Waste is a key 
area of focus for all our divisions. 

This year, we decreased our waste 
to landfill by almost five per cent to 
approximately 55,500 tonnes and 
increased waste recycled by 12 per cent 
to approximately 120,500 tonnes. 

Bunnings diverted 53 per cent, Kmart 
Group diverted 81 per cent and 
Officeworks diverted 86 per cent of its 
operational waste from landfill. The results 
have been achieved through initiatives 
such as changing the terms of current 
waste and recycling contracts, educating 
team members on waste management 

practices, monitoring waste and recycling 
performance, increasing reusable 
packaging and reducing non-recyclable 
materials in supply chain. This has 
resulted in an overall improved recycling 
performance for the Wesfarmers Group, 
with significant cost savings expected in 
the future.

During the year, Bunnings, Kmart Group 
and Officeworks worked with social 
enterprises, businesses and not-for 
profit organisations to provide recycling 
programs for products including batteries, 
paint and electrical items such as power 
tools and e-waste. 

Packaging and plastic

In 2018, all state and federal 
governments set targets to reduce 
environmental impacts from product 
packaging. To be achieved by 2025, the 
targets include ensuring all packaging 
is 100 per cent recyclable or reusable, 

Bunnings sustainable packaging initiatives

Bunnings is committed to 
transitioning to fully sustainable 
packaging with a significant focus on 
reducing operational and packaging 
waste, while still maintaining the 
integrity of products as they move 
through the supply chain. 

In the nursery, greenlife suppliers 
made significant progress in reducing 
the amount of virgin plastic packaging 
by transitioning to black plastic plant 

pots which incorporate more recycled 
plastic. Bunnings also worked with 
suppliers to remove non-essential 
plastic clips used to hold labels, 
reduce the label size, as well as 
reduce manufacturing waste and 
remove unnecessary plastic sleeves. 
These changes will continue to be 
implemented as existing supplier 
stock is depleted to ensure that 
additional waste is not created  
during the changeover process. 

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increasing the amount of recycled 
content used and phasing out single-
use plastics. All our divisions have plans 
in place to meet the 2025 packaging 
targets, and while some significant 
progress has been made, it remains a 
significant area of focus.

Waste
(from continuing operations)

 RECYCLED

 DISPOSED

176.0 kt

2020 120.5  55.5

2019  107.4  58.2

20181  351.3  153.6

20171  373.5  160.1

20161  356.1  151.2

1 

Includes discontinued operations, including Coles.

ROBUST 
GOVERNANCE

We maintain robust corporate 
governance policies in all our 
businesses.

Wesfarmers is committed to being 
transparent with all our stakeholders 
about our sustainability risks and 
opportunities and welcomes feedback at  
www.wesfarmers.com.au/sustainability 

For more details refer to the  
Corporate Governance Overview  
in this annual report. The full 2020 
Corporate Governance Statement, 
which covers key aspects of 
Wesfarmers’ governance framework 
and practices, is in the corporate 
governance section of the company 
website www.wesfarmers.com.au/cg

For more information about our sustainability 
performance across the Group, please visit 
www.wesfarmers.com.au/sustainability

 Wesfarmers 2020 Annual Report

67

 
 
 
 
 
 
 
 
 
 
 
Operating and financial review

Climate-related financial disclosures 

The impacts of climate 
change are increasingly 
being felt around the 
world. Our businesses, 
shareholders, customers, 
team members and the 
communities in which 
we operate expect us 
to manage the risks and 
opportunities we face. 

Wesfarmers acknowledges and 
supports the scientific consensus on 
climate change and is committed to 
contributing positively to the global  
goal of achieving net zero carbon 
emissions by 2050, consistent with  
the Paris Agreement.

We manage our businesses with  
deep carbon awareness and take 
responsibility for improving the energy 
efficiency of our operations, transitioning 
to renewable energy, investing in new 
technologies and working with our 
suppliers and customers to help them 
do the same. For this, we are 
accountable to all our stakeholders. 

This disclosure follows the 
recommendations of the Financial 
Standards Board Taskforce on 
Climate-related Financial Disclosures 
(TCFD). We recognise the importance of 
these disclosures to enable the efficient 
allocation of capital within markets and 
to drive the transition to a sustainable 
global economy for all.

As our economy progresses towards 
net zero, this will present significant 
opportunities for our businesses.  
It will also be important to support 
communities and industries at risk  
and ensure that the benefits and costs 
of our transition are shared fairly. 
Importantly, we will not achieve the 
global goal working alone and we 
support efforts to intensify cooperation. 

To see how we will meet our net zero 
ambition, see page 74. 

Setting a strong strategy

Wesfarmers’ climate change strategy  
is focused on managing climate-related 
risks, identifying opportunities and 
reducing emissions. We take a proactive 
approach to managing climate-related 
risks and opportunities throughout the 
portfolio and prioritise those projects 
that achieve abatement at a relatively 
lower marginal cost. 

68

Wesfarmers 2020 Annual Report

GHG emissions 

This year, Wesfarmers emitted a total  
of 1,602 thousand tonnes of carbon 
dioxide equivalent (CO2e) in Scope 1 
and 2 emissions. These emissions were 
three per cent more than last year. 

This year, our total energy use  
increased by eight per cent compared 
to the prior corresponding period, with 
21 petajoules of energy consumed. 

WesCEF increased its emissions  
by eight per cent due to increased 
production. Each of Bunnings, 
Officeworks and Kmart Group reduced 
their emissions through the continued 
rollout of solar and energy efficiency 
projects. Coregas increased its 
emissions by 26 per cent due to 
increased plant utilisation at the Mackay 
Air Separation Unit (ASU) during the 
year while the rest of the Wesfarmers 
Industrial and Safety businesses 
reduced their emissions by 16 per cent. 

For more detail on the performance of 
each division, please see their divisional 
pages in this annual report.

Delivering on our 
commitments 

This year, our divisions made pleasing 
progress against all aspects of our 
Climate Change Policy as we 
embedded our climate change strategy 
across our diverse portfolio. We also 
developed our governance systems and 
increased our disclosures in this annual 
report and online to meet our 
stakeholders’ expectations. 

Progress was made this year against 
key minimum standards set out in our 
Climate Change Policy: 

 − Metrics and Targets – The 
divisions have either adopted 
absolute or intensity emissions 
targets. Baseline changes can be 
made where divisions undertake 
significant growth opportunities.  
The Wesfarmers Managing Director 
and divisional managing directors' 
performance goals now include 
performance against the Climate 
Change Policy and divisional 
emissions targets and aspirations. 
These are reflected in variable 
remuneration incentives,  
where relevant.

 − Governance – The divisions 

Highlights of 2020

 − During the year, WesCEF 

commissioned a multivariable control 
system for process optimisation to 
improve ammonia plant performance 
and reinvested in improved catalyst 
abatement technology in one of its 
nitric acid plants. Further investment 
in the catalyst across the other plants 
is planned over the next two years.

 − Bunnings has decoupled emissions 
growth from store network growth, 
this year achieving a three per cent 
reduction on last year's emissions, 
while continuing to expand the store 
network.

 − Kmart Group, Officeworks and 

Wesfarmers Industrial and Safety 
businesses have continued to work 
with landlords to progress their 
energy efficiency project plans and 
solar rollout projects.

continue to report their Scope 1  
and 2 emissions and are expanding 
their reporting of Scope 3 emissions 
in line with Greenhouse Gas (GHG) 
Protocol standards. We now internally 
report all emissions regularly to  
better understand trends in our 
performance. 

 − Strategy – For the first time, as part 
of the Corporate Planning process, 
each division will forecast emissions. 
In line with best practice, we 
undertook an annual review of our 
carbon price which is used in 
assessing investment decisions. 

 − Risks and opportunities –  

The divisions are required to assess 
their climate change risks and 
opportunities. This assessment was  
a key focus in 2019 and substantial 
risk and opportunity analysis was 
included in our 2019 TCFD 
disclosures. For 2020, we undertook 
a review of this work to confirm it 
remains appropriate and updated it. 

Greenhouse gas emissions
(from continuing operations)

SCOPE 1 & 21

1,601.9  ktCO2e

2020  1,601.9

2019 

2018 

2017 

2016 

1,557.7

1,435.9

1,489.7

1,561.3

Wesfarmers divisional Scope 1 and 2 greenhouse gas emissions1

ktCO2e

1,000

900

800

300

200

100

0

319

16

304

13

270

13

263

13

257

250

303

291

SCOPE 1

SCOPE 2

965

897

843

909

46
0

46

43
0

43

54

56

26

12
14

27

12
15

FY19

FY20
BUNNINGS

FY19

FY20

KMART GROUP

FY19
OFFICEWORKS

FY20

FY19

FY20

FY19

FY20

WESCEF

WIS

1  Scope 1 and Scope 2 data includes emissions from continuing operations for Australian businesses where we have operational control under the NGER Act, other known 

non-reportable Australian-based emissions over which we have control, and our emissions in New Zealand and Asia.

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Operating and financial review

CLIMATE GOVERNANCE

The Wesfarmers Board has responsibility 
for managing the Group’s response to 
climate change. Climate change risk 
management is a permanent item on  
the Wesfarmers Operating Framework 
and is discussed by the Board and the 
Wesfarmers Audit and Risk Committee. 
The Board approves the Group’s climate 
change strategy including the Group’s 
Climate Change Policy, targets, strategic 
climate change-related decisions  
and climate-related disclosures. The 
Board also receives regular reporting  
and oversees climate change risk 
management. A consolidated Group  
Risk Report is provided to the Audit and 
Risk Committee and the Board for review 
and approval. The Corporate Plan is 
subject to a similar process and includes 
emissions forecasts. The Remuneration 
Committee makes recommendations  
to the Board regarding executive 
performance goals linked to performance 
against the Climate Change Policy and 
achievement of divisional emissions 
reduction targets and aspirations. 

The Wesfarmers Leadership  
Team reviews emerging risks and 
opportunities, leads stakeholder 
engagement and facilitates the sharing of 
best practice throughout the Group. Each 
Divisional board and each Divisional 
management team has responsibility for 
identifying and managing any material 
risks and opportunities and business 

Wesfarmers Group

performance, including against the 
climate change strategy, in accordance 
with the Group’s Risk Management 
Framework. Divisional audit and risk and 
compliance committees also oversee 
climate change-related risks relevant to 
the division.

In the 2020 financial year, climate change 
risk management and opportunity 
assessment were further embedded into 
the existing annual risk reviews and the 
Corporate Plan processes. Since 2014, 
Wesfarmers has considered an internal 
carbon price as part of capital allocation 
decisions for projects likely to result in 
direct carbon emissions. This carbon 
price is described on our sustainability 
website at www.wesfarmers.com.au/
sustainability

Additional information on Wesfarmers’ 
approach to corporate governance is 
available on pages 82 to 86 of this  
annual report. The full 2020 Corporate 
Governance Statement is available  
on the Wesfarmers website at 
www.wesfarmers.com.au/cg 

Governing our emissions 
targets 

Targets and aspirations have been set for 
each division or business, as appropriate. 
Due to our autonomous business model 
and the different emissions profiles of our 
businesses, no single Group-wide target 

or aspiration has been set. Responsibility 
for complying with the Climate Change 
Policy and meeting targets lies with 
divisional management and is overseen 
by the Wesfarmers Board and Leadership 
Team. The divisional emissions' targets 
reflect attributes of the relevant division, 
including the businesses emissions 
profile, expected future growth, recent 
emissions reductions and opportunities  
to reduce emissions. Absolute targets are 
intended to reduce emissions. Intensity 
targets are intended to reduce emissions 
per unit of production while not limiting 
business growth.

Potential for baseline changes 

The Climate Change Policy provides 
flexibility to accommodate significant 
changes to the scale of an existing 
business. Changes to a baseline must 
be approved by the Wesfarmers Board.

Mergers and acquisitions 

The Climate Change Policy recognises 
the dynamic and evolving nature of the 
Group and specifically contemplates 
changes to the portfolio. Where 
Wesfarmers acquires a business or 
operation, that business or operation 
must, within a reasonable timeframe, 
comply with the Climate Change  
Policy and establish an appropriate 
emissions target or aspiration. 

 - A Group-wide Climate Change 
Policy sets minimum standards 
expected of our divisions 

 - A shadow carbon price is 

built into Wesfarmers' Capital 
Expenditure Policy 

 - Quarterly carbon and energy 

 - Risk tools to undertake  

forums are held across the Group 
to share best practice 

scenario analysis

Wesfarmers Board, Audit  
and Risk Committee and 
Remuneration Committee 

 - Receives regular reporting 

 - Provides governance over  

climate change risks

 - Sets risk appetite

 - Sets performance goals  

and remuneration

Wesfarmers divisions

Carbon and energy teams 

 - Climate change policies in place 

 - Have processes for recording 

emissions data 

 -

Implement carbon reduction 
projects 

 - Meet regularly to share best 

practice through Wesfarmers' 
Carbon and Energy Forum

70

Wesfarmers 2020 Annual Report

Senior management and  
the corporate office 

 - Manage carbon and energy 

teams 

 - Set the climate change policies 

and strategies for the year ahead 

 -

Facilitate training 

 - Report to their divisional boards, 
the Wesfarmers Board and Audit 
and Risk Committee

Divisional boards and audit, risk 
and compliance committees 

 - Receives regular reporting of 
emissions and energy use 

 - Provide governance over  
climate change risks and 
supports the prioritisation  
of opportunities

OUR EMISSIONS PROFILE 

Our Scope 1 emissions predominantly 
come from the manufacture of 
ammonia, ammonium nitrate, sodium 
cyanide, LNG and LPG at our WesCEF 
businesses, the manufacturing and 
transportation of industrial and medical 
gases at our Coregas business as  
well as the use of natural gas and 
transportation fuels, such as diesel  
and petrol, in our retail businesses. 

Our Scope 2 emissions come  
from electricity use, predominantly in 
our retail businesses. We have been 
measuring and managing our Scope 1 
and 2 emissions for more than a decade  
in line with the National Greenhouse  
and Energy Reporting scheme. 

Our Scope 3 emissions derive largely 
from the production of goods for sale  
by our suppliers, the use and disposal 
of those goods, transportation and 
waste generated across our operations. 
We continue to focus on understanding 
and managing our Scope 3 emissions. 

Wesfarmers Scope 1, 2 and 3 emissions 

The graphic below illustrates the sources of Wesfarmers' Scope 1, 2 and 3 emissions, with reference to the GHG Protocol.

SCOPE 1

SCOPE 2

Commercial & 
urban heating & 
cooling network

Refrigerant 
usage 

Chemical 
production 
& industrial 
processes

Controlled
professional
transport

Electricity 
network

SCOPE 3

1 

Purchased 
goods, services 
& consumables

2 

Capital 
goods

3

Fuel & energy-related 
activities

4 

Upstream 
transportation 
& distribution 

Waste

5 

6 

Air travel or 
business travel

7 

Commuting 
employees & 
customers

8

Upstream 
leased assets

9 

Downstream 
transportation 
& distribution 

10 

Processing of 
sold products

11 

Use of sold 
products

12 

End-of-life 
treatment of 
sold products

13

Downstream 
leased assets

Franchises

14 

15 

Investments 
& JV’s

The divisions continue to develop the accuracy and coverage of their Scope 3 reporting categories, in line with the requirements of the Wesfarmers 
Climate Change Policy. Major progress this year relates to improvements made by Officeworks, Catch and WIS to expand their reporting in 
additional GHG protocol categories.

The divisions report Scope 3 emissions from the following sources:*

1

3

4

5

6

Upstream-purchased goods and services using the spend-based 
method for Bunnings, Kmart Group, Officeworks, WIS and Catch 
and the average data method for WesCEF;

Fuel and energy-related activities using the average data method;

Upstream transportation and distribution (shipping logistics) using 
the distance-based method for all divisions; 
In relation to upstream transportation and distribution (land-
based transport), all divisions have made some progress across 
intermodal transportation services. Due to the limited data 
availability and complexity of networks, this category will be 
developed over the coming years; 

9

11

12

Waste generated in operations using the waste type-specific 
method;

Business travel using the distance-based method;

 Downstream transportation and distribution for Officeworks using 
extrapolated redelivery data under the distance-based method;

Downstream use of sold products using the spend-based method 
for the Kmart Group;
Downstream use of sold products using the direct use-phase 
emissions method and electricity consumption emissions per 
product lifespan method for Officeworks;

Downstream end-of-life treatment of sold products using the 
spend-based method for the Kmart Group;
Downstream end-of-life treatment of sold products using the 
waste type-specific method for total paper-based products sold 
by Officeworks; and

15

Investments using the investment-specific method.

*   This is consistent with the methodologies and protocol categories in the GHG Protocol Corporate Value Chain (Scope 3) Accounting Reporting Standard.

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Operating and financial reviewOur climate change strategyWesfarmers adopts a proactive approach to managing climate- related risks and opportunities. We respond to changes in climate with diverse strategies, appropriate to each business, to reduce our environmental footprint while also realising opportunities and achieving long-term sustainable growth.Developed our Climate Change Policy Included additional reporting in the Operating and Financial Review in the annual reportOUR JOURNEY SO FAR Our climate-related disclosures and strategy have evolved significantly in  the last four years. We have found the TCFD framework an effective tool to assess and respond to climate-risk across the Group.RETAIL BUSINESSES Key strategies include:  -Improving the energy efficiency of our built environment through improved insulation and more efficient lighting and heating;  -Increasing focus on solar passive design principles for all new stores; -Accelerating installation of solar generation on buildings where  the rooftop  is accessible under current leasing arrangements; -Increasing our focus on modal shifts for transportation and logistics emissions; and -Procuring renewable energy via green procurement options now available  in the market. SCENARIO ANALYSIS At the centre of our climate change strategy, risk management approach, opportunity identification and emission reduction work is our scenario analysis. On an ongoing basis, we consider the latest scientific insight and implications  for both the scenarios and our climate change strategy and our risks and opportunities. This year we built on the Group-wide scenario analysis undertaken in 2019. Each division reviewed their detailed risk assessments and strategic opportunity examinations and tested them to ensure they continue to reflect their key climate risks and opportunities under three climate scenarios. The output  of this work is summarised on pages 76 to 78.The three scenarios reflect, respectively, the limiting of global average temperature increases above pre-industrial levels by 1.5°C, 2°C and  4°C by 2100. Each scenario was assessed over the short term (one to  five years), medium term (five to 15 years) and long term (15+ years). The scenarios combine elements of the International Energy Agency’s 2017 World Energy Outlook, the Representative Concentration Pathways established by  the Intergovernmental Panel on Climate Change (IPCC) Fifth Assessment Report and the Global Climate Models available from the Climate Change in Australia Projections for Australia’s National Resource Management (NRM) Regions Report. Each division has assessed its risks and opportunities against three distinct climate change scenarios. The scenarios are not forecasts or predictions nor are they intended to fully describe possible future outcomes. Rather, the scenarios are intended to draw attention to the key factors that may impact  our businesses. While the scenarios draw upon global practice and scientific information, it is important to note that they are hypothetical, and the future may resemble none, one or some of the scenarios.GovernanceWesfarmers 2020 Annual Report72Strategy

Risk management

Metrics and targets

Analysed the impact of climate 
change under different scenarios

Elevated climate change to a  
strategic risk 

Adopted divisional emissions 
targets 

Identified risks, opportunities  
and strategic responses for our 
divisions

Reviewed our internal carbon price

Included climate change 
assessment in acquisition due 
diligence 

Made progress in measurement  
of some Scope 3 emissions by 
divisions

NON-RETAIL BUSINESSES 

Key strategies include: 

 -

 -

 -

Identify opportunities to reduce emissions, for example, through alternate  
energy sources, energy efficiency and process optimisation technology; 

Increasing our focus on circular economy opportunities; 

Increasing our focus on modal shifts for transportation and logistics emissions; 

 - Continuously invest in technology improvements as they become available,  

for example the abatement catalyst technology; and 

 - Supporting efforts to develop emerging decarbonisation technologies through 

industry working groups as well as collaboration with universities and other research 
organisations, and our suppliers and customers. These include initiatives like green 
ammonia, hydrogen,  biomass and carbon reduction technology. 

1.5ºC 
scenario

2ºC 
scenario

4ºC 
scenario

Strong, very fast reduction in 
emissions driven by government 
policy, with a focus on  minimising 
climate change. 

The energy system rapidly transforms 
to zero emissions,  via the uptake of 
renewables.

Carbon intensive industries can only 
continue if they invest in carbon 
capture and storage technologies 
and/or are among  the most efficient  
in their industry.

Consumption of non-essential items 
falls and people reuse  and recycle 
more. 

A market-led transition, enabled by a 
policy environment which drives rapid 
reductions in emissions.

No coordinated global action  
on emissions reduction. 

A decentralised energy system 
emerges, dominated by demand 
management, renewable energy and 
storage technology.

Global trade flows remain strong,  
and the focus on circular economies 
grows with an increase in recycling 
and  a decoupling of resource use  
and growth. 

Business does not change significantly 
to  address climate change.

Fossil fuels deliver approximately 
50 per cent  of the global energy mix. 

Acute (extreme) and chronic (long-
term)  physical impacts of climate 
change are felt, with significant 
cumulative impact on the economy. 

Economic growth continues to 2030 
and  then declines as ecosystems 
struggle to  support the increased 
environmental impact. 

Resource depletion causes food and 
water scarcity and increases the risk  
of conflict. 

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Operating and financial reviewTargets and aspirationsAll divisions made steady improvements against absolute or intensity emissions targets set in 2019, by undertaking a range of projects designed to improve energy efficiency, increase our behind the meter generation of renewable power and prioritise green energy procurement. The targets reflect the Group’s  desire to support the global goal of reducing greenhouse gas emissions, consistent with the  Paris Agreement. Continue to implement and refine our Climate Change PolicyEmbed divisional reporting against our Climate Change PolicyThe performance goals and remuneration of the Wesfarmers Managing Director and the divisional managing directors include an assessment of their performance against the Climate Change Policy and divisional emissions targets and aspirations# Wesfarmers Industrial and Safety met its target in FY20 as a result of ongoing investment in energy efficiency projects and solar generation as well as one-off material impacts including due to COVID-19.* Baselines have been derived based on emissions reported in the FY18 NGER submission, less discontinued operations, plus other known non-reportable emissions over which we have control, plus other known international Scope 1 and 2 emissions in New Zealand and Asia. For WesCEF, the baseline has been increased to normalise for production outages during FY18.OUR JOURNEY FROM HEREGovernanceBunningsReflecting the strong expected growth  in its store network over coming years, Bunnings is targeting a 10 per cent reduction in Scope 1 and 2 emissions from its baseline  of 260 ktCO2e*Kmart GroupWhile significant progress has already been made over many years, Kmart Group is targeting a 20 per cent reduction in Scope 1 and 2 emissions from its baseline  of 331 ktCO2e*OfficeworksReflecting the opportunities associated  with the physical characteristics of its  store network, Officeworks is targeting  a 25 per cent reduction in Scope 1 and 2 emissions from  its baseline of 49 ktCO2e*304  ktCO2e265  ktCO2e2020 WHERE WE ARE NOW:2025 WHERE  WE WANT TO BE:43  ktCO2e37  ktCO2e2020 WHERE WE ARE NOW:2025 WHERE  WE WANT TO BE:263  ktCO2e234  ktCO2e2020 WHERE WE ARE NOW:2025 WHERE  WE WANT TO BE:Chemicals, Energy and FertilisersWesCEF is largely a Scope 1 emitter  and its target  is intensity-based*WesCEF’s 2025 target is that its emissions per unit of production are below the mean of comparable peersIndustrial and SafetyIndustrial and Safety (ex-Coregas) is  targeting a reduction  in emissions by 12 per cent from its baseline of 15 ktCO2e*Coregas is largely a Scope 1 emitter and its target is intensity-based. Coregas’ target is that its emissions per unit of production are below the mean of comparable peers965  ktCO2e2020 WHERE WE ARE NOW:NON-RETAIL BUSINESSESRETAIL BUSINESSES11#  ktCO2e13  ktCO2e2020 WHERE WE ARE NOW:2025 WHERE  WE WANT TO BE:ex-Coregasex-Coregas16  ktCO2eCoregasEmissions per unit  below mean of peersCoregasEmissions per unit  below mean of peers2025 WHERE  WE WANT TO BE:Wesfarmers 2020 Annual Report74Further climate change scenario analysis based on updated scenarios and the latest available scientific informationFurther analysis of the impact  of climate change on our supply chains and product mixPortfolio analysis and strategic analysisContinue to review and adjust the internal carbon price as necessaryFurther analysis of climate change on our transport and product-value chains including selected detailed physical assessmentsDevelop a better understanding of our Scope 3 emissions and consider strategic responses for  our businessesAssess achievement of Divisional short-term emissions targets and long-term net zero targets and aspirationsStrategyRisk managementMetrics and targetsOur retail businesses are accelerating plans to reduce their emissions, targeting net zero Scope 1 and 2 emissions by 2030. Bunnings, Kmart Group and Officeworks  will achieve this by improving their energy efficiency and moving to renewable power, while working simultaneously with suppliers and customers to better understand  and then reduce Scope 3 emissions.NET ZERO TARGET2030 Where we want to be:For WesCEF and Coregas, our aspiration is to achieve net zero Scope 1 and 2 emissions by 2050. For these businesses, the transition to net zero will take time, and we will invest and collaborate with others to support efforts to develop the new technologies that will drive the necessary transformation in these important sectors. For Industrial and Safety (ex-Coregas) we are targeting net zero Scope 1 and 2 emissions by 2050.NET ZERO ASPIRATION2050 Where we want to be: −Improving the energy efficiency of our built environment −Increasing our focus on modal shifts for transportation and logistics emissions −Increasing focus on solar passive design principles for all new stores −Accelerating installation of solar generation where possible  −Procuring renewable energy via green procurement options −A continued focus on energy efficiency, emissions reduction  and alternate energy sources  −Increasing our focus on circular economy and decarbonisation opportunities −Increasing our focus on modal shifts for transportation and logistics emissions  −Continuously invest in available abatement catalyst technology −Supporting efforts to develop emerging decarbonisation technologies Wesfarmers 2020 Annual Report75Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewOperating and financial review

RISKS AND OPPORTUNITIES

The physical and transition risks of climate change need to be considered in the context of the diversity of Wesfarmers’ 
businesses including in industry, operations, products, supply chain, customers, geography and scale. Where a risk applies  
to several of our businesses, that risk may impact each business differently. 

While climate change presents risks, there are also opportunities for the Group and its businesses. Consistent with our value-
creating strategies, the Group will continue to consider opportunities to invest in existing businesses and take advantage of the 
flexibility of the Wesfarmers conglomerate model to renew the portfolio through opportunistic and value-accretive acquisitions or 
divestments of businesses. In assessing these opportunities, the Group considers sustainability and looking after the environment 
as fundamental when applying a long-term horizon to its disciplined evaluation of investment decisions. 

Across the Group’s existing businesses, our climate-related opportunities are in five broad categories: resource efficiency and 
cost savings, renewable energy, new products and services, access to new markets and resilience in our supply chain. 

Physical risk 

A    Acute       AC    Acute and Chronic

Transition risk 

PL    Policy & Legal       M    Markets       R    Reputation        L    Liability      

 = most relevant

RISKS

SCENARIO
1.5°C 2°C 4°C

MITIGATION AND OPPORTUNITIES

TIMEFRAME – SHORT TERM (FROM 1–5 YEARS)

AC Extreme weather in localised areas 

may disrupt our supply chain, damage 
infrastructure or stores and damage stock. 

Improved analysis of new store locations, to avoid flood plains  
or ensure the store is built above prior flood levels. 

We may also hold additional stock to manage this risk.

AC For some of our industrial businesses, 

extreme weather may impact the productivity 
of certain chemical processes.

We continue to explore alternate technologies to cool the process 
down while trying to control costs and the emissions intensity of the 
cooling process.

PL

M

Carbon-intensive inputs and products may 
become scarcer or more expensive if these 
sectors cannot transition or offset their 
emissions.

PL

R

It may be difficult on leased premises  
to access renewable energy or install  
renewable generation.

Transport systems, which represent a large proportion of this 
carbon intensity, are moving forward in this area. Large amounts 
of R&D have been invested across the globe and alternate 
technologies are progressing dependent on haulage requirements.

Concurrently many international suppliers are receiving government 
support to transition to greener or renewable sources which will 
also reduce the embodied carbon in our products.

Ensuring we look at all potential procurement options helps to 
mitigate this and policies that require all new stores, with accessible 
rooftops, to have solar generation will ensure this problem slowly 
resolves as stores turn over. For the current store network, 
we continue to work with the smaller landlords to assist in the 
installation of renewable generation. For the larger landlords, the 
transition is already occurring, allowing for increased access to 
behind the meter generation in shopping centres. An increasing 
focus on green procurement options provides additional flexibility 
for shopping-centre-based stores in the network.

RISKS

SCENARIO
1.5°C 2°C 4°C

MITIGATION AND OPPORTUNITIES

TIMEFRAME – MEDIUM TERM (FROM 5–15 YEARS)

AC Suppliers of certain commodities or key 
inputs may be impacted, certain timber 
suppliers to Bunnings and pulp suppliers 
to Officeworks may experience shortages 
because of insufficient domestic supply and 
extreme weather affecting timber production.

Supply of some raw materials and inputs 
such as cotton, linen, rubber, metals and 
plastics may be impacted or more expensive.

AC

PL

M

Improve suppliers diversity helps to reduce this risk. Suppliers are 
aware of the risk and are looking at multiple alternate inputs, e.g. 
there are many composite wood-based products that incorporate 
recycled materials. The paper industry also has other plant-based 
alternatives which have improved substantially in quality.

Our businesses are looking at strategies to move away from virgin 
inputs and into circular economy (including recycled) alternatives. 

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Wesfarmers 2020 Annual Report

  
TIMEFRAME – MEDIUM TERM (FROM 5–15 YEARS) CONTINUED

AC

M

R

In some areas, extreme weather including 
flooding, rising temperatures and associated 
water scarcity may: 

•  damage agricultural-based inputs,  
reduce yields and impact growing  
regions (retail businesses). 

•  require changes to the way we make 
products and how much we can sell.

•  reduce plant productivity and increase 

downtime (industrial businesses).

AC Global and domestic supply chains  

may be disrupted. 

AC Extreme heat and more regular hot days 
may impact employee health, safety and 
productivity.

AC Retail customers may prefer air-conditioned 
stores and undercover parking, requiring 
refurbishment to store environments and 
increasing operating costs. Customer 
behaviour may change with reduced foot 
traffic in retail stores and increased online 
shopping.

Our businesses are looking at strategies to move away from virgin 
inputs and into circular economy or recycled alternatives. 

CSBP has invested in plant optimisation technology to continuously 
monitor all aspects of plant performance. We have also invested in 
improved catalyst abatement technology to continuously reduce 
emissions intensity.

Diversification of supplier base and geographic region to assist in 
agile repositioning of supply chains as well as holding additional 
stock on country and in domestic distribution centres (DCs) to 
buffer delays from disruption.

Investing in the energy efficiency of our network including 
insulation, to assist temperature control, as well as investigating 
other additional technologies. In the DCs where it is particularly 
problematic, shift hours can be amended and additional breaks 
taken to manage this.

In our manufacturing operations we adapt by altering shift hours. 
Additionally, as technology improves it becomes less about 
physical exertion when managing the process. 

Install energy efficiency technology and source renewable energy  
to reduce costs and emissions.

Continue to work with landlords to invest in renewable energy  
on rooftops and energy efficiency projects.

Invest in online delivery channels to provide this option to our 
customer base.

Continue to review our approach to store design to update design 
standards and include solar power and energy efficient fit-out as 
standard.

AC Extreme weather may mean some lines of 

commercial insurance become harder to 
obtain or more expensive.

Ensure built environment is as prepared as possible for potential 
extreme weather events, particularly if, for example, they are 
located in a flood plain.

Extreme weather may mean access to debt 
funding becomes more difficult as financiers’ 
risk profiles change.

AC

R

L

AC Extreme heat and prolonged drought 

may increase water scarcity, affecting our 
customers or our water-intensive operations.

Extended extreme weather may disrupt or 
damage our supply chains or infrastructure 
for extended periods or eliminate the supply 
of or render prohibitively expensive certain 
products or raw materials.

For the Kmart Group, synthetic fabrics and 
chemicals used to produce certain textiles 
for clothing and accessories may become 
more expensive as the cost of polymers and 
other inputs, including energy increases.

For Bunnings and Officeworks, timber and 
pulp shortages may occur because supply 
decreases as plantations are used to instead 
generate carbon offsets or logging is reduced 
to slow land degradation.

Our businesses may need to adapt as  
the economy transitions to low carbon 
products, customer demand changes,  
or costs increase.

AC

M

PL

M

R

PL

M

R

PL

M

M

R

Ensure our manufacturing operations are prioritising reductions  
in the emissions intensity of their operations.

Water Supply Strategy developed for CSBP Kwinana to ensure the 
long-term supply of suitable quality water for ongoing operations.

Diversification of supplier base and geographic region to assist  
in agile repositioning of supply chains and inputs.

We are always looking at alternate inputs from a composition, quality, 
price and sourcing standpoint. This has been expanded to actively 
investigate circular economy inputs and greener choices. As the cost 
of one input increases, other options will become viable. 

The transition to more circular products is underway. As they become 
more commercial we will transition more of our product lines.

We continue to build our teams’ capabilities and skills by training, 
developing and recruiting outstanding people to mitigate and adapt 
to risks and to take advantage of the opportunities associated with 
climate change.

Customers and other stakeholders, including 
investors, financiers and activists, may 
increasingly focus on the sustainability of  
our products.

Maintain an agile business model that can pivot towards these 
opportunities as they emerge. Transitioning to lower carbon 
operations ahead of our competitors may provide efficiency,  
cost or marketing opportunities.

 Wesfarmers 2020 Annual Report

77

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Operating and financial review

Physical risk 

A    Acute       AC    Acute and Chronic

Transition risk 

PL    Policy & Legal       M    Markets       R    Reputation        L    Liability      

 = most relevant

TIMEFRAME – MEDIUM TERM (FROM 5–15 YEARS) CONTINUED

PL

M

PL

M

Regulatory changes such as carbon pricing 
(subject to the scale of the pricing) may 
impact the financial performance of our 
businesses or impact the supply or price 
of certain inputs including raw materials, 
energy, fuel and water.

Carbon pricing (subject to the scale of the 
pricing) and other regulations may impact 
the competitiveness of our trade-exposed 
businesses (especially WesCEF) if our 
international competitors do not face similar 
carbon pricing and other regulation.

PL Prices may increase as a result of input cost 
pressures (including carbon pricing, subject 
to the scale of the pricing) leading to a 
decrease in consumer demand. 

LNG and LPG fuels could be affected by 
carbon, compared to liquid fuel solutions.

M For WesCEF, demand for natural gas  

may fall as consumers favour renewables 
and hydrogen.

R For our retail businesses:

•  they may need to respond to increasingly 
environmentally conscious consumers; 

•  the fast-fashion and electronics markets 
may transition to more durable products 
or products that are easier to reuse or 
recycle; and 

•  certain products may evolve to support 
the replacement of components rather 
than the replacement of entire item.

R Reputational concerns may drive businesses 
to more proactively manage carbon and 
other environmental risks. 

Continual assessment of the operating environment and key drivers 
of change, as well as enhancing diversified product offerings help 
to spread risk.

Continue to invest in technology to reduce Scope 1 emissions, 
including collaboration with research organisations. Continue to 
maximise plant efficiency to minimise cost of production.

We incorporate a carbon price into our capital allocation decisions 
to reduce this risk.

Ensure we maintain an agile business model that can pivot both 
offer and range to meet consumer demand at the right price point. 

For our industrial businesses, there may be opportunities for 
efficient operators as relatively inefficient and more carbon-
intensive operators become less competitive.

Invest in R&D alternate energy sources to capitalise on expanding 
markets as they develop.

Continue to build further circular and low carbon economy 
awareness in our business. For example, a continued focus 
on reducing plastic in product and packaging, and increased 
recycling rates as well as actively investigating circular economy 
opportunities with a view to transition products lines where the 
input exists, e.g. activewear.

Replacement of componentry can be problematic and a focus on 
recycling rare earths metals from electronic goods into second-life 
use is a focus.

Continue to invest in technology to reduce Scope 1 emissions, 
including collaboration with research organisations.

RISKS

SCENARIO
1.5°C 2°C 4°C

MITIGATION AND OPPORTUNITIES

TIMEFRAME – LONG TERM (FROM 15+ YEARS)

AC For our WesCEF businesses, extreme 

weather and prolonged drought may impact 
the amount of arable land in the Western 
Australian Wheatbelt or cause agriculture to 
relocate within Western Australia, reducing 
fertiliser demand or making alternative 
suppliers more competitive. Extreme heat 
and increased humidity may also reduce 
plant productivity, increase downtime and 
reduce product quality.

R Our industrial businesses may need  
to respond to increasing stakeholder  
activism relating to the carbon intensity  
of their operations.

M Our businesses may need to adapt as  
the economy transitions to low carbon 
products and customer demand changes  
or costs increase.

L

R

R

PL

M

Liability risk associated with class actions 
over climate change or lack of management 
of environmental risk. 

Changing stakeholder risk profiles, 
particularly in relation to carbon intensive 
operations, may make access to funding 
more difficult.

78

Wesfarmers 2020 Annual Report

Explore alternative markets less affected by climate change such as 
further north.

Investigating additional services, particularly in the technology and 
data areas to assist farmers maximise value and farming efficiency. 
WesCEF is also investing in adjacent opportunities such as granular 
fertiliser that acts as a nitrification inhibitor to improve plant uptake 
and reduce nitrous oxide emissions to air.

Continuing to evaluate and invest in emissions reduction 
technology and engage in industry collaboration to prioritise 
decarbonisation opportunities and greener product alternatives.

Continue to build on the capabilities and skills of our teams through 
training, developing and recruiting outstanding people to mitigate 
and adapt to risks and to take advantage of the opportunities 
associated with climate change.

A focus on sustainability is a pillar of Wesfarmers and all of its 
businesses approach to daily operations. 

Continuing to invest in technology to reduce Scope 1 emissions 
and engage in R&D initiatives to develop green ammonia 
technology.

 
Our Conclusion:Ernst & Young was engaged by Wesfarmers Limited (‘Wesfarmers’) to undertake limited assurance, as defined by Australian Auditing Standards and hereafter referred to as a ‘review’, over selected sustainability information disclosed in Wesfarmers’ 2020 Annual Report for the financial year ended 30 June 2020 (‘2020 Sustainability Reporting’). Based on our review, nothing came to our attention that caused us to believe that the sustainability information in the 2020 Annual Report had not been prepared and presented fairly, in all material respects, in accordance with the criteria defined below.What our review coveredErnst & Young (‘EY’ or ‘we’) reviewed:• Selected sustainability information disclosed in the Annual Report, limited  to the following: −Wesfarmers “Group Sustainability Performance” and “Climate-related financial disclosures” sections of the Operating and Financial Review (‘OFR’) −The “SUSTAINABILITY” sections for Bunnings, Kmart Group, Officeworks, Chemicals, Energy and Fertilisers, and Industrial and Safety.• A selection of performance metrics, as shown in the table below:Performance metrics• Scope 1, Scope 2, and Scope 3 greenhouse gas emissions in tonnes of carbon dioxide equivalent (tCO2-e)• Waste disposed and recycled (tonnes)• Water consumption (megalitres)• Energy consumption (petajoules)• Workplace health and safety data • Community contributions (AUD)• Aboriginal and Torres Strait Islander employee numbers• Aboriginal and Torres Strait Islander procurement spend (AUD)• Ethical sourcing audit program data• Employment and People dataCriteria In preparing its 2020 Sustainability Reporting, Wesfarmers applied the following criteria:• GRI Standards, including the Reporting Principles for defining report quality and report content • National Greenhouse and Energy Reporting Act 2007 (for Scope 1 and 2 greenhouse gas data) and GHG Protocol Guidance (for Scope 3 greenhouse gas data)• Other selected Criteria, as determined by Wesfarmers, and as set out in its Sustainability Reporting.Key responsibilities EY’s responsibility and independenceOur responsibility was to express a conclusion on the Wesfarmers 2020 Sustainability Reporting based on our review.We were also responsible for maintaining our independence and confirm that we have met the requirements of the APES 110 Code of Ethics for Professional Accountants, including independence, and have the required competencies and experience to conduct this assurance engagement.Wesfarmers’ responsibility Wesfarmers’ management (‘management’) was responsible for selecting the Criteria and preparing and fairly presenting the Sustainability Reporting in accordance with that Criteria. This responsibility includes establishing and maintaining internal controls, adequate records, and making estimates that are reasonable in the circumstances. Our approach to conducting  the reviewWe conducted our review in accordance with the Australian Auditing and Assurance Standards Board’s Australian Standard on Assurance Engagements Other Than Audits or Reviews of Historical Financial Information (‘ASAE 3000’), Assurance Engagements on Greenhouse Gas Statements (‘ASAE 3410’), and the terms of reference for this engagement as agreed with Wesfarmers on 20 April 2020.Summary of review procedures performed A review consists of making enquiries, primarily of persons responsible for preparing the Wesfarmers 2020 Sustainability Reporting and related information and applying analytical and other review procedures. Our procedures included:• Assessing Wesfarmers’ adherence to the GRI Standards Reporting Principles for defining report quality and report content, including the processes involved at a Divisional and Corporate level• Determining whether material topics and performance issues identified during our procedures had been adequately disclosed• Interviewing selected personnel from Corporate and Divisional offices, to understand the key sustainability issues related to the subject matter and processes for collecting, collating and reporting the Performance Data during the reporting period• Where relevant, gaining an understanding of systems and processes for data aggregation and reporting• Performing analytical tests and detailed substantive testing to source documentation for material qualitative and quantitative information• Checking the accuracy of calculations performed• Obtaining and reviewing evidence to support key assumptions in calculations and other data• Reviewing selected management information and documentation supporting assertions made in the subject matter• Checking that data and statements had been accurately transcribed from corporate systems and/or supporting evidence • Reviewing the presentation of claims, case studies and data against the relevant GRI principles contained in the criteria.We believe that the evidence obtained was sufficient and appropriate to provide a basis for our limited assurance conclusion.Limited AssuranceProcedures performed in a limited assurance engagement vary in nature and timing from, and are less in extent than, for a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Our procedures were designed to obtain a limited level of assurance on which to base our conclusion and do not provide all the evidence that would be required to provide a reasonable level of assurance.While we considered the effectiveness of management’s internal controls when determining the nature and extent of our procedures, our assurance engagement was not designed to provide assurance on internal controls. Our procedures did not include testing controls or performing procedures relating to checking aggregation or calculation of data within IT systems.Use of our Assurance StatementWe disclaim any assumption of responsibility for any reliance on this assurance report to any persons other than management and the Directors of Wesfarmers, or for any purpose other than that for which it was prepared.Independent Limited Assurance Statement to the Management and Directors of Wesfarmers LimitedErnst & YoungA member firm of Ernst & Young Global Limited.  Liability limited by a scheme approved under Professional Standards LegislationTerence Jeyaretnam FIEAustPartner Melbourne, Australia 23 September 2020 Wesfarmers 2020 Annual Report79Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewGovernance

Corporate governance overview

Board of  
Directors

Michael Chaney AO
CHAIRMAN

BSc, MBA, Hon. LLD W.Aust, FAICD
Age 70

Term: Chairman since November 2015;  
Director since June 2015.

Skills and experience: After an early career 
in petroleum geology and corporate finance, 
Michael joined Wesfarmers in 1983 as Company 
Secretary and Administration Manager. He 
became Finance Director in 1984 and was 
appointed Managing Director in July 1992. He 
retired from that position in July 2005.

Directorships of listed entities (last three years), 
other directorships/offices (current and recent):

 - Chairman of the National School Resourcing Board  

(since November 2017)

 - Director of the Centre for Independent Studies  

(since 2000)

 - Governor of the Forrest Research Foundation  

(since June 2014)

 - Chairman of Woodside Petroleum Limited  

(retired April 2018)

 - Chancellor of The University of Western Australia  

(retired December 2017)

 - Member of the Gresham Resources Royalties Fund 

Investment Committee (since June 2020)

Jennifer Westacott AO
DIRECTOR

BA (Honours), FAICD, FIPAA, FANZSOG
Age 60

Term: Director since April 2013.

Skills and experience: Jennifer is Chief 
Executive of the Business Council of Australia. 
Prior to that, she was a Board director and 
lead partner at KPMG. Jennifer has extensive 
experience in critical leadership positions in the 
New South Wales and Victorian governments.

Directorships of listed entities (last three years), 
other directorships/offices (current and recent):

 - Adjunct Professor at the City Futures Research Centre  

of the University of New South Wales (since 2013)

 - Chair of the Western City & Aerotropolis Authority  

(since February 2019)

 - Chair of Studio Schools of Australia (since July 2019)

 - Chair of the Mental Health Council of Australia  

(retired August 2019)

 - Board member of Cyber Security Research Centre 

(CSRC) Ltd (since February 2018)

 - Member of University of New South Wales Council  

(since December 2019)

 - Co-Patron of Pride in Diversity (since November 2017)

 - Patron of The Pinnacle Foundation (since March 2019)

Rob Scott 
MANAGING DIRECTOR

B.Comm, MAppFin, CA, GradDipAppFin
Age 51

Term: Director since November 2017.

Skills and experience: Rob joined Wesfarmers 
in 1993 before moving into investment banking in 
various roles in Australia and Asia. Rob rejoined 
Wesfarmers in 2004 in Business Development 
before being appointed Managing Director of 
Wesfarmers Insurance in 2007 and then Finance 
Director of Coles in 2013. He was Managing 
Director, Financial Services in 2014 and Managing 
Director of the Wesfarmers Industrials division 
in 2015. Rob became the Group’s Deputy Chief 
Executive Officer in February 2017 and assumed 
the role of Managing Director and Chief Executive 
Officer at the conclusion of the 2017 Annual 
General Meeting in November 2017.

Directorships of listed entities (last three years), 
other directorships/offices (current and recent):

 - Chairman and director of the flybuys joint venture with 
Coles Group Limited (since December 2018, resigned  
as Chairman in June 2020)

 - Chairman of Rowing Australia (since October 2014)

 - Director of Gresham Partners Group Limited  

(resigned July 2018)

 - Director of Gresham Partners Holding Limited  

(resigned July 2018)

 - Member of UWA Business School Advisory Board  

(since August 2017)

Sharon Warburton
DIRECTOR

BBus (Accounting & Business Law), FCA,  
FAICD, FAIB
Age 50

Term: Director since August 2019.

Skills and experience: Sharon has extensive 
board and executive experience in corporate 
strategy, business operations, finance, 
accounting and risk management, particularly 
in the resources, construction, infrastructure 
and property sectors, along with significant 
expertise in governance and remuneration. She 
was previously Executive Director Strategy and 
Finance at Brookfield Multiplex, and held senior 
management roles with ALDAR Properties PJSC 
in the United Arab Emirates, Citigroup in Sydney 
and Rio Tinto Limited in London and Perth. 

Directorships of listed entities (last three years), 
other directorships/offices (current and recent):

 - Director of Gold Road Resources Limited (since May 2016)

 - Director of Worley Limited (since February 2019)

 - Director of the Perth Children’s Hospital Foundation  

(since February 2014)

 - Member of the Takeovers Panel (since May 2015)

 - Adjunct Professor of Leadership and Strategy at Curtin 

University Faculty of Business and Law (since April 2019)

 - Director and Co-Deputy Chairman of Fortescue Metals 

Group Limited (retired March 2020)

 - Director of NEXTDC Limited (retired March 2020)

80

Wesfarmers 2020 Annual Report

 Wesfarmers 2020 Annual Report81Signed reportsShareholder and  ASX informationFinancial statementsDirectors’ reportGovernanceOperating and  financial reviewOverviewDiane Smith-Gander AODIRECTORB.Ec, MBA, Hon.DEc W.Aust (UWA), FAICD, FGIAAge 62Term: Director since August 2009.Skills and experience: Diane has extensive experience in corporate governance and providing strategic advice to corporations in Australia and overseas. She was a partner with McKinsey & Company in the USA, became a senior adviser to McKinsey & Company in Australia in 2016 and has more than a decade of executive experience in the banking industry. Directorships of listed entities (last three years), other directorships/offices (current and recent): -Director of HBF Health Limited (since May 2020) -Director of AGL Energy Limited (since September 2016) -Director of North Queensland Airports group of companies (since August 2018) -Chair of Safe Work Australia (since February 2016) -National Chairman of CEDA (since November 2019) -Director of Keystart Home Loans group of companies (since July 2016) -Member of Australian Partnership Council Norton Rose Fulbright Australia (retired July 2020) -Chair of University of Western Australia Business School Board (since January 2020)Vanessa WallaceDIRECTORB.Comm (UNSW), MBA (IMD Switzerland), MAICDAge 57Term: Director since July 2010.Skills and experience: Vanessa is an experienced board director and strategy management consultant who had been with Strategy& (formerly Booz & Company) for more than 25 years. She has global experience, living and working in Asia, and deep expertise in the financial services sector across the spectrum of wealth management, retail banking and insurance, with particular functional depth in risk management, post-merger integration and capturing business opportunities associated with channels, customers and markets.Directorships of listed entities (last three years), other directorships/offices (current and recent): -Managing Director of MF Advisory (since 2015) -Director of SEEK Limited (since March 2017) -Director of O’Connell Street Associates (since June 2018) -Founding Chairman of Drop Bio Pty Ltd, a digital health company (since January 2019) -Director of AMP Limited (March 2016 – May 2018) -Chairman of AMP Capital Holdings Limited  (August 2016 – June 2018)The Right Honourable Sir Bill English KNZMDIRECTORBA (Hons), BCom (Otago)Age 58Term: Director since April 2018.Skills and experience: Bill was Minister of Finance and Deputy Prime Minister of New Zealand from October 2008 to December 2016 and Prime Minister until the change of government in October 2017. He retired from parliament in March 2018. Bill has also held ministerial roles in health, education, housing, and revenue since his election to parliament in 1990. He has long-term interests in economic restructuring, sound microeconomic policy,  and social policy reform.Directorships of listed entities (last three years), other directorships/offices (current and recent): -Chairman of Mount Cook Alpine Salmon (since July 2018) -Chairman of Manawanui Support Ltd (since April 2019) -Chairman of Impact Lab Ltd (since May 2019) -Director of The Instillery (since August 2019) -Panel member of NSW Federal Financial Relations Review (since August 2019) -Advisor to Jarden Financial Services (since May 2018)Mike RocheDIRECTORBSc, GAICD, FIA (London), FIAA (Australia)Age 67Term: Director since February 2019.Skills and experience: Mike has more than 40 years’ experience in the finance sector where he held senior positions firstly as an actuary with National Mutual/AXA and then in investment banking where he provided strategic, financial, merger and acquisition, and capital advice to major corporations, private equity and government clients. Mike spent more than 20 years with Deutsche Bank including 10 years as Head of Mergers and Acquisitions where he advised on major takeovers and privatisations. He stepped down as Deutsche Bank’s Chairman of Mergers and Acquisitions (Australia and New Zealand) in 2016, and was a member of the Takeovers Panel for two terms from 2008 to 2014.Directorships of listed entities (last three years), other directorships/offices (current and recent): -Director of MaxCap Group Pty Ltd (since April 2019) -Director of Six Park Asset Management  (since December 2017) -Director of Te Pahau Management Ltd  (since November 2017) -Trustee Director of Energy Industries Superannuation Scheme Pty Ltd (since November 2016) -Panel member of Adara Partners (Aust) Pty Ltd  (since April 2017)Wayne OsbornDIRECTORDip Elect Eng, MBA, FAICD, FTSEAge 69Term: Director since March 2010.Skills and experience: Wayne started working  in the iron ore industry in the mid-1970s and joined Alcoa in 1979. He worked in various roles across the Australian business, including accountability for Alcoa’s Asia Pacific operations, prior to being appointed Managing Director in 2001, retiring in 2008.Directorships of listed entities (last three years), other directorships/offices (current and recent): -Director of South32 Limited (since May 2015) -Director of Alinta Holdings (retired April 2017) -Director of Alinta Energy Limited (retired April 2017)Governance

Corporate governance overview

The Board of Wesfarmers Limited

The Board of Wesfarmers Limited is committed to providing a 
satisfactory return to its shareholders and fulfilling its corporate 
governance obligations and responsibilities in the best interests 
of the company and its stakeholders. The 2020 Corporate 
Governance Statement details the key aspects of the governance 
framework and practices of Wesfarmers. It regularly reviews 
its governance framework and practices so as to ensure they 
consistently reflect market practice and stakeholder expectations.

The Board believes that the governance policies and practices 
adopted by Wesfarmers during the reporting period for the year 
ended 30 June 2020 follow the recommendations contained in the 
third edition of the ASX Corporate Governance Council’s Corporate 
Governance Principles and Recommendations (ASX Principles). It 
is noted that the fourth edition of the ASX Principles was released 
on 27 February 2019 and takes effect for a listed entity’s first 
full financial year commencing on or after 1 January 2020 – for 
Wesfarmers, this is the year ending 30 June 2021. Many of 
Wesfarmers’ corporate governance policies and practices set out 
in the 2020 Corporate Governance Statement also comply with the 
fourth edition of the ASX Principles.

Roles and responsibilities of the Board and 
management

The role of the Board is to:

•  approve the purpose, values and strategic direction of the 

Group;

•  guide and monitor the management of Wesfarmers and its 
businesses in accordance with the purpose, values and 
strategic plans;

•  oversee good governance practice; and

•  setting the Group's risk appetite and monitoring and reviewing 

the Group's financial and non-financial risk management 
systems.

The Board aims to protect and enhance the interests of its 
shareholders, while taking into account the interests of other 
stakeholders, including employees, customers, suppliers and the 
wider community.

In performing its role, the Board is committed to a high standard 
of corporate governance practice and to fostering a culture of 
compliance which values ethical behaviour, personal and corporate 
integrity, accountability, transparency and respect for others.

The Group Managing Director has responsibility for the day-to-day 
management of Wesfarmers and its businesses, and is supported 
in this function by the Wesfarmers Leadership Team.
Details of the members of the Wesfarmers Leadership Team 
are set out on pages 14 and 15 of this annual report and in the 
corporate governance section of the company’s website at 
www.wesfarmers.com.au/cg. The Board maintains ultimate 
responsibility for strategy and control of Wesfarmers and its 
businesses.

Structure and composition of the Board

Wesfarmers is committed to ensuring that the composition of the 
Board continues to include directors who collectively bring an 
appropriate mix of skills, commitment, experience, expertise and 
diversity (including gender diversity) to Board decision-making.
The Board currently comprises nine directors, including eight 
non-executive and independent directors. Detailed biographies of 
the directors as at 30 June 2020 are set out on pages 80 and 81 of 
this annual report.
Tony Howarth retired as a non-executive director at the end of the 
2019 Annual General Meeting on 14 November 2019 after serving 
as a director for 12 years.
The Board is of the view that the current directors possess an 
appropriate mix of skills, commitment, experience, expertise 
(including knowledge of the Group and the relevant industries in 
which the Group operates) and diversity to enable the Board to 
discharge its responsibilities effectively and deliver the company’s 
strategic priorities as a diversified corporation with current 
businesses operating in home improvement; apparel; general 
merchandise and office supplies; and businesses in chemicals, 
energy and fertilisers, and industrial and safety products.

82

 Wesfarmers 2020 Annual Report

In fulfilling its roles and responsibilities, the key focus areas of the 
Board during the 2020 financial year are set out below.

Key focus areas of the Board during the 2020 financial year 
included:

Guiding and supporting management in relation to the Group’s 
response to the COVID-19 outbreak, with a key focus on the 
health and safety of the Group’s team members and customers

Approving a $1.95 billion extension of the Group's available 
committed bank facilities and asset sales to further enhance the 
company's strong balance sheet position

Reviewing and providing input into the business operations and 
the strategic plans of each division likely to impact long-term 
shareholder value creation 

Overseeing management’s performance in strategy 
implementation

Overseeing the implementation of strategy to address areas of 
underperformance and reposition the portfolio to deliver growth 
in shareholder returns including changes to the Target and Kmart 
store networks

Approving changes to the leadership structure of its industrial 
businesses

Approving the partial sale of Wesfarmers’ 15 per cent 
shareholding in Coles Group Limited in two separate 
transactions:

-   sale of 4.9 per cent shareholding in February 2020 for pre-tax 

proceeds of $1,047 million, net of transaction costs; and 

-   sale of 5.2 per cent shareholding in March 2020 for pre-tax 

proceeds of $1,062 million, net of transaction costs

for total pre-tax profit on sale of $290 million

Monitoring and evaluating growth opportunities to complement 
the existing portfolio

Overseeing completion of the acquisition of Australian online 
retailer Catch Group Holdings Limited for cash consideration of 
$230 million

Overseeing completion of the acquisition of 100 per cent of the 
shares in Kidman Resources Limited at $1.90 per share by way 
of a Scheme of Arrangement

Monitoring the Group’s operating and cash flow performance, 
financial position and key metrics, including financial covenants 
and credit ratings

Reviewing the Group’s risk management framework, overseeing 
the implementation of strategies to improve the Group’s risk 
management framework and monitoring that the Group is 
operating with due regard to the risk appetite set by the Board

Monitoring the Group’s safety performance and overseeing 
implementation of strategies to improve safety performance and 
enhance workplace safety awareness

With the support of the Remuneration Committee, overseeing 
the Group's remuneration framework and remuneration 
outcomes for senior management

Reviewing the processes in place to attract, develop, motivate 
and retain talent

Reviewing policies, reporting and processes to improve the 
Group’s system of corporate governance

Appointing the Company Secretary

Corporate governance overview

The Board skills matrix set out below, describes the combined skills, experience and expertise presently represented on the Board. To the 
extent that any skills are not directly represented on the Board, they are augmented through management and external advisors.

David Cheesewright who has extensive experience in international retailing and manufacturing, including 19 years with Walmart, was 
appointed as an advisor to the Wesfarmers Board in August 2018.

SKILLS AND EXPERIENCE

BOARD

Leadership
Experience in a senior management position in a listed company, large or complex 
organisation or government body.

Corporate governance
Experience in and commitment to the highest standards of corporate governance, and 
includes experience as a director or senior executive in a listed company, large organisation 
or government body.

Financial acumen
Understanding of financial statements and reporting, key drivers of financial performance, 
corporate finance and internal financial controls.

Risk management 
Experience in identification, monitoring and management of material financial and 
non-financial risks and understanding, implementation and oversight of risk management 
frameworks and controls.

Digital, data and technology
Experience and expertise in identifying, assessing, implementing and leveraging digital 
technologies and other innovations, understanding the use of data and analytics and 
responding to digital disruption.

People and culture
Experience in overseeing workplace culture, people management, development and 
succession planning, setting remuneration frameworks and promoting inclusion and diversity.

Strategy 
Experience in corporate planning, including identifying and analysing strategic opportunities 
and threats, developing, implementing and delivering strategic objectives and monitoring 
performance against strategic objectives.

Corporate transactions
Experience in assessing and completing complex business transactions, including mergers, 
acquisitions, divestments, capital management, major projects and business integration.

Retail markets
Knowledge and experience in the retail and consumer goods industry, including 
merchandising, brand development, customer relationships and supply chain.

Industrial, resources and infrastructure
Senior executive or non-executive director experience and expertise in the industrial, 
resources or infrastructure sectors.

Regulatory and public policy
Experience in the management and oversight of compliance with legal and regulatory 
requirements and/or experience in the development, implementation and review of regulatory 
and public policy, including professional experience working or interacting with government 
and regulators.

Corporate sustainability and community engagement
Understanding and experience in sustainability best practices to manage the impact of 
business operations on the environment and community and the potential impact of climate 
change on business operations, and expertise in community and stakeholder relations.

International experience
Experience in international business, trade and/or investment at a senior executive level 
and exposure to global markets and a range of different political, regulatory and business 
environments.

9

9

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Governance

Corporate governance overview

Director independence

Role of the Remuneration Committee

Full details of the remuneration paid to non-executive and executive 
directors, and senior executives, along with details of Wesfarmers’ 
policy on the remuneration of senior executives are set out in the 
remuneration report on pages 92 to 116 of this annual report.

Senior executives comprising some members of the Wesfarmers 
Leadership Team have a variable or 'at risk' component as part of 
their total remuneration package under the Key Executive Equity 
Performance Plan (KEEPP).

The mix of remuneration components and the performance 
measures used in the KEEPP have been chosen to ensure that 
there is a strong link between remuneration earned and the 
achievement of the Group’s strategy and business objectives, 
alignment with the Group’s values, management of risk in 
accordance with the Group’s risk appetite, and, ultimately, 
generating satisfactory returns for shareholders. 

Annual performance reviews of each member of the Wesfarmers 
Leadership Team, including the Group Managing Director, for the 
2020 financial year have been undertaken. More details about 
Wesfarmers' performance and development review process for 
senior executives is set out in the 2020 Corporate Governance 
Statement.

Key focus areas of the Remuneration Committee during the 
2020 financial year included:

Reviewing and making recommendations to the Board in relation 
to the fixed and variable remuneration of the Group Managing 
Director and his direct reports

Reviewing and making recommendations to the Board in 
relation to the Wesfarmers variable remuneration plans, including 
undertaking a review of the KEEPP to ensure it remains an 
effective plan, meeting its original objectives and is fit for purpose

Reviewing and making a recommendation to the Board for the 
vesting outcomes of the 2016 KEEPP Performance Shares based 
on the assessment of performance against the performance 
targets

Reviewing the succession and transition plans for the 
Wesfarmers Leadership Team

Reviewing and making a recommendation to the Board on 
non-executive director fees

Reviewing and monitoring gender pay equity

Directors are expected to bring views and judgement to Board 
deliberations that are independent of management and free of 
any interest, position, association, business or other relationship 
or circumstance that could materially interfere with the exercise of 
objective, unfettered or independent judgement, having regard to 
the best interests of the company as a whole.

The Board’s assessment of independence and the criteria against 
which it determines the materiality of any facts, information or 
circumstances is formed having regard to the ASX Principles. In 
particular, the Board focuses on the factors relevant to assessing 
the independence of a director set out in recommendation 2.3 
of the ASX Principles and the materiality guidelines applied in 
accordance with Australian Accounting Standards.

The Board has reviewed the position and relationships of all 
directors in office as at the date of this annual report and considers 
that all eight non-executive directors are independent.

Committees of the Board

The Board has established an Audit and Risk Committee, a 
Remuneration Committee and a Nomination Committee as standing 
committees to assist with the discharge of its responsibilities. 
Details of the current membership and composition of each 
committee are set out in the 2020 Corporate Governance Statement 
on the company's website at www.wesfarmers.com.au/cg

Role of the Nomination Committee

As part of the Nomination Committee’s oversight of Board 
succession planning, it is also responsible for identifying suitable 
candidates to fill Board vacancies as and when they arise, or to 
identify candidates to complement the existing Board, and to 
make recommendations to the Board on their appointment. Where 
appropriate, external consultants are engaged to assist in searching 
for candidates.

The Nomination Committee is responsible for ensuring that there 
is a robust and effective process for evaluating the performance of 
the Board, its committees and individual non-executive directors. 
In relation to the re-appointment of a non-executive director, the 
Nomination Committee reviews the performance of the relevant 
non-executive director during their term of office and makes 
recommendations to the Board.

The form of the Board, committee and individual non-executive 
director performance reviews is considered and determined each 
year.  The outcomes of each Board and committee performance 
review are discussed by the Board and each respective committee. 
The outcomes of the performance review for each non-executive 
director are discussed between the non-executive director and 
the Chairman (and in the case of the performance review of the 
Chairman, between the Chairman and a nominated senior director). 
From time to time, the evaluation process may be facilitated by an 
external consultant. 

More details are available in the 2020 Corporate Governance 
Statement.

Key focus areas of the Nomination Committee during the 
2020 financial year included:

Consideration of feedback from major shareholders during the 
Chairman’s Roadshow conducted prior to the 2019 Annual 
General Meeting 

Identifying and considering potential candidates to fill Board 
vacancies

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Corporate governance overview

Role of the Audit and Risk Committee

Governance policies

The corporate governance section of the company’s website at 
www.wesfarmers.com.au/cg contains access to all relevant 
corporate governance information, including Board and committee 
charters, and Group policies referred to in the 2020 Corporate 
Governance Statement.

Ethical and responsible behaviour

Wesfarmers’ primary objective is to deliver satisfactory returns 
to shareholders through financial discipline and exceptional 
management of a diversified portfolio of businesses. The 
Wesfarmers Way is the framework for the company’s business 
model and comprises its values of integrity, openness, accountability 
and entrepreneurial spirit, details of which are published on the 
company’s website at www.wesfarmers.com.au. The Wesfarmers 
Way, together with the Code of Conduct and other policies, guide 
the behaviour of everyone who works at or for Wesfarmers as the 
company strives to achieve its primary objective. The Board and 
senior executives of the Group strive to ensure that their own actions 
and decisions reference and reinforce Wesfarmers’ core values.

Investor engagement

Wesfarmers recognises the importance of providing its 
shareholders and the broader investment community with 
facilities to access up-to-date, high-quality information, 
participate in shareholder decisions of the company and provide 
avenues for two-way communication between the company, the 
Board and shareholders. Wesfarmers has developed an investor 
engagement program for engaging with shareholders, debt 
investors, the media and the broader investment community. In 
addition, the company’s shareholders have the ability to elect 
to receive communications and other shareholding information 
electronically.

The Audit and Risk Committee assists the Board in fulfilling its 
responsibilities in overseeing the company’s financial reporting, 
compliance with legal and regulatory requirements, setting, 
articulating and reviewing the risk appetite of the Wesfarmers 
Group, and proactively managing the Group’s systems of internal 
control and its financial and non-financial risk management 
framework in accordance with the Group’s purpose, values and 
strategic direction.

Key focus areas of the Audit and Risk Committee during the 
2020 financial year included:

Monitoring the crisis management responses across the Group 
resulting from COVID-19 and the identification of emerging risks 
and associated mitigation strategies

Reviewing and assessing the Group’s processes which ensure 
the integrity of financial statements and reporting, and associated 
compliance with accounting, legal and regulatory requirements

Monitoring the Group’s information security framework, 
including data protection management, third party data risk 
management and the reporting structure and escalation process 
on information security risks

Overseeing the payroll assurance and remediation activities of 
the relevant Group businesses

Monitoring the ethical sourcing of products and services 
throughout the Group to ensure that there are appropriate 
safeguards and processes in place 

Monitoring the retail shrinkage control measures and reporting 
procedures in the Group’s divisions

Reviewing the Group's risk management framework, overseeing 
the implementation of strategies to improve the Group's risk 
management framework and monitoring that the Group is 
operating with due regard to the risk appetite set by the Board

Reviewing and evaluating the adequacy of the Group’s 
insurance arrangements to ensure appropriate cover for 
identified operational and business risks

Monitoring the Group’s tax compliance program both in 
Australia and overseas, including cross-border intra-Group 
transactions, to ensure its obligations are met in the jurisdictions 
in which the Group operates

A Group compliance program, supported by approved 
guidelines and standards, covering safety, the environment, legal 
liability, compliance with key governance policies, whistleblower 
reporting, information technology, data privacy and human rights

Overseeing the Group’s adoption of the new lease accounting 
standard AASB 16 Leases, including reviewing the associated 
disclosures

Monitoring compliance with Group policies including the Code 
of Conduct and reporting processes

Role of the external auditor

The company’s external auditor is Ernst & Young.

The effectiveness, performance and independence of the external 
auditor is reviewed annually by the Audit and Risk Committee. 
The lead audit partner is required to rotate after a maximum of 
five years. Mr Trevor Hammond is the lead audit partner and was 
appointed on 1 July 2019.

Ernst & Young has provided the required independence declaration 
to the Board for the financial year ended 30 June 2020. The 
independence declaration forms part of the directors’ report and is 
provided on page 91 of this annual report.

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Governance

Corporate governance overview

Risk management

Inclusion and diversity

Wesfarmers considers building a diverse and inclusive workforce 
a key enabler for delivering its objective of satisfactory returns to 
shareholders. Wesfarmers’ customers and stakeholders are diverse 
and to gain the best insight into their needs and expectations, 
and how to meet them, diverse and inclusive teams are required. 
A diversity of perspectives and backgrounds also strengthens 
creativity in teams. Moreover, creating an environment that 
attracts, retains, and develops team members with a wide range of 
strengths and experiences ensures Wesfarmers is best equipped 
for future growth.

The Wesfarmers Inclusion Policy encourages an inclusive work 
environment where everybody feels respected at work and aims to 
foster diversity in all its facets at all levels across the Group. 

Further details on inclusion and diversity are set out on page 62 of 
this annual report and in the 2020 Corporate Governance Statement.

Wesfarmers is committed to the identification, monitoring 
and management of material financial and non-financial risks 
associated with its business activities across the Group.

The Board recognises that a positive culture is fundamental to an 
effective risk management framework. Wesfarmers, through the 
Board, instills and promotes a culture which values the principles 
of honesty, transparency, integrity, fairness, constructive challenge 
and accountability, and these values are reflected in the Group’s 
Code of Conduct.

Management is responsible for the Group’s day-to-day compliance 
with risk management systems. Management monitors compliance 
with, and the effectiveness of, the risk management systems and 
controls at a divisional level. Senior management across the Group is 
responsible for reinforcing and modelling the key behaviours required 
to maintain a strong risk culture, including encouraging constructive 
challenge and transparency. Wesfarmers’ senior management reports 
to the Board on the adequacy of the risk management systems and 
processes on a consolidated basis across the Group and reports 
any material issues to the Board. Divisional managing directors 
are accountable for risk management outcomes, and day-to-day 
compliance, in their respective divisions.

Risk Management Framework

The Wesfarmers Risk Management Framework is reviewed on 
an annual basis by the Board to satisfy itself that it continues 
to operate effectively and as intended, and that the Group is 
operating with due regard to the risk appetite set by the Board. The 
Board reviewed the operation of the risk management framework 
in June 2020 and approved the Group risk appetite statement for 
the 2021 financial year.

This framework details the overarching principles and risk 
management controls that are embedded in the Group’s risk 
management processes, procedures and reporting systems and the 
division of the key risk management functions between the Board, 
Group Managing Director and Chief Financial Officer, Audit and 
Risk Committee, divisional management, divisional audit and risk 
committees and Group Assurance and Risk.

Wesfarmers recognises that risk is part of doing business and 
the Group is committed to the identification, monitoring and 
management of material risks associated with its business activities.

Further details on the Wesfarmers Risk Management Framework 
are set out in the 2020 Corporate Governance Statement on the 
company's website at www.wesfarmers.com.au/cg

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Directors' report
Wesfarmers Limited and its controlled entities

The information appearing on pages 6 to 86 forms part of the directors’ report for the financial year ended 30 June 2020 and is to be read 
in conjunction with the following information:

Results and dividends 

Year ended 30 June

Profit

Profit attributable to members of the parent entity

Dividends

The following dividends have been paid by the company or resolved to be paid by the directors since the 
commencement of the financial year ended 30 June 2020:

(a)   out of the profits for the year ended 30 June 2019 and retained earnings on the fully-paid ordinary 

shares:

(i)  fully-franked final dividend of 78 cents (2018: 120 cents) per share paid on 9 October 2019 (as 

disclosed in last year’s directors’ report)

(b)  out of the profits for the year ended 30 June 2020 on the fully-paid ordinary shares:

(i) fully-franked interim dividend of 75 cents (2019: 100 cents) per share paid on 31 March 2020

(ii) fully-franked final dividend of 77 cents (2019: 78 cents) per share to be paid on 1 October 2020

(iii) fully-franked special dividend of 18 cents per share to be paid on 1 October 2020 (2019: 100 cents
     per share paid on 10 April 2019)

2020

$m

2019

$m

1,697

5,510

884

1,361

850

873

204

1,134

884

1,134

Principal activities 

The principal activities of entities within the consolidated Group during the year were:

• 

• 

• 

retailing of home improvement and outdoor living products and 
supply of building materials;

retailing of general merchandise and apparel products;

retailing of office and technology products; 

•  manufacturing and distribution of chemicals and fertilisers; 

• 

industrial and safety product distribution;

•  gas processing and distribution; and

•  management of the Group's investments.

Directors

The directors in office at the date of this report are:

•  M A Chaney (Chairman)

•  R G Scott (Group Managing Director)

•  S W English

•  W G Osborn

•  M Roche

•  D L Smith-Gander

•  V M Wallace

•  S L Warburton

•  J A Westacott

All directors served on the Board for the period from 1 July 2019 to 30 June 2020, except S L Warburton who was appointed a director of 
the company on 1 August 2019.

The following directors retired during the year:

•  A J Howarth retired as a director of the company on 14 November 2019, at the conclusion of the 2019 Annual General Meeting.

The qualifications, experience, special responsibilities and other details of the directors in office as at the date of this report appear on 
pages 80 and 81 of this annual report.

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Directors' report

Directors' report
Wesfarmers Limited and its controlled entities

Directors' shareholdings
Securities in the company or in a related body corporate in which directors had a relevant interest as at the date of this report are:

M A Chaney

S W English

W G Osborn

M Roche

R G Scott*

D L Smith-Gander

V M Wallace

S L Warburton

J A Westacott

BWP Trust

Units

–

–

–

–

–

–

–

–

–

Wesfarmers Limited

Performance Rights

–

–

–

–

–

–

–

–

–

Shares

87,597

2,296

14,728

3,000

911,355

12,045

13,983

7,036

6,788

*  R G Scott holds 303,225 Restricted Shares and 258,087 Performance Shares under the Key Executive Equity Performance Plan (KEEPP). For further details, please see 

the remuneration report on pages 92 to 116 of this annual report.

A J Howarth retired as a director of the company on 14 November 2019, at the conclusion of the 2019 Annual General Meeting. As at that 
date, Mr Howarth had a relevant interest in 20,297 shares in Wesfarmers Limited and a relevant interest in 20,000 units in the BWP Trust. 

Directors’ meetings
The following table sets out the number of directors’ meetings (including meetings of Board committees) held during the year ended  
30 June 2020 and the number of meetings attended by each director.   

Board

Audit and Risk 
Committee

Remuneration 
Committee

Nomination Committee

Eligible to 
attend1

Attended2

Eligible to 
attend1

Attended2

Eligible to 
attend1

Attended2

Eligible to 
attend1

Attended2

M A Chaney3

S W English

A J Howarth4

W G Osborn

M Roche

R G Scott

D L Smith-Gander

V M Wallace

S L Warburton5

J A Westacott6

12

12

3

12

12

12

12

12

12

12

12

12

3

12

12

12

12

12

12

11

-

7

2

-

-

-

7

-

7

7

-

7

2

-

-

-

7

-

7

7

7

-

-

7

7

-

-

7

-

-

7

-

-

7

7

-

-

7

-

-

3

3

3

3

3

-

3

3

3

3

3

3

3

3

3

-

3

3

2

3

1  Number of meetings held while the director was a member of the Board/Committee. 
2  Number of meetings attended.
3  Notwithstanding he is not a member, M A Chaney attended all meetings of the Audit and Risk Committee held during the year.
4 

A J Howarth resigned as a director of the company on 14 November 2019 at the conclusion of the 2019 Annual General Meeting.  
S L Warburton was appointed as a director of the company effective 1 August 2019. She was appointed as Chairman of the Audit and Risk Committee effective from 
the  retirement of A J Howarth.  Ms Warburton did not attend a Nomination Committee meeting held to consider her appointment as Chairman of the Audit and Risk 
Committee. 
J A Westacott was granted a leave of absence for one Board meeting during the year. 

5 

6 

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Directors' report
Wesfarmers Limited and its controlled entities

Insurance and indemnification of directors and officers 

During or since the end of the financial year, the company has paid premiums in respect of a contract insuring all directors and officers 
of Wesfarmers Limited and its related entities against certain liabilities incurred in that capacity. Disclosure of the nature of the liability 
covered by the insurance and premiums paid is subject to confidentiality requirements under the contract of insurance.

In accordance with the company’s constitution, the company has entered into Deeds of Indemnity, Insurance and Access with each of the 
directors of the company. These Deeds:

• 

indemnify a director to the full extent permitted by law against any liability incurred by the director:

 – as an officer of the company or of a related body corporate; and

 –

to a person other than the company or a related body corporate, unless the liability arises out of conduct on the part of the 
director which involves a lack of good faith;

•  provide for insurance against certain liabilities incurred as a director; and

•  provide a director with continuing access, while in office and for a specific period after the director ceases to be a director, to certain 

company documents which relate to the director’s period in office.

In addition, the company’s constitution provides for the indemnity of officers of the company or its related bodies corporate from liability 
incurred by a person in that capacity.

No indemnity payment has been made under any of the documents referred to above during, or since the end of, the financial year.

Directors’ and other officers’ remuneration

Discussion of the Board’s policy for determining the nature and amount of remuneration for directors and senior executives and the 
relationship between such policy and company performance are contained in the remuneration report on pages 92 to 116 of this annual 
report.

Options

No options over unissued shares in the company were in existence at the beginning of the financial year or granted during, or since the 
end of, the financial year.

Company Secretary 

Aleksandra Spaseska was appointed as Executive General Manager, Company Secretariat & Group Risk in June 2019 and held the 
position of Company Secretary of Wesfarmers Limited for the period 1 July 2019 to 2 March 2020, following which she moved to the role 
of Chief Financial Officer of Kmart Group. While in the role of Executive General Manager, Company Secretariat & Group Risk, Aleksandra 
was a member of the Wesfarmers Leadership Team, she was the Company Secretary of a number of Wesfarmers Group subsidiary 
companies, and she had responsibility for the coordination of risk management across the Group. Aleksandra holds a Bachelor of 
Commerce (Honours) and a Doctor of Philosophy from The University of Western Australia. She is a CFA Charterholder and a Fellow of the 
Governance Institute of Australia.

Vicki Robinson was appointed as Executive General Manager, Company Secretariat effective from 2 March 2020 and was appointed as 
Company Secretary of Wesfarmers Limited from this same date. Prior to this, Vicki was General Manager, Legal (Corporate) where she 
played a key role in many of the Group's key mergers and acquisition transactions over many years. Vicki joined Wesfarmers in July 2003 
as a Legal Counsel with the Corporate Solicitors Office. In 2007, she moved to the role of General Manager for enGen, and she returned 
to the Corporate Solicitors Office in 2009. Vicki holds a Bachelor of Laws (Honours) and Bachelor of Commerce from The University of 
Western Australia and was admitted to practise as a barrister and solicitor in 1999.  Vicki chairs the Advisory Board of Curtin University 
Law School, is a member of the Advisory Council of the Curtin Faculty of Business and Law and the Methodist Ladies College Council, 
and was a director of the Black Swan State Theatre company from 2009 to 2018. She is a Fellow of the Governance Institute of Australia.

Significant changes in the state of affairs 

Particulars of the significant changes in the state of affairs of the consolidated entity during the financial year are as follows:

• 

revenue from continuing operations up from $27,920 million to $30,846 million

•  profit for the year down from $5,510 million to $1,697 million. The profit for the year included: 

 – $437 million post-tax impairment of the Kmart Group; 

 – $83 million post-tax restructuring costs and provisions for the Kmart Group;

 – $298 million post-tax impairment of Industrial and Safety;

 – $203 million post-tax gain on sale of 10.1 per cent of the Group's interest in Coles; and

 – $154 million post-tax gain on the revaluation of the retained 4.9 per cent interest in Coles.  

•  dividends per share of $1.70 (2019: $2.78 per share) 

• 

total assets up from $18,333 million to $25,425 million

•  shareholders’ equity down from $9,971 million to $9,344 million

•  net debt/(cash) down from $2,500 million to $(85) million

•  net cash flows from operating activities up from $2,718 million to $4,586 million 

The comparative amounts listed above have not been restated for the adoption of AASB 16. 

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Directors' report

Directors' report
Wesfarmers Limited and its controlled entities

Review of results and operations

The operations, financial position, business strategies and prospects for future financial years of the consolidated entity are detailed in the 
operating and financial review on pages 16 to 79 of this report.

Events after the reporting period

The following significant events have arisen since the end of the financial year: 

Dividend
A fully-franked final dividend of 77 cents per share resulting in a dividend payment of $873 million and a fully-franked special dividend of 
18 cents per share resulting in a payment of $204 million were determined with a payment date of 1 October 2020. The special dividend 
reflects the distribution of profits on the sale of the Group's 10.1 per cent interest in Coles during FY2020. These dividends have not been 
provided for in the 30 June 2020 full-year financial statements.

Non-audit services

Ernst & Young provided non-audit services to the consolidated entity during the year ended 30 June 2020 and received, or is due to 
receive, the following amounts for the provision of these services:

Tax compliance

Other

Total

$’000

605

-

605

The total non-audit services fees of $605 thousand represents 10.3 per cent of the total fees paid or payable to Ernst & Young  
and related practices for the year ended 30 June 2020. Total non-audit services fees and other assurance and agreed-upon procedures 
fees were $1,408 thousand. Further details of amounts paid or payable to Ernst & Young and its related practices are disclosed in note 29 
to the financial statements. 

The Audit and Risk Committee has, following the passing of a resolution of the Committee, provided the Board with written advice in 
relation to the provision of non-audit services by Ernst & Young.

The Board has considered the Audit and Risk Committee’s advice, and the non-audit services provided by Ernst & Young, and is satisfied 
that the provision of these services during the year by the auditor is compatible with, and did not compromise, the general standard of 
auditor independence imposed by the Corporations Act 2001 for the following reasons:

• 

the non-audit services provided do not involve reviewing or auditing the auditor’s own work or acting in a management or 
decision-making capacity for the company;

•  all non-audit services were subject to the corporate governance procedures and policies adopted by the company and have been 

reviewed by the Audit and Risk Committee to ensure they do not affect the integrity and objectivity of the auditor; and

• 

there is no reason to question the veracity of the auditor’s independence declaration (a copy of which has been reproduced on the 
following page).

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Directors' report
Wesfarmers Limited and its controlled entities

The directors received the following declaration from Ernst & Young:

Auditor’s independence declaration to the directors of Wesfarmers Limited

As lead auditor for the audit of the financial report of Wesfarmers Limited for the financial year ended 30 June 2020,  
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; and

b)  no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Wesfarmers Limited and the entities it controlled during the financial year.

Ernst & Young

T S Hammond
Partner 23 September 2020

A member firm of Ernst & Young Global Limited  
Liability limited by a scheme approved under Professional Standards Legislation

Environmental regulation and performance 

The activities of the consolidated entity are subject to environmental regulation by various authorities throughout Australia and the other 
countries in which the Group operates. 

Licences granted to the consolidated entity regulate the management of air and water quality and quantity, the storage and carriage of 
hazardous materials, the disposal of wastes and other environmental matters associated with the consolidated entity’s operations.

During the year there have been no known material breaches of the consolidated entity’s licence conditions.

Proceedings on behalf of the company 

No proceedings have been brought on behalf of the company, nor have any applications been made in respect of the company, under 
section 237 of the Corporations Act 2001.

Corporate governance 

In recognising the need for high standards of corporate behaviour and accountability, the directors of Wesfarmers Limited believe that 
the governance policies and practices adopted for the year ended 30 June 2020 follow the recommendations contained within the third 
edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (ASX Principles). It is noted 
that the fourth edition of the ASX Principles was released on 27 February 2019 and takes effect for a listed entity's first full financial year 
commencing on or after 1 January 2020 – for Wesfarmers this is the year ending 30 June 2021. An overview of the company’s corporate 
governance statement can be found on pages 82 to 86 of this annual report. The full corporate governance statement is available in the 
corporate governance section of the company’s website at www.wesfarmers.com.au/cg

Corporate information 

Wesfarmers Limited is a company limited by shares that is incorporated and domiciled in Australia. The company’s registered office and 
principal place of business is Level 14, Brookfield Place Tower 2, 123 St Georges Terrace, Perth, Western Australia.

Rounding 

The amounts contained in this report and in the financial statements have been rounded to the nearest million dollars unless otherwise 
stated (where rounding is applicable) 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 the instrument applies.

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report

Message from the Chairman of 
the Remuneration Committee

Dear Shareholders,
On behalf of the Board, I am pleased to present the 2020 Remuneration Report.

As described by the Chairman and Group Managing Director in 
their letters on pages 8 and 10 of this annual report respectively, 
the 2020 financial year has presented extraordinary external 
challenges for our executive key management personnel 
(KMP) and their teams. In this report, we explain how our 
remuneration framework for our executive KMP has responded 
to these events and present information on other remuneration 
considerations.

This year’s report addresses the desire for greater transparency 
regarding our variable remuneration framework, being the 
Key Executive Equity Performance Plan (KEEPP). We have 
included more information on why measures are used and how 
assessment decisions are made. We have also disclosed the 
Group financial and safety targets and outcomes as well as 
achievement of individual performance objectives.  

The Board has reflected upon the feedback it received regarding 
non-financial measures in the KEEPP annual scorecards and 
as performance conditions for the KEEPP Performance Shares. 
The inclusion of these measures is intended to align the Group’s 
material business risks, strategy positioning and execution and 
the individual performance objectives for each executive KMP. 
The Board has a strong view that such measures play a critical 
role in ensuring appropriate focus on long-term value creation 
and reduce the risk associated with focus on short-term profit 
results.

Impact of external events including COVID-19

Notwithstanding the substantial challenges facing our 
businesses during the financial year as a result of the onset of 
the COVID-19 pandemic, in addition to the severe bushfires, 
the company’s financial performance was solid. Operating profit 
finished the year above budget. The Board did not adjust any 
financial targets applicable under the KEEPP in the face of these 
challenges.

Pleasingly, our strong balance sheet allowed us to continue 
to support our customers, team members, suppliers and 
communities. The Group received approximately $40 million 
in wage subsidies outside of Australia, almost entirely in 
New Zealand, where the government mandated temporary store 
closures and trading restrictions which impacted Bunnings, 
Kmart, and Industrial and Safety. These payments were 
passed on to team members in full and represented less than 
one per cent of total team member payments made during the 
year. The variable remuneration outcomes were therefore not 
elevated as a result of this government support. 

The Board commends the effectiveness of management in 
dealing with the impact of COVID-19 on the Group. Our key 
priority is safety which has required the rapid implementation of 
additional measures to protect the health and wellbeing of team 
members and customers.  

Wesfarmers' performance in 2020

Statutory net profit was lower than budget as a result of a 
number of provisions and impairments during the period, 
which were only partially offset by non-operating gains. These 
comprised impairments in Target, and Industrial and Safety 
and provisions for restructuring expenses in Target, the profits 

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 Wesfarmers 2020 Annual Report

made on the sale of 10.1 per cent of Coles Group Limited and 
the unrealised profits on the remaining 4.9 per cent stake in 
Coles Group Limited, required under accounting standards. In 
addition, net profit includes the cost of remediating historical 
wage and salary underpayments in a number of divisions.

The Board was determined to ensure that remuneration 
outcomes took appropriate account of management effort, 
shareholder outcomes and community expectations.

For remuneration purposes, the statutory profit result was 
reduced by the accounting revaluation gain on the remaining 
Coles Group Limited stake as the Board concluded it was 
appropriate only to take this into account when and if the stake 
is disposed of for an economic gain. This is notwithstanding 
the fact that no additional accounting profit will be realised 
in the future under the revised accounting treatment. The 
Board also included (as previously announced) further Target 
store closure-related restructuring costs and provisions 
in Kmart Group of $120 to $140 million that are expected 
in the 2021 financial year. These resulted in lower variable 
remuneration outcomes for the 2020 financial year. Further 
details are provided in section 5.3.

Remuneration outcomes

Fixed Annual Remuneration
No changes were made to the fixed remuneration for the 
executive KMP during the year.

2020 KEEPP

Group Managing Director and Group Chief Financial Officer

For the first time, the 2020 KEEPP awards for the Group 
Managing Director and the Group Chief Financial Officer are 
delivered solely through equity as is the case going forward. This 
reflects a progressive reduction of the cash component since 
the KEEPP was introduced.

For the Group Managing Director and the Group Chief Financial 
Officer the financial component (being 60 per cent of the 
potential incentive award, measured against profit and return on 
equity targets) was below threshold and no KEEPP award was 
made in respect of this component. 

At the same time, management was very effective in working 
with all stakeholders to manage the Group through the 
COVID-19 environment, in successful portfolio reshaping 
and advancing key strategic agendas in digital and data, 
including the implementation of the Catch strategy. This strong 
performance in non-financial factors (including safety) resulted 
in overall KEEPP awards of 111.0 per cent and 116.3 per cent 
of fixed annual remuneration (FAR) for the Group Managing 
Director and the Group Chief Financial Officer respectively. 

The total KEEPP awards represent 37.0 per cent and 
38.8 per cent of the Group Managing Director's and the 
Group Chief Financial Officer's maximum variable remuneration 
opportunity respectively.

Remuneration report

Divisional executive KMP

The Board awarded KEEPP outcomes for our divisional 
executive KMP reflecting the varied financial performance of 
the specific divisions led by the executives, as well as each 
executive KMP’s individual performance, as described in 
more detail in section 5.3. The resultant outcomes ranged 
from 37.5 per cent to 95.2 per cent of their maximum variable 
remuneration opportunity. 

Kmart Group
The Board considered the major efforts and decisive action of 
Mr Scott and his team during the year in relation to the strategic 
options facing the Target business within the broader Kmart 
Group. The decision was to substantially reduce the size of the 
Target network and invest to convert many of its stores to Kmart 
stores which are expected to perform more strongly. 

A principal reason for the Group's financial performance falling 
below threshold was the substantial provisions made for these 
conversions. The Board considers a material component of 
these expenditures is more in the nature of an investment and 
will be substantially value-creating for shareholders if executed 
successfully.

In order to ensure continued management focus on 
delivering future shareholder benefit from this restructure, 
and to enable management to be rewarded for the decision 
only to the extent it adds value in the future, an additional 
grant of performance-tested shares of 50 per cent of FAR 
will be provided to the Group Managing Director and the 
Group Chief Financial Officer and 75 per cent of FAR for the 
Managing Director, Kmart Group. This grant will vest only to the 
extent that the level of total store profit for the stores converted 
to Kmart is achieved without exceeding the capital expenditure 
budget, relative to the Board-approved proposal, over a 
three-year performance period.

Vesting of prior year awards
The Group Managing Director received full vesting of the 
2016 KEEPP Performance Share grant related to his previous 
role as Managing Director, Wesfarmers Industrials. The four-year 
performance conditions were met in full (after taking into 
account the impairment in Industrial and Safety). Further details 
of this result are provided in section 5.6.

Review of the KEEPP

The Board is committed to an executive remuneration 
framework that is focused on driving a performance culture 
to reflect our diversified portfolio of businesses and reward 
long-term performance. The KEEPP was introduced in 2016 as 
a means of reinforcing our focus on long-term shareholder value 
creation.

Over the past year, being the fourth year since the introduction 
of the plan, the Board has undertaken a review of the KEEPP 
to ensure it is an effective plan that is meeting the original 
objectives set when it was implemented and that it remains fit 
for purpose and competitive. As part of this process the Board 
considered the feedback it received from our shareholders and 
proxy advisers and also reflected upon the competitiveness of 
the scheme; specifically, the implications of the scheme differing 
materially from most other plans of ASX 50 companies.

The conclusion of the review is that while the KEEPP creates a 
clear link between pay and performance and, by being heavily 
equity weighted, incentivises our executive KMP to act and 
think like business owners, there is room for improvement. 
This is particularly so where there is the risk that, contrary to 
the intent, the reliance on the scorecard to generate a variable 
remuneration outcome may inadvertently place too much 
emphasis on the short-term and at the same time render the 
KEEPP uncompetitive in the market. The Board has identified 
improvements to the KEEPP to ensure that the plan remains 

fit for purpose and to address market competitiveness, 
while providing greater clarity and specificity of performance 
measures. These and other mechanical changes are set out in 
detail on the following page.

The Board firmly believes these changes to be aligned with the 
interests of investors – increasing transparency and shareholder 
alignment in the way long-term performance is measured, while 
ensuring we provide market competitive remuneration which is 
important for talent retention. We encourage all of you to study 
the plan in detail.

Non-executive director fees

The main Board fees have remained unchanged since 
1 January 2017. In December 2019 and on appointment of the 
new Audit and Risk Committee Chairman, the Board reviewed 
the fees payable to the non-executive directors having regard 
to benchmark data, market position and relative fees for 
Committee work. Following this review, the Board realigned 
the fee payable to the Audit and Risk Committee Chairman by 
way of a reduction and approved an increase in fees payable to 
the Remuneration Committee Chairman and the Remuneration 
Committee members. Further information is set out in section 6.

Thank you for your continued support of Wesfarmers. We look 
forward to our ongoing engagement with you and sharing in the 
company's future success.

MIKE ROCHE

– Chairman, Remuneration Committee

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Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report

Improvements to the KEEPP  

The Board has approved changes to the Deferred Shares, Performance Shares and the administration of the plan, with a summary set out 
below. It is expected that (except where noted) these changes will be applied to the 2020 KEEPP awards, subject to the Board finalising 
and communicating all applicable terms and conditions. If applied, further information will be provided in the 2021 Remuneration Report.

2019 KEEPP

Proposed change and rationale

Deferred Shares - restriction periods

The trading restriction on half of the 
Deferred Shares lifts after five years and 
half after six years.

When the KEEPP was introduced in 2016, the restriction periods were deliberately set at market 
leading lengths, anticipating that other companies would follow suit, thus making long-dated 
awards the norm. This change has not occurred and therefore the length of restriction periods 
under the KEEPP are misaligned with our peers. 

To ensure the KEEPP continues to provide the executive KMP with market competitive 
remuneration, the Board intends to reduce the restriction period for one-third of the allocation of 
Deferred Shares to four years (with another third then released after five years, and the final third 
released after six years). Notwithstanding this change, Deferred Shares under the KEEPP will 
continue to be restricted for longer than the majority of equity awards offered by other companies, 
reinforcing the Board's commitment to continue to align executive and shareholder interests over 
the long term.

Performance Shares - performance conditions

Group Managing Director and Group Chief Financial Officer

The four-year performance conditions 
applied to the 2019 KEEPP included:

The Board intends to dispense with the strategic objectives component and increase the weighting 
on rTSR such that testing will comprise rTSR and portfolio management and investment outcomes. 

•  Wesfarmers relative total 

shareholder return (rTSR) (60%)

•  Portfolio management and 
investment outcomes (20%)

•  Strategic objectives (20%)

Divisional managing directors

The four-year performance conditions 
applied to the 2019 KEEPP included:

•  Wesfarmers rTSR (50%)
•  Divisional cumulative EBIT 

against Corporate Plan, subject to 
average ROC (50%)

This is to provide additional transparency and improve objective measurement of the performance 
conditions.

The Performance Shares are currently tested at the end of a four-year period against rTSR and 
cumulative earnings before interest and tax (EBIT) inclusive of a minimum return on capital (ROC) 
hurdle. The cumulative four-year EBIT test against Corporate Plan, runs two risks:

• 

• 

of too much weight being placed on a single year’s performance as that year contributes 
equally to four consecutive Performance Share grants; and

the disincentive of equally weighting each year when, in the opinion of the Board, the targets 
for the later years are more tenuous. 

Going forward, for future grants of Performance Shares under the KEEPP, the Board intends that 
EBIT will be considered against annual targets and in the earlier years of the four-year performance 
period will have a higher weighting than later years. The average ROC hurdle will be retained to 
ensure an efficient use of capital over the performance period as well as to maintain a strong focus 
on the long term.

Performance Shares - base awards

Some external stakeholders have expressed a concern that the award of variable remuneration under the KEEPP, being dependent on the extent 
of achievement of scorecard outcomes, is wholly dependent on short-term performance despite further performance testing. This contrasts 
with more typical short-term incentive and long-term incentive plans in almost all other ASX 50 companies, where there is an automatic annual 
allocation of performance equity, regardless of short-term results. The process under the KEEPP creates the risk that, contrary to the intent, the 
reliance on the scorecard to generate a variable remuneration outcome may inadvertently place too much emphasis on the short-term and also 
render the KEEPP uncompetitive in the market.

The Board is satisfied that the target opportunity and the maximum opportunity under the KEEPP are each appropriate. In addition to the 
concern above, and to protect Wesfarmers' investment in its talent and to mitigate retention risk, from the 2021 financial year, where the 
scorecard process results in an allocation of Performance Shares lower than 100 per cent of FAR (or 85 per cent for the divisional executive 
KMP), additional Performance Shares (which vest only to the extent they meet the performance conditions over the following four years) will be 
allocated to achieve that level. At target performance achievement, this change will have no effect on the amount of equity (or cash) awarded 
compared to the current process. This will result in variable remuneration being less dependent on performance over the initial 12-month period 
but more tied to performance over time.

Other changes

During the year, the Board reviewed the clawback provisions applicable to the KEEPP. While the Board considered its clawback rights to be 
sufficient, the wording has been updated and made more explicit. 

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Remuneration report (audited)

Contents

Section 1: 2020 Key management personnel

Section 2: Remuneration governance

Executive remuneration

Section 3:  Executive KMP remuneration framework and policy

Section 4:  Overview of Group performance

Section 5: Executive KMP remuneration

Non-executive director remuneration

Section 6: Non-executive directors

Other remuneration information

Section 7: Further information on remuneration

Section 8:  Independent audit of remuneration report

1.  2020 Key management personnel 

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The key management personnel (KMP) include the directors of Wesfarmers Limited and the executive KMP (the Group Managing Director 
and the Group Chief Financial Officer and those executives who have authority and responsibility for planning, directing and controlling the 
activities of a major profit generating division of Wesfarmers). The KMP for the 2020 financial year are as follows:

Current Directors

Michael Chaney AO

Diane Smith-Gander AO

Wayne Osborn

Vanessa Wallace

Jennifer Westacott AO

The Right Honourable Bill English KNZM

Mike Roche

Sharon Warburton

Former Director

Tony Howarth AO

Current executive KMP

Rob Scott, Group Managing Director

Anthony Gianotti, Group Chief Financial Officer

Ian Bailey, Managing Director, Kmart Group

Michael Schneider, Managing Director, Bunnings Group

Former executive KMP

David Baxby, Managing Director, Wesfarmers Industrials

These Directors were members of the Board of Wesfarmers Limited 
throughout the whole of the 2020 financial year.

Ms Warburton become a member of the Board of Wesfarmers Limited 
on 1 August 2019.

Mr Howarth retired from the Board of Wesfarmers Limited on 
14 November 2019.

These executive KMP held their positions throughout the whole of the 
2020 financial year.

Following the changes to the leadership structure of the Industrials 
businesses, as announced in March 2020, Mr Baxby stepped down 
as Managing Director, Wesfarmers Industrials and as a member of 
the executive KMP on 19 March 2020. As a result of the restructure, 
Mr Baxby was not replaced as a member of the executive KMP.

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

2.  Remuneration governance 

2.1  Role of the Board

The Board is responsible for setting remuneration policy and determining non-executive director, executive director and executive KMP 
remuneration. In addition, the Board is responsible for approving all targets and performance conditions set under the executive KMP 
variable remuneration framework, being the Key Executive Equity Performance Plan (KEEPP). 

The Board delegates responsibility to the Remuneration Committee for reviewing and making recommendations to the Board on these 
matters. The Board retains full discretion to decrease or increase outcomes to ensure that they are fair and reasonable. It can use this 
discretion to decrease or increase the outcome as it considers appropriate. 

The Board has regular meetings with each of the executive KMP during the year to discuss ongoing performance.

2.2  Role of the Remuneration Committee

The Remuneration Committee makes recommendations to the Board regarding all aspects of executive KMP remuneration. This includes 
making recommendations in relation to the targets to be included in the KEEPP scorecards and in relation to setting performance 
conditions that attach to Performance Shares (both the financial conditions and the other non-financial performance conditions). The 
Group Managing Director provides updates and makes recommendations to the Remuneration Committee on these matters in relation 
to his direct reports throughout the year. To inform the Board and Remuneration Committee, and to assist with their decision-making 
processes, additional information and data is sought from management and remuneration consultants, as required. 

The Audit and Risk Committee Chairman attends the relevant Remuneration Committee meetings and is formally involved in the 
remuneration outcome recommendations, ensuring that there is a tight linkage between behaviour, risk management and remuneration 
outcomes.

Further information regarding the objectives and role of the Remuneration Committee are contained in its charter, which is available in the 
corporate governance section of the company’s website at www.wesfarmers.com.au/cg

2.3  Culture and risk management

The Board believes that embedding the right culture and ensuring that the company operates within effective risk management protocols 
are enablers of strategic execution over the long term. Wesfarmers can only achieve its primary objective of generating satisfactory returns 
for shareholders over the long term by: looking after its team members, customers and suppliers; taking care of the environment and 
making sure that the Group is environmentally conscious in all of our activities; by acting ethically and honestly in all of our dealings; and 
by making meaningful contributions to the communities in which the Group operates.

Through the use of governance frameworks and in consultation with the Audit and Risk Committee, the Board ensures the executive KMP 
remuneration framework has a positive impact upon the company and all remuneration outcomes are aligned with the Board's approach 
to risk management. 

Fixed remuneration levels are set so as to sufficiently reward the executive KMP for performing the key requirements of their roles, having 
regard to the competitive environment for talent. 

In the annual KEEPP scorecards, the financial and safety measures and the individual performance objectives set by the Board are 
designed to drive strategic outcomes that benefit the company and its shareholders. This includes setting the ranges for threshold 
performance, below which no awards are made, and stretch performance, which attracts the maximum award. 

Targets set by the Board are assessed to be suitably risk-adjusted in accordance with the risk management framework so as to avoid 
unnecessary customer, team member or financial risk in the pursuit of the KEEPP outcomes. In assessing the annual KEEPP scorecards, 
the Board also considers how the outcomes have been achieved. For example, through the demonstration of behaviours aligned with 
appropriate ethics, values and culture, including a focus on team member safety and wellbeing, and consideration of any actions 
impacting Group reputation. 

2.4  Responsibility for determining remuneration of non-executive directors 

The Board is responsible for assessing non-executive director fees, assisted by the Remuneration Committee. Each year the 
non-executive director fees, including committee fees, are benchmarked externally against Australian companies of a comparable size 
and complexity. In the event of any proposed increase in fees, including committee fees, a reasonableness opinion is obtained from an 
external remuneration consultant and this is then considered by the Remuneration Committee and the Board (or only the Board if this 
relates to Remuneration Committee fees).  

2.5  Use of remuneration consultants

No remuneration recommendations as defined in section 9B of the Corporations Act 2001 were obtained during the financial year ended 
30 June 2020.

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Remuneration report (audited)

Executive remuneration

3.  Executive KMP remuneration framework and policy 

Wesfarmers’ primary objective is to provide satisfactory returns to shareholders over the long term. The guiding remuneration principles 
are focused on driving leadership performance and behaviours consistent with this objective, as well as with the Wesfarmers Way (as 
explained on page 17 of this annual report) and the Group’s overall strategies. 

Our guiding remuneration principles

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Align executive and stakeholder interests through share ownership while strengthening focus on Group results through 
awards of long-term, at-risk deferred equity

Be transparent and fit for purpose, recognising our autonomous operating model by linking rewards to the achievement 
of objectives for which executives are directly accountable and responsible while retaining a link to Group performance

Attract, motivate and retain world-class talent and outstanding people to drive outcomes

Recognise and reward high performance with a strong focus on the long term

Align effective risk management and demonstration of appropriate behaviours, ethics and values with rewards

Drive strategic achievement which aligns with long-term shareholder interests

(a)  Remuneration framework

The remuneration framework for the executive KMP comprises fixed annual remuneration (FAR) and variable at-risk remuneration (through 
participation in the KEEPP). Total remuneration is set at a competitive level to attract, retain and engage key talent, with fixed remuneration 
set at a level that is appropriate for the requirements of the role. 

Fixed annual remuneration

FAR comprises salary and other benefits (including statutory superannuation). FAR is benchmarked to our external peers and 
levels vary between the executive KMP and are based upon: role and responsibility; business and individual performance; internal 
and external relativities; and contribution, competencies and capabilities.  
FAR is not varied by reference to inflation or indexation as a matter of course. Changes are based on merit, a material change in 
role or responsibility, the market rate for comparable roles varying materially, or as a result of internal relativities, while protecting 
the significant investment of Wesfarmers in developing its key talent.

Variable remuneration - KEEPP

Opportunity
The KEEPP is a single total incentive established for each 
executive KMP that operates over seven years.
The quantum of the KEEPP award is determined against 
a personalised 12-month scorecard created for each 
executive KMP, split into financial performance measures 
(60 per cent weighting), individual performance objectives 
(30 per cent weighting) and safety performance measures 
(10 per cent weighting). 
The Remuneration Committee and the Board set the 
scorecards at the beginning of the financial year following 
consultation with the Group Managing Director.
The KEEPP award may vary within a range of zero to 
300 per cent of FAR and is delivered through up to three 
vehicles.

Delivery vehicles
Equity: KEEPP awards are delivered as long-dated equity, split 
evenly between Deferred Shares and Restricted Shares. 
Deferred Shares are restricted up to a total of six years once 
granted and can be subject to performance conditions if set by the 
Board at allocation.
Performance Shares are subject to further performance conditions 
over a four-year performance period. The Board has discretion to 
adjust the performance conditions in appropriate circumstances, 
so that participants are not unfairly advantaged or disadvantaged.
Cash: The Group Managing Director and Group Chief Financial 
Officer do not receive any cash, with their awards delivered solely 
in equity. For the 2020 financial year, a maximum of 35 per cent 
of FAR may be awarded in cash for the other executive KMP, 
reducing to 30 per cent of FAR for the 2021 financial year.

Determining outcomes

The financial and safety performance measures are assessed after the preparation and audit of the relevant results each year. 
The individual performance component is assessed after a review against the individual performance objectives at the end of the 
financial year. If performance against any measure or objective is assessed as below threshold, no outcome is awarded for that 
measure or objective. 

Board consideration of other factors

The final step in determining the outcome is calibration by the Board of the scorecard result and of the personal performance and 
behaviours of each participant alongside the consideration of whether the calculated outcome is fair and reasonable, and not 
inappropriate or simply formulaic. In 2020, the Board applied its discretion to allocate additional Performance-tested Shares for the 
Group Managing Director, Group Chief Financial Officer and the Managing Director, Kmart Group. See section 5.4 for more detail.

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Directors' report

Remuneration report (audited)

(b)  KEEPP life cycle 

The chart below shows the remuneration life cycle for each element of the KEEPP. The 2019 KEEPP award followed this life cycle and 
was awarded in the 2020 financial year, based on performance in the 2019 financial year. For further information on the timing for the 
2019 KEEPP award, see section 5.5(b) and (c).

Performance  
assessment

• 

12-month period (July to June)

Performance of each member of the executive KMP is assessed over the 12-month performance period 
ending 30 June against a scorecard that has financial measures (60 per cent weighting), individual 
performance objectives specific to the role (30 per cent weighting) and safety measures (10 per cent 
weighting).

Award 
determination 
assessment

If the assessment determines that performance on any measure is below threshold, the amount of the 
award for that measure is zero. If performance for a measure is assessed at threshold, then the award 
is 50 per cent of the target opportunity for that measure. If performance for a measure is assessed as 
at or above threshold, there is a straight-line calculation up to the target level and then a straight-line 
calculation up to the maximum level. The target opportunity across all measures is 200 per cent of FAR 
and the maximum award opportunity is 300 per cent of FAR.

Once the amount of the scorecard is determined, the Board then considers whether the proposed 
award is fair and reasonable in the circumstances. This assessment is a deliberate exercise of Board 
discretion to determine whether modifiers should increase or decrease the amount of the award. Total 
KEEPP awards are then delivered as follows:

• 

• 

Equity: The Group Managing Director and the Group Chief Financial Officer receive 100 per cent 
of their KEEPP awards in equity and are not eligible to receive any cash under the KEEPP. 
Equity is allocated in Deferred Shares and Performance Shares at no cost to participants. 
The number of shares allocated is determined using a face value calculated based upon the 
10-day, volume-weighted average price (VWAP) of Wesfarmers shares typically over the period 
immediately following the full-year results announced in August of that year. The allocation of 
equity generally occurs shortly after the Annual General Meeting.

Cash: For the executive KMP, excluding the Group Managing Director and the Group Chief 
Financial Officer, the amount of the cash component is zero where the award is equivalent to 
or below 100 per cent of FAR. An award above that level is paid in cash up to a maximum of 
35 per cent of FAR, with the remainder delivered in equity. Any cash is generally paid in August, 
following the release of Wesfarmers’ full-year results.

Deferred Shares  
and Performance 
Shares allocated

• 

Deferred Shares: 12-month forfeiture and five- and six-year trading restrictions

Deferred Shares: Deferred Shares are subject to a 12-month service condition (the forfeiture period) 
and any performance conditions that may be set by the Board at the date of allocation and are subject 
to trading restrictions for five or six years. Deferred Shares are held in trust and can only be transferred 
to the executive KMP once all trading restrictions and any other conditions are met. For the 2019 
Deferred Shares, 50 per cent will be released from the trading restriction in August 2024 and the 
remainder in August 2025. 

Final number 
of vested shares 
determined

• 

Performance Shares: four-year performance period

Performance Shares: Performance Shares remain at risk and will vest only to the extent further 
performance conditions are met when tested. Performance Shares are held in trust and can only be 
transferred to the executive KMP once vested. The 2019 Performance Shares will be performance 
tested over a four-year performance period ending 30 June 2023, against role-specific performance 
conditions. The Performance Shares will only vest to the extent that these performance conditions are 
met.

• 

All vesting conditions are complete after four years and all trading restrictions have 
ended after six years on the equity under each KEEPP award

98

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Remuneration report (audited)

(c)  Remuneration mix 

The charts below show each component of the remuneration framework for the executive KMP as a percentage of total remuneration.  

Group Managing Director and Group Chief Financial Officer

Total target remuneration

Total maximum remuneration

Fixed Annual Remuneration

33.3%

At-risk Remuneration

66.7%

  KEEPP Performance Shares 33.35%

  KEEPP Deferred Shares

33.35%

Fixed Annual Remuneration

25.0%

At-risk Remuneration

  KEEPP Performance Shares

  KEEPP Deferred Shares

75.0%

37.5%

37.5%

Divisional Managing Directors

Total target remuneration

Total maximum remuneration

Fixed Annual Remuneration

33.3%

At-risk Remuneration

  KEEPP Performance Shares

  KEEPP Deferred Shares

  KEEPP Cash

66.7%

27.5%

27.5%

11.7%

Fixed Annual Remuneration

25.0%

At-risk Remuneration

  KEEPP Performance Shares

  KEEPP Deferred Shares

  KEEPP Cash

75.0%

33.1%

33.1%

8.8%

4.  Overview of Group performance

Five-year statutory results

Financial year ended 30 June (as reported)

Net profit after tax (NPAT) ($m)

NPAT (excluding significant items) ($m)2

Return on equity (ROE) (rolling 12 months) (%)

ROE (excluding significant items) (rolling 12 months) (%)2

Earnings per share (EPS) (cents)

2016  

407

2,353

1.73

9.6

2017

2,873

2,873

12.4

12.4

2018

2019 

20201

1,197

5,510

2,772

2,339

1,697

2,075

5.23

38.73,4

17.83

11.7

19.2

22.1

36.23

254.7

105.83

487.23

150.03

EPS (excluding significant items) (cents)2

209.5

254.7

245.1

206.8

183.4

1 

2 

3 
4 

The Group applied AASB 16 Leases (AASB 16) from 1 July 2019 using the modified retrospective approach. Under this approach, comparatives were not restated. On a 
pre-AASB 16 basis, 2020 NPAT was $1,713 million.
These are considered non-IFRS measures. 2020 post-tax significant items include the gain on sale of Wesfarmers' 10.1 per cent interest in Coles Group Limited (Coles) 
completed in February 2020 (4.9 per cent) and March 2020 (5.2 per cent) of $203 million, gain from revaluation of the retained Coles investment of $154 million and the 
benefit from the finalisation of tax positions on prior year disposals of $83 million, offset by the $298 million non-cash impairment of the Wesfarmers Industrial and Safety 
division, and the $520 million non-cash impairment of the Target brand name and other assets and associated restructuring costs and provisions in the Kmart Group. 
2019 post-tax significant items include $2,264 million gain on demerger of Coles, $645 million gain on sale of Bengalla, $244 million gain on sale of KTAS, $120 million 
gain on sale of Quadrant Energy, partially offset by a $102 million provision for supply chain automation in Coles. 2018 post-tax significant items include impairments of 
$1,323 million relating to BUKI and Target, as well as the $375 million loss on sale of BUKI and $123 million gain on sale of Curragh Coal Mine. 2016 post-tax significant 
items include non-cash impairments of $1,844 million relating to Target and Curragh Coal Mine and $102 million of restructuring costs and provisions to reset Target. The 
Board exercises its discretion in determining whether these significant items are adjusted for when determining remuneration outcomes.
2016, 2018, 2019 and 2020 EPS and ROE include the items outlined in footnote 2 above.
2019 ROE was 17.7 per cent when adjusted to remove the increase in the ROE as a result of the Coles demerger.

Five-year shareholder returns

Financial year ended 30 June (as reported)

Total dividends per share (declared/determined) (cents)

Closing share price ($ as at 30 June)1

Adjusted closing share price ($ as at 30 June)2

Five-year rolling Total Shareholder Return (%, per annum)5

ASX 100 five-year rolling Total Shareholder Return (%, per annum)5

2016  

186

40.10

28.64

10.0

7.7

2017

223

40.12

28.66

11.3

12.1

2018

223

49.36

35.26

9.8

9.8

2019

2020

2783

1704

36.16

44.83

36.16

44.83

9.8

8.9

15.9

5.8

1 
2 

The opening share price on 1 July 2015 was $38.92.
The adjusted closing share price for 2016, 2017 and 2018 excludes the proportional impact of the Coles demerger, based on the volume-weighted average share price 
of Coles Group Limited on the first five days of trading post-listing. The adjusted opening share price on 1 July 2015 was $27.80.
2019 total dividends per share includes the 100 cent special dividend.
2020 total dividends per share includes the 18 cent special dividend reflecting the distribution of profits on the sale of the 10.1 per cent interest in Coles.

3 
4 
5  Source: Bloomberg.

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Directors' report

Remuneration report (audited)

The 2020 financial year has seen continued good performance from Bunnings, Officeworks and the Chemicals, Energy and Fertilisers 
businesses. It has been a disappointing year within the Industrial and Safety businesses, and in May 2020 the company announced a 
non-cash impairment of $298 million of the business, largely related to goodwill. Results in the Kmart Group were mixed. Kmart recorded 
solid earnings despite volatile retail conditions and cost inflation. While Target continued its disciplined cost control, the business recorded 
a loss following lower sales and higher clearance activity due to COVID-19. In May 2020, a number of actions were announced to 
accelerate the growth of Kmart and address the unsustainable performance of Target. As a result, a non-cash impairment of $437 million 
was recognised in relation to the Target brand name and other assets as well as $83 million in associated restructuring costs and 
provisions, primarily in relation to the closure of Target stores and the proposed conversions to Kmart.

The Group reported NPAT of $1,697 million for the 2020 financial year. The result for the year included post-tax significant items relating 
to the $203 million gain on the sale of the 10.1 per cent holding in Coles and one-off gain of $154 million on the revaluation of the retained 
Coles investment, $83 million provision for restructuring costs in Kmart Group, $437 million non-cash impairment of Kmart Group and 
$298 million non-cash impairment in the Industrial and Safety division. Further, the financial results at both a Group and divisional level 
include the full remediation costs following the identification of historical payroll errors.

For executive remuneration purposes, the Board used the reported financial results reduced to exclude the gain on the revaluation of 
the retained Coles investment and to include the additional $120 to $140 million provision for Kmart Group that was announced for the 
2021 financial year, which is in addition to the $83 million provision for the 2020 financial year above. 

5.  Executive KMP remuneration

5.1  Fixed annual remuneration

After consideration, the Board made no changes to fixed remuneration for any member of the executive KMP in the 2020 financial year.

5.2  2020 KEEPP award outcomes

The 2020 KEEPP award outcomes relate to performance from 1 July 2019 to 30 June 2020. The table below sets out specific information 
relating to the actual award outcomes for the 2020 financial year. 

Balance available 
for Deferred 
Shares
($)

Balance available 
for Performance 
Shares
($)

Cash award 
($)

Percentage of  
maximum 2020 KEEPP  
opportunity awarded 
%

Percentage of  
maximum 2020 KEEPP  
opportunity forfeited 
%

Name

R G Scott

A N Gianotti

I Bailey

D A Baxby1

1,387,500

1,387,500

Not eligible

784,688

675,000

496,111

784,688

Not eligible

675,000

496,111

168,750

327,600

525,000

M D Schneider

1,880,192

1,880,192

37.0

38.8

37.5

47.1

95.2

63.0

61.2

62.5

52.9

4.8

1  D A Baxby ceased as a member of the executive KMP on 19 March 2020 and remained eligible to participate in the 2020 KEEPP award, on a pro-rata basis. 

Mr Baxby's outcomes were determined in the ordinary course, subject to the same timing and approval processes. As per all participants, as at 30 June 2020, 
the service and performance conditions to determine vesting of the 2020 KEEPP Deferred Shares and Performance Shares had not yet been finalised. For further 
information, see page 104.

The cash component for the 2020 KEEPP award was paid to eligible divisional managing directors on 24 August 2020. The Deferred 
Shares and Performance Shares are expected to be allocated in December 2020 once performance conditions are set. Details of these 
equity grants will be provided in the 2021 Remuneration Report.

5.3  Details of the 2020 KEEPP annual scorecards

The 2020 KEEPP scorecards comprise financial measures, individual performance objectives relevant to the role of each executive KMP 
and safety measures. Scorecard financial targets are set in relation to the annual budgets and the safety targets are generally based upon 
an improvement on the previous year’s result. Individual performance objectives are customised based upon the participant’s role and 
the specific circumstances and strategic priorities of the Group and/or division, as appropriate. Where the Board considers it appropriate 
to do so, the scorecard targets will be adjusted so that participants are not unfairly advantaged or disadvantaged, for example, following 
portfolio management activity.

Financial measures (60 per cent weighting)
Group NPAT and Group ROE were chosen for the Group Managing Director and the Group Chief Financial Officer because they reflect 
how Wesfarmers uses capital to generate earnings, manages total costs within the business and ultimately generates a profit to 
provide shareholder returns. Group NPAT and ROE performance is assessed following the preparation and audit of the annual financial 
statements. NPAT and ROE are adjusted, where the Board considers it appropriate, to ensure participants are not unfairly advantaged or 
disadvantaged as a result of portfolio management activity.

Divisional financial measures of EBIT, ROC and, where applicable, sales growth, were chosen for the divisional managing directors 
because they are key financial measures directly linked to accountability at a divisional level that align with the Group financial measures 
and drive successful and sustainable financial business outcomes. Divisional performance is also assessed following the preparation and 
audit of the annual financial statements. Similar to NPAT and ROE, divisional financial measures are adjusted, where the Board considers it 
appropriate, to ensure participants are not unfairly advantaged or disadvantaged due to portfolio management activity.

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Remuneration report (audited)

Individual performance objectives (30 per cent weighting)
The individual performance objectives are split into two categories, comprising business enhancing objectives with 20 per cent weighting, 
and sustainability objectives, including climate change response, reputation, risk and talent, with 10 per cent weighting. The individual 
performance objectives were chosen because they are key areas in enabling the Group to achieve its primary objective of generating 
satisfactory returns to shareholders over the long term. Focusing on the strategic priorities set as objectives within the KEEPP scorecards 
will enable our divisions to retain and improve their leading positions in their respective markets as well as generating long-term growth. 
Progress against the individual performance objectives is assessed by the Board following a review of performance against the individual 
performance objectives by the Group Managing Director or Chairman, as appropriate, as part of the performance review cycle. 

Business enhancing objectives and strategies are designed to maximise business and growth opportunities over the long term, with a 
strong focus on digital and data capabilities and channels. For businesses undergoing a turnaround, the business enhancing objectives 
focus on key milestones. Examples of business enhancing objectives include assessing growth and investment opportunities, deepening 
digital and data analytics capability with demonstrated outcomes and operational optimisation projects.

Sustainability objectives provide a focus on the Group’s licence to operate and include several interrelated areas, for example, Group-wide 
sustainability initiatives such as emissions reduction targets and operational risk controls, including cyber security. Diversity, including 
gender balance, remains a focus as Wesfarmers recognises the importance and value of diverse teams throughout its businesses. 

Safety (10 per cent weighting)
Safety performance is measured through the total recordable injury frequency rate (TRIFR) at the Group or divisional level, as relevant to 
the executive KMP, and was chosen to reflect the Group's relentless focus on providing safe workplaces for all team members, in addition 
to the priority placed on the health and safety of the Group's customers and the community. TRIFR performance is assessed following 
completion of the annual sustainability assurance process.

2020 KEEPP scorecard

2020 KEEPP scorecard  
assessment

+

Consideration of  
other factors

=

Outcome and  
delivery

Financial measures
(60% of target)

Individual performance 
objectives (30% of target)
Safety (10% of target)

Group Managing Director 
Group Chief Financial Officer

•  Group NPAT and ROE

Individual performance 
objectives specific to the role 
of each executive KMP:

•  Business enhancing
•  Sustainability including 

climate change response, 
reputation, risk and talent

Safety:

•  Remuneration Committee 
and Board, with input 
from the Audit and Risk 
Committee, evaluation 
of each executive 
KMP’s performance and 
behaviours, including 
whether any modifiers 
should apply to the award

•  External environment and 

•  Group or divisional TRIFR

impact

Threshold performance for 
TRIFR is generally set based 
on the previous year's result.

•  The Board considers 

whether the outcome is 
fair and reasonable, not 
inappropriate or simply 
formulaic 

Final approved KEEPP 
outcomes are delivered as 
follows:

Group Managing Director 
Group Chief Financial Officer

•  Deferred Shares
•  Performance Shares

Divisional managing 
directors

•  Up to 35% of FAR in cash

After cash, if any

•  Deferred Shares
•  Performance Shares

Threshold performance is 
required for both Group NPAT 
and ROE before any award 
is made is respect of the 
financial measures.

Divisional managing 
directors

•  Divisional EBIT and ROC
•  Divisional sales growth      

- retail only

Threshold performance is 
required for both divisional 
EBIT and ROC before any 
award is made in respect of 
these measures. 

Threshold EBIT performance is 
also required before any award 
is made in respect of sales 
growth (where applicable).

In assessing performance against the scorecards, the Board considers the behaviours demonstrated by each executive KMP and, if the 
Board considers it appropriate, the outcome is reduced or modified. This includes, for example, behaviours in relation to risk management 
and demonstration of appropriate ethics, values and culture, any actions negatively impacting the Group's reputation, and team member 
safety and wellbeing. Further, the Board considers whether the calculated outcome is fair and reasonable, and may decrease or increase 
the outcome where appropriate.

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Directors' report

Remuneration report (audited)

The results of the performance against the annual scorecard and final outcome for each of the executive KMP for the 2020 KEEPP 
allocation are outlined below and on the following pages. Financial targets and outcomes are presented on a pre-AASB 16 basis.

Rob Scott – Group Managing Director, Wesfarmers Limited

2020 Performance highlights

Given the unique and challenging circumstances arising from the Australian bushfires and COVID-19, although not contemplated when the 
original scorecard objectives were set, the Board heavily weighted its assessment of Mr Scott’s performance and leadership throughout these 
crises when assessing the overall scorecard outcome specifically with regard to his business enhancing and sustainability objectives.

Financial (60% weighting)

Mr Scott's financial targets were:

•  Group NPAT: $1,896.7m
•  Group ROE: 17.9%

Outcome: 0% of FAR (Maximum opportunity: 180% of FAR)

Threshold performance for the Group financial measures was set at 92.5% of target and maximum performance achieved at 110% of target.

•  The Group achieved reported Group NPAT of $1,713m and reported ROE of 17.1%.

•  The Board excluded the gain on the revaluation of the retained Coles investment from the financial results for the purposes of calculating 
remuneration outcomes and included the additional provisions for Kmart Group for the 2021 financial year. The adjusted Group NPAT and 
ROE were below threshold.

•  As a result, Mr Scott's 2020 KEEPP outcome on financial measures was 0%.

•  The Group NPAT and ROE targets were adjusted to reflect the removal of associated profits from the Group’s 10.1% interest in Coles 

following the selldowns in February and March, and for earnings associated with the acquisitions of Kidman and Catch during the year.

•  While the financial targets, namely Group NPAT and ROE set in May 2019 have not been achieved, the tough and unpredictable external 

environment added a strong degree of stretch to these but the Board determined it was not appropriate to make any adjustments to these 
targets as a result of these external factors.

• 

In spite of the severity of the external challenges presented throughout the 2020 financial year, the Board is very pleased with Mr Scott's 
performance in driving the overall financial results for the Group. 

Safety (10% weighting)

Group TRIFR target: 12.21

•  The Group TRIFR result was 10.39.

Outcome: 30% of FAR (Maximum opportunity: 30% of FAR)

•  Through a continued focus on safety across the Group, 23.0% improvement on last year's TRIFR was achieved. This is particularly 

pleasing as it was achieved in the context of dealing with the changes in operating model required to operate in line with COVID-safe 
requirements. The divisions continue to focus on training, awareness and improving safety processes.

Business enhancing (20% weighting)

Outcome: 53% of FAR (Maximum opportunity: 60% of FAR)

Mr Scott was set a number of business enhancing objectives for the performance period, each of which has been individually assessed by 
the Board, with most assessed as being at least in line with the Board’s expectation. In addition, and as noted above, the Board considered 
and placed more weight upon Mr Scott's response to the Australian bushfires and COVID-19 from a business enhancing perspective. The 
Board rated Mr Scott's performance at the highest level based on the Group's response and performance throughout these crises.

•  Business growth: The Board assessed Mr Scott against a number of business growth objectives such as the portfolio management 

opportunities and sales growth across the Group, for example, the acquisition of Catch and the significant growth during the year. The 
Board assessed Mr Scott as performing either in line with or exceeding their expectations for these objectives.

•  Data and digital, including the flybuys joint venture: The Board was very pleased with Mr Scott’s delivery of the Group’s digital 

initiatives rating his progress as above expectation on these objectives, for example, the Group’s e-commerce capacity and capability 
adapted with agility and speed in relation to the COVID-19 environment. In addition, a number of new flybuys initiatives were launched 
during the year.

•  Turnaround / newly acquired businesses: As noted above the Board is pleased with the good progress of Catch. The Board assessed 
the Group’s progress in relation to its turnaround businesses as below their expectation although noting they endorsed the changes 
announced in May 2020 in relation to Kmart Group.

Sustainability (10% weighting)

Outcome: 28% of FAR (Maximum opportunity: 30% of FAR)

Mr Scott’s progress in relation to his sustainability performance objectives was assessed as being in line with Board expectation and his 
progress in relation to the Group’s emissions reduction being assessed as significantly exceeding expectation. As per the business enhancing 
objective, the Board highly commends Mr Scott's performance and the actions taken across the Group to protect and support stakeholders 
(investors, team members, customers, suppliers and the wider community) as a result of the Australian bushfires and COVID-19.

2020 KEEPP outcome

Scorecard measure

Threshold 
not met

Threshold met 
or exceeded

Target met 
or exceeded

Maximum 
achieved

Financial

Safety

Business enhancing 

Sustainability

102

 Wesfarmers 2020 Annual Report

The Board firmly believes the outcome of 
Mr Scott's 2020 KEEPP scorecard aligns with 
shareholder and other stakeholder experience 
over the year, especially when considering 
the speed and agility Mr Scott demonstrated 
in response to the significant external events 
throughout the 2020 financial year.

Mr Scott’s total 2020 KEEPP outcome will be 
allocated as:

•  $1,387,500 in Deferred Shares

•  $1,387,500 in Performance Shares

Remuneration report (audited)

Anthony Gianotti – Group Chief Financial Officer, Wesfarmers Limited

2020 Performance highlights

As Group Chief Financial Officer, Mr Gianotti’s Group financial and safety measures and outcomes are the same as those of the 
Group Managing Director. 

•  Mr Gianotti has had a very successful year with demonstrated strong performance, especially in relation to the Group’s response to 

COVID-19. During the year Mr Gianotti also assumed direct oversight of the Industrial and Safety businesses.

•  Business enhancing: During the 2020 financial year, Mr Gianotti has delivered very positive outcomes in relation to the balance sheet, 

capital management, debt management, credit ratings and cash management. Mr Gianotti successfully drove and coordinated the Group’s 
COVID-19 financial analysis and scenario planning to allow the Group to navigate through and respond at pace to the rapidly evolving 
circumstances across multiple jurisdictions and industries. Although the equity market environment may not have been conducive to 
undertaking major investments, Mr Gianotti has led the Business Development teams in undertaking major commercial projects.

•  Sustainability: Mr Gianotti has continued to have an active role in talent management and the upskilling of commercial, finance and risk 

roles across the Group in addition to driving strategic initiatives across the Group. Mr Gianotti has also continued the positive engagement 
with external agencies and providers to support the Group’s capital structure.

2020 KEEPP outcome

Scorecard measure Weighting 

Financial

Safety

Business enhancing 

Sustainability

(%)

60

10

20

10

Threshold 
not met

Threshold met 
or exceeded

Target met 
or exceeded

Maximum 
achieved

Mr Gianotti's total 2020 KEEPP outcome 
will be allocated as:

•  $784,688 in Deferred Shares

•  $784,688 in Performance Shares

Ian Bailey – Managing Director, Kmart Group

2020 Performance highlights

Mr Bailey's financial targets were set in relation to achievement of Kmart Group EBIT and ROC and Kmart comparable sales growth. Threshold 
performance for the EBIT and ROC financial measures was set at 95% of target and maximum performance achieved at 105% of target. 

• 

It was a mixed result for the businesses within Kmart Group throughout the year, with strong operational and financial performance by 
Kmart and Catch but lower than expected performance within Target.

•  The significant items include the non-cash impairment in relation to Kmart Group and the restructuring costs and provisions, primarily in 
relation to Target store closures, as announced in May 2020. Inclusive of significant items, Kmart Group achieved EBIT of ($220.8m) and 
ROC of (11.2%), both of which were below threshold and more than 15% below target.

•  Kmart achieved comparable sales growth of 4.3%, which was more than 15% above the target. This measure was subject to an EBIT gate 
which was not achieved. Sales growth for the Target brand was excluded from Mr Bailey’s 2020 KEEPP scorecard in recognition of the 
ongoing Target review. 

•  As a result, Mr Bailey's 2020 KEEPP outcome on financial measures was 0%.

•  Through a continued focus on safety, and noting the challenges posed by COVID-19, the Kmart Group TRIFR result (excluding Catch) was 

13.13, an improvement of 32.3% on last year.

•  Mr Bailey has demonstrated strong leadership throughout the year despite the significant challenges.

•  Business enhancing: Kmart Group delivered strong operational improvements particularly in the period prior to COVID-19. Positive 

progress was also made in digitisation and technological advancement along with a strong focus on risk controls. The acquisition of Catch 
has seen positive results throughout the year including the implementation of a number of customer-driven initiatives to leverage the 
Wesfarmers Group, including offering Click and Collect in some Target stores and recently introducing Target to its marketplace. Mr Bailey 
was instrumental in the detailed strategic review of Target and good progress has been made on executing the decisions including agreeing 
the terms for the conversion of 27 Target stores to Kmart stores and completing the first phase of restructuring the Target store support 
office.

•  Sustainability: Kmart Group continued its progress in emissions reduction, gender balance, Indigenous employment and team member 

engagement notwithstanding the significant external events.

2020 KEEPP outcome

Scorecard measure Weighting 

Financial

Safety

Business enhancing 

Sustainability

(%)

60

10

20

10

Threshold 
not met

Threshold met 
or exceeded

Target met 
or exceeded

Maximum 
achieved

Mr Bailey’s total 2020 KEEPP outcome will 
be allocated as:

•  $168,750 in cash

•  $675,000 in Deferred Shares

•  $675,000 in Performance Shares

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

Michael Schneider – Managing Director, Bunnings Group

2020 Performance highlights

Mr Schneider's financial targets were set in relation to achievement of Bunnings Group EBIT, ROC and total sales growth. Threshold 
performance for the EBIT and ROC financial measures was set at 95% of target and maximum performance achieved at 105% of target. 

•  Strong earnings and sales growth achieved in Bunnings demonstrated the resilience of its operating model and ability to adapt to the 

changing needs of customers during the year. Bunnings Group achieved EBIT of $1,851.9m, which was between 10% and 15% above 
target and ROC of 61.8%, which was more than 15% above the target. This result was delivered after absorbing additional costs 
associated with the response to the bushfires and COVID-19, including the costs incurred as a result of trading restrictions in New Zealand, 
together with the permanent closure of seven New Zealand stores, higher than budgeted expenditure to accelerate the progress of data 
and digital initiatives and additional incentive payments to store team members.

•  Total sales growth (including trade centres) was 13.9%, which was more than 15% above the target. 

•  As a result, the maximum 2020 KEEPP outcome on financial measures was achieved by Mr Schneider. 

•  Through a continued focus on safety, the Bunnings Group TRIFR result was 10.26, an improvement of 8.3% on last year. Bunnings ensured 
that it was able to provide a safe and convenient offer for consumer and trade customers, as well as a safe environment for the Bunnings 
team, especially in response to COVID-19.

• 

In its assessment, the Board considered the financial performance of Bunnings, including the periods both pre and during COVID-19. The 
Board determined the outcome for Mr Schneider was a fair reflection of performance across the full year, recognising Mr Schneider has 
provided very strong leadership to the Bunnings team over an incredibly challenging year, in turn providing support to the wider community.

•  Business enhancing: Under Mr Schneider’s leadership, Bunnings continued to execute its strategic agenda, accelerated the development 
of its digital offer during the period and introduced a number of initiatives to increase the convenience of its offer and enhance the customer 
experience both in-store and online. The rollout of Click and Deliver was completed, and the New Zealand e-commerce platform was 
launched ahead of schedule. In addition, Mr Schneider has continued to identify external growth opportunities for the business, for example 
the acquisition of Adelaide Tools.

•  Sustainability: Bunnings continued to demonstrate improvements in gender balance and Indigenous employment and is on track to 
achieve the emissions reduction target in 2025. Bunnings was recognised as the most trusted Brand in Australia as at May 2020.

2020 KEEPP outcome

Scorecard measure Weighting 

Financial

Safety

Business enhancing 

Sustainability

(%)

60

10

20

10

Threshold 
not met

Threshold met 
or exceeded

Target met 
or exceeded

Maximum 
achieved

Mr Schneider's total 2020 KEEPP outcome 
will be allocated as:

•  $525,000 in cash

•  $1,880,192 in Deferred Shares

•  $1,880,192 in Performance Shares

David Baxby – Managing Director, Wesfarmers Industrials (to 19 March 2020)

2020 Performance highlights

Mr Baxby had individual financial targets set in relation to Chemicals, Energy and Fertilisers (WesCEF) EBIT and ROC (40% weighting) and 
Industrial and Safety (WIS) EBIT and ROC (20% weighting). Threshold performance for the financial measures was set at 92.5% of target and 
maximum performance achieved at 110% of target.

•  The 2020 financial year saw continued solid performance from the WesCEF businesses. The performance of the WIS businesses was 

below expectations primarily due to the disappointing performance of Blackwoods in the first half of the year and lower customer demand 
in Workwear Group during the second half primarily due to the impact of COVID-19. In May 2020, the company announced a non-cash 
impairment of $298 million of the WIS business, largely related to goodwill. 

•  WesCEF achieved EBIT of $392.9m and ROC of 20.2%, both of which were between 0% and 5% above target.

• 

Inclusive of significant items, WIS achieved EBIT of ($270.6m) and ROC of (18.7%), both of which were more than 15% below target.

•  No financial thresholds in the KEEPP scorecard were met for WIS and therefore no award was made to Mr Baxby on these measures. 

For WesCEF, Mr Baxby received an above target outcome on the financial measures.

•  Through a continued focus on safety, and noting the challenges posed by COVID-19, the overall Industrials divisional TRIFR result was 

4.30, an improvement of 29.4% on last year.

•  Business enhancing: Good progress was made in establishing the Covalent joint venture team. Progress with the business turnaround of 

Blackwoods, particularly with respect to the ERP project, was assessed as below threshold.

•  Sustainability: Emissions reductions continue to be on track to achieve the long-term target and other objectives relating to gender 

balance and Indigenous employment were assessed as above threshold.

2020 KEEPP outcome

Scorecard measure Weighting 

Financial

Safety

Business enhancing 

Sustainability

(%)

60

10

20

10

Threshold 
not met

Threshold met 
or exceeded

Target met 
or exceeded

Maximum 
achieved

(WIS)

(WesCEF)

Mr Baxby's 2020 KEEPP has been 
pro-rated to reflect his time in role, from 
1 July 2019 to 19 March 2020.

Mr Baxby’s total 2020 KEEPP outcome will 
be allocated as:

•  $327,600 in cash

•  $496,111 in Deferred Shares

•  $496,111 in Performance Shares

104

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Remuneration report (audited)

5.4  Additional Performance-tested Shares

The Board is committed to demonstrating positive results for shareholders in relation to the decision to substantially reduce the size of the 
Target network and invest to convert many of its stores to Kmart stores which are expected to perform more strongly. The restructuring 
costs and provisions, along with the one-off costs to be incurred in the 2021 financial year, impacted the 2020 KEEPP awards related to 
the Group and Kmart Group financial results. The Board considers a material component of these are more in the nature of an investment 
and will be substantially value-creating for shareholders if executed successfully. As a result, after year-end, the Board has approved 
an additional grant of Performance-tested Shares, separate to the 2020 KEEPP awards, for the Group Managing Director, the Group 
Chief Financial Officer and the Managing Director, Kmart Group. The Performance-tested Shares will only vest to the extent that the 
level of store profit for the stores converted to Kmart is achieved without exceeding the capital expenditure budget, relative to the 
Board-approved proposal. 

These shares are expected to be allocated in December 2020, with details to be provided in the 2021 Remuneration Report.

Name

R G Scott

A N Gianotti

I Bailey

To be allocated in Performance-tested Shares

% of FAR

50.0

50.0

75.0

($)

1,250,000

675,000

1,012,500

5.5  Details of the 2019 KEEPP equity

As presented in the 2019 Remuneration Report, the 2019 KEEPP awards were delivered to executives during the 2020 financial year. 

The 2019 KEEPP Deferred Shares and Performance Shares were granted on 25 October 2019 for the Group Chief Financial Officer 
and the divisional managing directors, and on 14 November 2019 for the Group Managing Director, with any cash component paid on 
29 August 2019. Approval from Wesfarmers shareholders for the issuance of these shares to the Group Managing Director was obtained 
under listing rule 10.14 at the 2019 Annual General Meeting.

The terms applicable to the grant of Deferred Shares and Performance Shares for the 2019 KEEPP are set out on the following pages. 
Details of prior year grants are set out in the Remuneration Report for the relevant year. 

(a)  Details of the 2019 KEEPP allocations made during the 2020 financial year

The 2019 KEEPP Deferred Shares and Performance Shares set out below were delivered to the executive KMP during the 2020 financial 
year. The 2019 KEEPP outcomes were presented in section 4.2(d) of the 2019 Remuneration Report, including the percentage of the 
2019 KEEPP award opportunity that was forfeited.

Name

R G Scott

A N Gianotti

I Bailey

D A Baxby5

M D Schneider

Deferred Shares 
allocated (subject to 
a five- and six-year 
restriction from 
trading)1, 3

Performance Shares 
allocated (vesting 
subject to performance 
conditions over a four-year 
performance period)2, 3

Fair value of 
Deferred Shares 
at grant date4
 ($)

Fair value of 
Performance Shares
at grant date4
 ($)

79,995

44,754

17,296

34,977

31,016

79,995

44,754

17,296

34,977

31,016

3,292,594

1,837,152

710,001

1,435,806

1,273,207

2,674,393

1,484,290

596,366

1,206,000

1,069,432

1 

2

3

4

The 2019 KEEPP Deferred Shares were granted on 14 November 2019 for R G Scott and 25 October 2019 for the remaining executive KMP and are still subject to 
restrictions. No 2019 KEEPP Deferred Shares vested or were forfeited during the reporting period.

The 2019 KEEPP Performance Shares were granted on 14 November 2019 for R G Scott and 25 October 2019 for the remaining executive KMP and are still subject to 
performance conditions until 30 June 2023. Accordingly, no 2019 KEEPP Performance Shares vested or were forfeited during the reporting period.

The number of Deferred Shares and Performance Shares allocated was determined using the face value of Wesfarmers shares, based upon the 10-day VWAP of 
Wesfarmers shares over the period immediately following the full-year results announcement in August 2019 (i.e. 28 August – 10 September 2019) being $39.025375. 

For accounting purposes, the fair value at grant date is shown above, in accordance with AASB 2 Share-Based Payment. The Performance Shares subject to market 
conditions (rTSR condition) have been independently valued using the Monte Carlo simulation using the Black-Scholes framework. The Deferred Shares and the 
Performance Shares subject to non-market conditions (e.g. divisional EBIT and ROC) have been valued with reference to the Wesfarmers share price on grant date. 
For R G Scott, the value per Performance Share for the rTSR performance condition is $28.28 and the value per Deferred Share and per Performance Share subject to 
the portfolio management and investment outcomes condition and other strategic conditions is $41.16, valued as at 14 November 2019 following approval of the grant 
at the Wesfarmers 2019 Annual General Meeting. For all other KEEPP participants the value per Performance Share for the rTSR performance condition is $27.91 and 
the value per Deferred Share and per Performance Share subject to the portfolio management and investment outcomes condition and other strategic conditions or 
the divisional EBIT and ROC condition is $41.05, valued as at 25 October 2019. The fair value at the grant date represents the maximum possible total fair value of the 
shares. The minimum value of unvested shares is nil.

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Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

(b)  2019 Deferred Shares 

Once the amount of Deferred Shares to be granted was determined following the assessment of the 2019 KEEPP scorecard, the Deferred 
Shares did not have further performance conditions applied but did have a 12-month service condition (the forfeiture period) from the date 
they were allocated to participants and continue to be subject to trading restrictions as outlined below. 

2019 KEEPP Deferred Shares

12-month 
performance 
period

50% of Deferred Shares are restricted from trading for six years

50% of Deferred Shares are restricted from trading for five years

June 2019

2020

2021

2022

2023

2024

2025

Deferred Shares 
allocated in 
December 2019

Forfeiture 
period ends in 
December 2020

Restriction 
lifts on 50% of 
Deferred Shares 
in August 2024

Restriction 
lifts on 50% of 
Deferred Shares 
in August 2025

The 2019 Deferred Shares carry both dividend and voting rights. Dividends will be escrowed until the end of the 12-month forfeiture period 
and thereafter be paid to the executive KMP. If Deferred Shares are forfeited during the 12-month forfeiture period, the executive KMP 
is not entitled to the escrowed dividends. During the forfeiture period, a portion of the escrowed dividend amounts will be paid to the 
executive KMP to satisfy their tax liability (after allowing for the use of the franking credits) on dividends paid in respect of their Deferred 
Shares.

(c)  2019 Performance Shares 

The 2019 Performance Shares have performance conditions over a four-year performance period, from 1 July 2019 to 30 June 2023. The 
performance conditions will be tested shortly after the end of the performance period. Performance Shares will only vest based on the 
extent of the satisfaction of the performance conditions outlined below. Following testing, any Performance Shares that do not vest will be 
forfeited. The conditions applicable to the 2019 Performance Shares are set out below: 

Group Managing Director and Group Chief Financial Officer

Divisional managing directors

Wesfarmers' relative TSR

Portfolio management and 
investment outcomes

Strategic objectives

60%

20%

20%

Wesfarmers' relative TSR

Divisional cumulative EBIT  
and ROC 1

50%

50%

1  Set at a divisional level through annual Corporate 

Planning processes

Assessment of the performance conditions and achievement against the performance conditions will be determined by the Board having 
regard to any matters that it considers relevant.

The table below provides further detail on the performance conditions including how the testing and vesting, if applicable, will occur:

Measure

Detail

Relative total 
shareholder return  
(rTSR)

The rTSR condition measures the performance of an ordinary Wesfarmers share (including the value of any 
dividend and any other shareholder benefits paid during the performance period) against total shareholder return 
performance of a comparator group of companies, comprising the S&P/ASX 100 Index, over the same period. 

TSR performance is independently assessed over the performance period against the constituents of the 
S&P/ASX 100 Index as at the start of the performance period. 

Vesting schedule against rTSR:

Percentile ranking

Percentage of awards vesting

Below the 50th percentile

Equal to the 50th percentile

0% vesting

50% vesting

Between the 50th and 75th percentile

Straight-line vesting between 50% and 100%, i.e. an additional 2% of 
awards vest for each percentile increase

Equal to the 75th percentile or above

100% vesting

Wesfarmers’ rTSR was chosen because it provides a relative external market performance measure having regard to 
Wesfarmers’ ASX 100 peers and ensures all executive KMP are remunerated in relation to Group results.

106

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Remuneration report (audited)

Cumulative EBIT and 
ROC

The cumulative EBIT condition measures the respective division’s profit against its Corporate Plan profit target 
over the four-year performance period, subject to an average ROC gate, calculated using the ROC targets in its 
Corporate Plan.

The cumulative EBIT and average ROC are calculated after the preparation and audit of the financial statements 
following the end of the final year of the performance period and assessed against the targets set at the start of the 
performance period.

Vesting schedule against EBIT and ROC:

 –

 –

50 per cent of the Performance Shares vest if 90 per cent of the cumulative EBIT target is achieved, subject to 
achieving 90 per cent of the average ROC target; and
100 per cent of the Performance Shares vest if 100 per cent of the cumulative EBIT target is achieved, subject to 
achieving 90 per cent of the average ROC target.

Straight-line vesting occurs in between.

Four-year divisional EBIT, subject to average ROC, was chosen to ensure that the remuneration of divisional 
managing directors is directly linked to the achievement of long-term financial returns for the business for which 
they are directly accountable. 

The EBIT and ROC targets will be adjusted, where the Board considers it appropriate to do so, so that participants 
are not unfairly advantaged or disadvantaged due to portfolio management activity.

Wesfarmers portfolio management and investment outcomes were chosen to recognise the criticality of 
decision-making with regards to potential acquisitions, investments and disposals on shareholder value creation.

At the end of the four-year performance period, the Board will consider the performance of the Group Managing 
Director and Group Chief Financial Officer in relation to the acquisition, investment and disposal activities of the 
Group over that period. 

Throughout the performance period, the Board maintains a log of the portfolio management and investment 
decisions and rationale, including the decisions not to proceed with portfolio changes or investments. At the end 
of the performance period, the Board will consider the validity of these decisions from a shareholder value creation 
perspective, with a greater weighting placed upon decisions made in the first year of the performance period.  

Strategic objectives were chosen to reflect the importance placed by the Board on the achievement of non-financial 
outcomes, in addition to financial outcomes, that may, for example, build value for all stakeholders (shareholders, 
customers and team members), support long-term sustainable performance and reinforce the Group's strong 
corporate reputation. The Board considers it important to include strategic objectives as a measure of performance 
over the four-year period as this allows decisions to be made and assessed over the long term, recognising the 
impact of strategic decisions may not be apparent in the short term.

At the end of the four-year performance period the Board will consider the performance of the Group Managing 
Director and Group Chief Financial Officer and assess the achievement of this performance condition in relation to 
their strategic objectives target, such as in relation to talent development, leadership and corporate reputation. 

Wesfarmers’ portfolio 
management and 
investment outcomes

Strategic objectives

Following the assessment of the 2019 KEEPP scorecards and the determination of the amount of Performance Shares to be granted, the 
Performance Shares were allocated in December 2019.

2019 KEEPP Performance Shares

12-month 
performance 
period

Group Managing Director and Group Chief Financial Officer: 
rTSR (60% weighting), portfolio management and investment outcomes 
(20% weighting) and strategic objectives (20% weighting)

Divisional managing directors: 
rTSR (50% weighting) and divisional EBIT and ROC (50% weighting) 

June 2019

2020

2021

2022

2023

2024

4-year 
performance 
period begins     
1 July 2019

Performance 
Shares allocated 
in December 2019

Performance 
period ends and 
conditions tested 
as at 30 June 2023

Board approves 
testing and vesting 
outcome, expected 
to be in August 2023

The 2019 Performance Shares carry both dividend and voting rights. Dividends will be escrowed for the full four-year performance 
period and only paid to the executive KMP to the extent that the underlying shares vest. During the performance period, a portion of the 
escrowed dividend amounts will be paid to the executive KMP to satisfy their tax liability (after allowing for the use of the franking credits) 
on dividends paid in respect of their Performance Shares.

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Directors' report

Remuneration report (audited)

(d)  Further terms of the 2019 KEEPP

The table below sets out further details on other governance requirements under the 2019 KEEPP.

Cessation of 
employment

If an executive KMP ceases employment with Wesfarmers before the end of the forfeiture period, restriction period or 
performance period (as applicable), their entitlement to the shares (if any) will depend on the circumstances of their 
departure. The table below summarises the treatment that will generally apply in different circumstances, subject to 
the Board's discretion to determine a different treatment.

Reason

Deferred Shares

Performance Shares

Resignation

During the forfeiture period (i.e. within 12 months of 
allocation) – the Deferred Shares will be forfeited.

The Performance Shares will be forfeited.

After the forfeiture period has ended – the Deferred Shares 
will remain on foot and subject to the original conditions, 
other than a portion which may be released on termination 
to fund the tax liability on the Deferred Shares (subject to 
any limit under the Corporations Act 2001).

Dismissal by  
the Board, including 
for cause or significant 
underperformance

The Deferred Shares will be forfeited.

The Performance Shares will be forfeited.

Breach of restraint

The Deferred Shares will be forfeited.

The Performance Shares will be forfeited.

All other reasons

The Deferred Shares will remain on foot and subject 
to the original conditions, other than a portion which 
may be released on termination to fund the tax liability 
on the Deferred Shares (subject to any limit under the 
Corporations Act 2001).

The Performance Shares will remain on foot 
and subject to the original conditions.

Following cessation of employment (where Deferred Shares remain on foot):

If, following cessation of employment, the Board determines in good faith that:

 –

 –

the executive KMP has breached any restriction or undertaking owed to the Wesfarmers Group or any compromise 
or arrangement in relation to their cessation of employment; or
the executive KMP’s circumstances have changed making it no longer appropriate for them to retain the benefit 
of their award,

the Board may determine that:

 –
 –

some or all of the executive KMP’s Deferred Shares will be forfeited; and/or
the executive KMP is required to pay or repay as a debt the net proceeds of the sale of shares or dividends 
provided to them.

Change of control

If a change of control event occurs, the Board has broad discretion to determine the treatment of Deferred Shares 
and Performance Shares, having regard to any matter that the Board considers relevant.

Clawback

The terms of the KEEPP allow for the Board to clawback or adjust any incentive awards which were granted, vest 
or may vest, or are released or may be released (as applicable). For example, these powers can be exercised 
as a result of a material misstatement in, or omission from, the financial statements or otherwise as a result of 
fraud, dishonesty or breach of obligations. In such circumstances, the Board may, up to the value of the overpaid 
remuneration, reduce or defer or otherwise require the repayment of any amount paid or payable to the executive 
to ensure no inappropriate benefit is derived. The Board has discretion to adjust any conditions applicable to an 
award, if considered appropriate. 

108

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Remuneration report (audited)

5.6  2016 KEEPP awards that vested during the 2020 financial year

In 2016, eligible executive KMP were invited to receive Deferred Shares and Performance Shares under the 2016 KEEPP. The four-year 
performance period for the 2016 KEEPP Performance Shares ended on 30 June 2020. As explained in the 2019 Remuneration Report, 
the original 2016 KEEPP award was cancelled in 2018 and, following implementation of the demerger of Coles from the Wesfarmers 
Group, replacement awards were allocated in December 2018. Further details of the terms of the 2016 KEEPP are set out in the 
2019 Remuneration Report.

Mr Scott is the only member of the current executive KMP to have participated in the 2016 KEEPP. The 2016 KEEPP award was made 
to Mr Scott in respect of his role as Managing Director, Wesfarmers Industrials and the performance conditions included the financial 
performance of the Industrials division. 

There were two performance conditions measured over the four-year performance period, with 80 per cent weighted to a cumulative EBIT 
condition against the Industrials division's Corporate Plan, subject to an average ROC gate, and the remaining 20 per cent weighted to 
Wesfarmers' TSR relative to the TSR of the constituents of the S&P/ASX 50 Index.

Cumulative EBIT condition

Over the four-year performance period, the Industrials division reported EBIT and ROC of 68.47 per cent and 99.47 per cent above 
the four-year Corporate Plan performance condition respectively, despite the non-cash impairment of the Industrial and Safety division 
announced in May 2020.

Following consideration of the performance of the Industrials division as a whole over this period, the Board approved the full vesting of 
the Performance Shares that were subject to the cumulative EBIT condition.

Relative TSR condition

The Group outperformed the majority of its peers over the performance period with regard to rTSR and was ranked at the 85th percentile 
in the ASX 50. Following consideration, the Board approved the full vesting of the Performance Shares subject to the rTSR condition. 

The table below shows the vesting outcome of the 2016 KEEPP Performance Shares for Mr Scott.

Vesting Condition

Cumulative divisional EBIT 
(80% of the award)

Outcome
(2016-2020)

$2,422.3m

168.47% of target

rTSR (20% of the award)

66.41%

85.1 percentile 
ranking in ASX 50

% of maximum 
opportunity

Total % of 
Performance 
Shares vested

Number of 
Performance 
Shares vested

100%

100%

100%

45,138

5.7  Performance summary for the Group Managing Director

The chart below summarises the performance of the Group since the appointment of Mr Scott as Group Managing Director. In addition, it 
shows his KEEPP outcomes over the same period.

Performance summary for the Group Managing Director

rTSR 
(four-year performance period)
(Percentile ASX 50)

0
1
.
5
8

0
8
.
3
6

0
6
.
6
4

0
1
.
1
3

%

100

80

60

40

20

0

$m

3,000

2,500

2,000

1,500

1,000

500

0

NPAT 
(excluding significant items)1

ROE (R12) 
(excluding significant items)1

3
7
8
,
2

2
7
7
,
2

9
3
3
,
2

1
9
0
,
2

1
.
1
2

2
.
9
1

4
.
2
1

7
.
1
1

%

20

15

10

5

0

FY17

FY18

FY19

FY20

FY17

FY18

FY19

FY202

FY17

FY18

FY19

FY202

1  NPAT (excluding significant items) and ROE (excluding significant items) are considered non-IFRS measures.
2 

FY20 NPAT and ROE are presented on a pre-AASB 16 basis.

Summary of KEEPP outcomes for the Group Managing Director

Annual KEEPP scorecard  
(% of maximum opportunity)

Group NPAT and ROE,      
individual performance objectives

Performance measures

FY171

100.0

FY18

84.4

FY19

86.6

Vesting of KEEPP Performance Shares  
(% of award)

rTSR, Divisional EBIT and ROC

First testing of KEEPP Performance Shares 
(four-year performance period)

FY20

37.0

100.0

1 

FY17 scorecard outcome related to Mr Scott's prior divisional roles.

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

5.8  Executive remuneration (statutory presentation)

(a)  Statutory executive KMP remuneration table

In the following table, remuneration outcomes are presented based on the requirements of the Corporations Act 2001 and accounting 
standards (which has the benefit of being readily comparable with other companies) rather than a take-home pay basis (generally being 
cash and benefits and the value of equity received during the financial year). In this regard:

•  The KEEPP cash component is recognised for the year in which it is earned. The KEEPP Deferred Shares are recognised as an 

expense over a 12-month period typically spanning two financial years and the KEEPP Performance Shares are recognised over the 
performance period (four years) based on the assessed value when originally granted to the executive. The value recognised for the 
KEEPP Deferred Shares and Performance Shares may be significantly different to their value if and/or when the incentive vests to the 
executive. Note, as at 30 June 2020, the service and performance conditions to determine vesting of the 2020 KEEPP Deferred Shares 
and Performance Shares had not yet been finalised and therefore the following table does not include the expensing of these grants.

• 

In some circumstances, amounts are recorded as remuneration even when no equity vests to the executive and in other cases there 
can be negative remuneration from equity awards in a given year, for example due to non-vesting. 

In accordance with the accounting standards, the value shown in the statutory table for Mr Baxby under share-based payments includes 
an acceleration of all future 2017, 2018 and 2019 KEEPP-related expensing that would otherwise have been apportioned through to the 
2024 financial year as this equity continues to be held on his behalf in the trust. 

Short-term benefits

Cash 
salary 
($)

KEEPP 
cash5
($)

Non- 
monetary 
benefits6
($)

Long- 
term 
benefits1

Post- 
employment 
benefits2

Share-based 
payments3

Termination 
benefits

Total 

Performance 
related4

Other6
($)

Leave
($)

Super- 
annuation
($)

KEEPP and 
other equity 
($)

Termination 
payments
($)

($)

(%)

Executive director

R G Scott – Group Managing Director, Wesfarmers Limited

2020

2019

2,335,746

-

146,446

24,914

41,666

21,003

5,193,006

2,349,890

250,000

157,169

14,093

41,666

20,531

3,915,183

Senior executives

A N Gianotti – Group Chief Financial Officer, Wesfarmers Limited

2020

2019

1,261,265

-

73,357

24,914

22,500

21,003

2,907,533

1,275,409

135,000

59,311

14,093

22,500

20,531

2,037,622

I Bailey7 – Managing Director, Kmart Group

2020

2019

1,328,196

168,750

888,886

-

3,195

2,119

24,914

22,500

21,804

1,628,270

9,344

14,918

11,114

1,047,297

M D Schneider – Managing Director, Bunnings Group

2020

2019

1,399,256

525,000

82,135

24,914

25,000

21,804

1,695,844

1,389,505

600,000

91,886

14,093

25,000

21,804

2,025,464

Former senior executives

D A Baxby8 – Managing Director, Wesfarmers Industrials

-

-

-

-

-

-

-

-

7,762,781

6,748,532

4,310,572

3,564,466

3,197,629

1,973,678

3,773,953

4,167,752

919,854

327,600

2,296

1,493,178

15,569

15,752

2,507,970

255,789

5,538,008

1,254,469

520,000

3,195

14,093

21,667

20,531

1,429,300

3,263,255

J P Durkan9 – Managing Director, Coles

2019

447,089

687,123

3,567

2,934

7,635

5,133

365,158

G A Russo10 – Chief Executive Officer, Department Stores

2019

605,977

187,027

10,552

4,749

10,390

10,690

167,019

S A Cain11 – Managing Director, Coles

345,795

-

-

2,510

5,936

10,266

-

364,507

7,244,317 1,021,350

307,429

1,592,834

127,235

101,366

13,932,623

255,789 24,582,943

8,557,020 2,379,150

327,799

75,909

149,712

120,600

10,987,043

- 22,597,233

2020

2019

2019

Total

2020

2019

-

-

-

-

1,518,639

69.3

996,404

35.5

66.9

61.7

67.5

61.0

56.2

53.1

58.8

63.0

51.2

59.7

-

-

110

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Remuneration report (audited)

Footnotes to statutory remuneration table on the previous page 
1 
2  Superannuation contributions are made on behalf of the executive KMP in accordance with Wesfarmers’ statutory superannuation obligations. Also included is any part 

Long-term benefits relate to leave entitlements earned during the year.

3 

of the executive KMP’s salary that has been sacrificed into superannuation.
The amounts included in ‘share-based payments’ relate to the KEEPP, WESAP and annual incentive, as applicable – WESAP and annual incentive shares are 
share-based awards received by the executive KMP under other incentive plans prior to commencing as a member of the executive KMP and participating in the KEEPP:
•  The portion of the 2016 KEEPP, 2017 KEEPP and 2018 KEEPP that continue to be expensed in the 2020 financial year based on probability of vesting, as these 
shares are subject to performance and forfeiture conditions, together referred to as the service period. The amounts included for the 2019 KEEPP are detailed in 
section 5.5. 

•  The portion of the 2018 annual incentive shares that continue to be expensed in the 2020 financial year based on probability of vesting, as these shares are subject 

to performance and forfeiture conditions. 

•  The portion of the 2016 and 2017 WESAP shares that continue to be expensed in the 2020 financial year based on probability of vesting, as these shares are subject 

to performance and forfeiture conditions.

•  The expensing for the Deferred Shares and Performance Shares that are yet to be granted under the 2020 KEEPP will be included in the remuneration table in the 

2021 Remuneration Report.

4 

The percentage performance related for the 2020 financial year is the sum of the KEEPP cash and share-based payments divided by the total remuneration, reflecting 
the actual percentage of remuneration at risk for the year. The percentage of total remuneration that consists of KEEPP shares only, being the amount expensed in the 
2020 financial year for the 2016, 2017, 2018 and 2019 KEEPP shares (including the 2016 KEEPP replacement allocation and 2017 KEEPP replacement allocation), as 
applicable, is as follows – R G Scott 66.9 per cent, A N Gianotti 65.7 per cent, I Bailey 36.8 per cent, M D Schneider 42.7 per cent and D A Baxby 45.3 per cent.
5  Cash payments were made in August 2020 to eligible participants in relation to the KEEPP for the 2020 financial year. J P Durkan and G A Russo participated in a 

cash-based performance bonus during the 2019 financial year. 

6  Short-term benefits, ‘non-monetary benefits’, include the cost to the company of providing vehicles, life insurance and travel. Short-term benefits, ‘other’, includes the 

cost of directors and officers liability insurance (see also footnote 8 for additional inclusions for D A Baxby).
I Bailey became a member of the KMP, effective 1 November 2018.

7 
8  On 19 March 2020, following the Wesfarmers Industrials restructure announcement, D A Baxby stepped down as Managing Director and ceased to be a member of the 

KMP. Mr Baxby will remain employed until 19 March 2021 during which time he remains subject to his obligations under his employment contract. In accordance with 
the terms of the offer, Mr Baxby will be entitled to have his unvested 2019 KEEPP Deferred Shares and his unvested 2017, 2018 and 2019 KEEPP Performance Shares 
continue to be restricted in the plan after he leaves the Group, subject to the original terms and conditions (including performance conditions) of the offer. The amount 
shown in share-based payments includes an accelerated expensing of these unvested awards. 
Short-term benefits, ‘other’ for Mr Baxby also includes fixed remuneration to be paid to Mr Baxby until his cessation of employment on 19 March 2021, life insurance 
and his statutory redundancy entitlement, subject to his ongoing employment obligations being met.
Termination bene fi ts for Mr Baxby re fl ect the cost of his attendance at an advanced management program, legal expenses and a redundancy entitlement.
J P Durkan ceased to be a member of the KMP effective 14 September 2018. 

9 
10  G A Russo ceased to be a member of the KMP effective 31 October 2018.
11  S A Cain became a member of the KMP, effective 17 September 2018 and ceased 20 November 2018 following implementation of the Coles demerger scheme. 

(b)  Summary of KEEPP shares that were expensed during the 2020 financial year

The table below sets out details of the KEEPP shares that were expensed during the 2020 financial year. In addition, this table shows the 
KEEPP shares that vested during the year.

Deferred Shares vested 
during the year1

Performance Shares vested 
during the year2

Name

R G Scott

A N Gianotti

Year 

Number

2016 KEEPP

2017 KEEPP

-

-

2018 KEEPP

92,497

2019 KEEPP

2017 KEEPP

-

-

2018 KEEPP

49,948

2019 KEEPP

-

I Bailey

2018 KEEPP

42,854

D A Baxby

M D Schneider

2019 KEEPP

2017 KEEPP

-

-

2018 KEEPP

42,854

2019 KEEPP

2017 KEEPP

-

-

2018 KEEPP

42,527

2019 KEEPP

-

%

-

-

100

-

-

100

-

100

-

-

100

-

-

100

-

Number

45,138

%

100

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

Range that could 
be expensed over 
the remaining 
performance period3
($)

-

0 to 395,533

0 to 1,180,072

0 to 3,232,624

0 to 209,407

0 to 616,951

0 to 1,697,080

0 to 1,173,595

0 to 761,669

-

-

-

0 to 326,503

0 to 1,164,631

0 to 1,265,754

1 

2 

The 2016 Deferred Shares, replaced following the demerger of Coles, vested on 30 June 2019 although these remain subject to a trading restriction until August 2021 
and August 2022 respectively. The 2017 Deferred Shares, replaced following the demerger of Coles, vested on 30 June 2019 although these remain subject to a trading 
restriction until August 2022 and August 2023 respectively. The 2018 Deferred Shares were subject to a 12-month service condition and vested in December 2019, 
although these remain subject to a five- and six-year trading restriction until August 2023 and August 2024 respectively. The 2019 Deferred Shares remain unvested. The 
Deferred Shares are held in trust and can only be transferred to the executive KMP once all trading restrictions and any other conditions are met.
The 2016 Performance Shares were subject to a four-year performance period that ended on 30 June 2020 (see section 5.6 for further information). The 
2017 Performance Shares, 2018 Performance Shares and 2019 Performance Shares will reach the end of the four-year performance period on 30 June 2021, 
30 June 2022 and 30 June 2023 respectively. The Performance Shares are held in trust and can only be transferred to the executive KMP once vested.

3  Should the executive KMP resign prior to vesting, the Deferred Shares and Performance Shares would be forfeited. Accordingly, the minimum value of the unvested 

award would be nil. The value for Mr Baxby is nil because in accordance with the accounting standards, the expensing of his 2017, 2018 and 2019 KEEPP awards has 
been fully accelerated into the 2020 financial year.

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

5.9   Executive KMP share ownership

The Board considers it an important foundation of the Wesfarmers remuneration framework that the executive KMP hold a significant 
number of Wesfarmers shares to encourage them to behave like long-term owners and, as at the date of this report, all current executive 
KMP hold significantly more than their respective FAR in Wesfarmers shares.

The following table sets out the number of shares held directly, indirectly or beneficially by the current and former executive KMP 
(including their related parties).

Balance at 
beginning 
of year1

Allocated 
under 
remuneration 
framework2

Breakdown of balance at year-end

Held in an equity plan

Net 
change3

Balance at 
year-end4

Vested and 
restricted5

Vested and 
unrestricted6

Not  
vested7

Other 
shares8

751,365

304,244

157,406

136,056

205,006

159,990

89,508

34,592

69,954

62,032

-

-

911,355

393,752

(26,295)

165,703

-

206,010

(16,949)

250,089

253,687

108,757

62,730

68,028

103,236

596,438

62,951

338,082

256,635

-

-

-

-

184,771

100,224

102,973

137,982

146,853

-

-

-

62,951

910,661

356,859

Name

R G Scott

A N Gianotti

I Bailey

D A Baxby

M D Schneider

Total

1,554,077

416,076

(43,244)

1,926,909

1 

2 
3 
4 

5 

6 

7 

8 

This number reflects the fully-paid ordinary shares held directly, vested equity under the incentive plans as well as unvested equity under the incentive plans. The 
unvested equity may include the 2016 KEEPP Performance Shares, 2017 KEEPP Performance Shares and 2018 KEEPP Deferred Shares and Performance Shares and 
WESAP and annual incentive shares, as appropriate. WESAP and annual incentive shares are share-based awards received by the executive KMP under other incentive 
plans prior to commencing as KMP and participating in the KEEPP.
This number reflects the equity allocated under the 2019 KEEPP. 
The net change may include changes due to personal trades and forfeited equity.
This number reflects the fully-paid ordinary shares held directly, vested equity under the incentive plans as well as unvested equity under the incentive plans. The 
unvested equity may include the 2017 KEEPP Performance Shares, the 2018 KEEPP Performance Shares and the 2019 KEEPP Deferred Shares and Performance 
Shares and WESAP and annual incentive shares, as appropriate. WESAP and annual incentive shares are share-based awards received by the executive KMP under 
other incentive plans prior to commencing as KMP and participating in the KEEPP. Where an executive KMP has ceased to be a member of the executive KMP 
throughout the year, the balance at year-end reflects the balance of equity as at the date they ceased to be an executive KMP.
The vested and restricted equity includes any share-based awards received by the executive KMP that are now fully vested but remain subject to a restriction within 
the incentive plans. This includes the 2016 KEEPP Deferred Shares, 2017 KEEPP Deferred Shares, 2018 KEEPP Deferred Shares and annual incentive shares as 
appropriate. Annual incentive shares are share-based awards received by the executive KMP under other incentive plans prior to commencing as KMP and participating 
in the KEEPP. For executive KMP who ceased to be a member of the executive KMP during the financial year, the table reflects their equity holding at the date they 
ceased to be KMP.
The vested and unrestricted equity includes any share-based awards received by the executive KMP that are now fully vested and available to be removed from the 
incentive plans upon instruction from the executive KMP. For executive KMP who ceased to be a member of the executive KMP during the financial year, the table 
reflects their equity holding at the date they ceased to be KMP.
The unvested equity includes the 2017 KEEPP Performance Shares, the 2018 KEEPP Performance Shares and the 2019 KEEPP Deferred Shares and Performance 
Shares and WESAP shares, as appropriate. WESAP shares are share-based awards received by the executive KMP under other incentive plans prior to commencing 
as KMP and participating in the KEEPP. For executive KMP who ceased to be a member of the executive KMP during the financial year, the table reflects their equity 
holding at the date they ceased to be KMP.
This number reflects the fully-paid ordinary shares held directly outside of an equity plan by the executive KMP including their related parties. For executive KMP who 
ceased to be a member of the executive KMP during the financial year, the table reflects their equity holding at the date they ceased to be KMP.

5.10 Executive service agreements

The remuneration and other terms of employment for the Group Managing Director, the Group Chief Financial Officer and other 
executive KMP are covered in formal employment contracts. All service agreements are for unlimited duration and may be terminated 
immediately for serious misconduct. All executives are entitled to receive pay in lieu of any accrued but untaken annual and long 
service leave on cessation of employment.

The executive KMP must give a minimum 12 months’ notice should they wish to resign and Wesfarmers must give 12 months’ notice 
should it wish to terminate employment (other than for cause).

The Group Managing Director and the Group Chief Financial Officer may terminate their employment within 30 days of an event giving 
rise to fundamental change. This includes Mr Scott ceasing to be the most senior executive of the Group, a delisting of Wesfarmers or 
a material reduction in role, status or delegated authority.

In addition, and upon further payment (where required), Wesfarmers may invoke a restraint period of up to 12 months following separation, 
preventing the executive KMP from engaging in any business activity with competitors of the Group.

The former Managing Director, Wesfarmers Industrials, Mr Baxby, ceased to be a member of the executive KMP on 19 March 2020 
when he stepped down from the role and is expected to cease employment with the Group in the 2021 financial year. Mr Baxby’s leaving 
entitlements are expected to be in line with his contractual arrangements and his 2017, 2018, 2019 and 2020 KEEPP allocations will be 
left on foot and subject to the original conditions. The Board may approve a portion of Mr Baxby's KEEPP Deferred Shares be released on 
cessation to fund the tax liability arising at that time on the Deferred Shares, subject to any limit under the Corporations Act 2001.

112

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Remuneration report (audited)

Non-executive director remuneration

6.  Non-executive directors

6.1   Overview of non-executive director remuneration policy and arrangements

Our policy objectives and guiding principles

1

2

To be market competitive: aim to set fees at a level competitive with non-executive directors in comparator companies

To safeguard and preserve independence: to not include any performance-related element in remuneration

Aggregate fees approved by shareholders

The current maximum aggregate fee pool for non-executive directors of $3,600,000 was approved by shareholders at the 2015 Annual 
General Meeting. Fees paid to Wesfarmers’ non-executive directors for membership of Wesfarmers’ divisional boards, in addition to 
Wesfarmers’ Board and committee fees and superannuation contributions made on behalf of the non-executive directors in accordance 
with Wesfarmers’ statutory superannuation obligations, are included in this aggregate fee pool.

Regular reviews of remuneration

The Board periodically reviews the level of fees paid to the non-executive directors, including consideration of external benchmarking. 

The main Board fees have remained unchanged since 1 January 2017. In December 2019 and on appointment of the new Audit and 
Risk Committee Chairman, the Board reviewed the fees payable to the non-executive directors having regard to benchmark data, market 
position and relative fees for Committee work. Following this review, the Board realigned the fee payable to the Audit and Risk Committee 
Chairman and approved an increase in fees payable to the Remuneration Committee Chairman and members. Details of these fee 
changes are set out below.

6.2  Non-executive director fees and other benefits

The fees shown in the table below (inclusive of superannuation) took effect from 1 January 2020. The 2019 fees are included for 
comparison. 

Fees/benefits

Description

Board fees

Main Board1

Chairman – M A Chaney
Members – all non-executive directors

Committee fees

Audit and Risk Committee

Chairman – S L Warburton2
Members – D L Smith-Gander, J A Westacott, S W English

Remuneration Committee

Chairman – M Roche

Members – M A Chaney3, W G Osborn, V M Wallace

Superannuation

Other Group fees

Made to the Mercer Tailored Super Plan or another regulated superannuation 
fund. An amount is deducted from gross fees to meet statutory 
superannuation obligations.

Non-executive directors are paid additional fees, where applicable, for 
participation on the boards of Wesfarmers’ related bodies corporate (for 
example BWP Management Limited). None of the current non-executive 
directors participate on the boards of Wesfarmers’ related bodies corporate.

2020 ($)

2019 ($)

770,000
230,000

770,000
230,000

70,000
40,000

60,000
30,000

80,000
40,000

52,000
26,000

1  A Howarth retired from the Board and as Chairman of the Audit and Risk Committee on 14 November 2019.
2  S L Warburton was appointed to the Board of Wesfarmers Limited and as a member of the Audit and Risk Committee, effective 1 August 2019 and became Chairman of 

the Audit and Risk Committee on 14 November 2019.
The Chairman of the Board does not receive a separate fee for membership of any of the Board’s committees.

3 

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Directors' report

Remuneration report (audited)

6.3  Non-executive director remuneration

The fees paid or payable to the non-executive directors in relation to the 2020 financial year are set out below:

Short-term 
benef its

Fees –  
Wesfarmers  
Group
($)

Fees –  
Wesfarmers 
Limited
($)

Post-employment 
benef its

Total

Other 
benef its1 
($)

Superannuation2
($)

Non-executive directors

M A Chaney

S W English

W G Osborn

M Roche3

D L Smith-Gander

V M Wallace

S L Warburton4

J A Westacott

Former non-executive directors

A J Howarth5

P M Bassat6

J P Graham7

Total

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2020

2019

2020

2019

2019

2019

2020

2019

748,997

749,469

248,997

249,469

236,997

261,469

275,499

85,897

259,499

249,469

247,499

235,469

247,870

259,499

249,469

105,562

289,469

87,827

21,333

2,630,419

2,479,340

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

39,353

105,500

-

-

39,353

105,500

28,459

15,161

24,914

14,093

24,914

14,093

24,914

5,097

24,914

14,093

24,914

14,093

22,804

24,914

14,093

17,810

14,093

6,412

888

218,557

112,116

($)

798,459

785,161

294,914

284,093

282,914

296,093

310,914

98,964

294,914

284,093

282,914

270,093

290,701

294,914

284,093

172,798

429,593

102,412

22,221

21,003

20,531

21,003

20,531

21,003

20,531

10,501

7,970

10,501

20,531

10,501

20,531

20,027

10,501

20,531

10,073

20,531

8,173

-

135,113

3,023,442

159,860

2,856,816

1  Short-term benefits, ‘other benefits’, includes the cost of directors and officers liability insurance and the cost of other business-related expenses.
2  Superannuation contributions are made on behalf of non-executive directors in accordance with Wesfarmers’ statutory superannuation obligations, except where 

approval was obtained from the Australian Taxation Office by individual non-executive directors to be exempt from making superannuation contributions due to 
obligations being met by other employers. Also included is any part of a non-executive director’s fees that have been sacrificed into superannuation. 

3  M Roche was appointed as a non-executive director on 19 February 2019.
4  S L Warburton was appointed as a non-executive director on 1 August 2019.
5  A J Howarth retired from the Board, effective 14 November 2019. Mr Howarth received fees for participation on the board of BWP Management Limited. 
6  P M Bassat retired from the Board, effective 15 November 2018.
7 

J P Graham’s fees were paid to Gresham Partners Group Limited for participation on the Board of Wesfarmers Limited. Mr Graham retired from the Board, effective 
23 July 2018.

114

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Remuneration report (audited)

6.4  Non-executive director share ownership

The Board considers it an important foundation of the Wesfarmers remuneration framework that the directors hold a significant number of 
Wesfarmers shares to encourage them to behave like long-term owners. Directors are required to hold a minimum of 1,000 Wesfarmers 
shares within two months of appointment and are also expected to increase their holdings in Wesfarmers shares to the equivalent of their 
annual main board fee within a five-year period of appointment.

The following table sets out the number of shares held directly, indirectly or beneficially by directors and former directors (including their 
related parties).

Name

M A Chaney

S W English

A J Howarth4

W G Osborn

M Roche

D L Smith-Gander

V M Wallace

S L Warburton5

J A Westacott

Total

Balance at beginning of year1

Net change2

Balance at year-end3

87,597

1,082

19,960

14,728

2,000

12,045

13,483

-

5,493

156,388

-

1,214

337

-

1,000

-

500

7,036

1,295

11,382

87,597

2,296

20,297

14,728

3,000

12,045

13,983

7,036

6,788

167,770

1 
2 
3 

This number reflects the fully-paid ordinary shares held directly as well as vested and unrestricted equity under plans. 
The net change includes changes due to personal trades.
This number reflects the fully-paid ordinary shares held directly as well as vested and unrestricted equity under plans. Where a director ceased to be a director 
throughout the year, the balance at year-end reflects the balance of equity as at the date they ceased to be a director.

4  A J Howarth retired from the Board and ceased to be a member of the KMP, effective 14 November 2019.
5 

The information for S L Warburton reflects her time since appointment to the Board and as a member of the KMP, from 1 August 2019.

Wesfarmers 2020 Annual Report

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Directors' report

Remuneration report (audited)

Other remuneration information

7.  Further information on remuneration

7.1  Share trading restrictions

Wesfarmers’ Securities Trading Policy reflects the Corporations Act 2001 prohibition on KMP and their closely related parties entering into 
any arrangement that would have the effect of limiting the KMP’s exposure to risk relating to an element of their remuneration that remains 
subject to restrictions on disposal.

Wesfarmers directors, the Wesfarmers Leadership Team, and certain members of their immediate family and controlled entities are also 
required to obtain clearance from the Wesfarmers Company Secretary for the sale, purchase or transfer of Wesfarmers and BWP Trust 
securities and for short selling, short-term trading, security interests, margin loans and hedging relating to Wesfarmers and BWP Trust 
securities. The Wesfarmers Company Secretary refers all requests for clearance to at least two members of the Disclosure Committee. 
Clearance from the Chairman is also required for requests from Wesfarmers directors. Clearance cannot be requested for dealings that are 
subject to the Corporations Act 2001 prohibition referred to above.

The policy is available in the corporate governance section of the company’s website at www.wesfarmers.com.au/cg. Breaches of the 
policy are subject to disciplinary action, which may include termination of employment.

7.2   Other transactions and balances with key management personnel

From time to time, directors of the company or its controlled entities, or their director-related entities, may purchase goods or services 
from the Group. These purchases are on the same terms and conditions as those entered into by other Group team members or 
customers and are minor or domestic in nature.

There were no loans made during the year, or remaining unsettled at 30 June 2020, between Wesfarmers and its KMP and/or their related 
parties.

8. 

Independent audit of remuneration report

The remuneration report has been audited by Ernst & Young. Please see page 171 of this annual report for Ernst & Young’s report on the 
remuneration report. 

The directors’ report, including the remuneration report, is signed in accordance with a resolution of the directors of Wesfarmers Limited.

M A Chaney AO

Chairman

Perth
23 September 2020

R G Scott

Managing Director

116

 Wesfarmers 2020 Annual Report

Financial statements
For the year ended 30 June 2020 – Wesfarmers Limited and its controlled entities

Contents

Financial statements

Income statement

Statement of comprehensive income

Balance sheet

Cash flow statement

Statement of changes in equity

Notes to the financial statements

About this report

Segment information

Page 118

Page 119

Page 120

Page 121

Page 122

Page 123

Page 125

Group 
performance
P. 128

Group balance 
sheet
P. 131

Capital

P. 139

Risk

P. 143

Group information

Other

P. 152

P. 160

1. 

 Revenue and 
other income

4. 

 Cash and cash 
equivalents

13.   Capital 

management

18.   Financial risk 
management

21.   Associates 
and joint 
arrangements

27.   Commitments 

and 
contingencies

2.  Expenses

5.  Receivables

14.   Dividends and 
distributions

19.  Hedging

22.  Subsidiaries

28.   Events after the 
reporting period

3.  Tax expense

6. 

Inventories

15.   Equity and 
reserves

20.   Impairment of 
non-financial 
assets

23.  Acquisitions

29.   Auditors’ 

remuneration

7. 

 Other financial 
assets

16.   Earnings per 

share

8. 

 Property, plant 
and equipment

17.   Interest-bearing 
loans and 
borrowings

9. 

  Goodwill and 
intangible 
assets

10.  Mineral rights

11.  Leases

12.  Provisions

24.   Parent 

disclosures

30.   Other 

accounting 
policies

25.   Deed of Cross 
Guarantee

31.   Share-based 
payments

26.   Related party 

transactions

32.    Director and 
executive 
disclosures

33.    Tax 

transparency 
disclosures

Wesfarmers 2020 Annual Report

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Financial statements

Income statement
For the year ended 30 June 2020

Continuing operations
Revenue

Expenses 
Raw materials and inventory 
Employee benefits expense
Freight and other related expenses
Occupancy-related expenses1
Depreciation and amortisation1
Impairment expenses
Other expenses 
Total expenses

Other income
Share of net profits of associates and joint ventures

Earnings before finance costs and income tax expense
Interest on lease liabilities1
Other finance costs

Profit before income tax expense
Income tax expense

Profit after tax from continuing operations 

Discontinued operations
Profit after tax from discontinued operations

 Profit attributable to members of the parent 

Earnings per share attributable to ordinary equity holders of the parent  
from continuing operations
Basic earnings per share
Diluted earnings per share

Earnings per share attributable to ordinary equity holders of the parent
Basic earnings per share
Diluted earnings per share

Consolidated
2020

Note

$m

2019

$m

1

2

2
2
2
2

1
21

11
2

3

16

30,846 

27,920 

(19,307)
(4,990)
(435)
(446)
(1,528)
(941)
(1,329)
(28,976)

661 
213 
874 

2,744 
(237)
(133)

2,374 
(752)

1,622 

75 

1,697 

cents

143.4 
143.3 

150.0
149.9

(17,240)
(4,525)
(381)
(1,533)
(537)
-  
(1,198)
(25,414)

239 
229 
468 

2,974 
-  
(175)

2,799 
(859)

1,940 

3,570 

5,510 

cents

171.5 
171.4 

487.2 
486.7 

1   The comparative period has not been restated for the adoption of AASB 16, as the Group has applied the standard using the modified retrospective approach. Refer to 

notes 11 and 30 for further detail.

118

 Wesfarmers 2020 Annual Report

 
Statement of comprehensive income
For the year ended 30 June 2020

Profit attributable to members of the parent

Other comprehensive income

Items that may be reclassified to profit or loss:
Foreign currency translation reserve
Exchange differences on translation of foreign operations

Cash flow hedge reserve
Unrealised gains on cash flow hedges
Realised losses transferred to net profit
Realised gains transferred to non-financial assets
Transfer of hedges to Coles on demerger
Share of associates and joint ventures reserves
Tax effect

Items that will not be reclassified to profit or loss:
Financial assets reserve
Changes in the fair value of financial assets designated at fair value through other 
comprehensive income
Tax effect

 Retained earnings 
Remeasurement loss on defined benefit plan 
Tax effect
Other comprehensive loss for the year, net of tax

Total comprehensive income for the year, net of tax, attributable to members of the parent 
arising from:  
Continuing operations
Discontinued operations

Note

Consolidated
2020

$m

1,697

2019

$m

5,510

15

15

3

15

3

(4)

14

136

-  
(259)
-  
(1)
37

30
(9)

-  
-  
(70)

151
2
(204)
(22)
(2)
24

-  
-  

(1)
-  
(38)

1,552
75
1,627

1,903
3,569 
5,472

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Financial statements

Balance sheet
As at 30 June 2020

ASSETS
Current assets
Cash and cash equivalents
Receivables - trade and other
Inventories 
Derivatives 
Other
Total current assets 

Non-current assets
Investment in associates and joint ventures
Other financial assets
Deferred tax assets1 
 Property , plant and equipment
Mineral rights
Goodwill and intangible assets
Right-of-use assets1
Derivatives 
Other
Total non-current assets 
Total assets

LIABILITIES
Current liabilities
Trade and other payables 
Interest-bearing loans and borrowings 
Lease liabilities1
Income tax payable 
Provisions1
Derivatives 
Other
Total current liabilities 

Non-current liabilities
Interest-bearing loans and borrowings 
Lease liabilities1
Provisions1
Derivatives 
Other
Total non-current liabilities 
Total liabilities
Net assets

EQUITY
Equity attributable to equity holders of the parent
Issued capital
Reserved shares
Retained earnings
Reserves1
Total equity

Consolidated
2020

Note

$m

4
5
6
19

21
7
3
8
10
9
11
19

17
11

12
19

17
11
12
19

15
15

15

2,913 
1,037 
3,844 
41 
229 
8,064 

710 
1,123 
670 
3,623 
813 
3,814 
6,212 
386 
10 
17,361 
25,425 

4,008 
503 
1,019 
392 
1,078 
81 
189 
7,270 

2,153 
6,223 
346 
4 
85 
8,811 
16,081 
9,344 

15,818 
(89)
(245)
(6,140)
9,344 

2019

$m

795 
1,027 
4,246 
101 
181 
6,350 

3,393 
34 
194 
3,878 
-  
4,076 
-  
393 
15 
11,983 
18,333 

3,620 
356 
-  
222 
851 
7 
160 
5,216 

2,673 
-  
381 
1 
91 
3,146 
8,362 
9,971 

15,809 
(81)
(208)
(5,549)
9,971 

1 

The comparative period has not been restated for the adoption of AASB 16, as the Group has applied the standard using the modified retrospective approach. Refer to 
notes 11 and 30 for further detail.

120

 Wesfarmers 2020 Annual Report

Cash flow statement
For the year ended 30 June 2020

Cash flows from operating activities
Receipts from customers 
Payments to suppliers and employees1 
Dividends and distributions received from associates
Interest received
Borrowing costs2
Income tax paid
Net cash flows from operating activities3 

Cash flows from investing activities
Payments for property, plant and equipment and intangibles
Proceeds from sale of property, plant and equipment and intangibles 
Net proceeds from demerger and sale of businesses
Net proceeds from disposals of interests in associates and other investments 
Acquisition of subsidiaries, net of cash acquired
Net cash flows from investing activities 

Cash flows from financing activities
Proceeds from borrowings 
Repayment of borrowings
Repayment of lease liabilities
Equity dividends paid 
Demerger transaction costs recognised directly in equity
Net cash flows used in financing activities 

Net increase in cash and cash equivalents 
Cash and cash equivalents at beginning of year 
Cash and cash equivalents at end of year  

Consolidated
2020

Note

$m

2019

$m

34,197 
(28,725)
159 
9 
(367)
(727)
4,546 

(867)
299 
-  
2,198 
(988)
642 

-  
(381)
(955)
(1,734)
-  
(3,070)

2,118 
795 
2,913 

4

4
4

4

48,770 
(44,892)
65 
27 
(170)
(1,082)
2,718 

(1,356)
529 
858 
231 
(17)
245 

2,000 
(1,164)
-  
(3,628)
(59)
(2,851)

112 
683 
795 

For FY2020, payments to suppliers and employees exclude the repayment of, and interest paid on, lease liabilities.
For FY2020, borrowing costs include interest paid on lease liabilities.

1 
2 
3  Net cash flows from operating activities exclude the proportion of lease payments now classified as financing activities following the adoption of AASB 16, being 

$955 million for the year ended 30 June 2020.

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Financial statements

Statement of changes in equity
For the year ended 30 June 2020

Consolidated

Balance at 1 July 2018
Net profit for the year 

Other comprehensive income
Exchange differences on translation of foreign operations
Changes in the fair value of cash flow hedges, net of tax
Remeasurement loss on defined benefit plan, net of tax 
Total other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
Share-based payment transactions
Capital distribution and demerger dividend
Transfer of gain on demerger
Acquisition of shares on-market for Wesfarmers Long Term 
Incentive Plan (WLTIP)
Acquisition of shares on-market for Key Executive Equity 
Performance Plan (KEEPP)
Equity dividends

Balance at 30 June 2019 (as previously reported)

Adoption of AASB 16, net of tax
At 1 July 2019 (restated)
Net profit for the year
Other comprehensive income
Exchange differences on translation of foreign operations
Changes in the fair value of cash flow hedges, net of tax
Changes in the fair value of financial assets designated at fair 
value through other comprehensive income, net of tax
Remeasurement loss on defined benefit plan, net of tax 
Total other comprehensive income for the year, net of tax
Total comprehensive income for the year, net of tax
Share-based payment transactions
Acquisition of shares on-market for WLTIP and KEEPP
Equity dividends

Balance at 30 June 2020

Attributable to equity holders of the parent

Issued Reserved
shares
capital
$m
$m

Retained Reserves
earnings
$m

$m

Total
equity
$m

Note

22,277 
-  

(43)
-  

176 
5,510 

344 
-  

22,754 
5,510 

15
15
15

15

15
14

30

15
15

15
15

15
15
14

-  
-  
-  
-  
-  
14 
(6,482)
-  

-  

-  
-  
(6,468)
15,809 

-  
15,809 
-  

-  
-  

-  
-  
-  
-  
9 
-  
-  
9 
15,818 

-  
-  
-  
-  
-  
-  
-  
-  

(5)

(33)
-  
(38)
(81)

-  
(81)
-  

-  
-  

-  
-  
-  
-  
-  
(8)
-  
(8)
(89)

-  
-  
(1)
(1)
5,509 
-  
-  
(2,264)

14 
(51)
-  
(37)
(37)
4 
(8,124)
2,264 

14 
(51)
(1)
(38)
5,472 
18 
(14,606)
-  

-  

-  

(5)

-  
(3,629)
(5,893)
(208)

-  
(208)
1,697 

-  
-  

-  
-  
-  
1,697 
-  
-  
(1,734)
(1,734)
(245)

-  
-  
(5,856)
(5,549)

(518)
(6,067)
-  

(4)
(87)

21 
-  
(70)
(70)
(3)
-  
-  
(3)
(6,140)

(33)
(3,629)
(18,255)
9,971 

(518)
9,453 
1,697 

(4)
(87)

21 
-  
(70)
1,627 
6 
(8)
(1,734)
(1,736)
9,344 

122

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Notes to the financial statements: About this report
For the year ended 30 June 2020

About this report

Basis of consolidation

The consolidated financial statements comprise the financial 
statements of the Group. A list of controlled entities (subsidiaries) at 
year-end is contained in note 22.

The financial statements of subsidiaries are prepared for the 
same reporting period as the parent company, using consistent 
accounting policies. Adjustments are made to bring into line any 
dissimilar accounting policies that may exist.

In preparing the consolidated financial statements, all intercompany 
balances and transactions, income and expenses and profits and 
losses resulting from intragroup transactions have been eliminated. 
Subsidiaries are consolidated from the date on which control is 
obtained to the date on which control is disposed. The acquisition 
of subsidiaries is accounted for using the acquisition method 
of accounting. 

If the Group loses control over a subsidiary, it derecognises the 
related assets (including goodwill), liabilities, non-controlling interest 
and other components of equity, while any resultant gain or loss is 
recognised in profit or loss. Any investment retained is recognised 
at fair value.

Foreign currency 

The functional currencies of overseas subsidiaries are listed in 
note 22. As at the reporting date, the assets and liabilities of 
overseas subsidiaries are translated into Australian dollars at the 
rate of exchange ruling at the balance sheet date and the income 
statements are translated at the average exchange rates for the 
year. The exchange differences arising on the translation are taken 
directly to a separate component of equity.

Transactions in foreign currencies are initially recorded in the 
functional currency at the exchange rates ruling at the date of 
the transaction. Monetary assets and liabilities denominated in 
foreign currencies are translated at the rate of exchange ruling 
at the balance sheet date. Exchange differences arising from the 
application of these procedures are taken to the income statement, 
with the exception of differences on foreign currency borrowings 
that provide a hedge against a net investment in a foreign entity, 
which are taken directly to equity until the disposal of the net 
investment and are then recognised in the income statement. Tax 
charges and credits attributable to exchange differences on those 
borrowings are also recognised in equity.

Other accounting policies

Significant and other accounting policies that summarise the 
measurement basis used and are relevant to an understanding of 
the financial statements are provided throughout the notes to the 
financial statements.

Wesfarmers Limited (referred to as ‘Wesfarmers’) is a 
for-profit company limited by shares incorporated and 
domiciled in Australia whose shares are publicly traded on the 
Australian Securities Exchange (ASX). The nature of the operations 
and principal activities of Wesfarmers and its subsidiaries (referred 
to as ‘the Group’) are described in the segment information.

The consolidated financial report of the Group for the year ended 
30 June 2020 was authorised for issue in accordance with a 
resolution of the directors on 23 September 2020. The Directors 
have the power to amend and reissue the financial report. 

The financial report is a general purpose financial report which:

•  has been prepared in accordance with the requirements of 

the Corporations Act 2001, Australian Accounting Standards 
and other authoritative pronouncements of the Australian 
Accounting Standards Board (AASB) and International 
Financial Reporting Standards (IFRS) as issued by the 
International Accounting Standards Board (IASB);

•  has been prepared on a historical cost basis, except for 

investment properties held by associates and certain financial 
instruments which have been measured at fair value. The 
carrying values of recognised assets and 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;

• 

is presented in Australian dollars with all values rounded 
to the nearest million dollars ($’000,000) unless otherwise 
stated, in accordance with ASIC Corporations (Rounding in          
Financial/Directors’ Reports) Instrument 2016/191;

•  presents reclassified comparative information where required 

for consistency with the current year’s presentation;

•  adopts all new and amended Accounting Standards and 

Interpretations issued by the AASB that are relevant to the 
Group and effective for reporting periods beginning on or 
before 1 July 2019. Refer to note 30 for further details; and

•  except as outlined in note 30, does not early adopt Accounting 

Standards and Interpretations that have been issued or 
amended but are not yet effective.

Key judgements and estimates

In the process of applying the Group’s accounting policies, 
management has made a number of judgements and 
applied estimates of future events. 

The impact of COVID-19 has been considered in applying the 
Group's key judgements and estimates. As these are subject 
to increased uncertainty, actual outcomes may differ from the 
applied estimates. 

Judgements and estimates which are material to the financial 
report are found in the following notes:

Page

128

130

132

133

134

135

137

150

152

Note 1

Revenue and other income

Note 3

Tax expense

Note 6

Inventories

Note 8

Property, plant and equipment

Note 9

Goodwill and intangible assets

Note 11

Leases

Note 12

Provisions

Note 20

Impairment of non-financial assets

Note 21

Associates and joint arrangements

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: About this report
For the year ended 30 June 2020

Notes to the financial statements

The notes include information which is required to understand the 
financial statements and is material and relevant to the operations, 
financial position and performance of the Group. Information is 
considered material and relevant if, for example;

•  Group balance sheet: provides a breakdown of individual line 
items in the balance sheet that the directors consider most 
relevant and summarises the accounting policies, judgements 
and estimates relevant to understanding these line items;

the amount in question is significant because of its size or 
nature;

•  Capital: provides information about the capital management 
practices of the Group and shareholder returns for the year;

it is important for understanding the results of the Group;

it helps to explain the impact of significant changes in the 
Group’s business – for example, acquisitions, disposals and 
impairment writedowns; or

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:

•  Group performance: provides a breakdown of individual line 

items in the income statement that the directors consider most 
relevant and summarises the accounting policies, judgements 
and estimates relevant to understanding these line items;

•  Risk: discusses the Group’s exposure to various financial risks, 
explains how these affect the Group’s financial position and 
performance and what the Group does to manage these risks;

•  Group information: explains aspects of the Group structure 
and how changes have affected the financial position and 
performance of the Group, as well as disclosing related party 
transactions and balances; and

•  Other: provides information about items that are not 

recognised in the financial statements but could potentially 
have a significant impact on the Group’s financial position and 
performance; and provides information on items which require 
disclosure to comply with Australian Accounting Standards 
and other regulatory pronouncements.

• 

• 

• 

• 

Significant items in the current reporting period

Acquisition of Catch Group Holdings Limited

Impairment

On 12 August 2019, Wesfarmers, through its wholly-owned 
subsidiary Wesfarmers Online Retail Holdings Pty Ltd, completed 
the acquisition of Catch Group Holdings Limited (Catch) for 
consideration of $230 million. Refer to note 23 for further details.

Acquisition of Kidman Resources Limited

On 23 September 2019, Wesfarmers, through its wholly-owned 
subsidiary Wesfarmers Lithium Pty Ltd, completed the acquisition 
of all of the issued ordinary shares in Kidman Resources Limited 
(Kidman). The cash payment of $1.90 per share to Kidman 
shareholders was funded from existing banking facilities. 
Wesfarmers holds a 50 per cent interest in the Mt Holland 
lithium project based in Western Australia. Refer to note 23 for 
further details.

Sale of interest in Coles Group Limited

On 18 February 2020, Wesfarmers announced that it had executed 
the sale of 4.9 per cent of the issued capital of Coles Group Limited 
(Coles) for proceeds of $1,047 million, net of transaction costs. On 
30 March 2020, Wesfarmers announced that it had entered into 
an agreement to sell a further 5.2 per cent of the issued capital of 
Coles for proceeds of $1,062 million, net of transaction costs. 

The pre-tax gain on sale of the 10.1 per cent interest in Coles 
is $290 million (post-tax $203 million) and a further pre-tax gain 
of $220 million (post-tax $154 million) was recognised on the 
revaluation of the Group's retained interest in Coles. The retained 
interest in Coles at 30 June 2020 is recognised as a financial 
asset measured at fair value through other comprehensive income 
(FVOCI). Refer to note 21 for further details.

Adoption of AASB 16 Leases

Wesfarmers has applied AASB 16 from 1 July 2019. Wesfarmers 
as a lessee under AASB 16 has recognised right-of-use assets 
representing its right to use the underlying leased assets and lease 
liabilities representing its obligations to make lease payments.

The Group has separately recognised the interest expense on the 
lease liabilities and the depreciation expense of the right-of-use 
assets. Refer to notes 11 and 30 for further details.

124

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Industrial and Safety

The carrying value of the Industrial and Safety CGU exceeded 
its recoverable amount and a pre-tax impairment of $310 million 
(post-tax $298 million) was recognised in ‘impairment expenses’, 
which included pre-tax impairments against goodwill of 
$270 million (post-tax $270 million) and other assets of $40 million 
(post-tax $28 million). Refer to note 20 for further details.

Kmart Group

During the year, the first phase of the strategic review into the 
operations of Target was completed, identifying a number of 
actions to accelerate the growth of Kmart and address the 
unsustainable financial performance of Target. These actions 
included the conversion of suitable Target stores to Kmart stores, 
the closure of a number of Target stores and a restructuring of the 
Target store support offi ce.

Restructuring costs and provisions of $110 million (post-tax 
$83 million) were recognised for the above identified actions. 
In conjunction with the restructuring and as a result of the 
under-performance of Target stores, an impairment in the Kmart 
Group – Target business of $525 million (post-tax $437 million) was 
recognised in 'impairment expenses'. Refer to note 20 for further 
details on the impairment of the Kmart Group – Target business.

Impact of COVID-19

COVID-19 had significant impacts on the Group in financial 
year 2020 including:

•  Retail sales being impacted by significant volatility in foot 

traffic, driven by government restrictions, physical distancing 
requirements and customers spending more time at home;

•  Significant variation in demand across categories temporarily 
impacting stock availability in some areas, while bringing 
forward some purchases from future periods;

•  Lower inventory and higher payables at year end, resulting in a 

favourable but temporary cash flow benefit;

•  Government stimulus measures designed to provide income 
support to households and businesses having a positive 
impact on the Group's retail sales result; and

•  Approximately $40 million in wage subsidies (less than one 

per cent of total team member payments) passed on to team 
members during financial year 2020, almost entirely relating to 
New Zealand.

Notes to the financial statements: Segment information
For the year ended 30 June 2020

Segment information

The Group’s operating segments are organised and managed 
separately according to the nature of the products and services 
provided. 

Each segment represents a strategic business unit that offers 
different products and operates in different industries and markets. 
The Board and executive management team (the chief operating 
decision-makers) monitor the operating results of the business units 
separately for the purpose of making decisions about resource 
allocation and performance assessment.

The types of products and services from which each reportable 
segment derives its revenues are disclosed below. Segment 
performance is evaluated based on operating profit or loss (segment 
result), which in certain respects, is presented differently from 
operating profit or loss in the consolidated financial statements.

Interest income and other finance costs are not allocated 
to operating segments, as this type of activity is managed on 
a Group basis.

Transfer prices between business segments are set on an arm’s 
length basis in a manner similar to transactions with third parties. 
Segment revenue, expenses and results include transfers between 
business segments. Those transfers are eliminated on consolidation 
and are not considered material.

The operating segments and their respective types of products and 
services are as follows:

Bunnings
•  Retailer of building material and home and garden 

improvement products; and

•  Servicing project builders and the housing industry.

Kmart Group

Kmart

•  Retailer of apparel and general merchandise, including toys, 

leisure, entertainment, home and consumables.

Target

•  Retailer of apparel, homewares and general merchandise, 

including accessories, electricals and toys.

Catch

•  Online retailer offering branded products on a first-party basis 

and a third-party online marketplace.

Officeworks
•  Retailer and supplier of office products and solutions for 
home, small-to-medium sized businesses, and education.

Chemicals, Energy and Fertilisers (WesCEF)
•  Manufacturer and marketing of chemicals for industry, mining 

and mineral processing;

•  Manufacturer and marketing of broadacre and horticultural 

fertilisers;

•  Marketing and distributor of LPG and LNG;

•  LPG and LNG extraction for domestic and export markets;

•  Manufacturer of wood-plastic composite decking and 

screening products; and

•  50 per cent joint venture partner of the Mt Holland lithium 

project.

Industrial and Safety (WIS)
•  Supplier and distributor of maintenance, repair and operating 

products;

•  Manufacturer and marketing of industrial gases and 

equipment;

•  Supplier, manufacturer and distributor of workwear clothing in 

Australia and internationally;

•  Specialised supplier and distributor of industrial safety 

products and services; and

•  Provider of risk management and compliance services.

Other

Includes:

•  Food and staples retailing: 4.9 per cent (2019: 15.0 per cent) 

interest in Coles Group Limited;

•  Forest products: non-controlling interest in Wespine Industries 

Pty Ltd;

•  Property: non-controlling interest in BWP Trust;

• 

Investment banking: non-controlling interest in Gresham 
Partners Group Limited; and

•  Corporate: includes treasury, head office, central support 

functions and other corporate entity expenses. Corporate is 
not considered an operating segment and includes activities 
that are not allocated to other operating segments.

Revenues from contracts with customers by 
segment for FY2020

Segment result for FY20201

Bunnings

Kmart Group

Officeworks

WesCEF

WIS

Other

$m

14,996

9,152

2,775

2,081

1,745

4

%

48.8

29.8

9.0

6.8

5.6

0.0

Bunnings

Kmart Group

Officeworks

WesCEF

WIS

Other

$m

1,826

410

197

394

39

76

%

62.1

13.9

6.7

13.4

1.3

2.6

1  Excludes significant items.

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Segment information
For the year ended 30 June 2020

Segment information

The financial results for the comparative period were not restated upon the adoption of AASB 16. Earnings before interest, tax and 
depreciation and amortisation (EBITDA), depreciation and amortisation and interest on lease liabilities are therefore not comparable.

Revenue from contracts with customers
Other revenue 
Segment revenue

EBITDA
Depreciation and amortisation 
Interest on lease liabilities

Segment result

Items not included in segment result2,3
Other finance costs

Profit before income tax expense
Income tax expense
Profit attributable to members of the parent 

Other segment information
Segment assets
Investments in associates and joint ventures
Tax assets
Total assets

Segment liabilities
Tax liabilities
Interest-bearing loans and borrowings
Total liabilities
Segment net assets
Other net assets4
Net assets

BUNNINGS1
2020
$m

2019
$m

 14,996 
 3 
 14,999 

 13,162 
4 
 13,166 

 2,601 
(658)
(117)

1,826 

 - 

 1,818 
(192)
-  

 1,626 

-  

KMART GROUP

OFFICEWORKS

WesCEF

OTHER2 

CONSOLIDATED

2020
$m

 9,152 
 65 
 9,217 

 1,113 
(601)
(102)

410 

(635)

2019
$m

 8,540 
58 
 8,598 

733 
(193)
-  

540 

-  

 8,163 
 17 

 5,118 
 17 

 5,725 
 - 

3,755 
-  

 1,819 

1,531 

 - 

-  

2,450 

87 

1,563 

89 

1,585 

1,752 

-  

-  

(6,062)

(1,983)

(4,518)

(1,476)

(1,028)

(559)

(458)

(392)

(543)

(348)

2,118 
(1,790)
328 

3,152 
(2,599)
553 

1,207 
354 
1,561 

2,279 
(488)
1,791 

Capital expenditure5
Share of net profit or loss of associates and joint ventures included in segment 
result

 511 

 470 

 132 

199 

 - 

 - 

 - 

-  

1 

2 

3 

The 2020 Bunnings segment result includes a net property contribution of $16 million (2019: $85 million). Due to the adoption of AASB 16, $20 million of the gain on sale 
and leaseback transactions that would have been recognised on execution of the sale under AASB 117 Leases (AASB 117) instead reduces the carrying amount of the 
retained right-of-use asset and will be realised in the income statement over the lease term through reduced depreciation expense.
The 2020 Other segment result includes the share of profits from Wesfarmers' interest in Coles when it was an associate and accounted for using the equity method but 
excludes the gain of $290 million on the sale of 10.1 per cent of the interest in Coles and a gain of $220 million on the revaluation of the retained 4.9 per cent interest in 
Coles. The 2019 Other segment result includes the gain on disposal of Wesfarmers' direct and indirect interest in Barminco and subsequent increase in the fair value of 
Wesfarmers' indirect interest in Ausdrill shares totalling $61 million.
The 2020 Kmart Group segment result excludes impairments of the Target brand name and other assets of $525 million and restructuring costs and provisions 
of $110 million. The 2020 WIS segment result excludes impairment of $310 million.

4  Other net assets relate predominantly to intercompany financing arrangements and segment tax balances.
5  Capital expenditure includes accruals for costs incurred during the year. The amount excluding movements in accruals is $867 million (2019: $861 million).

126

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2020

$m

 2,775 

 12 

 2,787 

307 

(99)

(11)

197 

-  

2019

$m

2020

$m

2019

$m

2019

$m

2020

$m

2019

$m

2020

$m

2019

$m

WIS

2020

$m

 2,305 

 2,081 

 2,075 

 1,745 

 1,752 

9 

 4 

3 

 - 

-  

 2,314 

 2,085 

 2,078 

 1,745 

 1,752 

 30,753 

27,818 

 93 

102 

 30,846 

 27,920 

195 

(28)

167 

-  

-  

481 

(86)

(1)

394 

-  

513 

(80)

 433 

-  

-  

121 

(77)

(5)

39 

(310)

124 

(38)

 86 

-  

-  

4 

 9 

13 

84 

(7)

(1)

76 

510 

4,303 

606 

670 

(424)

(392)

2,107 

2,671 

4,778 

(16)

28 

12 

128 

(6)

-  

122 

-  

1,027 

3,287 

194 

(353)

(222)

904 

4,823 

5,727 

(2,656)

(3,029)

5 

-  

201 

215 

24,045 

710 

670 

 14,746 

 3,393 

194 

25,425 

 18,333 

4,707 

(1,528)

(237)

 2,942 

(435)

(133)

2,374 

(752)

1,622 

(13,033)

(392)

(2,656)

(16,081)

 9,344 

 - 

9,344 

861 

213 

3,511 

(537)

 2,974 

-  

-  

(175)

2,799 

(859)

1,940 

(5,111)

(222)

(3,029)

(8,362)

 9,971 

 - 

 9,971 

 852 

229 

791 

286 

1,077 

 40 

 - 

972 

40 

1,012 

42 

-  

2,079 

(853)

1,226 

114 

12 

1,260 

(768)

492 

58 

14 

1,042 

(668)

374 

59 

-  

1,404 

(1,008)

396 

83 

-  

 
Notes to the financial statements: Segment information
For the year ended 30 June 2020

BUNNINGS1

KMART GROUP

OFFICEWORKS

WesCEF

WIS

OTHER2 

CONSOLIDATED

2020

$m

2019

$m

 14,996 

 13,162 

 3 

4 

 14,999 

 13,166 

 2,601 

(658)

(117)

 - 

 1,818 

(192)

-  

-  

1,826 

 1,626 

2020

$m

 9,152 

 65 

 9,217 

 1,113 

(601)

(102)

410 

(635)

2019

$m

 8,540 

58 

 8,598 

733 

(193)

540 

-  

-  

2020
$m

 2,775 
 12 
 2,787 

307 
(99)
(11)

197 

-  

2019
$m

 2,305 
9 
 2,314 

195 
(28)
-  

167 

-  

2020
$m

 2,081 
 4 
 2,085 

481 
(86)
(1)

394 

-  

2019
$m

 2,075 
3 
 2,078 

513 
(80)
-  

 433 

-  

2020
$m

 1,745 
 - 
 1,745 

121 
(77)
(5)

39 

(310)

2019
$m

 1,752 
-  
 1,752 

124 
(38)
-  

 86 

-  

 8,163 

 17 

 5,118 

 17 

 5,725 

3,755 

 - 

-  

 1,819 
 - 

1,531 
-  

2,450 
87 

1,563 
89 

1,585 
-  

1,752 
-  

(6,062)

(1,983)

(4,518)

(1,476)

(1,028)

(559)

(458)

(392)

(543)

(348)

Share of net profit or loss of associates and joint ventures included in segment 

2,118 

(1,790)

328 

3,152 

(2,599)

553 

1,207 

354 

1,561 

2,279 

(488)

1,791 

 511 

 470 

 132 

199 

 - 

 - 

 - 

-  

791 
286 
1,077 

 40 

 - 

972 
40 
1,012 

42 

-  

2,079 
(853)
1,226 

114 

12 

1,260 
(768)
492 

58 

14 

1,042 
(668)
374 

59 

-  

1,404 
(1,008)
396 

83 

-  

Revenue from contracts with customers

Other revenue 

Segment revenue

EBITDA

Depreciation and amortisation 

Interest on lease liabilities

Segment result

Items not included in segment result2,3

Other finance costs

Profit before income tax expense

Income tax expense

Profit attributable to members of the parent 

Other segment information

Segment assets

Investments in associates and joint ventures

Interest-bearing loans and borrowings

Tax assets

Total assets

Segment liabilities

Tax liabilities

Total liabilities

Segment net assets

Other net assets4

Net assets

Capital expenditure5

result

2020
$m

2019
$m

4 
 9 
13 

84 
(7)
(1)

76 

510 

4,303 
606 
670 

(424)
(392)
(2,656)

2,107 
2,671 
4,778 

(16)
28 
12 

128 
(6)
-  

122 

-  

1,027 
3,287 
194 

(353)
(222)
(3,029)

904 
4,823 
5,727 

5 

-  

201 

215 

2020
$m

 30,753 
 93 
 30,846 

4,707 
(1,528)
(237)

 2,942 

(435)
(133)

2,374 
(752)
1,622 

24,045 
710 
670 
25,425 

(13,033)
(392)
(2,656)
(16,081)
 9,344 
 - 
9,344 

861 

213 

2019
$m

27,818 
102 
 27,920 

3,511 
(537)
-  

 2,974 

-  
(175)

2,799 
(859)
1,940 

 14,746 
 3,393 
194 
 18,333 

(5,111)
(222)
(3,029)
(8,362)
 9,971 
 - 
 9,971 

 852 

229 

Total revenue
from continuing operations
$30,846m

$m
35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

FY16

FY17

FY18

FY19

FY20

10.5%

$m

30,846

27,920

26,763

25,083

24,419

FY20

FY19

FY18

FY17

FY16

Geographical information

The table below provides information on the geographical location 
of revenue and non-current assets (other than financial instruments, 
deferred tax assets and pension assets). Revenue from external 
customers is allocated to a geography based on the location of 
the operation in which it was derived. Revenue from contracts 
with customers disaggregated by geographic location is materially 
consistent with the table below. Non-current assets are allocated 
based on the location of the operation to which they relate. 
The comparative period has not been restated for the adoption of 
AASB 16.

Australia
New Zealand
United Kingdom
Other

Revenue

2020
$m

2019
$m

Non-current  
assets

2020
$m

2019
$m

28,688
2,101
35
22
30,846

 25,786
2,066
41
27 
 27,920

14,439
711
2
22
15,174

 11,082 
 257
4
10
11,353

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Financial statements

Notes to the financial statements: Group performance
For the year ended 30 June 2020

1.  Revenue and other income 
from continuing operations

Revenue from contracts with 
customers

Sale of retail goods in store
Sale of retail goods online
Sale of fertilisers, chemicals, speciality 
gases, LPG and LNG

Sale of industrial products
Services revenue

Other revenue
Interest revenue
Other

Total revenue

Other income
Gain on sale of associate 
Gains on disposal of property, plant and 
equipment and other assets
Other1
Total other income

Consolidated
2020
$m

2019
$m

25,039 
1,814 

23,042 
947 

2,074 

2,067 

1,699 
127 
30,753 

1,700 
62 
27,818 

10 
83 
93 
30,846 

 26 
76 
102 
27,920 

Where satisfaction of a performance obligation is completed over 
time, revenue is recognised in line with the progress towards 
complete satisfaction of the performance obligation.

A right of return is not a separate performance obligation and 
the Group recognises revenue net of estimated returns. A refund 
liability and a corresponding asset in inventory representing the 
right to recover the returned products from the customer is also 
recognised. 

Other revenue

Interest revenue

Revenue is recognised as the interest accrues on the related 
financial asset. Interest is determined using the effective interest 
rate method, which applies the interest rate that exactly discounts 
estimated future cash receipts over the expected life of the 
financial instrument. 

Dividends

Revenue from dividends, other than those arising from associates, 
is recognised when the Group’s right to receive the payment is 
established.

290 

8 
363 
661 

 - 

 124 
115 
239 

Operating lease rental revenue

Operating lease revenue consists of rentals from investment 
properties and sub-lease rentals. Rentals received under operating 
leases and initial direct costs are recognised on a straight-line basis 
over the term of the lease.

Key estimate: gift cards 
Revenue from the sale of gift cards is recognised when 
the card is redeemed and the customer purchases goods 
by using the card, or when the gift card is no longer 
expected to be redeemed (breakage). At 30 June 2020, 
$96 million of revenue is deferred in relation to gift cards 
(2019: $83 million). Gift card liabilities are contract liabilities 
as payment has been received for a performance obligation 
to be completed at a future point in time.

The key assumption in measuring the contract liability for 
gift cards and vouchers is the expected breakage, which 
is reviewed annually based on historical information. Any 
reassessment of expected breakage in a particular year 
impacts on the revenue recognised from expiry of gift 
cards and vouchers (either increasing or decreasing). Any 
reasonably possible change in the estimate is unlikely to 
have a material impact.

Key judgement: flybuys
The Group is a participant in the flybuys loyalty program 
whereby eligible customers are granted loyalty points based 
on the dollars they spend. Following the demerger of Coles 
and the loss of control of Loyalty Pacific Pty Ltd, the Group 
has concluded that they are an agent in this arrangement 
as the nature of the loyalty program is that flybuys is 
responsible for supplying the awards to the customer and 
as such the Group’s role is only to arrange for flybuys to 
provide the goods or services. 

1  Other includes a $220 million gain recognised on the revaluation of the Group's 

retained 4.9 per cent interest in Coles.

Recognition and measurement

Revenue from contracts with customers
Revenue from contracts with customers is recognised when 
control of the goods or services is transferred to the customer at an 
amount that reflects the consideration to which the Group expects 
to be entitled in exchange for those goods or services.

The Group generates a significant proportion of its revenue from 
the sale of the following finished goods:

•  Merchandise direct to customers through the Group’s retail 
operations either through the sale of retail goods in store 
or online. Control of goods typically passes at the point of 
sale (refer to Bunnings, Kmart Group and Officeworks in the 
Segment information).

•  Sales to commercial customers under contracts, of products:

i. 

for which the Group has distribution rights, principally 
related to industrial maintenance and industrial safety (refer 
to WIS in the Segment information); and

ii.  produced or purchased by the Group including fertilisers, 

chemicals, speciality gases, LPG and LNG (refer to 
WesCEF in the Segment information).

The Group's contracts with customers for the sale of goods 
generally include one performance obligation. Revenue for the 
sale of goods is recognised at the point in time when control of the 
asset is transferred to the customer, typically at either the point of 
sale or at the time of delivery of the goods to the customer. Cash 
payment is generally received at the point of sale. Revenue from 
Layby transactions is recognised on the date when the customer 
completes payment and takes possession of the merchandise. Any 
cash received in advance of the completion of the performance 
obligation is recognised on the balance sheet as a contract liability.

128

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Notes to the financial statements: Group performance
For the year ended 30 June 2020

2.  Expenses 

from continuing operations

Remuneration, bonuses and on-costs
Superannuation expense
Share-based payments expense
Employee benefits expense

Minimum lease payments
Short-term and low-value lease payments
Contingent rental payments
Outgoings and other
Occupancy-related expenses1

Depreciation 
Depreciation of right-of-use assets
Amortisation of intangibles
Amortisation other
Depreciation and amortisation

Impairment of property, plant and 
equipment
 Impairment of goodwill  and intangible 
assets
Impairment of right-of-use assets
Impairment of trade and other receivables
Impairment expenses

Repairs and maintenance
Utilities and office expenses
Insurance expenses
Other
Other expenses

Interest on interest-bearing loans and 
borrowings
Discount rate adjustment
Amortisation of debt establishment costs
Other finance related costs
Other finance costs

Consolidated
2020
$m

2019
$m

4,573 
325 
92 
4,990 

-  
23 
30 
393 
446 

433 
964 
61 
70 
1,528 

168 

551 
198 
24 
941 

209 
486 
53 
581 
1,329 

113 
3 
5 
12 
133 

4,140 
303 
82 
4,525 

1,176 
-  
76 
281 
1,533 

424 
-  
47 
66 
537 

-  

-  
-  
-  
-  

219 
440 
113 
426 
1,198 

153 
7 
3 
12 
175 

1 

The Group adopted AASB 16 from 1 July 2019. Had the Group's previous 
accounting policies under AASB 117 been applied for the current year, the total 
occupancy-related expenses would have been $1,638 million. Refer to note 11 
for further details. 

Recognition and measurement

Employee benefits expense
The Group’s accounting policy for liabilities associated with 
employee benefits is set out in note 12. The policy relating to 
share-based payments is set out in note 31. 

The majority of employees in Australia and New Zealand are party 
to a defined contribution superannuation scheme and receive 
fixed contributions from Group companies and the Group’s 
legal or constructive obligation is limited to these contributions. 
Contributions to defined contribution funds are recognised as 
an expense as they become payable. Prepaid contributions 
are recognised as an asset to the extent that a cash refund 
or a reduction in the future payment is available. The Group 
also operates a defined benefit superannuation scheme, the 
membership of which is now closed.

Employee benefits expense by segment
from continuing operations

$m

5,000

4,000

3,000

2,000

1,000

0

Bunnings

Kmart Group

Officeworks

WesCEF

WIS

FY20

FY19

Depreciation and amortisation
Refer to notes 8, 9 and 11 for details on depreciation and 
amortisation.

Impairment
Impairment expenses are recognised to the extent that the carrying 
amounts of assets exceed their recoverable amounts. Refer to 
notes 18(d) and 20 for further details on impairment. 

Other finance costs
Other finance costs are recognised as an expense when they are 
incurred, except for interest charges attributable to major projects 
with substantial development and construction phases.

Provisions and other payables are discounted to their present 
value when the effect of the time value of money is significant. 
The impact of the unwinding of these discounts and any changes 
to the discounting is shown as a discount rate adjustment in 
finance costs.

Capitalisation of borrowing costs

To determine the amount of borrowing costs to be capitalised as 
part of the costs of major construction projects, the Group uses 
the weighted average interest rate (excluding non-interest costs) 
applicable to its outstanding borrowings during the year. For 
financial year 2020, had there been major long-term construction 
projects, the weighted average interest rate applicable would have 
been 4.30 per cent (2019: 4.66 per cent).

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group performance
For the year ended 30 June 2020

3. Tax expense

Recognition and measurement

Consolidated
2020
$m

2019
$m

Current taxes
Current tax assets and liabilities are measured at the amount 
expected to be recovered from or paid to taxation authorities at 
the tax rates and tax laws enacted or substantively enacted by the 
balance sheet date.

The major components of tax expense are:

Income statement 
(continuing operations)
Current income tax expense

Current year (paid or payable)
Adjustment for prior years 
Deferred income tax expense
Temporary differences 
Adjustment for prior years 

932 
(4)

(193)
17 

810 
10 

39 
-  

Income tax expense reported in the 
income statement

752 

859 

Statement of changes in equity
Net loss on revaluing cash flow hedges
Net gain on revaluing financial assets
Income tax benefit reported in equity

Tax reconciliation (continuing operations)
Profit before tax
Income tax rate at the statutory rate of 30%
Adjustments relating to prior years
Non-deductible items
Share of results of associates and  
joint ventures
Utilisation of previously unrecognised tax 
losses
Other
Income tax on profit before tax

Deferred income tax in the balance 
sheet relates to the following:

Provisions
Employee benefits
Accruals and other payables 
Interest-bearing loans and borrowings
Leases
Derivatives
Inventories
Property, plant and equipment
Other individually insignificant balances

Deferred tax assets

Accelerated depreciation for tax 
purposes
Derivatives
Accrued income and other
Intangible assets
Other individually insignificant balances

Deferred tax liabilities
Net deferred tax asset

Deferred income tax in the income 
statement relates to the following:

Provisions
Depreciation, amortisation and 
impairment
Other individually insignificant balances

Deferred tax expense

130

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(37)
9 
(28)

(24)
-  
(24)

2,374 
712 
13 
156 

2,799 
840 
10 
12 

(32)

(14)

(80)  
(17)
752 

271 
250 
58 
161 
229 
26 
52 
144 
70 
1,261 

128 
128 
222 
16 
97 
591 
670 

(139)

(21)
(16)
(176)

-  
11 
859 

113 
211 
66 
151 
-  
2 
49 
138 
65 
795 

123 
148 
260 
8 
62 
601 
194 

2 

(13)
50 
39 

Deferred taxes
Deferred income tax is provided using the full liability balance 
sheet method. Deferred income tax assets are recognised for 
all deductible temporary differences, carried forward unused tax 
assets and unused tax losses, to the extent it is probable that 
taxable profit will be available to utilise them. 

Deferred income tax assets and liabilities are measured at the 
tax rates that are expected to apply to the year when the asset is 
realised or the liability is settled, based on tax rates and tax laws 
that have been enacted or substantively enacted at the balance 
sheet date. 

Deferred income tax is provided on temporary differences at 
balance sheet date between accounting carrying amounts and the 
tax bases of assets and liabilities, other than for the following:

•  Where they arise from the initial recognition of an asset or 

liability in a transaction that is not a business combination and 
at the time of the transaction, affects neither the accounting 
profit nor taxable profit or loss.

•  Where taxable temporary differences relate to investments in 

subsidiaries, associates and interests in joint ventures: 

i.  Deferred tax liabilities are not recognised if the timing of the 
reversal of the temporary differences can be controlled and 
it is probable that the temporary differences will not reverse 
in the foreseeable future.

ii.  Deferred tax assets are not recognised if it is not 

probable that the temporary differences will reverse in the 
foreseeable future and taxable profit will not be available to 
utilise the temporary differences. 

Deferred tax liabilities are also not recognised on recognition of 
goodwill.

Income taxes relating to items recognised directly in equity are 
recognised in equity and not in the income statement.

Offsetting deferred tax balances
Deferred tax assets and deferred tax liabilities are offset only if a 
legally enforceable right exists to set off current tax assets against 
current tax liabilities and the deferred tax assets and liabilities relate 
to the same taxable entity and the same taxation authority.

Key judgement: unrecognised deferred tax assets

Capital losses: The Group has unrecognised benefits 
relating to carried forward capital losses, which can only 
be offset against eligible capital gains. The Group has 
determined that at this stage future eligible capital gains to 
utilise the tax assets are not currently sufficiently probable. 
The unrecognised deferred tax assets of $30 million 
(2019: $39 million) relate wholly to capital losses in Australia.

Key judgement: unrecognised deferred tax liability

A deferred tax liability has not been recognised on indefinite 
life intangibles for which the carrying value has been 
assessed as recoverable through sale, consistent with the 
Group’s practice and strategy to maximise shareholder 
returns through value-adding transactions.

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

Net cash capital expenditure

Cash capital expenditure
 Payment for property 
 Payment for plant and equipment 
Payment for intangibles 

 Proceeds from sale of property, plant, 
equipment and intangibles 
 Net cash capital expenditure 

Consolidated
2020
$m

2019
$m

243 
506 
118 
867 

299 
568 

323 
975 
58 
1,356 

529 
827 

Cash capital expenditure by segment for FY2020

Bunnings

Kmart Group

Officeworks

$m

511

142

40

%

58.9

16.4

4.6

WesCEF

110

12.7

WIS

Other

59

5

6.8

0.6

4. Cash and cash equivalents

For the purpose of the cash flow statement, 
cash and cash equivalents comprise the 
following:

Cash on hand and in transit
Cash at bank and on deposit

Reconciliation of net profit after tax to 
net cash flows from operations
Net profit
Non-cash items

Depreciation and amortisation
Impairment of assets
Gain on disposal/demerger of 
businesses
Net gain on disposal of non-current 
assets including investments and 
associates 
Share of net profits of associates and 
joint ventures
Dividends and distributions received 
from associates
Discount adjustment in borrowing costs
Other

(Increase)/decrease in assets

Receivables - trade and other
Inventories
Prepayments
Deferred tax assets
Other assets

Increase/(decrease) in liabilities
Trade and other payables
Current tax payable
Provisions
Other liabilities

Net cash flows from operating activities

Recognition and measurement

Consolidated
2020
$m

2019
$m

172 
2,741 
2,913 

266 
529 
795 

1,697 

5,510 

1,528 
941 

810 
23 

-  

(3,266)

(495)

(249)

(213)

(233)

159 
3 
6 

(34)
443 
(32)
(225)
(7)

346 
173 
224 
32 
4,546 

65 
7 
(39)

109 
(557)
(83)
130 
(3)

473 
(78)
129 
(30)
2,718 

Cash at bank and on deposit
Cash and short-term deposits in the balance sheet comprise cash 
at bank and on hand, and short-term deposits with an original 
maturity of three months or less and are classified as financial 
assets held at amortised cost.

Cash at bank earns interest at floating rates based on daily bank 
deposit rates. Short-term deposits are made for varying periods of 
between one day and three months, depending on the immediate 
cash requirements of the Group, and earn interest at the respective 
deposit rates. 

Cash at bank and on deposit is held with banks and financial 
institutions with investment grade credit ratings. Refer to note 18(d) 
for credit risk disclosures.

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Financial statements

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

5. Receivables

Trade and other
Trade receivables
Allowance for credit losses
Other debtors

Allowance for credit losses
Movements in the allowance for credit 
losses account were as follows:

Carrying amount at beginning of year
Allowance for credit losses recognised
Write-offs
Unused amount reversed
Disposal/demerger of controlled entity
Carrying amount at the end of the year

Consolidated
2020
$m

2019
$m

890 
(23)
170 
1,037 

948 
(47)
126 
1,027 

47 
26 
(48)
(2)
-  
23 

58 
3 
-  
(2)
(12)
47 

Recognition and measurement

Trade receivables and other debtors are all classified as financial 
assets held at amortised cost on the basis they are held with 
the objective of collecting contractual cash flows and the cash 
flows relate to payments of principal and interest on the principal 
amount outstanding.

Trade receivables
Trade receivables generally have terms of up to 30 days. They 
are recognised initially in accordance with the Group's revenue 
policy and subsequently measured at amortised cost using the 
effective interest method, less an allowance for credit losses. Refer 
to note 18(d) for a description of the application of the simplified 
approach to determine lifetime expected credit loss (ECL) on trade 
receivables and details of the Group's credit risk exposure. 

Other debtors
These amounts generally arise from transactions outside the usual 
operating activities of the Group. They do not contain impaired 
assets and are not past due. It is expected that other debtors' 
balances will be received when due.

6. Inventories

Raw materials 
Finished goods 
Right of return assets

Consolidated
2020
$m

2019
$m

30 
3,806 
8 
3,844 

30 
4,209 
7 
4,246 

Inventories recognised as an expense from continuing operations 
for the year ended 30 June 2020 totalled $20,084 million 
(2019: $18,072 million).

Recognition and measurement

Inventories are valued at the lower of cost and net realisable value. 
The net realisable value of inventories is the estimated selling price 
in the ordinary course of business less estimated costs to sell.

132

 Wesfarmers 2020 Annual Report

6. Inventories (continued)
Costs incurred in bringing each product to its present location and 
condition are accounted for as follows:

•  Raw materials: purchase cost on a weighted average basis.

•  Manufactured finished goods and work in progress: cost of 

direct materials and labour and a proportion of manufacturing 
overheads based on normal operating capacity.

•  Retail and wholesale merchandise finished goods: purchase 
cost on a weighted average basis, after deducting any 
settlement discounts and supplier rebates, and including 
logistics expenses incurred in bringing the 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

The key assumptions, which require the use of management 
judgement, are the variables affecting costs recognised in 
bringing the inventory to their location and condition for 
sale, estimated costs to sell and the expected selling price. 
These key assumptions are reviewed at least annually. 
The total expense relating to inventory writedowns during 
the year was $42 million (2019: reversal of $3 million). Any 
reasonably possible change in the estimate is unlikely to have 
a material impact. 

Key estimate: supplier rebates

The recognition of certain supplier rebates in the income 
statement requires management to estimate both the volume 
of purchases that will be made during a period of time and 
the related product that was sold and remains in inventory 
at reporting date. Management’s estimates are based on 
existing and forecast inventory turnover levels and sales. 
Reasonably possible changes in these estimates are unlikely 
to have a material impact.

7. Other financial assets

Financial assets measured at FVOCI
Other

Consolidated
2020
$m

2019
$m

1,122 
1 
1,123 

33 
1 
34 

The carrying value of the Group's retained interest of 4.9 per cent 
in Coles at 30 June 2020 was $1,122 million. No dividends were 
received from Coles for the period 31 March 2020 to 30 June 2020. 
Refer to note 21 for further details. 

Recognition and measurement

The Group's other financial assets primarily comprise equity 
instruments measured at FVOCI. Fair value gains and losses are 
presented in OCI and there is no subsequent reclassification of 
fair value gains and losses to profit and loss on the derecognition. 
Dividends are recognised in profit or loss as other income when the 
Group's right to payment is established. 

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

 Land 
 $m 

 Buildings 
 $m 

 Leasehold 
improvements 
 $m 

 Plant, 
vehicles and 
equipment 
 $m 

 Mineral 
lease and 
development 
 $m 

 Total 
 $m 

8. Property, plant and equipment

 Consolidated 

Year ended 30 June 2020

Gross carrying amount - at cost
Accumulated depreciation and impairment
Net carrying amount

Movement
Net carrying amount at beginning of year
Additions
Disposals and write-offs
Impairment 
Depreciation and amortisation
Acquisition of controlled entities
Transfers
Other including foreign exchange movements
Net carrying amount at the end of the year

 392 
 -   
 392 

 448 
 33 
 (107)
 - 
 -   
 -   
 18 
 -   
 392 

 555 
 (151)
 404 

 371 
 210 
 (146)
 - 
 (12)
 -   
 (18)
 (1)
 404    

Assets under construction included above:

 -   

 211 

Year ended 30 June 2019

Gross carrying amount - at cost
Accumulated depreciation and impairment
Net carrying amount

Movement
Net carrying amount at beginning of year
Additions
Disposals and write-offs
Depreciation and amortisation
Transfers
Other including foreign exchange movements
Net carrying amount at the end of the year

Assets under construction included above:

 448 
-  
 448 

 1,142 
 108 
 (802)
 -   
 -   
 -   
 448 

-  

 519 
 (148)
 371 

 778 
 203 
 (595)
 (12)
 (4)
 1 
 371 

 99 

 864 
 (455)
 409 

 442 
 70 
 (3)
 (34)
 (71)
 -   
 5 
 -   
 409 

 50 

 793 
 (351)
 442 

 906 
 123 
 (497)
 (95)
 4 
 1 
 442 

 39 

 6,960 
 (4,542)
 2,418 

 2,617 
 405 
 (26)
 (134)
 (420)
 27 
 (45)
 (6)
 2,418 

 189 

 6,705 
 (4,088)
 2,617 

 5,484 
 772 
 (3,037)
 (607)
 -   
 5 
 2,617 

 200 

 -   
 -   
 -   

 8,771 
 (5,148)
 3,623 

 -   
 -   
 -   
 - 
 -   
 -   
 -   
 -   
 -      

 3,878 
 718 
 (282)
 (168)
 (503)
 27 
 (40)
 (7)
 3,623 

 -   

 450 

 -   
 -   
 -   

 8,465 
 (4,587)
 3,878 

 98 
 1 
 (99)
 -   
 -   
 -   
 -   

 8,408 
 1,207 
 (5,030)
 (714)
-  
7 
 3,878 

-  

 338 

Recognition and measurement

The carrying value of property, plant and equipment is measured 
as the cost of the asset, less accumulated depreciation and 
impairment. The cost of the asset also includes the cost of 
replacing parts that are eligible for capitalisation, and the cost of 
major inspections.

Depreciation and amortisation
Items of property, plant and equipment are depreciated on a 
straight-line basis over their useful lives. The estimated useful life 
of buildings is between 20 and 40 years and plant and equipment 
is between three and 40 years. Land is not depreciated.

Expenditure on mining areas of interest in which production has 
commenced is amortised over the life of the mine, based on the 
rate of depletion of the economically recoverable reserves. 

Leasehold improvements are amortised over the period of 
the lease or the anticipated useful life of the improvements, 
whichever is shorter. 

Impairment
Refer to note 20 for details on impairment testing.

Derecognition
An item of property, plant and equipment is derecognised when it is 
sold or otherwise disposed of, or when its use is expected to bring 
no future economic benefits. Any gain or loss from derecognising 
the asset (the difference between the proceeds of disposal and the 
carrying amount of the asset) is included in the income statement in 
the period the item is derecognised.

Key estimates: property, plant and equipment
The estimations of useful lives, residual value and 
amortisation methods require management judgement and 
are reviewed annually. If they need to be modified, the change 
is accounted for prospectively from the date of reassessment 
until the end of the revised useful life (for both the current 
and future years). Such revisions are generally required when 
there are changes in economic circumstances impacting 
specific assets or groups of assets, such as changes in store 
performance or changes in the long-term commodity price 
forecasts. These changes are limited to specific assets and 
as such, any reasonably possible change in the estimate is 
unlikely to have a material impact on the estimations of useful 
lives, residual value or amortisation methods. 

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Financial statements

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

9. Goodwill and intangible assets

 Consolidated 

Year ended 30 June 2020

Gross carrying amount - at cost
Accumulated amortisation and impairment
Net carrying amount

Movement
Net carrying amount at beginning of year
Additions
Acquisition of controlled entities 
Transfers
Disposals and write-offs
Impairment
Amortisation for the year

Other including foreign exchange movements
Net carrying amount at end of year

Year ended 30 June 2019

Gross carrying amount - at cost
Accumulated amortisation and impairment
Net carrying amount

Movement
Net carrying amount at beginning of year
Additions
Disposals and write-offs

Amortisation for the year
Other including foreign exchange movements
Net carrying amount at end of year

Goodwill
$m

Brand
$m

Contractual and 
non-contractual 
relationships1
$m

Gaming 
and liquor 
licences
$m

Software
$m

3,459 
(493)
2,966 

3,090 
-  
148 
(2)
-  
(270)
-  

- 
2,966 

3,313 
(223)
3,090 

875 
(257)
618 

831 
-  
20 
-  
-  
(231)
(2)

-  
618 

855 
(24)
831 

13,491 
21 
(10,422)

-  
-  
3,090 

3,654 
-  
(2,821)

(2)
-  
831 

71 
(29)
42 

22 
5 
22 
-  
-  
-  
(7)

-
42 

44 
(22)
22 

38 
-  
(13)

(3)
-  
22 

468 
(280)
188 

133 
115 
12 
42 
(12)
(50)
(52)

-  
188 

313 
(180)
133 

519 
50 
(346)

(90)
-  
133 

Total
$m

4,873 
(1,059)
3,814 

4,076 
120 
202 
40 
(12)
(551)
(61)

-  
3,814 

4,525 
(449)
4,076 

-  
-  
-  

-  
-  
-  
-  
-  
-  
-  

-  
-  

-  
-  
-  

158 
-  
(158)

-  
-  
-  

17,860 
71 
(13,760)

(95)
-  
4,076 

1  Contractual and non-contractual relationships are intangible assets that have arisen through business combinations. They represent the value of pre-existing customer 

relationships in the acquired company. 

Recognition and measurement

A summary of the useful lives of intangible assets is as follows:

Goodwill
Goodwill acquired in a business combination is initially measured 
at cost. Cost is measured as the cost of the business combination 
minus the net fair value of the acquired and identifiable assets, 
liabilities and contingent liabilities. Following initial recognition, 
goodwill is measured at cost less any accumulated impairment 
losses. Refer to note 20 for further details on impairment. 

Intangible asset

Useful life

Brand1

Contractual and 
non-contractual relationships

Indefinite and finite 
(up to 20 years)

Finite (up to 15 years)

Software

Finite (up to seven years)

Intangible assets
Intangible assets acquired separately are measured on initial 
recognition at cost. The cost of intangible assets acquired in a 
business combination is their fair value at the date of acquisition. 

Following initial recognition, intangible assets are carried at cost 
less amortisation and any impairment losses. Intangible assets 
with finite lives are amortised on a straight-line basis over their 
useful lives and tested for impairment whenever there is an 
indication that they may be impaired. The amortisation period and 
method is reviewed at each financial year-end. Intangible assets 
with indefinite lives are tested for impairment in the same way as 
goodwill. Refer to note 20 for further details on impairment.

1 

Includes trade names and other intangible assets with characteristics of a 
brand.

Assets with an assumed indefinite useful life are reviewed at each 
reporting period to determine whether this assumption continues to 
be appropriate. If not, it is changed to a finite life and accounted for 
prospectively as a change in accounting estimate.

Key judgement: useful lives of intangible assets

Certain brands have been assessed as having indefinite lives 
on the basis of strong brand strength, ongoing expected 
profitability and continuing support. The brand incorporates 
complementary assets such as store formats, networks and 
product offerings. 

134

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

9. Goodwill and intangible assets (continued)

10. Mineral rights

Consolidated
2020

2019

$m

$m

Consolidated

Allocation of goodwill to groups of 
cash generating units

Carrying amount of goodwill
Bunnings
Kmart Group
Officeworks
WesCEF
WIS

Allocation of indefinite life intangible 
assets to groups of cash generating 
units

Carrying amount of intangibles
Bunnings
Kmart Group
Officeworks
WIS

11. Leases

876 
856 
816 
2 
416 
2,966 

868 
716 
818 
2 
686 
3,090 

1 
435 
160 
22 
618 

1 
648 
160 
22 
831 

2020
$m

 - 
 790 
 23 
 - 
 813 

Movement
Net carrying amount at the beginning of the year
Acquisitions
Additions
Disposals and write-offs
As at 30 June 2020

Recognition and measurement

Exploration activity involves the search for mineral resources, 
the determination of technical feasibility and the assessment of 
commercial viability of an identified resource. 

Exploration and evaluation expenditure in relation to separate 
areas of interest for which rights of tenure are current, is capitalised 
and carried forward as an asset in the balance sheet where it 
is expected that the expenditure will be recovered through the 
successful development and exploitation of an area of interest, or 
by its sale; or where exploration activities have not yet reached 
a stage which permits a reasonable estimate of the existence or 
otherwise of economically recoverable reserves. 

An exploration and evaluation asset shall be reclassified to 
mineral lease and development when the technical feasibility and 
commercial viability of extracting the resource are demonstrable. 

Refer to note 20 for details on impairment testing.

Group as a lessee
The Group has leases primarily in relation to retail and distribution properties, in addition to offices, motor vehicles and office 
equipment. The lease terms vary significantly and can include escalation clauses, renewal or purchase options and termination rights. 
Escalation clauses vary between fixed rate, inflation-linked, market rent and combination reviews. Changes to rental terms linked to 
inflation or market rent reviews typically occur on an annual or five-yearly basis. 

Set out below are the carrying amounts of the right-of-use assets and the movements during the year.

 Consolidated 

Year ended 30 June 2020
Gross carrying amount - at cost
Accumulated depreciation and impairment
Net carrying amount

Movement
At 1 July 2019 (restated)
Net additions
Acquisition of controlled entities
Impairment
Depreciation expense
Other including foreign exchange movements
Net carrying amount at the end of the year

Right-of-use assets

 Land 
 $m 

 Buildings 
 $m 

 Vehicles 
 $m 

 Total 
 $m 

 46 
 (4)
 42 

 48 
 (2)
 - 
 - 
 (4)
 - 
 42 

 7,263 
 (1,116)
 6,147 

 6,287 
 992 
 32 
 (198)
 (956)
 (10)
 6,147 

 27 
 (4)
 23 

 17 
 10 
 - 
 - 
 (4)
 - 
 23 

 7,336 
 (1,124)
 6,212 

 6,352 
 1,000 
 32 
 (198)
 (964)
 (10)
 6,212 

Wesfarmers 2020 Annual Report

135

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Financial statements

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

11. Leases (continued)

Set out below are the carrying amounts of the lease liabilities and 
the movements during the year.

Consolidated

At 1 July 2019 (restated)
Additions
Acquisition of controlled entities
Accretion of interest
Lease payments
Other including foreign exchange movements
Carrying amount at 30 June 2020

Current
Non-current

2020
$m

 7,275 
 896 
 38 
 237 
 (1,192)
 (12)
 7,242 

 1,019 
 6,223 

The maturity profile of the Group's lease liabilities based on 
contractual undiscounted payments is provided in note 18(b).

The Group has a number of lease contracts that include 
extension options. Management exercises significant judgement 
in determining whether these extension options are reasonably 
certain to be exercised. Further details on this key judgement are 
provided on the following page. 

Lease extension options are available in respect of 69 per cent 
of the Group’s leases. The number and extent of available lease 
extension options differs considerably between leases.  Where 
the Group has deemed the exercise of an extension option as 
reasonably certain, the next available option period associated 
with the lease has been included in the lease term and is therefore 
incorporated in the recorded lease liability of $7,242 million. A 
number of available option periods, which are exercisable at the 
discretion of the Group as lessee, have not been included in the 
recorded lease liability on the basis that they are not reasonably 
certain to be exercised, and do not represent liabilities or 
contingent liabilities of the Group at 30 June 2020. 

The following are the lease-related amounts recognised in the 
income statement.

Consolidated

Depreciation of right-of-use assets
Interest on lease liabilities
Short-term and low-value lease payments (included 
in occupancy-related expenses)
Variable lease payments (included in 
occupancy-related expenses)
Total amount recognised in the income statement

2020
$m

 964 
 237 

 23 

 30 
 1,254 

Recognition and measurement

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. 

Right-of-use assets
Right-of-use assets are recognised at the commencement date 
of the lease (i.e. the date the underlying asset is available for 
use). Right-of-use assets are initially measured at cost, less any 
accumulated depreciation and impairment losses, and adjusted 
for any remeasurement of lease liabilities. The cost of right-of-use 
assets includes the amount of lease liabilities recognised, initial 
direct costs incurred, and lease payments made at or before 
the commencement date less any lease incentives received.     
Right-of-use assets are depreciated on a straight-line basis over 
the shorter of the lease term and the estimated useful lives of 
the assets. The estimated useful lives of the right-of-use building 
assets are between one and 40 years and right-of-use plant, 
vehicles and equipment assets are between one and 20 years. The 
right-of-use assets are also subject to impairment, assessed in 
accordance with the Group’s impairment policy.

Lease liabilities
Lease liabilities are recognised by the Group at the commencement 
date of the lease. Lease liabilities are measured at the present value 
of lease payments to be made over the lease term. 

The lease payments include fixed payments (including in-substance 
fixed payments) less any lease incentives receivable, variable lease 
payments that depend on an index or rate, and amounts expected 
to be paid under residual value guarantees. The lease payments 
also include the exercise price of a purchase option reasonably 
certain to be exercised by the Group. Variable lease payments that 
do not depend on an index or a rate are recognised as expenses 
in the period in which the event or condition that triggers the 
payment occurs.

In calculating the present value of lease payments, the Group uses 
its incremental borrowing rate (IBR) at the lease commencement 
date where the interest rate implicit in the lease is not readily 
determinable. After the commencement date, the lease liability is 
increased to reflect the accretion of interest and reduced for lease 
payments made. In addition, the carrying amount of lease liabilities 
is remeasured if there is a modification, a change in the lease term, 
a change in the lease payments (e.g. changes to future payments 
resulting from a change in an index or rate used to determine such 
lease payments) or a change in the assessment to purchase the 
underlying asset.

Short-term leases and lease of low-value assets
The Group applies the short-term lease recognition exemption to 
its short-term leases, which are defined as those leases that have 
a lease term of 12 months or less from the commencement date. 
It also applies the lease of low-value assets recognition exemption 
to leases that are considered to be low value. Lease payments on 
short-term leases and leases of low-value assets are recognised as 
expenses on a straight-line basis over the lease term.

Lease liabilities by segment
as at 30 June 2020

Bunnings

Kmart Group

Officeworks

WesCEF

WIS

Other

$m

3,727

2,943

343

27

167

35

%

51.5

40.6

4.7

0.4

2.3

0.5

136

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

11. Leases (continued)

12. Provisions

Key judgements and estimates: leases

Lease term

The lease term is considered to be a key judgement. At 
lease commencement, Wesfarmers considers an option to 
extend a lease to be reasonably certain when there is a clear 
economic incentive for extension, such as:

• 

• 

favourable contractual terms and conditions in the 
option period compared to market rates;

leasehold improvements have recently been undertaken 
and are likely to have significant residual value at the end 
of the current lease period;

•  significant termination costs exist; or

• 

the underlying asset is important to the Group’s 
operations.

After lease commencement, the lease term is reassessed 
upon the occurrence of a significant event or change in 
circumstance.

Discount rate

The discount rates applied in measuring the lease liability 
are a key estimate area. As at 30 June 2020, the rates were 
between 1.8 and 3.8 per cent. On commencement of a 
lease, the future lease payments are discounted using the 
IBR where the interest rate implicit in the lease is not readily 
available. The lessee's IBR reflects the Group's IBR adjusted 
for lease tenure and the currency of the lease. Where there 
is a lease modification, a revised discount rate is applied in 
remeasuring the lease liability.

Current
Employee benefits
Self-insured risks
Restructuring and make good
Other

Non-current
Employee benefits
Self-insured risks
Restructuring and make good
Lease provision
Other

Total provisions

Consolidated
2020
$m

2019
$m

723 
149 
124 
82 
1,078 

97 
116 
125 
-  
8 
346 
1,424 

605 
127 
39 
80 
851 

84 
109 
44 
138 
6 
381 
1,232 

Recognition and measurement

Provisions are recognised when: 

• 

• 

the Group has a present obligation (legal or constructive) as a 
result of a past event; 

it is probable that resources will be expended to settle the 
obligation; and 

•  a reliable estimate can be made of the amount of the 

Stand-alone price of lease and non-lease components

obligation.

As applicable, the calculated lease liability excludes an 
estimate of the gross lease payments allocated to non-lease 
components. This estimate is determined on a lease-by-lease 
basis on inception of the lease. 

In determining the stand-alone price of the lease and 
non-lease components, consideration is given to benchmark 
property outgoings and historical information of the Group's 
lease portfolio. 

Key estimate: discounting

Provisions, other than employee benefits, are determined by 
discounting the expected future cash flows at a pre-tax rate 
that reflects current market assessments of the time value of 
money and the risks specific to the liability to the extent they 
are not included in the cash flows.

Employee benefit provision balances are calculated using 
discount rates derived from the high-quality corporate bond 
(HQCB) market in Australia provided by Milliman Australia. 

Employee benefit provisions have been calculated using 
discount rates of between 0.6 and 2.7 per cent 
(2019: between 1.5 and 2.9 per cent).

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group balance sheet
For the year ended 30 June 2020

12. Provisions (continued)
Employee benefits
The provision for employee benefits represents annual leave, long 
service leave entitlements and incentives accrued by employees.

Wages and salaries

Liabilities for wages and salaries, including non-monetary benefits 
expected to be settled within 12 months of the reporting date, 
are recognised in provisions and other payables in respect of 
employees’ services up to the reporting date. They are measured at 
the amounts expected to be paid when the liabilities are settled.

Annual leave and long service leave

The liability for annual leave and long service leave is recognised in 
the provision for employee benefits. It is measured as the present 
value of expected future payments for the services provided by 
employees up to the reporting date. Expected future payments are 
discounted using market yields at the reporting date on HQCB with 
terms to maturity and currencies that match, as closely as possible, 
the estimated future cash outflows.

Key estimate: long service leave

Long service leave is measured using the projected unit credit 
method. Management judgement is required in determining 
the following key assumptions used in the calculation of long 
service leave at balance sheet date:

• 

• 

• 

future increases in salaries and wages;

future on-cost rates; and

future probability of employee departures and period of 
service.

The total long service leave liability is $364 million 
(2019: $327 million). Given the magnitude of the liability and 
the nature of the key assumptions, any reasonably possible 
change in one or a combination of the estimates is unlikely to 
have a material impact.

Mine rehabilitation
Mining lease agreements impose obligations to remediate areas 
where mining activity has taken place. Provisions for remediation 
have been calculated assuming current technologies. As part of the 
valuation methodology, the risks are incorporated in the cash flows 
rather than the discount rates.

Self-insured risks
The Group is self-insured for workers’ compensation and general 
liability claims. Provisions are recognised based on claims reported, 
and an estimate of claims incurred but not reported. These 
provisions are determined on a discounted basis, using an actuary 
valuation performed at each reporting date.

Key estimate: self-insured risks

The self-insured risk liability is based on a number of 
management estimates including, but not limited to:

• 

• 

future inflation;

investment return;

•  average claim size;

•  claim development; and

•  claim administration expenses.

These assumptions are reviewed periodically and any 
reassessment of these assumptions will affect workers’ 
compensation or claims expense (either increasing or 
decreasing the expense). Any reasonable change in these 
assumptions will not have a significant impact on the Group. 

Make good
The Group recognises the present value of the estimated costs 
that may be incurred in restoring leased premises to their original 
condition at the end of the respective lease terms as a provision for 
make good. The costs are recognised as the obligation is incurred 
either at commencement of the lease or as a consequence of using 
the asset and are included in the cost of the right-of-use assets. 
This estimate is reviewed at each reporting date and adjusted for 
any known changes in the initial cost estimate. 

Restructuring
Provisions for restructuring are recognised where steps have been 
taken to implement a detailed plan, including discussions with 
those impacted by it and relate principally to: 

• 

• 

the closure of retail outlets or distribution centres;

restructuring; and

•  associated redundancies.

Carrying amount at 1 July 2018
Arising during year
Utilised
Disposal/demerger of controlled entities
Carrying amount at 30 June 2019

Adoption of AASB 16 

At 1 July 2019 (restated)
Arising and acquired during year
Utilised
Carrying amount at 30 June 2020

Lease 
provision  
$m

Self-insured 
risks
$m

Mine 
rehabilitation
$m

Restructuring 
and make 
good
$m

252 
10 
(2)
(122)
138 

(138)

-  
-  
-  
-  

585 
141 
(136)
(354)
236 

-  

236 
107 
(78)
265 

45 
1 
-  
(46)
-  

-  

-  
-  
-  
-  

80 
182 
(34)
(145)
83 

(31)

52 
220 
(23)
249 

Other
$m

436 
36 
(31)
(355)
86 

(14)

72 
41 
(23)
90 

Total
$m

1,398 
370 
(203)
(1,022)
543 

(183)

360 
368 
(124)
604 

138

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Capital
For the year ended 30 June 2020

13. Capital management
The Group’s capital management objectives
The primary objective of Wesfarmers is to provide a satisfactory 
return to its shareholders. The Group aims to achieve this 
objective by:

• 

improving returns on invested capital relative to that cost of 
capital; and

•  ensuring a satisfactory return is made on any new capital 

invested.

Capital is defined as the combination of shareholders’ equity, 
reserves and net financial debt. The Board is responsible for 
monitoring and approving the capital management framework 
within which management operates. The purpose of the framework 
is to safeguard the Group’s ability to continue as a going concern 
while optimising its debt and equity structure. Wesfarmers aims 
to maintain a capital structure that is consistent with a stable 
investment grade credit rating. 

Note

15
15

15

17
4

Consolidated
2020

2019

$m

$m

15,818 
(89)
(245)
(6,140)
9,344 

2,656 
(2,913)
(257)
9,087 

15,809 
(81)
(208)
(5,549)
9,971 

3,029 
(795)
2,234 
12,205 

Equity and reserves
Issued capital
Reserved shares
Retained earnings
Reserves

Net debt1
Total interest-bearing loans and 
borrowings 
Less: cash and cash equivalents

Total capital employed

1  Net debt excludes lease liabilities as at 30 June 2020.

The Group manages its capital through various means, including:

•  adjusting the amount of dividends paid to shareholders;

•  maintaining a dividend investment plan; 

• 

• 

raising or returning capital; and 

raising or repaying debt for working capital requirements, 
capital expenditure and acquisitions. 

Wesfarmers regularly monitors its capital requirements using 
various benchmarks, with the main internal measures being 
cash interest cover, debt cover and fixed charges cover. The 
principal external measures are the Group’s credit ratings from 
Standard & Poor’s and Moody’s.

Cash interest cover
Profit before income tax
Finance costs
Depreciation and amortisation
EBITDA (A)
Net cash interest paid (B)
Cash interest cover (times) 
(A/B)
Adjusted EBITDA3,4 (C)
Cash interest cover (times)(C/B) 
(applying adjusted EBITDA)

Debt cover
Total interest-bearing loans and 
borrowings
Total lease liabilities
Less: cash and cash 
equivalents
Net financial debt (D) 
EBITDA (A)
Debt cover (times) (D/A)
Adjusted EBITDA3,4 (C)
Debt cover (times) (D/C) 
(applying adjusted EBITDA)

Fixed charges cover
EBITDA (A)
Minimum lease payments
EBITDA before minimum lease 
payments (E)
Finance costs (net of discount 
adjustment) and minimum 
lease payments (F) 

Fixed charges cover (times) (E/F)
Adjusted EBITDA3,4 (C)
Minimum lease payments
Adjusted EBITDA before 
minimum lease payments (G)
Fixed charges cover (G/F) 
(applying adjusted EBITDA)

Group credit ratings
Standard & Poor’s
Moody's

Consolidated1
2020
$m

20192
$m

2,374 
370 
1,528 
4,272 
120 

35.6 
4,707 

39.3 

2,656 
7,242 

(2,913)
6,985 
4,272 
1.6 
4,707 

1.5 

4,272 
-  

4,272 

367 
11.6 
4,707 
-  

4,707 

12.7

6,643 
175 
809 
7,627 
143 

53.3 
4,370 

30.6 

3,029 
-  

(795)
2,234 
7,627 
0.3 
4,370 

0.5 

7,627 
1,707 

9,334 

1,875 
5.0 
4,370 
1,707 

6,077 

3.2 

A-(stable)
A3(stable)

A-(stable)
A3(stable)

1 

2 

3 

4 

The income statement metrics include both continuing and discontinued 
operations.
The comparative period has not been restated for the adoption of AASB 16, as 
the Group has applied the Standard using the modified retrospective approach.
The FY2020 adjusted EBITDA excludes impairments of the Target brand 
name and other assets of $525 million, restructuring costs and provisions of 
$110 million in the Kmart Group and an impairment to WIS of $310 million, 
offset by a gain of $290 million on the sale of 10.1 per cent of the interest in 
Coles and a gain of $220 million on the revaluation of the retained 4.9 per cent 
interest in Coles.
The FY2019 adjusted EBITDA excludes the $2,319 million gain on demerger 
of Coles, the $679 million gain on disposal of Bengalla, the $267 million 
gain on disposal of KTAS, the $138 million (US$98 million) gain on disposal 
of Quadrant Energy and the $146 million provision for Coles supply chain 
automation.

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Financial statements

Notes to the financial statements: Capital
For the year ended 30 June 2020

14. Dividends and distributions

Declared and paid during the period 
(fully-franked at 30 per cent)
Interim dividend for 2020: $0.75  (2019: $1.00) 
Final dividend for 2019: $0.78 (2018: $1.20) 
Special dividend for 2019: $1.001
Capital distribution and demerger dividend2

Proposed and unrecognised as a liability 
(fully-franked at 30 per cent)
Final dividend for 2020: $0.77 (2019: $0.78) 
Special dividend for 2020: $0.183

Franking credit balance
Franking credits available for future years at 
30 per cent adjusted for debits and credits 
arising from the payment of income tax 
payable and from recognised dividends 
receivable or payable

Impact on the franking account of dividends 
proposed before the financial report was 
issued but not recognised as a distribution 
to equity holders during the year

Consolidated
2020
$m

2019
$m

850 
884 
-  
-  
1,734 

1,134 
1,361 
1,134 
14,565 
18,194 

873 
204 

1,077 

884 
-  

884 

558 

391 

(462)

(379)

1 

2 

3 

A fully-franked special dividend of 100 cents per share was paid on 
10 April 2019.
The capital distribution and demerger dividend represents the fair value of the 
Coles distribution to shareholders. 
The fully-franked special dividend reflects the distribution of profits on the sale 
of the 10.1 per cent interest in Coles during FY2020. 

Wesfarmers’ dividend policy considers availability of franking 
credits, current earnings and future cash flow requirements and 
targeted credit metrics.  

The Group operates a dividend investment plan which allows 
eligible shareholders to elect to invest dividends in ordinary 
shares. All holders of Wesfarmers ordinary shares with addresses 
in Australia or New Zealand are eligible to participate in this plan. 
The allocation price for shares is based on the average of the daily 
volume-weighted average price of Wesfarmers ordinary shares sold 
on the Australian Securities Exchange, calculated with reference 
to a period of not less than five consecutive trading days as 
determined by the directors.

An issue of shares under the dividend investment plan results in an 
increase in issued capital unless the Group elects to purchase the 
required number of shares on-market.

15. Equity and reserves
The nature of the Group’s contributed equity
Ordinary shares are fully paid and have no par value. They carry 
one vote per share and the right to dividends. They bear no special 
terms or conditions affecting income or capital entitlements of the 
shareholders and are classified as equity.

Reserved shares are ordinary shares that have been repurchased 
by the company and are being held for future use. They include 
employee reserved shares, which are shares issued to employees 
under the share loan plan. Once the share loan has been paid 
in full, they are converted to ordinary shares and issued to the 
employee.

Incremental costs directly attributable to the issue of new shares 
are shown in equity as a deduction, net of tax, from the proceeds. 
There are no shares authorised for issue that have not been issued 
at the reporting date.

Movement in shares 
on issue

Ordinary shares
$m

'000

Reserved shares
$m

'000

At 1 July 2018
Exercise of 
in-substance options
Acquisition of 
shares-on-market for 
WLTIP
Acquisition of 
shares-on-market for 
KEEPP
KEEPP and WLTIP 
vested during the year
Demerger capital 
distribution1
Demerger transaction 
costs, net of tax 
Transfer from other 
reserves
At 30 June 2019 and 
1 July 2019
Exercise of 
in-substance options
Acquisition of 
shares-on-market for 
WLTIP
Acquisition of 
shares-on-market for 
KEEPP
KEEPP vested during 
the year
Transfer from other 
reserves
At 30 June 2020

1,133,840  22,277 

(2,342)

(43)

-  

-  

-  

-  

-  

-  

-  

-  

-  

(6,441)

-  

-  

(41)

14 

119 

-  

(174)

(5)

(1,056)

(33)

744 

-  

-  

-  

-  

-  

-  

-  

1,133,840  15,809 

(2,709)

(81)

-  

-  

-  

-  

-  

-  

-  

-  

105 

(17)

-  

-  

(185)

(8)

271 

-  

9 
-  
1,133,840  15,818 

-  
(2,535)

-  
(89)

Shareholder distributions

Interim dividend

Final dividend 
(FY20: proposed)

Special dividend 
(FY20: proposed)

1 

The capital distribution is the allocation of the Coles demerger distribution to 
share capital and has been calculated by reference to the market value of Coles' 
shares and the market value of Wesfarmers' shares post-demerger.

$/share

3.0
2.5
2.0
1.5
1.0
0.5
0.0

2016

2017

2018

2019

2020

140

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Notes to the financial statements: Capital
For the year ended 30 June 2020

15. Equity and reserves (continued)

Capital reserve

Cash flow hedge reserve

2020
$m

2019
$m

24 

(60)

24 

27 

Demerger reserve

(5,860)

(5,860)

Financial assets reserve

Foreign currency  
translation reserve
Leasing reserve

26 

53 

5 

57 

(518)

-  

Restructure tax reserve

150 

150 

Share-based  
payments reserve

45 

48 

Total reserves

(6,140)

(5,549)

16. Earnings per share

Nature and purpose

The capital reserve was used to accumulate capital profits. The reserve can be used 
to pay dividends or issue bonus shares.

The hedging reserve records the portion of the gain or loss on a hedging instrument 
in a cash flow hedge that is determined to be in an effective hedge relationship. 
The change in cash flow hedge reserve for the year ended 30 June 2020 includes the 
after-tax net decrease in the market value of cash flow hedges from 30 June 2019, 
and comprised $68 million of foreign exchange rate contracts, $7 million of interest 
rate swaps and $12 million of commodity swaps.
The demerger reserve is used to recognise the gain on demerger of Coles and the 
demerger dividend.
The financial assets reserve records fair value changes on financial assets measured 
at fair value through other comprehensive income.
The foreign currency translation reserve is used to record exchange differences 
arising from the translation of the financial statements of foreign subsidiaries.
The leasing reserve is used to recognise the cumulative effect of adopting AASB 16 
at the date of initial application.
The restructure tax reserve is used to record the recognition of tax losses arising 
from the equity restructuring of the Group under the 2001 Ownership Simplification 
Plan. These tax losses were generated on adoption by the Group of the tax 
consolidation regime.
The share-based payments reserve is used to recognise the value of equity-settled 
share-based payments provided to employees, including key management 
personnel, as part of their remuneration.

Profit attributable to ordinary equity 
holders of the parent ($m)
WANOS1 used in the calculation of basic 
EPS (shares, million)2
WANOS1 used in the calculation of diluted 
EPS (shares, million)2

- Basic EPS (cents per share)
- Diluted EPS (cents per share)

Consolidated
2020

2019

1,697 

5,510 

1,131 

1,131 

1,132 
150.0
149.9 

1,132 
487.2 
486.7 

1  Weighted average number of ordinary shares.
2 

The variance in the WANOS used in the calculation of the basic EPS and the 
diluted EPS is attributable to the dilutive effect of in-substance options and 
restricted shares.

There have been no transactions involving ordinary shares 
between the reporting date and the date of completion of 
these financial statements, apart from the normal conversion 
of employee-reserved shares (treated as in-substance options) 
to unrestricted ordinary shares.

Calculation of earnings per share

Basic earnings per share
Basic earnings per share is calculated as net profit attributable to 
members of the parent, adjusted to exclude any costs of servicing 
equity (other than dividends), divided by the weighted average 
number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share
Diluted earnings per share is calculated as per basic earnings per 
share with an adjustment for the weighted average number of ordinary 
shares that would be issued on conversion of all dilutive potential 
ordinary shares. Dilution arises as a result of the employee reserved 
shares issued under the employee share plan being accounted for as 
in-substance options and unvested restricted shares.

Basic earnings per share

150.0 cents

cents/share
500

400

300

200

100

0

1 

2 

3 

4 

FY201

FY192

FY183

FY17

FY164

150.0

487.2

105.8

254.7

36.2

FY16

FY17

FY18

FY19

FY20

Basic EPS adjusted for significant items

FY2020 EPS of 150.0 cents per share includes significant items relating to 
non-cash impairments, write-offs and provisions for the Kmart Group, the 
non-cash impairment of WIS, the finalisation of tax positions on prior year 
disposals and the gain on sale of 10.1 per cent interest in Coles and subsequent 
revaluation of the retained interest. Excluding these items, basic EPS is 
183.4 per share.
FY2019 EPS of 487.2 cents per share includes significant items relating to 
the gains on disposal of Bengalla, KTAS and Quadrant Energy, the gain on 
demerger of Coles and the provision for Coles' supply chain automation. 
Excluding these items, basic EPS is 206.8 cents per share.
FY2018 EPS of 105.8 cents per share includes significant items relating to 
non-cash impairments and write-offs and store closure provisions at BUKI, 
loss on disposal of BUKI and Target's non-cash impairment, offset by the gain 
on disposal of the Curragh Coal Mine. Excluding these items, basic EPS is 
245.1 cents per share.
FY2016 EPS of 36.2 cents per share includes significant items relating to the 
post-tax impairments of Target and the Curragh Coal Mine and restructuring 
costs and provisions to reset Target . Excluding the impairments, basic EPS is 
200.4 cents per share. Excluding all significant items, basic EPS is 209.5 cents 
per share.

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Financial statements

Notes to the financial statements: Capital
For the year ended 30 June 2020

17.  Interest-bearing loans and borrowings

Current
Unsecured

Bank debt 
Capital market debt 

Non-current
Unsecured

Bank debt 
Capital market debt 

Total interest-bearing loans and borrowings

Consolidated
2019
2020
$m
$m

-  
503 
503 

6 
350 
356 

111 
2,042 
2,153 
2,656 

142 
2,531 
2,673 
3,029 

The illustration below provides details, including the principal 
repayment obligations, of all loans and borrowings on issue at 
30 June 2020.

Outstanding loans and borrowings

Funding activities
The Group continues its strategy of maintaining diversity of 
funding sources, pre-funding upcoming maturities (if required) and 
maintaining a presence in key markets. In March 2020, $350 million 
of domestic bonds matured and were repaid from available cash 
balances. No new bond issuances occurred during the year. In 
May 2020, $1,950 million of new two-year bank facilities were 
established with existing relationship banks.

Recognition and measurement
Capital market debt includes foreign and domestic corporate 
bonds. All loans and borrowings are initially recognised at fair value, 
less directly attributable transaction costs. After initial recognition, 
interest-bearing loans and borrowings are subsequently measured 
at amortised cost using the effective interest method. Gains and 
losses are recognised in profit or loss 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. 

Bank debt

Capital market debt

Current 
$503m

Non-current 
$2,153m

A$m
1,600

1,200

800

400

0

FY21

FY22

FY23

The table below sets out the movements in net borrowings for the periods presented.

Liabilities from financing 
activities

Borrowings 
due within 
one year 
$m
1,159 
1,005 
184 
-  
-  
(2,000)
8 
356 
(356)
508 
-  
(5)
-  
503 

Borrowings 
due after 
one year 
$m
2,965 
(171)
(184)
65 
2 
-  
(4)
2,673 
(25)
(508)
13 
-  
-  
2,153 

Assets held 
to hedge 
long-term 
borrowings 
$m
(353)
-  
-  
(60)
(2)
-  
31 
(384)
-  
-  
(17)
4 
11 
(386)

Total 
$m
3,771 
834 
-  
5 
-  
(2,000)
35 
2,645 
(381)
-  
(4)
(1)
11 
2,270 

Net debt as at 1 July 2018
Cash flows 
Transfers
Foreign exchange adjustments
Fair value changes, relating to hedged risk
Debt assumed by Coles on demerger
Other non-cash movements
Net debt as at 30 June 2019 and 1 July 2019
Cash flows 
Transfers
Foreign exchange adjustments
Fair value changes, relating to hedged risk
Other non-cash movements
Net debt as at 30 June 2020

142

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Notes to the financial statements: Risk
For the year ended 30 June 2020

18. Financial risk management
The Group holds financial instruments for the following purposes:

•  Financing: to raise finance for the Group’s operations or, in the case of short-term deposits, to invest surplus funds. The types of 
instruments used include bank loans, bank accepted bills, commercial paper, corporate bonds, cash and short-term deposits.

•  Operational: the Group’s activities generate financial instruments, including cash, trade receivables, trade payables and finance 

advances.

•  Risk management: to reduce risks arising from the financial instruments described above, including forward exchange contracts and 

interest rate swaps.

It is, and has been throughout the year, the Group’s policy that no speculative trading in financial instruments shall be undertaken.

The Group’s holding of these financial instruments exposes it to risk. The Board reviews and agrees the Group’s policies for managing 
each of these risks, which are summarised in the table below:

Risk 

Nature 

Liquidity risk (note 18(b))

Management 

Wesfarmers is exposed to liquidity risk 
primarily due to its capital management 
policies, which view debt as a key element 
of the Group’s capital structure (see note 13).
To facilitate effective use of debt as part of 
the capital structure, the Group continues 
to maintain investment grade credit ratings 
from Standard & Poor’s and Moody’s. These 
policies expose the Group to risk including 
the sufficiency of available unused facilities 
and the maturity profile of existing financial 
instruments.

Liquidity risk is managed centrally by Group Treasury, by considering 
over a period of time the operating cash flow forecasts of the underlying 
businesses and the degree of access to debt and equity capital markets.
The Group’s objective is to maintain a balance between continuity of 
funding and flexibility through the use of bank loans, bank accepted bills, 
commercial paper, corporate bonds and the overnight money market 
across a range of maturities. Although the bank debt facilities have fixed 
maturity dates, from time to time they are reviewed and extended, thus 
deferring the repayment of the principal. The Group aims to spread 
maturities to avoid excessive refinancing in any period.

Market risk (note 18(c))

Foreign 
currency risk 

The Group’s primary currency exposure 
is to the US dollar and arises from sales or 
purchases by a division in currencies other 
than the division’s functional currency. The 
Group is also exposed to the Euro through 
its borrowing facilities.
As a result of operations in New Zealand, 
the Group’s balance sheet can also be 
affected by movements in the AUD/NZD 
exchange rate. The Group mitigates the 
effect of its translational currency exposure 
by borrowing in NZ dollars in New Zealand.

Interest rate 
risk 

The Group’s exposure to the risk of 
changes in market interest rates relates 
primarily to the Group’s debt obligations 
that have floating interest rates.

The objective of the Group's policy on foreign exchange hedging is 
to protect the Group from adverse currency fluctuations. Hedging is 
implemented for the following reasons: 
•  protection of competitive position; and 
•  greater certainty of earnings due to protection from sudden currency 

movements.

The Group manages foreign currency risk centrally by hedging material 
foreign exchange exposures for firm commitments relating to sales or 
purchases or when highly probable forecast transactions have been 
identified.
The Group aims to hedge approximately 30 to 100 per cent of its 
non-capital expenditure-related foreign currency purchases for which 
firm commitments or highly probable forecast transactions exist, up to 24 
months forward. The Group also aims to hedge 100 per cent of capital 
expenditure-related foreign currency purchases, above divisional defined 
limits, to match expected payment dates and these may extend beyond 
12 months. The current hedge contracts extend out to February 2022. The 
Group has also hedged 100 per cent of its Euro borrowing facilities. 

The policy of the Group is to limit its exposure to adverse fluctuations in 
interest rates, which could erode the Group’s profitability and adversely 
affect shareholder value. Management reviews interest rate risk exposure 
on an ongoing basis (at least once each quarter) or whenever a major 
change in debt levels is anticipated. The review includes a reference to 
ongoing cash flow forecasts and considers future mergers, acquisitions, 
divestments, capital management and capital expenditure as appropriate. 
Recommendations in relation to interest rate hedging are provided to the 
Wesfarmers Chief Financial Officer for approval, as required.
To manage the interest rate exposure, the Group generally enters into 
interest rate swaps, in which it agrees to exchange, at specified intervals, 
the difference between fixed and variable rate interest amounts calculated 
by reference to an agreed-upon notional principal amount. These swaps 
are designated to hedge interest costs associated with underlying debt 
obligations.
Although Wesfarmers has issued Euro bonds, cross-currency swaps 
are in place that remove any exposure to Euro interest rates. These 
cross-currency swaps ensure that the effective interest rate to Wesfarmers 
is referenced to Australian interest rates.

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Financial statements

Notes to the financial statements: Risk
For the year ended 30 June 2020

18. Financial risk management (continued) 

Risk 

Nature 

Management 

Commodity 
price risk 

The Group’s exposure to commodity price 
risk is purely operational and arises from 
the purchase of inventory with commodity 
price as a significant input, such as natural 
gas and Brent oil.

Credit risk (note 18(d))

Credit risk is the risk that a contracting 
entity will not complete its obligation 
under a financial instrument or customer 
contract that will result in a financial loss 
to the Group. 
The Group is exposed to credit risk 
from its operating activities (primarily 
from customer receivables) and from its 
financing activities, including deposits 
with financial institutions, foreign 
exchange transactions and other 
financial instruments.

To manage commodity price risk, the Group has entered into a Brent 
oil future contract to hedge the variability in cash flows arising from 
movements in the natural gas price applicable to forecast natural gas 
purchases over three years, ending in December 2020.
The Group does not enter into any financial instruments that vary with 
movements in other commodity prices. Excluding the foreign exchange 
risk component, which is managed as part of the Group’s overall foreign 
exchange risk management policies and procedures referred to previously, 
these exposures are not hedged.
No commodity price sensitivity analysis is provided as a reasonable 
change in the Brent oil future would not have had a material impact to 
the Group this financial year and the Group's other commodity 'own use 
contracts' are outside the scope of AASB 9 Financial Instruments.

Customer credit risk is managed by each division subject to established 
policies, procedures and controls relating to customer credit risk 
management. The Group trades primarily with recognised, creditworthy 
third parties. Customers who wish to trade on credit terms are subject 
to credit verification procedures, including an assessment of their 
independent credit rating, financial position, past experience and industry 
reputation.
Receivables
Credit risk management practices include reviews of trade receivables 
aging by days past due, the timely follow-up of past due amounts and 
the use of credit securities such as credit insurance, retention of title and 
letters of credit. 
Financial instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed 
by Group Treasury in accordance with Board-approved policy. Investments 
of surplus funds are made only with approved counterparties who have 
investment grade credit ratings. Surplus funds are invested within credit 
limits assigned to each counterparty, unless appropriate approval is 
provided. 
The carrying amount of financial assets represents the maximum credit 
exposure. There are no significant concentrations of credit risk within 
the Group.

18(a)  Offsetting financial instruments

The Group presents its derivative assets and liabilities on a gross basis. Derivative financial instruments entered into by the Group are 
subject to enforceable master netting arrangements, such as an International Swaps and Derivatives Association (ISDA) master netting 
agreement. In certain circumstances, for example, when a credit event such as a default occurs, all outstanding transactions under an 
ISDA agreement are terminated, the termination value is assessed and only a single net amount is payable in settlement of all transactions.

The amounts set out in note 19 represent the derivative financial assets and liabilities of the Group, that are subject to the above 
arrangements, and are presented on a gross basis.

18(b)  Liquidity risk

The Group endeavours to maintain funding flexibility by keeping committed credit lines available with a variety of counterparties. Surplus 
funds are generally invested in instruments that are tradeable in highly liquid markets with highly rated counterparties. As at 30 June 2020, 
the Group has total undrawn financing facilities available of $5,005 million (2019: $3,000 million). 

The table on the following page analyses the Group’s financial liabilities, including net and gross settled financial instruments and lease 
liabilities, into relevant maturity periods based on the remaining period at the reporting date to the contractual maturity date. The amounts 
disclosed in the tables are the contractual undiscounted cash flows and will not necessarily reconcile with the amounts disclosed in the 
balance sheet.

Expected future interest payments on loans and borrowings and derivative cash flows exclude accruals recognised in trade and other 
payables at the reporting date. 

For foreign exchange derivatives, cross-currency interest rate swaps and hedged commodity swaps, the amounts disclosed are the gross 
contractual cash flows to be paid. 

For interest rate swaps, the cash flows are the net amounts to be paid at each quarter, excluding accruals included in trade and other 
payables at the reporting date, and have been estimated using forward interest rates applicable at the reporting date.

144

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Notes to the financial statements: Risk
For the year ended 30 June 2020

18(b)  Liquidity risk (continued)

< 3 
months,  
or on 
demand
$m

3-12 
months
$m

1-2 
years
$m

2-3 
years
$m

3-4 
years
$m

4-5 
years
$m

>5 
years
$m

Total 
contractual 
cash flows
$m

Carrying 
amount 
(assets)/ 
liabilities
$m

3,768

234

6

-

-

500

1,113

1,085

-

-

-

-

-

-

4,008

4,008

2,698

2,656

3
308

9
901

43
1,128

30
1,061

-
989

-
899

-
2,932

85
8,218

-
7,242

-

2

1

(3)

1

51

-

-

-

-

(104)

(329)

-

-

-

-

-

-

-

-

-

(3)

3

(3)

3

(381)

(383)

10
4,092

29
1,722

1
2,187

-
1,847

-
989

-
899

-
2,932

40
14,668

41
13,564

 3,343 

 277 

 - 

 - 

 - 

 6 

 350 

 500 

 1,164 

 1,114 

 8 

-

(3)

1

 28 

 54 

 46 

 31 

(4)

(7)

(3)

(4)

-

-

-

-

51

44

(125)

(359)

(29)
3,326

(51)
644

(11)
580

-
1,085

-
786

 - 

 - 

 - 

-

-

-

-
-

 - 

 - 

 - 

-

-

-

-
-

3,620

 3,620 

3,134

 3,029 

167

(7)

(14)

 - 

(7)

(14)

(388)

(377)

(91)
6,421

(88)
6,163

Consolidated

Year ended 30 June 2020

Trade and other payables
Loans and borrowings before 
swaps
Expected future interest 
payments on loans and 
borrowings
Lease liabilities 
Hedge interest rate swaps (net 
settled)
Hedged commodity swaps (net 
settled)
Cross-currency interest rate 
swaps (gross settled)
Hedge forward exchange 
contracts (gross settled)
Total 

Year ended 30 June 2019

Trade and other payables
Loans and borrowings before 
swaps
Expected future interest 
payments on loans and 
borrowings
Hedge interest rate swaps (net 
settled)
Hedged commodity swaps (net 
settled)
Cross-currency interest rate 
swaps (gross settled)
Hedge forward exchange 
contracts (gross settled)
Total 

18(c)  Market risk 

Foreign exchange risk
The Group's exposure to the US dollar and Euro (prior to hedging contracts) at the reporting date were as follows:

Consolidated

Financial assets
Cash and cash equivalents
Trade and other receivables
Cross-currency interest rate swap
Hedge foreign exchange derivative assets
Commodity derivative asset
Financial liabilities
Trade and other payables
Interest-bearing loans and borrowings
Commodity derivative liability
Hedge foreign exchange derivative liabilities 
Net exposure 

2020

2019

USD
A$m

EUR
A$m

USD
A$m

EUR
A$m

6
18
-
-
-

-
-
383
-
-

18
21
-
88
14

3
-
377
-
-

(995)
-
(3)
(40)
(1,014)

(36)
(2,045)
-
(1)
(1,699)

(1,029)
-
-
-
(888)

(33)
(2,029)
-
-
(1,682)

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Financial statements

Notes to the financial statements: Risk
For the year ended 30 June 2020

18(c)  Market risk (continued)
Group's sensitivity to foreign exchange movements 
The sensitivity analysis below shows the impact that a reasonably 
possible change in foreign exchange rates over a financial year 
would have on profit after tax and equity, based solely on the 
Group’s foreign exchange risk exposures existing at the balance 
sheet date. The Group has used the observed range of actual 
historical rates for the preceding five-year period, with a heavier 
weighting placed on recently observed market data, in determining 
reasonably possible exchange movements to be used for the 
current year’s sensitivity analysis. Past movements are not 
necessarily indicative of future movements. The following exchange 
rates have been used in performing the sensitivity analysis:

Consolidated

USD

EUR

USD

EUR

2020

2019

Actual
+10% (2019: +10%)
-10% (2019: -10%)

0.69
0.76
0.62

0.61
0.67
0.55

0.70
0.77
0.63

0.62
0.68
0.56

Floating rate
Cash assets

The impact on profit and equity is estimated by applying the 
hypothetical changes in the US dollar and Euro exchange rate to 
the balance of financial instruments at the reporting date. 

Differences from the translation of financial statements into the 
Group’s presentation currency are not taken into consideration in 
the sensitivity analysis and as such the NZ dollar has no material 
impact. The results of the foreign exchange rate sensitivity analysis 
are driven by three main factors, as outlined below:

• 

• 

the impact of applying the above foreign exchange 
movements to financial instruments that are not in hedge 
relationships will be recognised directly in profit;

to the extent that the foreign currency denominated derivatives 
on balance sheet form part of an effective cash flow hedge 
relationship, any fair value movements caused by applying the 
above sensitivity movements will be deferred in equity and will 
not affect profit; and

•  movements in financial instruments forming part of an effective 

fair value hedge relationship will be recognised in profit. 
However, as a corresponding entry will be recognised for the 
hedged item, there will be no net effect on profit.

At 30 June 2020, had the Australian dollar moved against the 
US dollar and Euro, as illustrated in the table above, with all other 
variables held constant, the Group’s profit after tax and other equity 
would have been affected by the change in value of its financial 
assets and financial liabilities as shown in the table below:

2020
A$m

2019
A$m

• 

• 

10
(143)

3
175

3
47

(3)
(57)

11
(161)

2
197

2
44

(2)
(53)

Consolidated

AUD/USD +10% (2019: +10%)
- impact on profit
- impact on equity 
AUD/USD -10% (2019: -10%)
- impact on profit
- impact on equity 

AUD/EUR +10% (2019: +10%)
- impact on profit
- impact on equity 
AUD/EUR -10% (2019: -10%)
- impact on profit
- impact on equity 

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Interest rate risk 
As at the reporting date, the Group had financial assets and 
liabilities with exposure to interest rate risk as shown in the table 
below. Interest on financial instruments, classified as floating rate, 
is repriced at intervals of less than one year. Interest on financial 
instruments, classified as fixed rate, is fixed until maturity of the 
instrument. The classification between fixed and floating interest 
takes into account applicable hedge instruments.

Consolidated

Financial assets
Fixed rate
Finance advances and loans

Financial liabilities
Fixed rate
Capital market debt 

Floating rate
Unsecured bank loans
Capital market debt 

2020
$m

2019
$m

3

3

2,741

529

2,042

2,374

111
503

148
507

At 30 June 2020, after taking into account the effect of interest rate 
swaps, economic hedging relationships and early repayment of 
a portion of core debt facilities, approximately 28 per cent of the 
Group’s core borrowings are exposed to movements in variable 
rates (2019: approximately 25 per cent). 

Group's sensitivity to interest rate movements
The following sensitivity analysis shows the impact that a 
reasonably possible change in interest rates would have on Group 
profit after tax and equity. The impact is determined by assessing 
the effect that such a reasonably possible change in interest rates 
would have had on the interest income/(expense) and the impact 
on financial instrument fair values. This sensitivity is based on 
reasonably possible changes over a financial year, determined 
using observed historical interest rate movements for the preceding 
five-year period, with a heavier weighting given to more recent 
market data.

The results of the sensitivity analysis are driven by three main 
factors, as outlined below:

for unhedged floating rate financial instruments, any increase 
or decrease in interest rates will impact profit;

to the extent that derivatives form part of an effective cash 
flow hedge relationship, there will be no impact on profit and 
any increase/(decrease) in the fair value of the underlying 
derivative instruments will be deferred in equity; and

•  movements in the fair value of derivatives in an effective fair 
value hedge relationship will be recognised directly in profit. 
However, as a corresponding entry will be recognised for the 
hedged item, there will be no net impact on profit.

Notes to the financial statements: Risk
For the year ended 30 June 2020

18(c)  Market risk (continued)
The following sensitivity analysis is based on the Australian 
variable interest rate risk exposures in existence at balance sheet 
date. If interest rates had moved by +/-50bps (basis points) 
(2019: +/- 50bps) and with all other variables held constant, profit 
after tax and equity would be affected as follows:

18(e)  Fair values 

The carrying amounts and estimated fair values of all the Group's 
financial instruments carried at amortised cost recognised in the 
financial statements are materially the same with the exception of 
the following:

2020
$m

2019
$m

Consolidated

Capital market debt: carrying amount
Capital market debt: fair value 

2020
$m

2019
$m

 2,545 
 2,574 

 2,881 
 2,974 

Consolidated

+ 50bps (2019: +50bps)
- impact on profit
- impact on equity 

- 50bps (2019: -50bps)
- impact on profit
- impact on equity 

18(d)  Credit risk

7
10

(7)
(10)

-
16

-
(16)

The carrying amount of current receivables represents the Group's 
maximum credit exposure. 

The Group applies the simplified approach in measuring expected 
credit losses (ECLs) for trade receivables and other short-term 
debtors, whereby an allowance for impairment is considered across 
all trade receivables and other short-term debtors, regardless 
of whether a credit event has occurred, based on the expected 
losses over the lifetime of the receivable. Therefore, the Group 
does not track changes in credit risk but instead recognises a 
loss allowance based on lifetime ECLs at each reporting date. The 
Group has established the following provision matrix that is based 
on its historical credit loss experience, adjusted for forward-looking 
factors specific to debtors and the economic climate. 

Trade receivables - 
days past due 

2020
Current 
Under one month 
One to two months 
Two to three months 
Over three months 
Total 

2019
Current 
Under one month 
One to two months 
Two to three months 
Over three months 
Total 

Estimated total 
gross carrying 
amount at default 
($m)

Expected 
credit 
loss rate 
(%)

Lifetime 
expected 
credit 
loss ($m) 

850 
 133 
 18 
 28 
 28 
 1,057 

784
141
40
22
87
 1,074 

0.3
1.6
8.3
9.3
52.9

0.3
0.8
3.8
5.0
46.9

3 
2 
1 
3 
14 
23

2 
1 
2 
1 
41 
47

The Group’s exposure to bad debts is not significant and default 
rates have historically been very low. Trade receivables are written 
off when there is no reasonable expectation of recovery, which may 
be indicated by the debtor failing to engage in a payment plan or 
the debtor failing to make timely contractual payments.

The methods and assumptions used to estimate the fair value of 
financial instruments are as follows: 

Cash 
The carrying amount is fair value due to the asset's liquid nature.

Receivables/payables 
Due to the short-term nature of these financial rights and 
obligations, carrying amounts are estimated to represent fair values. 

Other financial assets/liabilities 
The fair values of capital market debt held at fair value have been 
calculated by discounting the expected future cash flows at 
prevailing interest rates using market observable inputs. The fair 
values other financial assets have been calculated using market 
interest rates. The fair values of listed investments, classified as 
financial assets held at FVOCI, have been calculated using quoted 
share prices.

Derivatives 
The Group enters into derivative financial instruments with various 
counterparties, principally financial institutions with investment 
grade credit ratings. Foreign exchange forward contracts, interest 
rate swap contracts, cross-currency interest rate swaps and the 
commodity future contract are all valued using forward pricing 
techniques. This includes the use of market observable inputs, 
such as foreign exchange spot and forward rates, yield curves of 
the respective currencies, interest rate curves and forward rate 
curves of the underlying commodity. Accordingly, these derivatives 
are classified as Level 2 in the fair value measurement hierarchy.

Valuation of financial instruments 
For all fair value measurements and disclosures, the Group uses 
the following to categorise the method used:

•  Level 1: the fair value is calculated using quoted prices in 

active markets.

•  Level 2: the 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: the fair value is estimated using inputs for the asset or 

liability that are not based on observable market data.

The Group’s financial instruments were primarily valued using 
market observable inputs (Level 2), with the exception of financial 
assets measured at FVOCI (Level 1) and shares in unlisted 
companies at fair value (Level 3) that were valued at $1 million 
(2019: $1 million).

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 reassessing 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. 
There were no transfers between Level 1 and Level 2 during the 
year. There were no Level 3 fair value movements during the year.

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Financial statements

Notes to the financial statements: Risk
For the year ended 30 June 2020

19. Hedging
Types of hedging instruments
The Group is exposed to risk from movements in foreign 
exchange, interest rates and commodity prices. As part of the 
risk management strategy set out in note 18, the Group holds the 
following types of derivative instruments:

Forward exchange contracts: contracts denominated in US dollar 
and Euro to hedge highly probable sale and purchase transactions 
(cash flow hedges).

Interest rate swaps: to optimise the Group’s exposure to fixed 
and floating interest rates arising from borrowings. These hedges 
incorporate cash flow hedges, which fix future interest payments, 
and fair value hedges, which reduce the Group’s exposure to 
changes in the value of its assets and liabilities arising from interest 
rate movements.

Cross-currency interest rate swaps: to either reduce the Group’s 
exposure to exchange rate variability in its interest repayments 
of foreign currency denominated debt (cash flow hedges) or to 
hedge against movements in the fair value of those liabilities due 
to exchange and interest rate movements (fair value hedges). The 
borrowing margin on cross-currency interest rate swaps has been 
treated as a ‘cost of hedging’ and deferred into equity. These costs 
are then amortised to the profit and loss as a finance cost over the 
remaining life of the borrowing.

Brent oil future contract: to reduce the Group’s exposure to price 
variability in its forecast purchase of natural gas (cash flow hedge).

Notional

$m

2020

Weighted 
average 
hedged rate

Asset Liability

Notional

$m

$m

$m

2019
Weighted 
average 
hedged rate

Asset

Liability

$m

$m

Foreign exchange contracts

Cash flow hedge - sales (AUD)

US$14

Cash flow hedge - purchases (AUD)

US$2,044

Cash flow hedge - purchases (NZD)

US$146

Cash flow hedge - purchases (AUD)

Interest rate swap contracts

Fair value hedge

€ 8

A$300

Asset: 0.65 
Liability: Nil
Asset: 0.71 
Liability: 0.66
Asset: 0.67 
Liability: 0.62
Asset: 0.61 
Liability: 0.57

BBSW +            
0.82% 
floating

 1 

 - 

US$30

 37 

(76) US$2,274

 3 

 - 

 3 

(5)

US$149

(1)

 - 

€ 1

A$300

Asset: 0.70 
Liability: 0.71
Asset: 0.74 
Liability: 0.70
Asset: 0.69 
Liability: 0.66
Asset: 0.87 
Liability: 0.91

BBSW + 
0.82% 
floating

-  

93 

3 

-  

7 

Cross-currency interest rate swaps

Cash flow hedge
Brent oil contracts
Cash flow hedge

€ 1,250

5.32% fixed

 383 

 - 

€ 1,250

5.32% fixed

377 

0.257m 
barrels

AU$70.34  
per barrel

 - 

(3)

0.696m 
barrels

AU$69.50  
per barrel

14

-  

(7)

(1)

-  

-  

-  

-  

Total derivative asset/(liability)

 427 

(85)

494 

(8)

Recognition and measurement

Recognition 
Derivative financial instruments are initially recognised at fair 
value on the date on which a derivative contract is entered into 
and are subsequently remeasured to fair value per note 18(e). The 
method of recognising any remeasurement gain or loss depends 
on the nature of the item being hedged. For hedging instruments, 
any hedge ineffectiveness is recognised directly in the income 
statement in the period in which it is incurred. This was immaterial 
in the current year.

For the purposes of hedge accounting, hedges are classified as:

•  Fair value hedges when they hedge the exposure to changes 

in the fair value of a recognised asset, liability or firm 
commitment that could affect profit or loss; or

•  Cash flow hedges when they hedge a particular risk 

associated with the cash flows of recognised assets and 
liabilities and highly probable forecast transactions. A hedge 
of the foreign currency risk of a firm commitment is accounted 
for as a cash flow hedge.

Hedge accounting
At the start of a hedge relationship, the Group formally designates 
and documents the hedge relationship, including the risk 
management strategy for undertaking the hedge. This includes 
identification of the hedging instrument, the hedged item or 
transaction, the nature of the risk being hedged and how the entity 
will assess the hedging instrument’s effectiveness (including the 
analysis of sources of hedge ineffectiveness and how the hedge 
ratio is determined). Hedge accounting is only applied where there 
is an economic relationship between the hedged item and the 
hedging instrument and the hedge ratio of the hedging relationship 
is the same as that resulting from actual quantities of the hedged 
item and hedging instrument used.

148

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Wesfarmers will discontinue hedge accounting prospectively only 
when the hedging relationship, or part of the hedging relationship 
no longer qualifies for hedge accounting, which includes where 
there has been a change to the risk management objective and 
strategy for undertaking the hedge and instances when the hedging 
instrument expires or is sold, terminated or exercised. For these 
purposes, the replacement or rollover of a hedging instrument into 
another hedging instrument is not an expiration or termination if 
such a replacement or rollover is consistent with our documented 
risk management objective. 

Notes to the financial statements: Risk
For the year ended 30 June 2020

19. Hedging (continued)
Hedges that meet the criteria for hedge accounting are classified and accounted for as follows:

Fair value hedges
The Group uses fair value hedges to mitigate the risk of changes in the fair value of foreign currency borrowings from foreign currency 
and interest rate fluctuations over the hedging period. Where these fair value hedges qualify for hedge accounting, gains or losses from 
remeasuring the fair value of the hedging instrument are recognised within finance costs in the income statement, together with gains or 
losses in relation to the hedged item where those gains or losses relate to the risk intended to be hedged. The net amount recognised in 
the income statement in this financial year was less than $1 million (2019: $1 million).

The maturity profile of the fair value hedges is shown in note 18(b). 

If the hedged item is a firm commitment (and therefore not recognised), the subsequent cumulative change in the fair value of the hedged 
risk is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss. The changes in the fair value of the 
hedging instrument are also recognised in profit or loss.

The accumulated amount of fair value adjustments which are included in the carrying amount of interest bearing loans and borrowings in 
the balance sheet is as follows:

Face value at inception
Change arising from revaluation to spot rates at 30 June

Balance of unamortised discount/premium
Amortised cost
Accumulated amount of fair value hedge adjustment attributable to hedged risk 
Carrying amount

2020

2019

Foreign 
bonds
$m
 1,630 
 415 
 2,045 

(3)
 2,042 
- 
 2,042 

Domestic 
bonds
$m
 500 
 - 
 500 

- 
 500 
 3 
 503 

Foreign 
bonds
$m
 1,630 
 399 
 2,029 

(5)
 2,024 
 - 
 2,024 

Domestic 
bonds
$m
 850 
 - 
 850 

(1)
 849 
 8 
 857 

There was no material ineffectiveness relating to financial instruments in designated fair value hedge relationships during the year 
(2019: nil).

Cash flow hedges
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 associated with our foreign currency borrowings and ongoing business activities, predominantly where we have 
highly probable purchase or settlement commitments in foreign currencies. The Group also uses cash flow hedges to hedge variability in 
cash flows due to interest rate or natural gas price movements associated with some of our domestic borrowings or forecast natural gas 
purchases respectively. 

For cash flow hedges, the portion of the gain or loss on the hedging instrument that is effective is recognised directly in equity, while the 
ineffective portion is recognised in profit or loss. The maturity profile of these hedges is shown in note 18(b) with the recognition of the gain 
or loss expected to be consistent with this profile.

2020

2019

Trade
$m

Foreign 
bonds
$m

Foreign 
debt
$m

Commodity 
hedge
$m

Trade
$m

Foreign 
bonds
$m

Foreign 
debt
$m

Commodity 
hedge
$m

Change in the fair value of 
the hedged item 

(129)

5 

- 

(17)

(32)

28 

- 

(14)

Amounts recognised in equity are transferred to the income statement when the hedged transaction affects profit or loss, such as when 
hedged income or expenses are recognised or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or 
liability, the amounts taken to equity are transferred to the initial carrying amount of the non-financial asset or liability.

If the forecast transaction is no longer expected to occur, amounts previously recognised in equity are transferred to the income 
statement. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a 
hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction occurs.

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Financial statements

Notes to the financial statements: Risk
For the year ended 30 June 2020

20. Impairment of non-financial assets
Testing for impairment
The Group tests property, plant and equipment, goodwill and 
intangibles and right-of-use assets for impairment:

•  at least annually for indefinite life intangibles and goodwill; and

•  where there is an indication that the asset may be impaired 

(which is assessed at least each reporting date); or

•  where there is an indication that previously recognised 

impairment (on assets other than goodwill) may have changed.

Discount rates used in both calculations are based on the weighted 
average cost of capital determined by prevailing or benchmarked 
market inputs, risk adjusted where necessary. Other assumptions 
are determined with reference to external sources of information 
and use consistent estimates for variables such as terminal 
cash flow multiples. Increases in discount rates or changes in 
other key assumptions, such as operating conditions or financial 
performance, may cause the recoverable amounts to fall below 
carrying values.

Annual impairment testing of intangibles and goodwill is performed 
at 31 March each year to coincide with the timing of the annual 
corporate plan and business forecast process. 

Recognised impairment

Industrial and Safety

The carrying values of mineral rights and capitalised exploration 
and evaluation assets are reviewed at each reporting date for 
indicators of impairment in accordance with AASB 6 Exploration 
for and Evaluation of Mineral Resources (AASB 6), and, when 
indicators are identified, tested for impairment in accordance with 
AASB 136 Impairment of Assets.

If the asset does not generate independent cash inflows and 
its value in use cannot be estimated to be close to its fair value, 
the asset is tested for impairment as part of the cash generating 
unit (CGU) to which it belongs. Mineral rights or exploration and 
evaluation assets are allocated to the CGU to which the exploration 
activity relates.  

Assets are impaired if their carrying value exceeds their recoverable 
amount. The recoverable amount of an asset or CGU is determined 
as the higher of its fair value less costs of disposal (FVLCOD) and 
value in use (VIU).

Impairment calculations
In assessing VIU, the estimated future cash flows are discounted 
to their present value using a discount rate that reflects current 
market assessments of the time value of money and the risks 
specific to the asset or CGU. In determining FVLCOD, a discounted 
cash flow model is used based on a methodology consistent with 
that applied by the Group in determining the value of potential 
acquisition targets, maximising the use of market observed inputs. 
These calculations, classified as Level 3 on the fair value hierarchy, 
are compared to valuation multiples, or other fair value indicators 
where available, to ensure reasonableness. 

Inputs to impairment calculations
For VIU calculations, cash flow projections are based on 
Wesfarmers’ corporate plans and business forecasts prepared by 
management and approved by the Board. The corporate plans 
are developed annually with a five-year outlook and, for these 
calculations, are adjusted to exclude the costs and benefits of 
expansion capital and on the understanding that actual outcomes 
may differ from the assumptions used.

In determining FVLCOD, the valuation model incorporates the cash 
flows projected over the balance of the current corporate plan 
period. These projections are discounted using a risk-adjusted 
discount rate commensurate with a typical market participant’s 
assessment of the risk associated with the projected cash flows. 

For both the VIU and FVLCOD models, cash flows beyond the 
five-year corporate plan period are extrapolated using estimated 
growth rates, which are based on Group estimates, taking into 
consideration historical performance as well as expected long-term 
operating conditions. Growth rates do not exceed the consensus 
forecasts of the long-term average growth rate for the industry in 
which the CGU operates.

The potential impacts of COVID-19 have been considered in the 
Group's impairment testing through downside scenario analysis. 

150

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In the second half of financial year 2020, the deterioration in 
economic conditions resulted in lower customer demand, and, 
along with uncertainty as to future economic conditions in a 
COVID-19 affected environment, impacted the forecast profitability 
of the Industrial and Safety division, requiring an impairment of 
goodwill and other assets. 

Impairment of $40 million ($28 million post-tax) was recognised 
on other assets where the recoverable amount of the assets was 
determined to be nil. In addition, the Industrial and Safety CGU 
was tested for impairment and as the carrying value exceeded its 
recoverable amount, impairment of $270 million was recognised 
against goodwill.

The methodology and key assumptions applied in assessing the 
recoverable amount of the Industrial and Safety CGU are outlined 
on the following page. 

Kmart Group - Target business

During the year, the first phase of the strategic review into the 
operations of Target was completed, identifying a number of 
actions to accelerate the growth of Kmart and address the 
unsustainable financial performance of Target. These actions 
included the conversion of suitable Target stores to Kmart stores, 
the closure of a number of Target stores and a restructuring of the 
Target store support offi ce.

In conjunction with the restructuring, and as a result of the 
under-performance of Target stores, the Target trading store 
CGUs, including associated distribution centre and support office 
assets, were tested for impairment, resulting in total pre-tax 
impairments to store plant and equipment of $133 million and lease 
right-of-use assets of $161 million. As the remaining significant 
asset associated with Target is the Target brand name, the value of 
which is supported by the cash flows of the underlying stores, an 
impairment test was also conducted to determine the recoverable 
amount of the brand name, resulting in a pre-tax impairment of 
$231 million.

The impairment recognised on Target assets as described above 
totalled $525 million ($437 million post-tax). The key assumptions 
for assessing the recoverable amounts of the Target assets are 
outlined on the following page.

Reversal of impairment

Where there is an indication that previously recognised impairment 
losses may no longer exist or have decreased, the asset is tested. 
If there has been a change to the estimates used to determine 
the asset’s recoverable amount since the last impairment loss 
was recognised, the carrying value of the asset is increased to 
its recoverable amount. That increased amount cannot exceed 
the carrying value that would have been determined, net of 
depreciation, had no impairment loss been recognised for the 
asset in prior years. Such reversal is recognised in profit or loss 
and the depreciation charge is adjusted in future periods to 
allocate the asset’s revised carrying value, less any residual value, 
on a systematic basis over its remaining useful life. Impairments 
recognised against goodwill are not reversed.

There were no material reversals of impairment during the 
2020 financial year. 

Notes to the financial statements: Risk
For the year ended 30 June 2020

20. Impairment of non-financial assets (continued)

Key estimates: impairment of non-financial assets

Industrial and Safety CGU

The key assumptions used for assessing the recoverable amount of the Industrial and Safety CGU are set out below. The 
recoverable value has been determined using the FVLCOD methodology. 

Earnings growth over the forecast period is supported by a transformation program, which is currently underway, to invest in 
a new enterprise-wide resource planning system and data and digital systems to realise productivity improvements, improve 
customer experience, enhance supply chain efficiency, build merchandising capability and sales force effectiveness designed to 
increase market share.

The post-tax discount rates incorporate a risk-adjustment relative to the risks associated with the net post-tax cash flows being 
achieved, while the growth rates beyond FY2025 are based on market estimates of the long-term average industry growth rate. 

Discount rate (post-tax)
Growth rate beyond corporate plan (nominal)
Headroom as a percentage of the CGU’s net carrying value
Terminal value as a percentage of the CGU’s recoverable value

Industrial and Safety
2019

2020

11.1%
2.5%
-
86.4%

9.0%
3.0%
4.4%
83.8%

As the Industrial and Safety CGU's carrying value has been impaired to its recoverable amount at 30 June 2020, any adverse 
movements in key assumptions may lead to further impairment. The forecast improvement in the CGU's financial performance is 
expected to occur in the medium term given the lead time in application of the transformation program. 

The recoverable value of Industrial and Safety is sensitive to changes in its discount rate and its forecast terminal cash flow that 
drives terminal value. A 60 basis point increase in its discount rate or a ten per cent reduction in its forecast terminal cash flow 
would result in an approximate $100 million additional impairment to the carrying value of the Industrial and Safety CGU.

Kmart Group CGU - Target business (including brand, store and other assets)

Trading store CGUs

The recoverable amounts for each of the trading store CGUs were determined using VIU calculations, based on forecast cash 
flows for those stores over their respective remaining lives, incorporating the planned outcomes of the committed restructuring 
plan. Each trading store CGU primarily comprised store plant and equipment and right-of-use assets. A post-tax discount rate of 
12.0 per cent was adopted in the impairment calculation. Distribution centre and support office assets associated with the stores 
were also tested for impairment. A majority of store CGUs were impaired to their recoverable amounts at 30 June 2020 and an 
impairment loss of $294 million was recognised. Any adverse movements in key assumptions may lead to further impairment. 

Target brand

As part of the impairment of the Target business, the recoverable amount of the Target brand was assessed on a FVLCOD basis, 
using the relief from royalty methodology. The key assumptions applied in the valuation are set out below.

Discount rate (post-tax)
Royalty rate
Terminal growth rate (nominal)

Target brand

2020

12.0%
0.7%
2.5%

The other key assumption applied in the brand valuation are forecast revenues, which are consistent with the assumptions 
applied in the store impairment testing but include online sales. As the Target brand's carrying value has been impaired to its 
recoverable amount of $62 million at 30 June 2020, any adverse movements in key assumptions may lead to further impairment. 

Australian Light Minerals (ALM)

In accordance with AASB 6, the Group has assessed the mineral rights asset (Mt Holland lithium project), held by ALM for 
indicators of impairment. Given the relative decline in short-term lithium hydroxide prices, the life-of-mine valuation model 
prepared at acquisition was updated to assess the potential impact of the decline in pricing on the project at 30 June 2020. 
Based on the sensitivities performed, management does not consider the decline in pricing to be an indicator of impairment. 
The Group intends to continue to enhance the project economics, with the aim of reaching a final investment decision in the first 
quarter of the calendar year 2021. The recoverability of the carrying amount is dependent on the successful development and 
commercial exploitation, or alternatively, sale of the area of interest.

Other CGUs

The Group has assessed the recoverable amounts of other CGUs with goodwill and other indefinite life intangible assets using 
VIU calculations and considered potential downside scenarios in respect of the impact of COVID-19. Discount rates applied in 
the impairment testing for the Bunnings, Kmart Group and Officeworks CGUs ranged from 9.3 per cent to 10.6 per cent. Terminal 
growth rates ranging from 2.0 per cent to 2.6 per cent were also applied. Based on current economic conditions and CGU 
performances, other than as noted above, no reasonably possible change in a key assumption used in the determination of the 
recoverable value of CGUs would result in a material impairment to the Group.

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group information
For the year ended 30 June 2020

21. Associates and joint arrangements

Consolidated
2020
$m

2019
$m

 625 
 85 
 710 

 3,337 
 56 
3,393 

 3,337 

 705 

 193 
(157)
(50)
-  
(1,819)

 232 
(68)
-  
3 
(106)

 - 
(879)

 2,571 
-  

 625 

3,337 

 193 
 - 
 20 
(1)
 212 

227 
(1)
2 
-  
228 

Investment in associates
Interest in joint ventures

Movement in investment in associates
Net carrying amount at the beginning of 
the year
Share of net profit from operations of 
associates
Dividends
Capital returns
Movement in reserves
Associates disposed of during the year
Value of retained interest in Coles at date 
of demerger
Associate derecognised during the year
Net carrying amount at the end of the 
year

Total comprehensive income from 
associates and joint ventures
Share of net profit from associates
Other comprehensive loss of associates
Share of profits from joint ventures
Other comprehensive income of joint ventures
Total comprehensive income for the year

Recognition and measurement 

Investment in associates

The Group’s investments in its associates, being entities in which the 
Group has significant influence and are neither subsidiaries or joint 
arrangements, are accounted for using the equity method. Under this 
method, the investment in associate is carried in the balance sheet 
at cost plus any post-acquisition changes in the Group’s share of the 
net assets of the associate. 
Goodwill relating to associates is included in the carrying amount 
of the investment and is not amortised. After application of the 
equity method, the Group determines whether it is necessary to 
recognise any additional impairment loss with respect to the Group’s 
investment. The income statement reflects the Group’s share of the 
results of the operations of the associate.
Where there has been a change recognised directly in the equity of 
the associate, the Group recognises its share of any changes and 
discloses this in the statement of comprehensive income.
Where the reporting dates of the associates and the Group vary, 
management accounts of the associate for the period to the Group’s 
balance date are used for equity accounting. The accounting policies 
of associates are consistent with those used by the Group for like 
transactions and events in similar circumstances.

Investment properties owned by associates are initially measured at 
cost, including transaction costs. Subsequent to initial recognition, 
investment properties are stated at fair value, which reflects market 
conditions at the balance sheet date. Gains or losses arising from 
changes in the fair values of investment properties are recognised in 
profit or loss of the associate, in the year in which they arise. This is 
consistent with the Group’s policy.

BWP Trust

The Group has a 24.8 per cent interest in BWP Trust. The Group's 
interest in BWP Trust is accounted for using the equity method in 
the consolidated financial statements. The fair value of the Group's 
interest, by reference to the closing share price of BWP Trust on 
30 June 2020, was $610 million (Level 1 in the fair value hierarchy). 
The following table summarises the financial information of the 
Group's investment in BWP Trust.

Summarised balance sheet 
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets
Group's share of BWP Trust's net assets

Summarised income statement
Revenue
Expenses
Unrealised gains in fair value
Profit attributable to the unit holders of 
BWP Trust
Group's share of profit for the period

Coles Group Limited

2020

$m

 68 
 2,419 
 78 
 506 
 1,903 
 472 

 156 
(39)
 94 

 211 
 52 

2019

$m

50 
2,265 
92 
416 
1,807 
448 

156 
(40)
53 

169 
42 

The Group has a retained interest of 4.9 per cent (2019: 15 per cent) 
in Coles following the sale of 4.9 per cent of its interest on             
18 February 2020, and a further 5.2 per cent on 30 March 2020 
for total proceeds of $2,109 million, net of transaction costs. The 
pre-tax gain on sale is $510 million ($357 million post-tax), which 
includes a pre-tax revaluation gain of $220 million ($154 million 
post-tax) upon cessation of equity accounting and the recognition 
of a financial asset measured at fair value. Prior to the sale of the 
10.1 per cent interest in Coles, the Group's share of profit for the 
period 1 July 2019 to 30 March 2020 was $111 million and the 
Group received dividends from Coles of $111 million. 

Following the demerger of Coles in November 2018, the Group's 
15 per cent retained interest in Coles was accounted for using 
the equity method in the consolidated financial statements as the 
Group had determined that it had significant influence due to its 
voting power, representation on the Coles board, its influence on 
the dividend policy and the existence of an ongoing relationship 
formalised through a relationship deed. As a result of the sale of 
10.1 per cent of the Group's interest in Coles, the Group no longer 
has significant influence and therefore the investment no longer 
meets the criteria to be accounted for as an associate. The retained 
interest in Coles is accounted for as a financial asset measured 
at FVOCI and is presented within other financial assets on the 
balance sheet.

Interests in joint arrangements
The Group recognises its share of the assets, liabilities, expenses 
and income from the use and output of its joint operations. The 
Group’s investments in its joint ventures are accounted for using 
the equity method.

152

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Group information
For the year ended 30 June 2020

21.  Associates and joint arrangements (continued)

Key judgement: control and significant influence

The Group has a number of management agreements with associates and joint arrangements 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 contract. 

Where the Group has the unilateral power to direct the relevant activities of an investee, the Group then assesses whether the 
power it holds is for its own benefit (acting as principal) or for the benefit of others (acting as agent). This determination is based 
on a number of factors including an assessment of the magnitude and variability of the Group’s exposure to variable returns 
associated with its involvement with the investee. In an agency capacity, the Group is considered to be acting on behalf of other 
parties and therefore does not control the investee when it exercises its decision-making powers.

Interests in associates and joint arrangements

Principal activity

Reporting date 

Country of 
incorporation 

Associates

BWP Trust 

Coles Group Limited

Food and staples retailing

Property investment

30 June

30 June

Gresham Partners Group Limited

Investment banking

30 September

Gresham Private Equity Funds1

Private equity fund

Queensland Nitrates Management Pty Ltd Chemical manufacture

Queensland Nitrates Pty Ltd 

Chemical manufacture

Wespine Industries Pty Ltd

Pine sawmillers

30 June

30 June

30 June

30 June

Australia

Australia

Australia

Australia

Australia

Australia

Australia

Ownership

2020

2019

%

%

24.8

(a)

50.0

-

50.0

50.0

50.0

24.8

15.0

50.0

(b)

50.0

50.0

50.0

Joint operations

Sodium Cyanide 

Mt Holland Lithium

Joint ventures

BPI NO 1 Pty Ltd

Covalent Lithium Pty Ltd

Loyalty Pacific Pty Ltd2

Sodium cyanide manufacture

30 June

Lithium development

31 December

Australia

Australia

 75.0 

 50.0 

 75.0 

 - 

Property management

Management company

Loyalty programs

30 June

31 December

28 June

Australia

Australia

Australia

 (c) 

 50.0 

 50.0 

 (c) 

 - 

 50.0 

1  Gresham Private Equity Fund No. 2 was wound up on 15 November 2019.

2 

A wholly-owned subsidiary, Wesfarmers Loyalty Management Pty Ltd, has a 50.0 per cent interest in Loyalty Pacific Pty Ltd (flybuys). 

(a)   A wholly-owned subsidiary, Wesfarmers' Retail Holdings Pty Ltd, has a 4.9 per cent interest in Coles Group Limited. The retained interest in Coles no longer meets the 

criteria to be accounted for as an associate and is accounted for as a financial asset measured at FVOCI.

(b)  Gresham Private Equity Funds: While the Group’s interest in the unitholders’ funds of Gresham Private Equity Fund No. 2 amounted to greater than 50.0 per cent, it was 
not a controlled entity as the Group did not have the practical ability to direct its relevant activities. Such control required a unitholders’ resolution of 75.0 per cent of 
votes pursuant to the Funds’ trust deeds. 

(c)  BPI NO 1 Pty Ltd: While the Group owns the only equity share in BPI NO 1 Pty Ltd, the Group’s effective interest approximates 50.0 per cent and joint control is effected 

through contractual arrangements with the joint venture partner.

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group information
For the year ended 30 June 2020

22. Subsidiaries
The consolidated financial statements include the financial statements of Wesfarmers Limited and the subsidiaries listed in the 
following table:

Entity

A.C.N. 003 921 873 Pty Limited

A.C.N. 004 191 646 Pty Ltd

A.C.N. 007 870 484 Pty Ltd 

A.C.N. 008 734 567 Pty Ltd

A.C.N. 061 462 593 Pty Ltd

A.C.N. 092 194 904 Pty Ltd 

A.C.N. 112 719 918 Pty Ltd

AEC Environmental Pty Ltd 

ANKO Global Holdings Pty Ltd

ANKO Retail Incorporated 

Australian Gold Reagents Pty Ltd

Australian Graphics Pty Ltd 

Australian International Insurance 
Limited 

Australian Light Minerals Pty Ltd 
(formerly Kidman Resources Limited)

Australian Underwriting Holdings 
Limited 

Australian Underwriting Services Pty 
Ltd 

Australian Vinyls Corporation Pty Ltd  

AVC Holdings Pty Ltd 

AVC Trading Pty Ltd 

BBC Hardware Limited 

BBC Hardware Properties (NSW) Pty 
Ltd

BBC Hardware Properties (Vic) Pty Ltd

Blacksmith Jacks Pty Ltd

Blackwoods 4PL Pty Ltd 

Blackwoods Training Pty Ltd

Blackwoods Xpress Pty Ltd

BPI Management Pty Ltd

BrandsExclusive (Australia) Pty Ltd

BUKI (Australia) Pty Ltd 

Bullivants International Pty Ltd 

Bullivants Pty Limited 

Bunnings (NZ) Limited

Bunnings Group Limited 

Bunnings Joondalup Pty Ltd

Bunnings Limited

Bunnings Management Services Pty 
Ltd

Bunnings Manufacturing Pty Ltd 

Bunnings Properties Pty Ltd

Bunnings Technologies India Private 
Limited 

BWP Management Limited 

C S Holdings Pty Limited 

+

(cid:93)

+

@

+

+

+

+

+

@

+

+

(cid:132)

+

# (cid:132)

+

+

@ (cid:122)

<

+

154

 Wesfarmers 2020 Annual Report

2020
%

2019
%

Entity

2020
%

2019
%

100

100

100

100

100

100

100

100

100

100

75

100

100

100

100

100

100

100

100

100

100

100

75

100

Campbells Hardware & Timber Pty 
Limited

Casey Exploration Pty Ltd

Catch Essentials Pty Ltd

Catch Group Holdings Limited

Catch Group Share Holdings Pty Ltd

Catch.com.au Pty Ltd 

CGNZ Finance Limited 

Chemical Holdings Kwinana Pty Ltd 

CMNZ Investments Pty Ltd 

ConsortiumCo Pty Ltd 

Coo-ee Investments Pty Limited

Coregas NZ Limited 

100

100

Coregas Pty Ltd 

Crowl Creek Exploration Pty Ltd

CSBP Ammonia Terminal Pty Ltd 

CSBP Limited 

CTE Pty Ltd

Cuming Smith and Company Limited 

Dairy Properties Pty Ltd 

Dowd Corporation Pty Ltd 

Eastfarmers Pty Ltd

ECC Pty Ltd 

ENV.Australia Pty Ltd 

Environmental and Licensing 
Professionals Pty Ltd 

FIF Investments Pty Limited

Forrestania Lithium Pty Ltd

Fosseys (Australia) Pty Ltd 

Geeks2U Holdings Pty Limited

Geeks2U International Pty Limited

Geeks2U IP Pty Limited

Geeks2U NZ Limited

Geeks2U Pty Limited

Geeks2U UK Limited

GPML Pty Ltd

Greencap Holdings Limited

Greencap Pty Ltd

HouseWorks Co Pty Ltd 

Howard Smith Limited 

Incorporatewear Limited 

Incorporatewear, Unipessoal LDA

J Blackwood & Son Pty Ltd 

James Patrick & Co Pty Ltd  
(in liquidation)

100

-

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

-

100

100

100

100

100

100

100

100

100

100

-

100

100

@

@

@ +

@

@ +

(cid:132)

+

(cid:132)

+

@

+

+

@

+

(cid:132)

~ (cid:83)

+

# (cid:83)

< (cid:153)

+

KAS Direct Sourcing Private Limited

# (cid:122)

KAS Global Trading Pty Limited

(cid:141)

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

-

100

100

100

100

100

100

100

100

100

100

100

100

-

-

-

-

-

100

100

100

100

100

100

100

-

100

100

100

100

100

100

100

100

100

100

100

-

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Notes to the financial statements: Group information
For the year ended 30 June 2020

22. Subsidiaries (continued)

Entity

KAS International Sourcing 
Bangladesh Pvt Ltd 

KAS International Trading (Shanghai) 
Company Limited 

KAS Pty Limited 

KAS Services India Private Limited

Kidman Barrow Creek Pty Ltd

Kidman Gold Pty Ltd

Kidman Mining Pty Ltd

Kleenheat Pty Ltd 

Kmart Australia Limited  

Kmart Group Asia Pty Ltd

Kmart Holdings Pty Ltd

Kmart NZ Holdings Limited

Kwinana Nitrogen Company 
Proprietary Limited 

Lawvale Pty Ltd 

Liftco Pty Limited 

Loggia Pty Ltd 

Manacol Pty Limited  

MC2 Pacific Pty Ltd 

Meredith Distribution (NSW) Pty Ltd 

Meredith Distribution Pty Ltd 

MH Gold Pty Limited

Millars (WA) Pty Ltd

Modwood Technologies Pty Ltd 

Montague Resources Australia Pty Ltd

Mumgo Pty Ltd 

Neat N’ Trim Uniforms Pty Ltd 

NZ Finance Holdings Pty Limited

Officeworks Businessdirect Pty Ltd 

Officeworks Holdings Pty Ltd

Officeworks Ltd 

Officeworks NZ Limited

Officeworks Property Pty Ltd

Pailou Pty Ltd 

Patrick Operations Pty Ltd

Petersen Bros Pty Ltd

Premier Power Sales Pty Ltd 

Protector Alsafe Pty Ltd 

Protex Healthcare (Aus) Pty Ltd 

PT Blackwoods Indonesia

R & N Palmer Pty Ltd

Rapid Evacuation Training Services 
Pty Ltd 

Relationship Services Pty Limited

Retail Australia Consortium Pty Ltd

Retail Investments Pty Ltd 

SBS Rural IAMA Pty Limited 

(cid:91)

(cid:88)

(cid:141)

(cid:122)

@

@

@

+

+

(cid:132)

+

+

+

@

@

@

(cid:132)

+

+

(cid:132)

+

(cid:129)

2020
%

2019
%

Entity

2020
%

2019
%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

-

-

-

100

100

100

100

100

100

100

100

100

100

100

100

100

-

100

100

-

-

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

Scones Jam n Cream Pty Ltd 

Sellers (SA) Pty Ltd

Share Nominees Limited

Sotico Pty Ltd

Target Australia Pty Ltd  

Target Australia Sourcing (Shanghai) 
Co Ltd

Target Australia Sourcing Limited

Target Holdings Pty Ltd

TheActive Pty Ltd

The Builders Warehouse Group Pty 
Limited

The Franked Income Fund 

The Westralian Farmers Limited 

The Workwear Group HK Limited

The Workwear Group Holding Pty Ltd 

The Workwear Group Pty Ltd 

Tincorp Holdings Pty Ltd

Trimevac Pty Ltd 

Tyremaster (Wholesale) Pty Ltd 

Ucone Pty Ltd 

Validus Group Pty Ltd 

Valley Investments Pty Ltd 

Viking Direct Pty Limited 

W4K.World 4 Kids Pty Ltd 

Wesfarmers Agribusiness Limited 

Wesfarmers Bengalla Management 
Pty Ltd 

Wesfarmers Bengalla Pty Ltd (formerly 
Wesfarmers Bengalla Limited)

Wesfarmers Bunnings Limited 

Wesfarmers Chemical US Holdings 
Corp 

Wesfarmers Chemicals, Energy & 
Fertilisers Limited 

Wesfarmers Coal Resources Pty Ltd 

Wesfarmers Department Stores 
Holdings Pty Ltd

Wesfarmers Emerging Ventures Pty 
Ltd

Wesfarmers Energy (Gas Sales) 
Limited 

Wesfarmers Energy (Industrial Gas) 
Pty Ltd

Wesfarmers Fertilizers Pty Ltd 

Wesfarmers Gas Limited 

Wesfarmers Holdings Pty Ltd

Wesfarmers Industrial & Safety 
Holdings NZ Limited 

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

-

100

100

100

100

100

100

-

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

+

# (cid:88)

# (cid:141)

+

@

+

# (cid:141)

+

+

@

+

+

+

+

+

(cid:93)

+

+

+

+

+

+

# (cid:132)

100

100

Wesfarmers Industrial & Safety NZ 
Limited 

(cid:132)

100

100

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group information
For the year ended 30 June 2020

Entity acquired/incorporated during the year
Entity dissolved/deregistered during the year
Audited by firms of Ernst & Young International
Audited by other firms of accountants
An ASIC-approved deed of cross guarantee has been 
entered into by Wesfarmers Limited and these entities
All subsidiaries are incorporated in Australia unless 
identified by one of the following symbols:

Bangladesh
Bermuda
China
Hong Kong
India
Indonesia
New Zealand
Portugal 
Singapore
United Arab Emirates
United Kingdom 
United States of America

@
~
#
<

+

(cid:91)

(cid:87)(cid:3)

(cid:88)

(cid:141)

(cid:122)(cid:3)

(cid:129)

(cid:132)(cid:3)

(cid:153)

(cid:97)

(cid:84)(cid:3)

(cid:83)(cid:3)

(cid:93)(cid:3)

All entities utilise the functional currency of the country 
of incorporation with the exception of Wesfarmers Risk 
Management Limited, which utilises the Australian dollar 
and KAS International Trading (Shanghai) Company 
Limited, PT Blackwoods Indonesia and Wesfarmers Oil & 
Gas Pty Ltd, which utilise the US dollar.

2020
%

2019
%

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

100

(cid:88)

100

100

100

100

100

49

100

100

100

100

-

49

100

100

22. Subsidiaries (continued)

Entity

Wesfarmers Industrial and Safety Pty 
Ltd 

Wesfarmers Insurance Investments 
Pty Ltd 

Wesfarmers International Holdings 
Pty Ltd

Wesfarmers Investments Pty Ltd

Wesfarmers Kleenheat Gas Pty Ltd 

Wesfarmers Lithium Pty Ltd

Wesfarmers LNG Pty Ltd 

Wesfarmers Loyalty Management Pty 
Ltd 

Wesfarmers LPG Pty Ltd 

Wesfarmers New Energy Holdings 
Pty Ltd

Wesfarmers Oil & Gas Pty Ltd

Wesfarmers Online Retail Holdings 
Pty Ltd

Wesfarmers Provident Fund Pty Ltd

Wesfarmers Resources Pty Ltd 
(formerly Wesfarmers Resources 
Limited)

Wesfarmers Retail Holdings Pty Ltd 

Wesfarmers Retail Pty Ltd 

Wesfarmers Risk Management 
(Singapore) Pte Ltd

+

+

+

+

+

+

+

+

+

+

(cid:97)

Wesfarmers Risk Management Limited  # (cid:87)

+

+

Wesfarmers Securities Management 
Pty Ltd

Wesfarmers Superannuation Pty Ltd

Wesfarmers Transport Limited 

Weskem Pty Ltd 

Westralian Farmers Superphosphates 
Limited 

WEV Capital Investments Pty Ltd 

WFCL Investments Pty Ltd

WIS International Pty Ltd

WIS Solutions Pty Ltd 

WIS Supply Chain Management 
(Shanghai) Co Ltd 

WPEQ Pty Ltd (formerly Wesfarmers 
Private Equity Pty Ltd)

WPP Holdings Pty Ltd 

WW E-Services Australia Pty Limited 

WWG Middle East Apparel Trading 
LLC 

@

(cid:84)

XCC (Retail) Pty Ltd

Yakka Pty Limited 

156

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Group information
For the year ended 30 June 2020

Acquisition of Kidman Resources Limited
On 23 September 2019, Wesfarmers, through its wholly-owned 
subsidiary Wesfarmers Lithium Pty Ltd, completed the acquisition 
of all the issued ordinary shares in Kidman. The cash payment of 
$1.90 per share to Kidman shareholders was funded from existing 
banking facilities.

Upon completion of the transaction, Wesfarmers holds a 
50 per cent interest in the Mt Holland lithium project based in 
Western Australia.

The acquisition has been accounted for as an asset acquisition 
as the transaction did not meet the definition of a business 
combination in accordance with AASB 3 Business Combinations.

Details of the carrying values of identifiable assets and liabilities as 
at the date of acquisition are:

Kidman

Assets
Cash
Mineral rights
Deferred tax assets
Other

Liabilities
Trade payables
Carrying value of identifiable net assets

Purchase price 
allocation
$m

33 
790 
2 
1 

50 
776 

23. Acquisitions
Business combination - Acquisition of Catch 
Group Holdings Limited
On 12 August 2019, Wesfarmers, through its wholly-owned 
subsidiary Wesfarmers Online Retail Holdings Pty Ltd, completed 
the acquisition of Catch for consideration of $230 million.

Catch is an established, profitable and cash-generative business 
that operates an online business model offering branded products 
on a first-party basis and a third-party online marketplace. The 
acquisition of Catch is expected to accelerate the digital and 
e-commerce capabilities of Kmart Group.

Details of the fair values of identifiable assets and liabilities as at the 
date of acquisition are:

Catch

Assets
Cash
Receivables - trade and other
Inventories
Property, plant and equipment
Right-of-use assets
Intangible assets
Other

Liabilities

Trade and other payables
Lease liabilities
Provisions
Deferred tax liabilities 
Other
Fair value of identifiable net assets

Goodwill arising on acquisition
Purchase consideration transferred

Cash outflow on acquisition
Net cash acquired 
Cash paid
Net cash outflow on acquisition

Fair value 
recognised on 
acquisition
$m

5 
2 
44 
26 
26 
52 
15 

30 
32 
7 
4 
10 
87 

140 
227 

(5)
227
222 

From the date of acquisition, the contribution to the Group's 
revenue from Catch was $364 million.

Had the acquisition of Catch occurred at the beginning of the 
financial year and had the same fair values detailed above applied, 
neither the profit nor revenue of the Group would have been 
materially different from that reported. 

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Group information
For the year ended 30 June 2020

25. Deed of Cross Guarantee
The subsidiaries identified with a ‘+’ in note 22 are parties to a 
Deed of Cross Guarantee under which each party has guaranteed 
to pay any deficiency in the event of the winding up of any of the 
members in the Closed Group. By entering into the Deed, the 
wholly-owned entities have been relieved from the requirement 
to prepare a financial report and directors’ report under ASIC 
Corporations (Wholly-owned companies) Instrument 2016/785.
These subsidiaries and Wesfarmers Limited together referred to 
as the ‘Closed Group’, either originally entered into the Deed on 
27 June 2008, or have subsequently joined the Deed by way of an 
Assumption Deed.
The consolidated income statement and retained earnings of the 
entities that are members of the Closed Group is as follows:

Consolidated income statement and 
retained earnings

Profit from continuing operations before 
income tax
Profit from discontinued operations before 
income tax
Income tax expense
Net profit for the year 
Retained earnings at beginning of year
Remeasurement gain on defined benefit 
plan, net of tax
Adjustment for companies transferred into/
out of the Closed Group
Transfer of gain on demerger
Total available for appropriation
Dividends provided for or paid
Retained earnings at end of year

Consolidated statement of comprehensive 
income 

Profit for the year 
Other comprehensive income 
Items that may be reclassified to profit or loss: 
Exchange differences on translation of 
foreign operations
Changes in the fair value of cash flow 
hedges, net of tax

Items that will not be reclassified to profit or loss: 
Changes in the fair value of financial assets 
designated at FVOCI, net of tax
Remeasurement loss on defined benefit plan 
Other comprehensive loss for the year, net 
of tax 
Total comprehensive income for the year, 
net of tax, arising from: 
Continuing operations
Discontinued operations

Deed

2020
$m

2019
$m

2,542 

 2,981 

-  
(671)
1,871 
(304)

 5,270 
(833)
 7,418 
 172 

-  

(1)

(481)
-  
1,086 
(1,734)
(648)

(101)
(4,164)
 3,324 
(3,628)
(304)

Deed

2020
$m

2019
$m

1,871 

7,418

-  

(87)

16 
-  

(2)

(49)

-  
(1)

(71)

(52)

1,800 
-  
1,800 

2,202
5,164 
 7,366 

24. Parent disclosures

Assets
Current assets
Non-current assets
Total assets

Liabilities
Current liabilities
Non-current liabilities
Total liabilities
Net assets

Equity
Equity attributable to equity holders of the 
parent
Issued capital
Employee reserved shares
Retained earnings
Dividends reserve 
Restructure tax reserve
Hedging reserve
Share-based payments reserve
Demerger reserve
Total equity

Parent

2020
$m

2019
$m

11,194 
6,113 
17,307 

 10,659 
 6,088 
 16,747 

1,235 
2,187 
3,422 
13,885 

 974 
 2,640 
 3,614 
 13,133 

15,724 
2 
1,460 
292 
150 
(23)
44 
(3,764)
13,885 

 15,724 
 2 
 723 
 292 
 150 
(41)
 47 
(3,764)
13,133

Profit attributable to members of the parent

2,471 

 7,251 

Total comprehensive income for the year, 
net of tax, attributable to members of the 
parent

Contingencies
Contingent liabilities at balance date, not 
included in this financial report, were as 
follows:

2,464 

 7,229 

Trading guarantees

157 

 196 

Wesfarmers is party to various legal actions that have arisen in the 
normal course of business. It is expected that any liabilities arising 
from such legal action would not have a material adverse effect on 
the Group’s financial report.

Dividends reserve
The dividends reserve was created by the parent entity for 
the purposes of segregating profits from which dividends to 
shareholders can be paid. 

Guarantees
Wesfarmers Limited and certain Australian controlled entities are 
parties to a Deed of Cross Guarantee (the Deed).

Parent entity financial information
The financial information for the parent entity has been prepared on 
the same basis as the consolidated financial statements, except as 
set out below.

Investments in subsidiaries, associates and joint 
venture entities
Investments in subsidiaries, associates and joint venture entities 
are accounted for at cost in the financial statements of the parent. 
Dividends received from associates are recognised in the parent 
entity’s profit or loss when its right to receive the dividend is 
established.

158

 Wesfarmers 2020 Annual Report

 
Notes to the financial statements: Group information
For the year ended 30 June 2020

25. Deed of Cross Guarantee (continued)
The consolidated balance sheet of the entities that are members of 
the Closed Group is as follows:

26. Related party transactions

Consolidated balance sheet

Assets
Current assets
Cash and cash equivalents 
Receivables - trade and other
Receivables - related parties
Inventories 
Derivatives
Other
Total current assets

Non-current assets
Receivables
Investment in controlled entities
Investment in associates and joint ventures
Other financial assets
Deferred tax assets 
Property, plant and equipment
Goodwill and intangible assets
Right-of-use assets
Derivatives
Other
Total non-current assets 
Total assets

Liabilities
Current liabilities
Trade and other payables 
Interest-bearing loans and borrowings
Lease liabilities
Income tax payable
Provisions 
Derivatives
Other
Total current liabilities

Non-current liabilities
Payables
Interest-bearing loans and borrowings 
Lease liabilities
Provisions
Derivatives
Other
Total non-current liabilities 
Total liabilities
Net assets

Equity
Issued capital
Reserved shares
Retained earnings 
Reserves 
Total equity

Deed

2020
$m

2019
$m

2,707 
909 
956 
3,443 
41 
206 
8,262 

-  
3,093 
239 
1,123 
727 
3,313 
3,739 
5,844 
386 
2 
18,466 
26,728 

3,590 
503 
920 
384 
997 
81 
158 
6,633 

973 
2,033 
5,932 
328 
4 
81 
9,351 
15,984 
10,744 

15,809 
(89)
(648)
(4,328)
10,744 

621 
842 
-  
3,870 
101 
146 
5,580 

134 
3,570 
2,899 
-  
310 
3,619 
3,972 
-  
393 
7 
14,904 
20,484 

3,222 
350 
-  
205 
814 
7 
140 
4,738 

1,041 
2,523 
-  
370 
1 
89 
4,024 
8,762 
11,722 

15,809 
(81)
(304)
(3,702)
11,722 

Transactions with related parties 
Associates
Lease rent paid
Operating lease rent received
Financial advisory fees paid
Management fees received
Sales of goods and services 
Purchases of goods and services 

Consolidated
2020
$'000

2019
$'000

140,982 
(13,255)
9 
(14,364)
(36,546)
2,889 

147,094 
(15,411)
14,569 
(13,457)
(33,870)
2,512 

Joint arrangements
Lease rent paid
Payments for loyalty program
Receipts from loyalty program redemption
Sales of goods and services 
Purchases of goods and services 

25,202 
24,507 
(33,439)
(1,402)
503 

26,226 
16,337 
(26,022)
(1,274)
-  

Outstanding balances with related 
parties 
Associates
Amounts receivable from associates
Amounts owing to associates

10,528 
(195)

23,625 
(5,845)

Joint arrangements
Amounts receivable from joint ventures
Amounts owing to joint ventures

7,123 
(169,425)

6,013 
(164,964)

The Group entered into transactions with related parties during the 
year as follows: 

•  Rent for retail stores and warehouses has been paid by the 
Group to an associated entity, BWP Trust, and to a joint 
arrangement, BPI No. 1 Pty Ltd. Rent has been received from 
an associate for the sublease of rental space. 

•  Management fees have been received from an associated 

entity, BWP Trust, on normal commercial terms and conditions 
for staff and other services provided to associates. 

•  Amounts have been paid to and received from 

Loyalty Pacific Pty Ltd for the operation of the flybuys loyalty 
program.

•  Partly-owned subsidiaries of an associate of the Group, 
Gresham Partners Group Limited, have provided office 
accommodation and advisory services to Wesfarmers and 
were paid fees of $9,159 in 2020 (2019: $14,568,706).

•  Other related party transactions include sales and purchases 
to associates and joint arrangements on normal commercial 
terms and conditions.

Coles Group Limited was a related party for the period in which it 
was an associate, 1 July 2019 to 30 March 2020.

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Other
For the year ended 30 June 2020

27.  Commitments and contingencies

28.  Events after the reporting period

Consolidated
2020
$'000

2019
$'000

4,005 

4,433 

588 

2,731 

465 
-  
5,058 

917 
115 
8,196 

473 

311 

215 

129 

140 
828 
5,886 

182 
622 
8,818 

Operating lease commitments  
Group as lessor 
Within one year
Greater than one year but not more than 
five years
More than five years

Capital commitments1
Within one year
Commitments arising from agreements to 
invest in Gresham Private Equity Funds

Other expenditure commitments1
Within one year
Greater than one year but not more than 
five years
More than five years

Contingencies1
Trading guarantees

Consolidated
2020
$m

2019
$m

21 

55 
23 
99 

25 

61 
32 
118 

270 

278 

-  
270 

2 
280 

85 

112 

93 
75 
253 

181 
161 
454 

157 

196 

Dividends

A fully-franked final dividend of 77 cents per share resulting 
in a dividend payment of $873 million and a fully-franked 
special dividend of 18 cents per share resulting in a payment 
of $204 million were determined with a payment date of 
1 October 2020. The special dividend reflects the distribution of 
profits on the sale of the Group’s 10.1 per cent interest in Coles 
during FY2020. These dividends have not been provided for in the 
30 June 2020 full-year financial statements.

29. Auditors' remuneration

Fees to Ernst & Young (Australia)
Fees for the audit and review of the 
financial reports of the Group and any 
controlled entities 
Fees for other assurance and 
agreed-upon-procedures services 
Fees for other services 
- tax compliance
- other

1  Commitments arising for capital expenditure and other expenditure contracted 
for at balance date and contingent liabilities at balance date are not included in 
this financial report.

Guarantees

The Group has issued a number of bank guarantees to third parties 
for various operational and legal purposes. It is not expected that 
these guarantees will be called on.

Other

Certain companies within the Group are party to various legal 
actions that have arisen in the normal course of business. It is 
expected that any liabilities arising from such legal action would not 
have a material effect on the Group’s financial performance.

Fees to other overseas network firms of 
Ernst & Young (Australia)
Fees for the audit and review of the 
financial reports of the Group and any 
controlled entities 
Fees for other assurance and 
agreed-upon-procedures services 
Fees for other services 
- tax compliance

Total auditors' remuneration

Other assurance and agreed-upon-procedures services and other 
services represent 23.9 per cent (2019: 25.7 per cent, excluding 
services provided to the Group in relation to the Coles demerger) 
of the total fees paid or payable to Ernst & Young and related 
practices for the year ended 30 June 2020.

Auditors’ remuneration includes amounts reimbursed to the 
auditors for incidental costs incurred in completing their services. 
The remuneration for the comparative period has been restated to 
include these incidental costs.

160

 Wesfarmers 2020 Annual Report

Notes to the financial statements: Other
For the year ended 30 June 2020

30. Other accounting policies
(a)   New and amended accounting standards and 

interpretations adopted from 1 July 2019

All new and amended Australian Accounting Standards and 
Interpretations mandatory to the Group as at 1 July 2019 have been 
adopted and include:

AASB 16 Leases
Prior to the adoption of AASB 16, the Group classified each 
of its leases (as lessee) at inception as either finance leases or 
operating leases under AASB 117. Operating lease payments 
were recognised as an expense in the income statement on a 
straight-line basis over the lease term. Fixed rate increases to 
lease payments, excluding contingent or index-based rental 
increases, were recognised on a straight-line basis over the 
lease term. An asset or liability was recognised for the difference 
between the amount paid and the lease expense recognised 
in earnings on a straight-line basis. Contingent rental payments 
that arose as a result of either turnover-based rentals or movements 
in relevant indices were recognised in the income statement as they 
were incurred.

AASB 16 introduced a single lessee accounting model and requires 
a lessee to recognise assets and liabilities for all leases with a 
term of more than 12 months, unless the underlying asset is of low 
value. Wesfarmers, as a lessee under AASB 16, has recognised a 
right-of-use asset representing its right to use the underlying leased 
assets and a lease liability representing its obligations to make 
lease payments. The Group has separately recognised the interest 
expense on the lease liability and the depreciation expense on the 
right-of-use asset.

The Group has remeasured the lease liability upon the occurrence 
of certain events (e.g. a change in the lease term, a change in future 
lease payments resulting from a change in an index or rate used 
to determine those payments). The Group recognises the amount 
of any remeasurement of the lease liability as an adjustment to the 
right-of-use asset.

Lessor accounting under AASB 16 is substantially unchanged from 
the accounting under AASB 117. The Group, as a lessor, is not 
materially impacted by the adoption of AASB 16.

Wesfarmers has elected not to apply the practical expedient to 
combine lease and non-lease components for its property leases. 
As such, the calculated lease liability excludes an estimate of the 
gross lease payments allocated to non-lease components. 

The effect of adopting AASB 16 as at 1 July 2019 is as follows:

Right-of-use assets

Deferred tax asset
Lease liabilities
Provisions
Leasing reserve

$m

6,352

222
(7,275)
183
518

The following is a reconciliation of the Group’s operating lease 
commitments under AASB 117 at 30 June 2019 to the lease liability 
recognised at 1 July 2019 on transition to AASB 16. 

Operating lease commitments at 30 June 2019

Less: short-term leases
Less: non-lease components
Add: impact of reasonably certain lease extensions
Add: base rent escalations previously considered 
contingent
Add: other
Less: impact of discounting1
Lease liabilities recognised at 1 July 2019

$m

8,541

(87)
(647)
361

150
104
(1,147)
7,275

1 

The weighted average IBR at the date of initial application was 3.4 per cent. 

Other new and amended accounting standards and 
interpretations
The following other amendments and interpretations apply for the 
first time from 1 July 2019 but do not have a material impact on the 
Group:

•  AASB Interpretation 23 Uncertainty over Income Tax 

Impact on adoption of AASB 16

Treatments; and

•  AASB 2018-1 Amendments to Australian Accounting 
Standards - Annual Improvements 2015-2017 Cycle.

The Group has early adopted AASB 2020-4 Amendments to 
Australian Accounting Standards - COVID-19-Related Rent 
Concessions which would have been effective for the Group 
from 1 July 2020. The impact of the early application of this 
amendment is not material.

Wesfarmers has applied AASB 16 from 1 July 2019, using the 
modified retrospective transition method whereby there is an option 
on a lease-by-lease basis to calculate the right-of-use asset as 
either:

• 

its carrying amount as if AASB 16 had been applied since the 
lease commencement date, but discounted using the lessee's 
incremental borrowing rate at the date of initial application; or

•  an amount equal to the lease liability, adjusted by the amount 
of any prepaid or accrued lease payments relating to that 
lease recognised in the balance sheet immediately before the 
date of initial application.

Under this method, there is no requirement to restate comparatives. 

When applying the modified retrospective approach to leases 
previously classified as operating leases under AASB 117, the 
Group elected, on a lease-by-lease basis, to apply a number of 
practical expedients on transition including:

• 

the application of a single discount rate to a portfolio of leases 
with reasonably similar characteristics;

•  applied the short-term exemption to leases with a lease term 

that ends within 12 months of 1 July 2019;

• 

• 

the utilisation of previous assessments of onerous leases; and

the use of hindsight in determining the lease term.

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Financial statements

Notes to the financial statements: Other
For the year ended 30 June 2020

30. Other accounting policies (continued)
(b) New and amended standards and interpretations issued but not yet effective

The following new and amended accounting standards and interpretations issued but not yet effective are relevant to current operations. 
They are available for early adoption but have not been applied by the Group in this financial report. The effects of these standards and 
interpretations are not expected to be material.

Reference

Description

AASB 2018-7 Amendments to 
Australian Accounting Standards - 
Definition of Material

Conceptual Framework for Financial 
Reporting

The application of this Standard is effective from 1 January 2020, and will be adopted by the 
Group on 1 July 2020. This Standard makes amendments to the definition of 'material' to 
reference the effect of obscuring information to be similar to omitting or misstating information 
and states that an entity assesses materiality in the context of the financial statements as a 
whole. 

The application of this Standard is effective from 1 January 2020, and will be adopted by 
the Group on 1 July 2020. The revised Conceptual Framework includes a new chapter on 
measurement, guidance on reporting financial performance, improved definitions and guidance, 
in particular, the definitions of an asset and a liability and clarifications in important areas, such 
as the roles of stewardship, prudence and measurement uncertainty in financial reporting.

AASB 2019-1 Amendments to 
Australian Accounting Standards 
- References to the Conceptual 
Framework

The application of this Standard is effective from 1 January 2020, and will be adopted by the 
Group on 1 July 2020. The Standard makes amendments to a number of Australian Accounting 
Standards, Interpretations and other pronouncements to reflect the issuance of the Conceptual 
Framework for Financial Reporting (Conceptual Framework). 

AASB 2018-6 Amendments to 
Australian Accounting Standards - 
Definition of a Business

The application of this Standard is effective from 1 January 2020, and will be adopted 
by the Group on 1 July 2020. This Standard amends the definition of a business in 
AASB 3 Business Combinations. 

AASB 2019-3 Amendments to 
Australian Accounting Standards - 
Interest Rate Benchmark Reform 

The application of this amendment is effective from 1 January 2020, and will be adopted by 
the Group on 1 July 2020. These amendments to AASB 7 Financial Instruments: Disclosures, 
AASB 9 and AASB 139 Financial Instruments: Recognition and Measurement were issued in 
response to the effects of Interbank Offered Rates reform on financial reporting. They provide 
mandatory temporary relief enabling hedge accounting to continue during the period of 
uncertainty before the replacement of an existing interest rate benchmark with an alternative 
‘nearly risk-free’ benchmark.

AASB 2019-5 Amendments to 
Australian Accounting Standards - 
Disclosures of the Effect of New IFRS 
Standards Not Yet Issued in Australia

The application of this amendment is effective from 1 January 2020, and will be adopted by the 
Group on 1 July 2020. This Standard amends AASB 1054 Australian Additional Disclosures by 
adding a requirement for entities complying with IFRS Standards to disclose the potential effect 
of an IFRS Standard that has not yet been issued by the AASB so that an entity complying with 
Australian Accounting Standards can assert compliance with IFRS standards.

AASB 2014-10 Amendments to 
Australian Accounting Standards 
- Sale or Contribution of Assets 
between an Investor and its Associate 
or Joint Venture

The application of this amendment is effective from 1 January 2022, and will be adopted by 
the Group on 1 July 2022. The amendments require a full gain or loss to be recognised when a 
transaction involves a business (whether it is housed in a subsidiary or not) and partial gain or 
loss to be recognised when a transaction involves assets that do not constitute a business, 
even if these assets are housed in a subsidiary.

AASB 2020-1 Amendments to 
Australian Accounting Standards - 
Classification of Liabilities as Current 
or Non-current

The application of this amendment is effective from 1 January 2022, and will be adopted by 
the Group on 1 July 2022. This amendment to AASB 101 Presentation of Financial Statements 
clarifies the requirements for classifying liabilities as current or non-current.

AASB 2020-3 Amendments to 
Australian Accounting Standards - 
Annual Improvements 2018-2020 and 
Other Amendments

The application of this amendment is effective from 1 January 2022, and will be adopted by 
the Group on 1 July 2022. This standard makes amendments to AASB 1 First-time Adoption of 
Australian Accounting Standards, AASB 3, AASB 9, AASB 116 Property, Plant and Equipment, 
AASB 137 Provisions, Contingent Liabilities and Contingent Assets and AASB 141 Agriculture.

(c)  Tax consolidation

Wesfarmers and its 100 per cent owned Australian resident subsidiaries have formed a tax consolidated group with effect from 
1 July 2002. Wesfarmers is the head entity of the tax consolidated group. Members of the group have entered into a tax sharing 
agreement in order to allocate income tax expense to the wholly-owned subsidiaries on a stand-alone basis. The tax sharing arrangement 
provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. The 
possibility of such a default is considered remote at the date of this report.

Members of the tax consolidated group have entered into a tax funding agreement. The group has applied the group allocation approach 
in determining the appropriate amount of current taxes to allocate to members of the tax consolidated group. The tax funding agreement 
provides for each member of the tax consolidated group to 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 return and payment of the tax liability.

162

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Notes to the financial statements: Other
For the year ended 30 June 2020

31. Share-based payments
The Group provides benefits to employees (including the executive 
director) of the Group through share-based incentives. Employees 
are paid for their services or incentivised for their performance 
in part through shares or rights over shares. The expense arising 
from these transactions is shown in note 2. The total number of 
ordinary Wesfarmers shares acquired on market during the financial 
year to satisfy employee incentive schemes was 2,009,216 
(2019: 3,572,448) at an average price of $41.79 (2019: $32.27) 
per share.

Recognition and measurement
Share-based payments can either be equity-settled or cash-settled. 
If the employee is provided a choice of settlement options then the 
scheme is considered to be cash-settled.

Equity-settled transactions
The cost of equity-settled transactions with employees is measured 
using their fair value at the date at which they are granted. In 
determining the fair value, only performance conditions linked to 
the price of the shares of Wesfarmers Limited (market conditions) 
are taken into account.

The cost of equity-settled transactions is recognised, together with 
a corresponding increase in equity, over the period in which any 
performance conditions (excluding market conditions) are met, 
ending on the date on which the employees become fully entitled 
to the award (vesting date). The cumulative expense recognised for 
equity-settled transactions at each reporting date until vesting date 
reflects the extent to which the vesting period has expired and the 
proportion of the awards that are expected to ultimately vest. No 
expense is recognised for awards that do not ultimately vest due to 
a non-market performance condition not being met. The expense 
is recognised in full if the awards do not vest (or are not exercised) 
due to a market performance condition not being met.

Where the terms of an equity-settled award are modified, as a 
minimum, an expense is recognised as if the terms had not been 
modified. In addition, an expense is recognised for any increase 
in the value of the transaction as a result of the modification, as 
measured at the date of modification.

Where an equity-settled award is cancelled, it is treated as if it 
had vested on the date of cancellation, and any expense not yet 
recognised for the award is recognised immediately. However, if a 
new award is substituted for the cancelled award, and designated 
as a replacement award on the date that it is granted, the cancelled 
and new award are treated as if they were a modification of the 
original award, as described above.

Cash-settled transactions

The ultimate expense recognised in relation to cash-settled 
transactions will be equal to the actual cash paid to the employees, 
which will be the fair value at settlement date. The expected 
cash payment is estimated at each reporting date and a liability 
recognised to the extent that the vesting period has expired and 
in proportion to the amount of the awards that are expected to 
ultimately vest. 

Additional information on award schemes

Key Executive Equity Performance Plan (KEEPP)
KEEPP was introduced in September 2016, and was the only 
variable remuneration plan the current executive key management 
personnel (KMP) were invited to participate in during the 2020 
financial year.

Under the 2019 KEEPP, eligible executives were invited to receive 
performance shares and deferred shares in the company. 

Performance shares - 2019 KEEPP 

For the Group Managing Director (Group MD) and the Group 
Chief Financial Officer (Group CFO), the performance hurdles are 
Wesfarmers’ total shareholder return (TSR) relative to the TSR of 
the ASX 100 (60 per cent weighting), portfolio management and 
investment outcomes (20 per cent weighting) and other strategic 
objectives (20 per cent weighting). For the divisional managing 
directors, the performance hurdles are cumulative EBIT and return 
on capital (ROC) performance against the divisional corporate plan 
(50 per cent weighting) and Wesfarmers’ TSR relative to the TSR of 
the ASX 100 (50 per cent weighting).

The fair value of the performance shares with a TSR hurdle is 
determined using an option pricing model with the following inputs:

Grant date
Grant date share price ($)
Volatility (%)
Risk-free rate (%)
Fair value ($)

Group CFO 
and Divisional 
MDs
25 Oct 2019
41.05
17.98
0.74
27.91

Group MD 
14 Nov 2019
41.16
17.79
0.77
28.28

Equity-settled awards outstanding
Weighted average share price in 2020 was $39.62 (2019: $39.16). The following table includes shares subject to trading restrictions.

Outstanding at the beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
Other adjustments
Outstanding at the end of the year
Exercisable at the end of the year

KEEPP

(shares)

WESAP

(shares)

WLTIP

WESP

(shares)

(rights)

(options)

 1,500,504 
 416,076 
 - 
 - 
 - 
 1,916,580 
 - 

 7,464,746 
 2,155,558 
(2,574,791)
(269,876)
(18,137)
 6,757,500 
 4,927,904 

 199,092 
 68,645 
(96,226)
 - 
 58,018 
 229,529 
 234,424 

 668,680 
 - 
(483,188)
(60,954)
 - 
 124,538 
 - 

 205,799 
 - 
(16,795)
 - 
 - 
 189,004 
 964,778 

Wesfarmers 2020 Annual Report

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Financial statements

Notes to the financial statements: Other
For the year ended 30 June 2020

31. Share-based payments (continued)
Key Executive Equity Performance Plan (KEEPP) 
(continued)
Deferred shares - 2019 KEEPP 

Eligible executives also received a deferred shares award under 
the KEEPP. If an executive resigns or is terminated for cause within 
a year, the Board may decide to cancel that share allocation. The 
fair value of the award at grant date is expensed over the one-year 
forfeiture period. The grant date share price is the fair value of both 
the deferred shares and the performance shares with EBIT and 
ROC hurdles, portfolio management and investment outcomes 
hurdles, or other strategic objectives hurdles.

31. Share-based payments (continued)
Wesfarmers Employee Share Plan (WESP)
The last issue under the WESP was made in December 2004. 
Under the plan, employees were invited to apply for ordinary shares 
in the company, funded by an interest-free loan from the Group. 
The employees’ obligation for repayment of the loans is limited to 
the dividends declared and capital returns by the company and, 
in the event the employee ceases employment, the market price 
achieved on the sale of the shares.

The plan is accounted for as an in-substance equity-settled award, 
with the contractual life of each option equivalent to the estimated 
loan life and no maximum term. 

Further details of the KEEPP and of the terms of the grants during 
the year are provided in the remuneration report.

32. Director and executive disclosures

Wesfarmers Employee Share Acquisition Plan 
(WESAP)
The WESAP was introduced in October 2009. Under the plan, all 
eligible employees are invited to acquire fully-paid ordinary shares 
in the company. The shares are either acquired under a salary 
sacrifice arrangement or are granted as an award, subject to the 
Group achieving a net profit after tax performance hurdle. Eligibility 
for an award of shares is dependent upon an in-service period with 
a participating division and being a permanent employee. 

The plan qualifies as a non-discriminatory employee share 
scheme complying with the requirements of Division 83A of the 
Income Tax Assessment Act 1997 (as amended) for Australian 
resident employees. The average fair value of the equity 
instruments granted was $39.86 (2019 average: $39.91) and was 
determined with reference to the share price on the date of grant.

Wesfarmers Employee Share Acquisition Plan 
(WESAP) - Executives
In November 2016, WESAP was introduced to eligible executives. 
Under this offer, eligible executives are invited to receive an 
award of Wesfarmers’ fully-paid ordinary shares subject to a 
three-year restriction. 

If an executive resigns or is terminated for cause within three 
years, the Board may decide to cancel that share allocation. The 
average fair value of the equity instruments granted was $41.87 
(2019 average: $32.46) and was determined with reference to the 
share price on the date of grant.

Wesfarmers Long Term Incentive Plan (WLTIP)
Long-term incentive

Under the WLTIP, eligible executives were invited to receive 
performance rights in the company, subject to testing at the 
end of the applicable four-year performance period. Prior to the 
demerger of Coles, the last issue under these terms was made in 
November 2016. WLTIP performance rights did not carry a right to 
participate in the demerger and participants did not receive Coles 
shares in respect of them. Additional performance rights were 
granted to eligible executives in December 2018, following the 
demerger of Coles from the Group, to preserve the overall value 
of the award and ensure they were not unfairly disadvantaged by 
the demerger. 

Annual incentive

In August 2019, eligible executives received a restricted (mandatory 
deferred) share award under the WLTIP. If an executive resigns or 
is terminated for cause within one year of the share allocation, the 
Board may decide to cancel that share allocation. The fair value of 
the award at grant date is expensed over the forfeiture period.

Compensation of key management personnel
The remuneration disclosures are provided in sections one to eight 
of the remuneration report on pages 92 to 116 of this annual report 
designated as audited and forming part of the directors’ report.

Short-term benefits
Long-term benefits
Post-employment benefits
Termination benefits
Share-based payments

Consolidated
2020
$'000

2019
$'000

13,054 
127 
236 
256 
13,933 
27,606 

14,037 
150 
280 
-  
10,987 
25,454 

Other transactions with key management personnel
From time to time, directors of Wesfarmers or its controlled entities, 
or their director-related entities, may purchase goods or services 
from the Group. These purchases are on the same terms and 
conditions as those entered into by other Group employees or 
customers and are trivial or domestic in nature.

33. Tax transparency disclosures

A reconciliation of Wesfarmers’ accounting profit to its tax expense 
and material temporary and non-temporary differences are 
disclosed in note 3. 

A reconciliation of accounting profit to income tax paid or payable 
and the effective company tax rates for Australian and global 
operations of the Group are tabled below.

Continuing operations

Tax paid or payable reconciliation
Accounting profit
Income tax at the statutory rate of 30%
Non-deductible items
Temporary differences: deferred tax
Associates and other
Utilisation of previously recognised tax 
losses
Current year tax paid or payable

Consolidated
2020
$m

2019
$m

2,374 
712 
156 
193 
(49)

(80)
932 

2,799 
840 
12 
(39)
(3)

-  
810 

Effective tax rate
Effective tax rate for Australian operations
Effective tax rate for global operations

30.7%
31.7%

30.2%
30.7%

164

 Wesfarmers 2020 Annual Report

Directors' declaration
Wesfarmers Limited and its controlled entities

In accordance with a resolution of the directors of Wesfarmers Limited, we state that:

1. 

In the opinion of the directors:

1.1 

 the financial statements, notes and the additional disclosures included in the directors’ report designated as audited,  
of the consolidated entity for the full-year ended 30 June 2020 are in accordance with the Corporations Act 2001, including:

(a) 

(b) 

 giving a true and fair view of the consolidated entity’s financial position as at 30 June 2020 and of its performance  
for the year ended on that date; and

 complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the 
Corporations Regulations 2001; and

1.2 

 the financial statements and notes comply with International Financial Reporting Standards as disclosed in the notes  
to the financial statements on page 123 of the 2020 Annual Report; and

1.3 

 there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

2. 

3. 

 This declaration has been made after receiving the declaration required to be made to the directors in accordance with section 295A 
of the Corporations Act 2001 for the financial year ended 30 June 2020.

 In the opinion of the directors, as at the date of this declaration, there are reasonable grounds to believe that the members of the 
Closed Group comprising the company and the controlled entities marked ‘+’ as identified in note 22 will be able to meet any 
obligations or liabilities to which they are or may become subject to by virtue of the Deed of Cross Guarantee referred to in note 25.

On behalf of the Board:

M A Chaney AO 
Chairman   

R G Scott 
Managing Director

Perth 
23 September 2020

Wesfarmers 2020 Annual Report

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Signed reports

Independent auditor's report
To the Members of Wesfarmers Limited

Independent auditor's report to the members of Wesfarmers Limited

Report on the audit of the financial report

Opinion

We have audited the financial report of Wesfarmers Limited (the Company) and its subsidiaries (collectively the Group), which comprises 
the consolidated statement of financial position as at 30 June 2020, the consolidated statement of comprehensive income, consolidated 
statement of changes in equity and consolidated statement of cash flows for the year then ended, notes to the financial statements, 
including a summary of significant accounting policies, 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 2020 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 judgment, 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.

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation

166

 Wesfarmers 2020 Annual Report

Independent auditor's report
To the Members of Wesfarmers Limited

1.  Target restructure and impairment of non-current assets

  Why significant

  How our audit addressed the key audit matter

During the period to 30 June 2020, the Group announced a 
strategic review of the Target operations within the Kmart Group. 

As disclosed in the Significant items in the current reporting 
period section of the notes to the financial statements, the Group 
recognised restructuring provisions and costs of $110 million at 
30 June 2020, primarily reflecting Target store closure costs and a 
restructure of the Target store support office.

The Group also conducted impairment testing for Target on the 
basis of forecast cash flows incorporating the expected outcomes 
of the committed restructuring plan, recognising a total impairment 
charge of $525 million against the brand name, store plant and 
equipment, right-of-use assets and other assets as disclosed in 
Note 20 Impairment of non-financial assets.

Our audit procedures included an assessment of the existence 
of constructive obligations at the balance date in relation to the 
restructure and evaluation of the assumptions and methodologies 
applied in the calculation of restructure costs. 

We evaluated the assumptions and methodologies applied in the 
impairment assessment, with emphasis on those relating to the 
determination of cash generating units (“CGUs”), forecast cash 
flows, growth rates, discount rates, comparative industry valuation 
multiples and other market evidence, including the impact of the 
adoption of AASB 16 Leases in the current year. 

We involved our valuation specialists to evaluate the 
appropriateness of key inputs, where relevant to the impairment 
tests, including:

Impairment assessments are typically complex and judgmental, 
as they include the modelling of a range of assumptions and 
estimates that will be impacted by future performance and market 
conditions. 

The determination of the recoverable amounts of Target’s tangible 
and intangible assets, as well as the nature and quantum of 
restructuring provisions to be recognised, required significant 
judgement by the Group. 

Key assumptions, judgements and estimates applied in the Target 
impairment assessment are set out in Note 20.

•  Discount rates

•  Terminal growth rates

•  Market evidence of industry earnings valuation multiples

•  Long-term inflation and growth rate assumptions

•  Forecast exchange rate assumptions.

We also considered the adequacy of the financial report 
disclosures regarding the recognition of restructuring costs and 
provisions, impairment testing approach, key assumptions and 
sensitivity analysis.

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation

Wesfarmers 2020 Annual Report

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Signed reports

Independent auditor's report
To the Members of Wesfarmers Limited

2.  WIS impairment of non-current assets

  Why significant

  How our audit addressed the key audit matter

As required by Australian Accounting Standards, the Group 
assesses at the end of each reporting period whether there are 
any factors indicating that an asset may be impaired. Goodwill 
and indefinite life intangibles are assessed for impairment at least 
annually.

Our audit procedures included an evaluation of the assumptions 
and methodology applied in the assessment, with emphasis on 
those relating to the determination of forecast cash flows, growth 
rate, discount rate, comparative industry valuation multiples and 
other market evidence. 

During the 2020 financial year, an impairment test was conducted 
for the WIS CGU, resulting in an impairment charge of $310 million 
before tax, including impairment of goodwill and other assets, as 
disclosed in Note 20.

Key assumptions, judgements and estimates applied in the Group’s 
impairment assessment for WIS are set out in Note 20.

3.  AASB 16 Leases

  Why significant

The new accounting standard AASB 16 Leases (“AASB 16”) was 
effective for the Group from 1 July 2019. 

The adoption of the new standard has had a significant impact on 
the Group’s financial position and performance, as disclosed in 
Note 11 Leases to the financial statements. 

Adopting AASB 16 involved a number of key judgements and 
estimates, which are described in Note 11. In particular:

•  The application of available practical expedients

•  The estimation of lease terms for contracts where extension 

options exist

•  The incremental borrowing rates applied

•  The estimation of standalone prices for non-lease 

components.

We involved our valuation specialists to evaluate the 
appropriateness of key inputs, where relevant to the impairment 
test, including:

•  Discount rate

•  Terminal growth rate

•  Market evidence of industry earnings valuation multiples

•  Long-term inflation and growth rate assumptions

•  Forecast exchange rate assumptions.

We also considered the adequacy of the financial report disclosures 
regarding the impairment testing approach, key assumptions and 
sensitivity analysis.

  How our audit addressed the key audit matter

Our audit procedures included the following:

•  We assessed the Group’s processes for implementing the 
standard and for the ongoing accounting for leases under 
AASB 16

•  We evaluated the Group’s key judgements and estimates 
applied in adopting the standard and assessed whether 
Wesfarmers’ accounting principles comply with AASB 16, 
including application of available practical expedients

•  We tested samples of both new and existing lease contracts 

to assess whether the associated balances had been 
calculated materially in accordance with contract terms and 
the requirements of AASB 16, including the identification of 
fixed and variable components of lease consideration

•  We tested samples of lease reassessments and modifications 
during the period to assess whether they had been accounted 
for in accordance with the requirements of AASB 16

•  We assessed the completeness of the Group’s material 

identified lease arrangements 

•  We held discussions with representatives from divisional 
property management teams to understand the basis for 
estimated lease terms and non-lease component rates

•  We agreed the data used in estimating the standalone prices 
of non-lease components to an external benchmark report 
released by an independent party

•  We involved our capital and debt advisory specialists and 
actuarial specialists to evaluate the appropriateness of the 
Group’s methodology and calculations used to determine the 
incremental borrowing rates applied to discount future lease 
payments to present value

•  We considered the adequacy of the financial report 

disclosures.

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation

168

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Independent auditor's report
To the Members of Wesfarmers Limited

4. 

Inventory valuation and existence 

 Why significant

  How our audit addressed the key audit matter

At 30 June 2020, the Group held significant inventory balances of 
$3,844 million, as disclosed in Note 6 Inventories. 

Inventories are valued at the lower of cost and net realisable value 
(“NRV”). The NRV of inventories is the estimated selling price in 
the ordinary course of business less estimated costs to sell, the 
determination of which requires significant judgement by the 
Group.

Key matters of judgement include:

•  The variables affecting costs recognised in bringing the 

inventory to its location and condition for sale

•  Estimated costs to sell

•  The expected selling price.

In addition, the distribution of the Group’s inventory across a high 
number of locations and the quantum of the inventory balances 
may result in an increased risk of existence.

Our audit procedures included the following:

•  We assessed the inventory management, procurement and 

commercial income processes, including an evaluation of the 
effectiveness of relevant controls

•  We attended stocktakes at a sample of locations and reviewed 

stocktake processes for compliance with internal policies

•  We tested the subsequent reconciliation of the stock count 

results into the inventory records and general ledger

•  We tested the accuracy of the weighted average costing 
systems and performed overhead allocation testing on a 
sample of inventory

•  We tested the costs incurred and the accuracy of the pricing 

assumptions in the NRV testing

•  We evaluated management’s assessment of stock 

obsolescence provisions through attendance at stocktakes, 
enquiries and analytical procedures

•  We performed inventory cut-off testing on a sample of 

transactions either side of year-end

•  We reviewed key stock statistics including sell through rates, 

stock ageing and stock turnover

•  We performed analysis of shrinkage results and provision 

calculations

•  We considered the adequacy of the financial report 

disclosures.

5.  Supplier rebates

  Why significant

  How our audit addressed the key audit matter

Rebates associated with its retail operations are received by the 
Group from suppliers. 

The value and timing of supplier rebates recognised requires 
judgement and the consideration of a number of factors including:

•  The commercial terms of each individual rebate 

•  The appropriate timing of recognition

•  Consideration of the nature of the rebate and whether the 
amount should be applied against the carrying value of 
inventory or recognised in the income statement 

•  The accurate recognition and measurement of rebates in 

accordance with Australian Accounting Standards and the 
Group’s related processes and controls.

Disclosures relating to the measurement and recognition of supplier 
rebates can be found in Note 6.

Our audit procedures included the following:

•  We gained an understanding of the nature of each material 
type of supplier rebate including assessing the significant 
agreements in place

•  We assessed the effectiveness of relevant controls in place 
relating to the recognition and measurement of rebate 
amounts

•  We performed comparisons of the various rebate 

arrangements against the prior year and budget, including 
analysis of aging profiles and where material variances were 
identified, obtained supporting evidence

•  We selected a sample of supplier rebates and tested whether 

documentation existed supporting the recognition and 
measurement of the rebates in the 30 June 2020 financial 
statements

•  We inspected a sample of material new contracts entered into 
before and after the balance date and assessed whether the 
treatment adopted by the Group in respect to rebates was 
appropriate

•  We inquired of legal counsel as to the existence of other 
rebate contracts or contracts with unusual terms and 
conditions

•  We inquired of business representatives including product 
category merchandisers, supply chain managers and 
procurement staff as to the existence of any non-standard 
agreements or side arrangements

•  We considered the adequacy of the financial report 

disclosures.

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation

Wesfarmers 2020 Annual Report

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Signed reports

Independent auditor's report
To the Members of Wesfarmers Limited

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 2020 
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.

Responsibilities of the directors for the financial report

The directors of the Company are responsible for the preparation of the financial report that gives a true and fair view in accordance with 
Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to 
enable the preparation of the financial report that gives a true and fair view 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 judgment 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

•  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

170

 Wesfarmers 2020 Annual Report

Independent auditor's report
To the Members of Wesfarmers Limited

Report on the audit of the Remuneration Report

Opinion on the Remuneration Report

We have audited the Remuneration Report included in pages 95 to 116 of the directors’ report for the year ended 30 June 2020.

In our opinion, the Remuneration Report of Wesfarmers Limited for the year ended 30 June 2020, 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.

Ernst & Young

T S Hammond 
Partner 
Perth 
23 September 2020 

J K Newton 
Partner 
Perth 
23 September 2020

A member firm of Ernst & Young Global Limited 
Liability limited by a scheme approved under Professional Standards Legislation

Wesfarmers 2020 Annual Report

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Shareholder and ASX information

Five-year financial history

All figures in $m unless shown otherwise1

Summarised income statement
Revenue from contracts with customers
Other revenue
Total revenue
Operating profit before depreciation and amortisation, 
finance costs and income tax
Depreciation and amortisation 
EBIT (after interest on lease liabilities)
Other finance costs
Income tax expense 
Profit after tax from discontinued operations
Operating profit after income tax attributable to members 
of Wesfarmers Limited

Post-AASB 16
20203

30,753
93
30,846

4,272
(1,528)
2,507
(133)
(677)
75

20194

44,485
199
44,684

7,627
(809)
6,818
(175)
(1,133)
3,570

Pre-AASB 16
20185

2017

20166

69,595
283
69,878

4,079
(1,283)
2,796
(221)
(1,378)
(1,407)

68,099
345
68,444

5,668
(1,266)
4,402
(264)
(1,265)
-

65,643
338
65,981

2,642
(1,296)
1,346
(308)
(631)
-

1,697

5,510

1,197

2,873

407

Capital and dividends
Ordinary shares on issue (number) 000's as at 30 June
Paid up ordinary capital as at 30 June
Fully-franked dividend per ordinary share 
(declared/determined) (cents)
Fully-franked special dividend per ordinary share 
(declared/determined) (cents)2 

Financial performance
Earnings per share (weighted average) (cents)
Earnings per share growth (%)

Return on average ordinary shareholders' equity (R12) 
(excluding significant items) (%)

Financial position as at 30 June
Total assets
Total liabilities
Net assets
Net tangible asset backing per ordinary share ($)
Net debt to equity (%)
Total liabilities/total assets (%)

1,133,840
15,818

1,133,840
15,809

1,133,840
22,277

1,133,840
22,268

1,126,131
21,937

152

18

150.0
(69.2)

22.1

25,425
16,081
9,344
4.89
(0.9)
63.2

178

100

487.2
360.5

19.2

18,333
8,362
9,971
5.21
25.1
45.6

223

-

105.8
(58.5)

11.7

36,933
14,179
22,754
4.33
17.3
38.4

223

-

254.7
603.6

12.4

40,115
16,174
23,941
4.44
20.1
40.3

186

-

36.2
(83.2)

9.6

40,783
17,834
22,949
3.45
31.0
43.7

Stock market capitalisation as at 30 June

50,830

41,000

55,966

45,490

45,158

1 

2 

3 

4 

5 

6 

All figures are presented as last reported, including discontinued operations.
The 2020 fully-franked special dividend reflects the distribution of after-tax profits on the sale of the Group's 10.1 per cent interest in Coles.
The summarised income statement for 2020 includes significant items relating to the following pre-tax (post-tax) items: $525 million ($437 million) impairment of the 
Target brand name and other assets, $110 million ($83 million) restructuring costs and provisions in the Kmart Group and a $310 million ($298 million) impairment to WIS, 
offset by a gain of $290 million ($203 million) on the sale of 10.1 per cent of the interest in Coles, a gain of $220 million ($154 million) on the revaluation of the retained 
4.9 per cent interest in Coles and a benefit of $83 million from the finalisation of tax positions on prior year disposals.
The summarised income statement for 2019 includes significant items relating to the following pre-tax (post-tax) items: $2,319 million ($2,264 million) gain on demerger 
of Coles, the $679 million ($645 million) gain on disposal of Bengalla, the $267 million ($244 million) gain on disposal of KTAS, the $138 million ($120 million) gain on 
disposal of Quadrant Energy and $146 million ($102 million) provision for Coles supply chain automation.
The summarised income statement for 2018 includes significant items relating to the following pre-tax (post-tax) items: $306 million ($300 million) non-cash impairment 
of Target, BUKI's writedown and store closure provision of $931 million ($1,023 million), $375 million ($375 million) loss on disposal relating to BUKI, partially offset by 
$120 million ($123 million) gain of the Curragh Coal Mine.
The summarised income statement for 2016 includes significant items relation to the following pre-tax (post-tax) items: $1,266 million ($1,249 million) non-cash 
impairment of Target; $850 million ($595 million) non-cash impairment of Curragh Coal Mine; and $145 million ($102 million) of restructuring costs and provisions to reset 
Target.

172

 Wesfarmers 2020 Annual Report

Shareholder information

Substantial shareholders

As at the date of this report, the following shareholders are substantial shareholders for the purposes of Part 6C.1 of the 
Corporations Act 2001:

•  BlackRock Group (BlackRock Inc. and subsidiaries) holding 6.04 per cent; and

•  The Vanguard Group, Inc. holding 6.00 per cent.

Voting rights

Wesfarmers fully-paid ordinary shares carry voting rights of one vote per share.

Distribution of members and their holdings

Size of holdings

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

Number of 

shareholders % of issued capital

381,378

88,083

9,879

5,025

161

10.92

16.20

6.03

8.92

57.93

There were 12,643 shareholders that held less than a marketable parcel of Wesfarmers ordinary shares.

There were 1.04 per cent of shareholders with registered addresses outside Australia.

Twenty largest shareholders

The 20 largest shareholders of ordinary shares on the company’s register as at 23 September 2020 were:

Name

HSBC Custody Nominees (Australia) Limited

J P Morgan Nominees Australia Pty Limited

Citicorp Nominees Pty Limited

National Nominees Limited

BNP Paribas Nominees Pty Ltd (Agency Lending DRP A/C) 

BNP Paribas Noms Pty Ltd (DRP) 

HSBC Custody Nominees (Australia) Limited (Nt-Comnwlth Super Corp A/C)

Australian Foundation Investment Company Limited 

Citicorp Nominees Pty Limited (Colonial First State Inv A/C) 

CPU Share Plans Pty Limited (WESAP DFE Control A/C)

Argo Investments Limited 

CPU Share Plans Pty Limited (WES Exu Control A/C) 

Milton Corporation Limited

Netwealth Investments Limited (Wrap Services A/C) 

Goldman Sachs Australia + Nominee Holdings Pty Ltd (WES Ltd Div Inv Plan A/C)

HSBC Custody Nominees (Australia) Limited

BNP Paribas Nominees Pty Ltd Hub24 Custodial Serv Ltd (DRP A/C)

Australian Executor Trustees Limited (IPS Super A/C) 

AMP Life Limited

Mr Peter Alexander Brown

Number of shares % of issued capital

258,627,814

182,605,556

59,955,587

27,103,517

21,011,386

9,380,324

8,530,195

7,372,000

7,078,572

5,087,149

5,040,027

3,486,180

2,877,375

2,856,856

2,661,826

2,257,511

1,911,134

1,833,228

1,750,973

1,552,825

22.81

16.11

5.29

2.39

1.85

0.83

0.75

0.65

0.62

0.45

0.44

0.31

0.25

0.25

0.23

0.20

0.17

0.16

0.15

0.14

The percentage holding of the 20 largest shareholders of Wesfarmers ordinary shares was 54.06.

Wesfarmers 2020 Annual Report

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Shareholder and ASX information

Investor information

Managing your shareholding

Change of name or consolidation of holdings

The company’s share registry is managed by Computershare 
Investor Services Pty Limited (Computershare).

The Investor Centre website is the fastest, easiest and most 
convenient way to view and manage your shareholding. Investor 
Centre enables a shareholder to:

•  view the company share price;

•  change your banking details;

•  change your address (for non-CHESS sponsored holdings);

•  update your dividend instructions;

•  update your Tax File Number (TFN), Australian Business 

Number (ABN) or exemption;

•  select your email and communication preferences; 

•  view your transaction and dividend history; and

•  generate a holding balance letter.

Visit www.wesdirect.com.au and click on ‘Login’ for portfolio 
membership or click on ‘Single Holding’ to view your Wesfarmers 
shareholding information.

When communicating with Computershare or accessing your 
holding online you will need your Securityholder Reference Number 
(SRN) or Holder Identification Number (HIN) as shown on your 
Issuer Sponsored/CHESS statements.

You can also contact Computershare by:

Post  GPO Box 2975 Melbourne, Victoria 3001 Australia

Telephone Australia  1300 558 062 

Telephone International  (+61 3) 9415 4631

Website  www.investorcentre.com/contact

Tax File Numbers

While it is not compulsory to provide a TFN, if shareholders 
have not provided a TFN and Wesfarmers pays an unfranked or 
partly-franked dividend, the company will be required to deduct tax 
from the unfranked portion of the dividend at the top marginal rate 
plus the Medicare Levy. Shareholders can go online to update their 
TFN by visiting www.wesdirect.com.au

Name changes or consolidation of multiple holdings into one single 
holding must be made in writing by using the required forms, which 
can be downloaded from www.wesdirect.com.au and clicking on 
the ‘Printable Forms’ button.

Uncertificated Share Register: The Wesfarmers share register is 
uncertificated. Two forms of uncertificated holdings are available to 
shareholders:

• 

Issuer sponsored holdings – these holdings are sponsored 
by Wesfarmers and there is no need for shareholders to be 
sponsored by a stockbroker; and

•  Broker sponsored holdings – shareholders may arrange to 
be sponsored by a stockbroker who will require a signed 
sponsorship agreement.

Holding statements are issued to shareholders within five business 
days after the end of any month in which transactions occur that 
alter the balance of their holding. Shareholders can also access 
details of their shareholdings and dividends paid on their holdings 
by visiting www.wesdirect.com.au

Information on Wesfarmers

Wesfarmers website

Up-to-date information on the company can be obtained from the 
company’s website www.wesfarmers.com.au

Securities Exchange listing

Wesfarmers shares are listed on the Australian Securities Exchange 
under the code WES.

Share prices can be accessed from major Australian newspapers, 
on the Wesfarmers website or at www.asx.com.au

Dividend investment plan

The company’s dividend investment plan was reinstated with effect 
from 27 February 2007. Details of the plan can be obtained from 
the share registry or the Wesfarmers website.

Privacy

A copy of the Wesfarmers Privacy Policy is available on the 
Wesfarmers website.

Wesfarmers Corporate Affairs department

Further information and publications about the company’s 
operations are available from the Corporate Affairs department on 
(08) 9327 4428 (within Australia) or (+61 8) 9327 4428 (International) 
or from the Wesfarmers website.

174

 Wesfarmers 2020 Annual Report

Financial calendar+

Record date for final and special dividends

26 August 2020

Final and special dividends paid

Annual general meeting (virtual)

Half-year end

Half-year profit announcement

Record date for interim dividend

Interim dividend payable

Year-end

+ Timing of events is subject to change.

1 October 2020

12 November 2020

31 December 2020

February 2021

February 2021

April 2021

30 June 2021

Annual General Meeting

The 39th Annual General Meeting of Wesfarmers Limited will be a 
virtual meeting and will be held on Thursday 12 November 2020  
at 1:00pm (Perth time). Shareholders will be able to participate 
in the meeting through an online platform. Further details will be 
provided in the 2020 Notice of Meeting.  

Website

To view the 2020 Annual Report, shareholder and company 
information, news announcements, background information 
on Wesfarmers’ businesses and historical information, visit the 
Wesfarmers website at www.wesfarmers.com.au

Corporate directory
Wesfarmers Limited ABN 28 008 984 049

Registered office

Level 14, Brookfield Place Tower 2 

123 St Georges Terrace

Perth, Western Australia 6000

Telephone  (+61 8) 9327 4211 

Facsimile  (+61 8) 9327 4216 

Website  www.wesfarmers.com.au

Email  info@wesfarmers.com.au

Executive director

Rob Scott 
Group Managing Director and Chief Executive Officer

Non-executive directors

Michael Chaney AO 
Chairman

The Right Honourable Sir Bill English KNZM

Wayne Osborn

Mike Roche

Diane Smith-Gander AO 

Vanessa Wallace 

Sharon Warburton

Jennifer Westacott AO

Chief Financial Officer

Anthony Gianotti

Company Secretary

Aleksandra Spaseska (from 1 July 2019 to 2 March 2020)

Vicki Robinson (from 2 March 2020)

Share registry

Computershare Investor Services Pty Limited

Yarra Falls, 452 Johnston Street 

Abbotsford, Victoria 3067

Telephone Australia  1300 558 062

Telephone International  (+61 3) 9415 4631

Facsimile Australia  (03) 9473 2500 

Facsimile International  (+61 3) 9473 2500

Website  www.investorcentre.com/wes

Wesfarmers 2020 Annual Report

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Wesfarmers 2020 Annual Report176BunningsChemicals, Energy and FertilisersIndustrial and SafetyWesfarmers businessesKmart GroupOfficeworksOther activities4.9%50%50%50%24.8%This annual report has been printed utilising solar electricity onto sustainable FSC certified paper. 

Both printer and paper manufacturer are ISO14001 certified, the highest environmental standard.

Designed by Clarity Communications

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