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Deliveringtoday.Valuetomorrow.WesfarmersAnnualReport2013 Everydaybringswithittheopportunityorgrowthorrefectiononmethodsandperormanceimprovementopracticesandresultsandabovealltheopportunitytolearnandimprove.Throughsharingknowledgeacrossdiverseroleslocationsandbusinessportolioswecandeliveronourcommitmenttoprovidevaluetoourpeopleourshareholdersandourcommunities.Deliveringtoday.Valuetomorrow.SecuritiesexchangelistingWesfarmersisacompanylimitedbysharesthatisincorporatedanddomiciledinAustralia.AustralianSecuritiesExchangeASXlistingcodesWesfarmersWESWesfarmersPartiallyProtectedSharesWESNWesfarmersLimitedABN28008984049 1WesfarmersaNNUaLreport2013ContentsOperatingandfnancialreview2Chairmansmessage14ManagingDirectorsreview16Wesarmersleadershipteam18FinanceDirectorsreview20AboutWesfarmersFromitsoriginsin1914asaWesternAustralianarmerscooperativeWesarmershasgrownintooneoAustraliaslargestlistedcompanies.HeadquarteredinWesternAustraliaitsdiversebusinessoperationscoversupermarketsdepartmentstoreshomeimprovementandofcesuppliescoalproductionandexportinsurancechemicalsenergyandertilisersandindustrialandsaetyproducts.WesarmersisoneoAustraliaslargestemployersandhasashareholderbaseoapproximately500000.Sustainability55Boardodirectors58Corporategovernancestatement60Directorsreport72Remunerationreport77Financialstatements95Directorsdeclaration176Independentauditorsreport177Annualstatementocoalresourcesandreserves178Shareholderinormation180Fiveyearfnancialhistory182Investorinormation183Corporatedirectory184ProudhistorystrongutureSteepedinaoundationodistributionandretailingsinceitsormationtodayWesarmersisoneoAustraliasleadingretailersanddiversifedindustrialcompanies.Insurance38Resources42ChemicalsEnergyandFertilisers46IndustrialandSaety50Otheractivities54OurobjectiveWesarmersremainscommittedtoprovidingasatisactoryreturntoshareholders.Coles22HomeImprovementandOfceSupplies26Kmart30Target34 2OperatingandnancialreviewHighlightssummaryKEYFINANCIALDATAYearended30June20132012Revenuem5983258080Earningsbeoreinteresttaxdepreciationandamortisationm47294544Depreciationandamortisationm1071995Earningsbeoreinterestandtaxm36583549Netprotatertaxm22612126Operatingcashfowsm39313641Netcapitalexpenditureonpropertyplantequipmentandintangiblesm16722351Freecashfowsm21711472Dividendspaidm19851789Totalassetsm4315542312Netdebtm52594904Shareholdersequitym2602225627KEYSHAREDATAEarningspersharecents195.9184.2Operatingcashfowpersharecents339.7314.6Freecashfowpersharecents187.6127.2Dividendspersharedeclaredcents180.0165.0KEYRATIOSReturnonaverageshareholdersequityR128.98.4FixedchargescoverR12times3.02.9InterestcoverR12cashbasistimes12.210.8Gearingnetdebttoequity20.219.1WealthcreatedbyWesarmersKeynancialdata591231610201312910m201212280mEmployeessalarieswagesandotherbenetsGovernmenttaxandroyaltiesLendersnancecostsrelatedtoborrowedfundsShareholdersdividendsontheirinvestmentsReinvestedinthebusiness58124161025001500100020005000Netprotaftertax2261m2013226120122126201119222010156520091522201312111009 3WesfarmersaNNUaLreport2013FinancialhighlightsOperatingrevenueo59.8billionup3.0percentEarningsbeoreinterestandtaxEBITo3658millionup3.1percentNetprotatertaxo2261millionup6.3percentEarningspershareo1.96up6.4percentOperatingcashfowso3931millionup8.0percentFreecashfowso2171millionup47.5percentFully-rankedull-yeardividendo1.80declaredup9.1percentOperationalhighlightsColesachievedstrongEBITearningsgrowtho13.1percentto1533million.ThisresultwasachievedthroughtheprovisionoabettercustomeroerbyenhancingstoresimprovingthebroaderColesnetworkandinvestinginlowerpriceswhichwereundedprincipallybyachievingoperatingecienciesacrossstoressupplychainandstoresupportunctions.Bunningsrecordedanothergoodresultwithearningsgrowtho7.5percentto904million.Bunningscontinuedtoinvestinbettercustomerexperiencesrangeinnovationandcategoryexpansionwithimprovedstockfowachievedandincreasedvalueprovidedtocustomersthroughcontinuedpriceinvestment.Ofceworksrecordedearningsgrowtho9.4percentto93millionunderpinnedbystrongtransactionandunitgrowthacrossanexpandingstorenetworkandonline.Kmartrecordedstrongearningsgrowtho28.4percentto344millionprincipallythroughimprovementsinsourcingrangeassortmentinventorymanagementandin-storeexecution.Targetreportedearningso136millionbelowthe244millionachievedintheprioryearwithsalesandtradingmarginsaectedbypricedefationduetoincreasedcompetitionandongoingchallengesinentertainment-relatedcategories.Thereweresignicantmanagementchangeslateintheyearandhighlevelsoclearanceactivitywererequiredtobeundertakentoreduceexcessinventoryparticularlygiventhelatestarttowinter.Costswerealsohigherthanplannedinpartduetorestructuringactivitiesexpectedtoprovideuturebenets.Insurancerecordedearningso205millionwhichwasasignicantincreaseonthe5millionachievedintheprioryearlargelydrivenbyhigherpremiumsandamoreavourableclaimsexperiencewithintheunderwritingbusinesses.Resourcesreportedearningso148millionor66.3percentbelowlastyearduetolowerexportcoalpricesasthedivisionexperiencedaprogressivelyweakeningexportcoalmarket.Positivelyastrongocusoncostcontrolresultedinreducedminecashcosts.ChemicalsEnergyandFertilisersreportedearningso249millionwhichwereinlinewithlastyearaterallowanceortheterminationpaymento9millionrelatingtotheHIsmeltagreementreceivedinthepriorperiod.Earningsweresupportedbygoodplantproductionperormancesandproductpricinginthechemicalsbusiness.OsettingthiswasapoorharvestandadryJunewhichadverselyaectedertiliserearningsandareducedcontributionromKleenheatGasduetolowergascontentintheDampiertoBunburynaturalgaspipeline.IndustrialandSaetydeliveredasolidresultinachallengingmarketwithearningso165millionbelowthe190millionrecordedintheprioryear.Thisresultwassupportedbyahighleveloocusoncostcontrolimproveddistributioncapabilitiesandthemaintenanceostrongservicelevelsandcustomerretention.Otherbusinessesnon-tradingitemsandcorporateoverheadsreportedanexpenseo119millioncomparedtoanexpenseo137millionlastyearwithbetterresultsintheGreshamPrivateEquityFundsandtheBWPTrustpartiallyosetbylowerinterestrevenue.Financingcostsortheyearo432millionwere73millionlowerthanthepreviousyearrefectingthebenetsorenancingactivityandtheprogressiveexpiryopre-globalnancialcrisisinterestratehedges.Netcapitalexpenditureo1672millionwas28.9percentbelowlastyearinpartdrivenbyanincreaseinretailpropertydisposalproceedsollowinghigherlevelsosaleandleasebackactivity.Givenincreasedearningsgoodreecashfowgenerationandastrongbalancesheetdirectorsdeclaredanincreaseintheully-rankedull-yeardividendo9.1percentto1.80pershareandannouncedtheintentiontomakesubjecttoshareholderapprovalacapitalreturno50centsperully-paidordinaryshareandpartiallyprotectedshareaccompaniedbyanequalandproportionateshareconsolidation.200150100500Earningspershare195.9cents2013195.92012184.22011166.72010135.72009158.5201312111009200150100500Dividendspershare180cents2013180201216520111502010125200911020131211100940003000200010000Operatingcashows39312013393120123641201129172010332720093044201312111009m 4OperatingandfnancialreviewWesarmersisadiversifedAustraliancompanywithstrongestablishedmarketpositionsandrecognisedbrandswiththeobjectiveodeliveringsatisactoryreturnstoshareholders.Thisinormationissupplementarytothefnancialreportandshouldbereadinconjunctionwiththefnancialstatementsandtheiraccompanyingnotesonpages95to175othisannualreport.ActivitiesFromouroriginsin1914asaWesternAustralianarmerscooperativeWesarmershasgrownintooneoAustraliaslargestlistedcompaniesandemployers.Wesarmersdiversebusinessoperationscoversupermarketsdepartmentstoreshomeimprovementandofcesuppliescoalproductionandexportinsurancechemicalsenergyandertilisersandindustrialandsaetyproducts.ThevastmajorityoWesarmersbusinessesoperateinAustraliaandNewZealandwiththeportolioincludingsomeoAustraliasleadingbrands.Inachallengingenvironmentthesolidgrowthinrevenueandearningsachievedin2013highlightsthebeneftsoourconglomeratemodelwhereportoliodiversityassiststheriskmanagementoearningsandGroupownershipenablesdivisionstotakealong-terminvestmentview.ObjectiveTheprimaryobjectiveoWesarmersistoprovideasatisactoryreturntoourshareholders.ThemeasureusedbytheGrouptoassesssatisactoryreturnsistotalshareholderreturnsTSRovertime.WemeasureourperormancebycomparingWesarmersTSRagainstthatachievedbytheSPASX200Index.Wesarmersaimstoachieveitsobjectiveoprovidingsatisactoryreturnstoshareholdersbyimprovingreturnsoninvestedcapitalrelativetothecostothatcapitalandensuringasatisactoryreturnismadeonanynewcapitalinvested.Onthismeasureduringthelast10yearstheGrouphasdeliveredcompoundannualgrowthinTSRo12.0percentwhichcomparestogrowthinTSRo9.3percentintheSPASX200Index.ReturnonEquityGivenakeyactorindeterminingTSRperormanceismovementinWesarmerssharepricewhichcanbeaectedbyactorsoutsidethecontrolothecompanyincludingmarketsentimentbusinesscyclesinterestratesandexchangeratestheGroupocusesonReturnonEquityROEasakeyinternalperormanceindicator.TheWesarmersWayOutstandingpeopleCommercialexcellenceEmpoweringcultureInnovationSocialresponsibilityRobustfnancialcapacitySatisactoryreturntoshareholdersGrowthenablersObjectiveStrengthenexistingbusinessesthroughoperatingexcellenceandsatisyingcustomerneedsSecuregrowthopportunitiesthroughentrepreneurialinitiativeRenewtheportoliothroughvalue-addingtransactionsEnsuresustainabilitythroughresponsiblelong-termmanagementValuecreatingstrategies 5WesfarmersaNNUaLreport2013Duetothelong-termvaluecreationopportunityaordedbytheColesGroupacquisitiontheGrouphasinrecentyearsconsideredgrowthinROEasanimportantdriveroTSR.ThroughtheturnaroundoColestheGrouphasachievedgrowthinROEo21.9percentovertheveyearsto30June2013withROEo8.9percentrecordedin2013.ReturnonCapitalWhileROEisakeyperormanceindicatorataGrouplevelReturnonCapitalROCistheprincipalmeasureobusinessunitperormanceasitalignstheGroupsdivisionstoimproveGroupreturnsinareaswithintheircontrol.MinimumROCtargetsoreachdivisionaresetbasedontheGroupspre-taxcostocapitalwhilesatisactoryROCtargetsareestablishedbasedontheGroupsROEtargetswhicharereviewedannuallywithreerencetotheperormanceothebroadermarket.DivisionalROCperormancecanbeoundinthereviewooperationspages9to13andinthedivisionalreviewspages22to54othisannualreport.StrategicframeworkDrivingtheGroupsobjectivetoprovideasatisactoryreturntoshareholdersareouroverarchingstrategies.Thesearestrengtheningexistingbusinessesthroughoperatingexcellenceandsatisyingcustomerneedssecuringgrowthopportunitiesthroughentrepreneurialinitiativerenewingtheportoliothroughvalue-addingtransactionsensuringsustainabilitythroughresponsiblelong-termmanagementAsshowninthetablebeloweachstrategyisunderpinnedbyasetocommonGrouppracticesthatsupporttheGroupsoverarchingstrategicramework.AkeyattributeoWesarmersstrategicrameworkisthemaintenanceoalong-termocusandactingsustainablyinthecreationovalueandthebuildingobusinesses.FurtherdetailontheGroupssustainabilityinitiativescanbeoundintheGroupsSustainabilityReportandinthesustainabilitysectionpages55to57.StrategiesExternalbenchmarkingtoensurebestpracticeandinnovationStrongstrategicplanningprocessDetailedoperationalplansandimplementationprogramsThesettingostretchtargetsandperormancemonitoringStrongocusonteamdevelopmentandmanagementokeyrolesuccessionStrengthenexistingbusinessesthroughoperatingexcellenceandsatisfyingcustomerneedsEncouragementoexperimentationandinnovationStrongcommercialevaluationmethodologyApreparednesstoinvestwithalong-termocusonshareholderreturnsAppropriatecorporategovernanceprocesseswithsucientfexibilitytosupportentrepreneurialinitiativeSecuregrowthopportunitiesthroughentrepreneurialinitiativeFocusonbuildingbusinessesorthelong-termAstrongcommercialevaluationcapabilityapplyingstrictinvestmentvaluationmethodsRigorousduediligenceandintegrationprocessespostacquisitionMaintenanceoastrongbalancesheettoenabletheGrouptoactopportunisticallyAcquisitionobusinesseswhichtheGrouphastheabilitytooperateandimproveDivestmentswhereshareholderreturnscanbemaximisedOngoingreviewotheportoliotoensurecapitalisallocatedecientlyRenewtheportfoliothroughvalue-addingtransactionsProtectandenhanceourreputationwithstakeholdersLookaterthehealthsaetyanddevelopmentoourpeopleResponsiblysourceproductsacrosstheGroupContributepositivelytothecommunitiesinwhichweoperateMinimiseourenvironmentalootprintProvideappropriategovernancestructurestosaeguarduturevaluecreationEnsuresustainabilitythroughresponsiblelong-termmanagement 6Operationalindependenceamongbusinessesandanexperiencedmanagementteamwithaproventrackrecord.OperatingandfnancialreviewSupportingWesarmersvaluecreatingstrategiesandattheheartoouroperatingmodelistheGroupsannualcorporateplanningprocesswhichisintendedtoensureconsistentstrategicplanningacrosstheGroupandthedevelopmentodetailedstrategicinitiativesaimedatimprovingutureperormanceandachievingsatisactoryROCtargets.CurrentareasodivisionalstrategicocusincludedrivingoperationalefcienciesinallretailbusinessesandreinvestinginbettervalueandserviceorcustomerscontinuingtooptimisesupplychainsparticularlyinColesandTargetinnovationinproductcategoriesandallretailchannelstomarketincludingthroughonlineandstorerenewalprogramsstorenetworkexpansionandcapitalrecyclingparticularlyinColesandBunningssuccessulcompletionandcommissioningoammoniumnitrateexpansionandsodiumcyanidedebottleneckingprojectsinthechemicalsbusinessimprovingproductivityintheResourcesdivisionincreasingtheInsurancedivisionsunderwritingreturnsthroughdisciplinedriskselectionincommerciallinesandgrowthinpersonallinesthroughColestargetingbolt-onacquisitionsinbrokingandcreatingoperationalefciencyproductrangedevelopmentandcustomerbasediversifcationintheIndustrialandSaetydivision.MoredetailregardingdivisionaloperationalstrategiescanbeoundintheReviewoOperationspages9to13thedivisionalreviewspages22to54andintheGroupsstrategybriefngdaypresentationlodgedwiththeASXon29May2013.InthedeliveryoitsstrategiesaswellasdetailedimplementationplanstheGroupocusesonsixkeyenablersOutstandingpeopleWesarmersseekstobeanemployerochoice.AttractingoutstandingpeopleandutilisingtheirindividualtalentsisthemostcriticalelementinstrivingorsustainablesuccessandWesarmersrecognisesthatwhilstgreatassetsandstrategiesarecriticalitispeoplewhoultimatelydriveoutcomes.EmpoweringcultureWesarmersrecognisesthatanempoweringcultureengendersaccountabilityordeliveringtheresultsagreeduponthroughtheGroupscorporateplanningramework.Wesarmersencouragesitsteammemberstobeproactiveindrivingthecreationovalueintheirbusinesses.InnovationWesarmersseekstodevelopaculturethatencouragesinnovationrewardsboldnessandcreativityandacceptshonestmistakes.CommercialexcellenceWesarmersseekstoensurethatitemploysstrongfnancialdisciplineinalloitsdecisionsacrosstheGroup.Wesarmershasaclearbiastowardpromotingstrongcommercialcapabilityacrossitsleadershipbase.RobustfnancialcapacityBymaintainingastrongbalancesheettheGroupaimstoprovideacompetitivecostandaccesstocapitaltoallowtheGrouptoactwhenvaluecreatingopportunitiespresentthemselves.SocialresponsibilityRespectoremployeescustomersandsuppliersandarelentlessocusonprovidingsaeworkplacesareundamentaltothewaythatWesarmersoperates.Wesarmerssocialresponsibilityextendstomaintaininghighstandardsoethicalconductenvironmentalresponsibilityandcommunitycontribution.OperatingmodelWesarmersoperatingmodelisocusedonensuringeachotheGroupsdivisionshasaverystrongmanagementcapabilityandday-to-dayoperationalautonomyoverseenbydivisionalboardsandawell-establishedGroup-widerameworkwheregovernanceprocessesarecoordinatedovera12monthoperatingcycle.ThisapproachencouragesstrongaccountabilityoroperatingresultsandassuranceinareassuchasStrategicplanningbudgetingandmonitoringoperormanceRiskmanagementincludinginternalauditandinsuranceprotectionGroup-widehumanresourcemanagementsystemssuchasexecutiveremunerationandshareschemestalentdevelopmentandkeyrolesuccessionplanningandCentralisedstatutoryaccountingtaxtreasuryandlegalsupport. 7WesfarmersaNNUaLreport2013TheGroupsBusinessDevelopmentunctionprovidestheGroupassuranceoveranysignifcantcapitalexpenditureevaluationincludingmergerandacquisitionactivityaswellaspostimplementationreview.RisksRiskisanacceptedpartodoingbusinessandWesarmersrecognisestheimportanceoandiscommittedtotheidentifcationmonitoringandmanagementomaterialrisksassociatedwithitsbusinessactivitiesacrosstheGroup.ThetablebelowsetsoutthemajorrisksidentifedthroughtheGroupsriskmanagementprocess.TherisksnotedarenotinanyparticularorderanddonotincludegenericriskssuchaschangestoeconomicconditionsaectingbusinessandhouseholdsinAustraliawhichwouldaectallcompanieswithalargedomesticpresenceandwhichcouldhaveamaterialimpactontheutureperormanceotheGroup.AspartoitsmanagementprocessesandoperatingcycletheGroupregularlyreviewsmaterialbusinessrisksaswellasplanstomitigatetheserisksanddiscussestheseplanswiththeWesarmersBoard.FurtherinormationonriskmanagementincludingpoliciesresponsibilityandcertifcationcanbeoundintheCorporategovernancestatementonpages60to71.ProspectsDespitemorechallengingorecastsortheAustraliandomesticeconomyandhouseholdstheGroupcontinuestoremainoptimisticinitsoutlook.TheturnaroundstrategiesinColesKmartandOfceworkshaveprovidedsolidplatormsoruturegrowth.Thesebusinessesended2013withsolidmomentumandhaveplansinplacetopursueurtheropportunitiestodelivergrowththroughoperatingefcienciesandimprovementsintheircustomeroers.Bunningsoutlookappearssimilarlypositivesupportedbyaullstrategicandoperationalagendatoimproveanalreadystrongcustomerexperience.Theutureconversionothepropertypipelineintotradinglocationsatahigherratethanhistoricallyachievedisalsoexpectedtocontributetogrowth.TargetremainsavaluedbrandinAustraliaanditsperormanceisexpectedtoprogressivelyimproveovertime.Tradinginthefrsthalothe2014fnancialyearishoweverexpectedtocontinuetobechallengingasaresultoongoingwinterclearanceactivityandthenon-repeatohighlevelsopromotionalactivityintheprioryear.TheInsurancedivisionsoutlookappearspositiveassumingtheabsenceosignifcantcatastropheevents.InrelationtounderwritinggrowthinColesInsuranceandongoingdisciplineincommercialunderwritingisexpected.Futuregrowthinbrokingearningsisalsoanticipatedbutplannedsystemsupgradeswillconstrainmarginimprovementinthenear-term.Theshort-termoutlookortwootheGroupsIndustrialdivisionswillcontinuetobechallenging.Currentvariablemetallurgicalcoaldemandandlowexportcoalpricesprovideoradifcultshort-termoutlookortheResourcesdivision.Withinthisenvironmentthedivisionwillcontinuetomaintainastrongocusoncostcontrol.ThedivisionwillbeneftshouldtherebeanyurtherweakeningintheAustraliandollar.Longer-termareducingcoststructureandrecentcapacityexpansionsprovideleveragetoanyimprovementincoalprices.TheIndustrialandSaetydivisionisalsoexpectedtoaceamoredifcultshort-termtradingoutlook.Thelonger-termoutlookortheChemicalsEnergyandFertilisersdivisionappearspositivegiventheexpectedcommissioningduringthe2014fnancialyearoitsammoniumnitrateexpansionandsodiumcyanidedebottleneckingprojects.RisksIncreasedcompetitionIneectiveexecutionostrategyLossokeymanagementpersonnelDamageordilutiontoWesarmersbrandsLossocriticalsupplyinputsorinrastructureincludingITsystemsBusinessinterruptionarisingromindustrialdisputesworkstoppagesandaccidentsRisksinherentindistributionandsaleoproductsIneectivereinsuranceocatastrophiclossinunderwritingNon-compliancewithapplicablelawsregulationsandstandardsAdverseregulatoryorlegislativechangeAdversecurrencymovementsAdversecommoditypricemovementsmetallurgicalcoalReducedaccesstoundingStrategicOperationalRegulatoryFinancial 8OperatingandfnancialreviewRetailoperationsColes20132012Revenuem3578034117Earningsbeoreinterestandtaxm15331356Segmentassetsm2036719940Segmentliabilitiesm41453676Capitalemployedm1611415572Returnoncapitalemployed9.58.7HomeImprovementandOfceSupplies20132012Revenuem91678644Earningsbeoreinterestandtaxm997926Segmentassetsm58885647Segmentliabilitiesm957810HomeImprovementCapitalemployedm34923250Returnoncapitalemployed25.925.9OfceSuppliesCapitalemployedm11471210Returnoncapitalemployed8.17.1Kmart20132012Revenuem41674055Earningsbeoreinterestandtaxm344268Segmentassetsm21452057Segmentliabilitiesm750604Capitalemployedm13291416Returnoncapitalemployed25.918.9Target20132012Revenuem36583738Earningsbeoreinterestandtaxm136244Segmentassetsm35613538Segmentliabilitiesm464575Capitalemployedm29302896Returnoncapitalemployed4.68.4InsuranceandIndustrialbusinessesInsurance20132012Revenuem20831915Earningsbeoreinterestandtaxm2055Segmentassetsm44404423Segmentliabilitiesm28692988Capitalemployedm13961278Returnoncapitalemployed14.70.4Resources20132012Revenuem15392132Earningsbeoreinterestandtaxm148439Segmentassetsm19202051Segmentliabilitiesm420496Capitalemployedm14801488Returnoncapitalemployed10.029.5ChemicalsEnergyandFertilisers20132012Revenuem18051786Earningsbeoreinterestandtaxm249258Segmentassetsm16751485Segmentliabilitiesm303310Capitalemployedm14001282Returnoncapitalemployed17.820.1IndustrialandSaety20132012Revenuem16471690Earningsbeoreinterestandtaxm165190Segmentassetsm12921309Segmentliabilitiesm281270Capitalemployedm11191187Returnoncapitalemployed14.716.0Divisionalkeyfnancialdata 9WesfarmersaNNUaLreport2013ReviewofoperationsColesOperationsColesisanationalsupermarketliquoruelandconvenienceretailerinAustralia.ItspurposeistogivethepeopleoAustraliaashoptheytrustdeliveringqualityvalueandservice.Coleshas756ullservicesupermarkets810liquoroutletsunderthreebrandsand92hotels636uelandconveniencestoresMorethan99000teammembersOperatingresultsanddriversRevenueo35.8billionup4.9percentEBITo1533millionup13.1percentReturnoncapitalo9.5percentuprom8.7percentTotaloodandliquorsalesgrowtho5.5percentandcomparativestoresalesgrowtho4.3percentOverouryearsoindustryoutperormanceContinuedinvestmentincustomervalueundedromcostreductionsandbusinessecienciesContinuedinvestmentinproductqualityparticularlyreshcategoriesOngoingtransormationothesupplychainLauncho90morestoresinrenewalormatopeningo6largerormatstoresandnetspacegrowtho1.6percentGoodprogressonmulti-channelinitiativesincludingtrialsonewColesOnlinewebsiteGrowthinnancialservicesincludingColesInsuranceandfybuysloyaltyprogramStrongcustomerresponsetoueloersandbetterrangeandvalueintheconveniencestorenetworkStrategiesandprospectsEmbarkonsecondwaveotransormationwithaocusonqualityserviceandvalueTakeadvantageourtheropportunitiesinstorerenewalsupplychaintransormationandoperatingecienciesInvestmentincategoryinnovationColesbranddevelopmentmulti-channelintegrationandatailoredloyaltyoerCultureocontinuousimprovementHomeImprovementandOfceSuppliesOperationsBunningsBunningsisaretailerohomeimprovementandoutdoorlivingproductsservicinghomeandcommercialcustomersinAustraliaandNewZealand.210warehousestores67smallormatstores36tradecentresMorethan33000teammembersOfceworksOceworksisaretailerandsupplierooceproductsandsolutionsorhomebusinessandeducationinAustralia.150storesNationalonlineandmobilesaleschannelsMorethan6000teammembersOperatingresultsanddriversBunningsRevenueo7.7billionup7.0percentEBITo904millionup7.5percentReturnoncapitalheldat25.9percentTotalstoresalesgrowtho7.2percentwithstore-on-storesalesincreasing4.4percent10newwarehousestores10smallerormatstoresandthreetradecentresopenedContinuedrangeinnovationandcategoryexpansionOfceworksRevenueo1.5billionup1.6percentEBITo93millionup9.4percentReturnoncapitalo8.1percentuprom7.1percentChallengingmarketconditionsStrongonlinesalesgrowth13newstoresopenedStrategiesandprospectsBunningsMorecustomervaluethroughlowestpricesDeliveringbettercustomerexperiencesExpandingbrandreachExpandingcommercialbusinessthroughbettercapabilityMoremerchandisinginnovationInvestmentintheteambetterstockfowimprovedproductivityanddeepercommunityinvolvementHigherrateopropertypipelineconversionOngoingocusoncapitalrecyclingOfceworksEnhancingcustomeroerbyextendedcategoryreachexpandedprintandcopyandurnitureoerspriceleadershipandstoreinnovationReducingcomplexityandcostodoingbusinessContributiontooperatingdivisionalEBIT41ContributiontooperatingdivisionalEBIT26BusinessesBusinesses 10ReviewooperationsOperatingandfnancialreviewTargetOperationsTargetisadepartmentstoreretailerinAustralia.Targetsvaluepropositionistodeliverstyleandqualityeverydayatpricesitscustomerslove.Targethas183Targetstores125TargetCountrystoresMorethan24000teammembersOperatingresultsanddriversRevenueo3.7billiondown2.1percentEBITo136milliondown44.3percentReturnoncapitalo4.6percentdownrom8.4percentTotalsalesdecreased1.7percentandcomparablestoressalesgrowthell3.3percentEarningsaectedbychallengingtradingconditionsstrongcompetitionhigherthanexpectedshrinkageandclearanceactivityStuartMachinappointedManagingDirectoron15AprilandinitiatedbacktobasicsocusStoresupportocerestructuredLeadershipteamstrengtheningunderway14newstoresopenedandsevenclosedStrategiesandprospectsBacktobasicsocusCommencementotransormationprogramStrengtheningoleadershipteamtodrivetransormationInitiativesincluderationalisingrangeimprovingdirectsourcingreviewingpricingarchitectureandimprovingthesupplychainTradingenvironmentremainschallengingEarningsexpectedtorecoverbutwilltaketimeContributiontooperatingdivisionalEBIT4KmartOperationsKmartisadiscountdepartmentstoreretailerinAustraliaandNewZealandandaprovideroretailautomotiveservicesrepairsandtyresinAustralia.Kmartsvisionistobeabusinesswhereamiliescomerstorthelowestpricesoneverydayitems.Kmarthas190Kmartstores263KmartTyreAutoServicecentresMorethan31000teammembersOperatingresultsanddriversRevenueo4.2billionup2.8percentEBITo344millionup28.4percentReturnoncapitalo25.9percentuprom18.9percentTotalstoresalesgrowtho2.7percentwithcomparablestoresalesgrowtho2.1percent14consecutivequartersogrowthincustomertransactionsandunitssoldImprovementsinsourcingrangeassortmentinventorymanagementandstoreexecutionSixnewKmartstoresopenedand10storesreurbishedFivenewKmartTyreAutostoresopenedStrategiesandprospectsContinuedocusongrowththroughvolumeretailingoperationalexcellenceadaptablestoresandhighperormancecultureImprovesourcingstockfowandavailabilityContinuedocusonethicalsourcingandstrongersupplierrelationshipsLowerAustraliandollarexpectedtoaectmargingrowthSixnewstoresplannedin2014TeamandcustomersaetyapriorityContributiontooperatingdivisionalEBIT9BusinessesBusinesses 11WesfarmersaNNUaLreport2013ResourcesOperationsTheResourcesdivisionownsandoperatesworld-scaleopen-cutcoalproducingresourcesinAustralia.ResourceshasCurraghinQueenslandwhichproducesmetallurgicalcoalorexportandsteamingcoalordomesticpowergeneration40percentoBengallainNewSouthWaleswhichisoperatedbyCoalAlliedandproducesexportsteamingcoalorAsiaMorethan650teammembersOperatingresultsanddriversRevenueo1.5billiondown27.8percentEBITo148milliondown66.3percentReturnoncapitalo10.0percentdownrom29.5percentProductiono13.7milliontonnesup10.4percentCurraghproductionup5.3percentto10.6milliontonnesBengallaproductionup32.6percentto3.1milliontonnesExportrevenueaectedbylowcoalpricesandhighAustraliandollarStrongcostcontroldelivereda12.5percentreductioninCurraghsunitminecashcostsexcludingcarbontaxStrategiesandprospectsContinuedocusonproductivityandcostcontrolSalesoCurraghmetallurgicalexportcoalin2014expectedtobe7.5to8.5milliontonnesGlobaleconomicuncertaintyexpectedtoseevariableshort-termcoaldemandLong-termmetallurgicalcoaloutlookremainssoundExpansionoptionsexistorbothmineswitheasibilitystudiescompleteConsideracquisitionswhichcouldprovideeconomiesoscaleandgrowthContributiontooperatingdivisionalEBIT4BusinessesInsuranceOperationsWesarmersInsuranceisaprovideroinsurancesolutionsinselectedmarketcategoriesinAustraliaNewZealandandtheUnitedKingdom.IthasgeneralinsuranceunderwritingbusinessesintheruralSMEandcommercialsectorsandagrowingbusinessinpersonallinesthroughColesInsurance.ItsbrokingoperationsocusontheSMEandcommercialsectors.Insurancehas89WFIofces26Lumleyofces32OAMPSofces23CrombieLockwoodofcesMorethan3600teammembersOperatingresultsanddriversRevenueo2.1billionup8.8percentEBITo205millionuprom5millionReturnoncapitalo14.7percentuprom0.4percentHigherpremiumsachievedandlowerclaimsUnderwritingcombinedoperatingratioo95.3percentStronggrowthinColesInsuranceMotorandRuralContinuedinvestmentinITandefciencyTargetedreductioninexposuretohigherriskregionsandcategoriesStronggrowthinNewZealandbrokingStrategiesandprospectsFurtherimprovementinearningsexpectedin2014intheabsenceosignifcantcatastropheeventsStronggrowthexpectedinpersonallinesBrokingtogrowthroughtargetedrecruitmentbolt-onacquisitionsandproductivityimprovementLowerinterestratestoconstraininvestmentearningsContinuedinvestmentinbrokingsystemsupgradeContributiontooperatingdivisionalEBIT5Businesses 12OperatingandfnancialreviewReviewooperationsChemicalsEnergyandFertilisersOperationsWesarmersChemicalsEnergyFertilisersWesCEFproducesandmarketschemicalsertilisersandgasproducts.WesCEFhasAmmoniaandammoniumnitrateproductionacilitiesinWesternAustralia50percentoQNPammoniumnitrateproductionacilitiesinQueenslandSodiumcyanideproductionacilitiesinWesternAustraliaPVCResinandspecialtychemicalsproductionacilitiesinVictoriaLPGandLNGdistributionacrossAustraliawithLPGandLNGproductionacilitiesinWesternAustraliaFertiliserproductionandimportationacilitiesinWesternAustraliaMorethan1500teammembersOperatingresultsanddriversRevenueo1.8billionup1.1percentEBITo249milliondown3.5percentinlinewithlastyearaterallowanceorterminationpaymento9millionrelatingtotheHIsmeltagreementreceivedinthepriorperiodReturnoncapitalo17.8percentdownrom20.1percentHigherchemicalearningsdrivenbygoodproductionperormanceandstrongproductpricinginammoniaammoniumnitrateandsodiumcyanideLowergasearningsduetoallineedstockLPGcontentandreducedvolumeLowerertiliserearningsduetodecliningpricesapoorergrainharvestandadryJuneAmmoniumnitrateexpansionrom520000tonnesto780000tonnesperannumontrackorfrsthalcalendaryear2014LaunchednaturalgasretailbusinessinWesternAustraliaStrategiesandprospectsOngoingocusoncompletionoammoniumnitrateexpansionandsodiumcyanidedebottleneckingprojectsin2014Chemicalsbusinesswell-placedtobeneftromcontinuingstrongresourcesdemandLPGcontentineedstocktoremainchallengingCostandproductivityimprovementprogramsunderwayinLPGFertiliseroutlookremainsdependentonseasonalandarmingconditionsContributiontooperatingdivisionalEBIT7IndustrialandSafetyOperationsIndustrialandSaetyprovidesindustrialandsaetyproductsandservicesinAustraliaandNewZealand.Itsvaluepropositionistobeatrustedprovideroindustrialandsaetysolutionstoenableitscustomerstorunmaintainandgrowtheirbusinessesefcientlyandsaely.IndustrialandSaetyhas222branches145additionalgasdistributionpointsMorethan3500teammembersOperatingresultsanddriversRevenueo1.6billiondown2.5percentEBITo165milliondown13.2percentReturnoncapitalo14.7percentdownrom16.0percentChallengingenvironmentascustomersreducedactivityandocusedoncostsRealignedcostbasethroughbusinessrestructureandannouncedclosureo13locationsBusinessrealignedalongthreecustomer-centricstreamsMaintainedstrongservicelevelsincluding95percentdeliveryinullontimeExtendedhomebrandrangesandservicesLaunchedonlinebusinessesinAustraliaandNewZealandStrategiesandprospectsContinuedocusonsupplychainandoperationalefcienciesandloweringthecostodoingbusinessContinuedocusonserviceandvaluetocustomersincludingproductandservicerangedevelopmentContinuetotargetdiversifcationothecustomerbaseGrowthintonewrelatedmarketsincludingservicesConsiderationotargetedacquisitionstocomplementorganicgrowthTradingenvironmentexpectedtoremainchallengingContributiontooperatingdivisionalEBIT4BusinessesBusinesses 13WesfarmersaNNUaLreport2013OtheractivitiesGresham50.0percentinterestininvestmenthouseGreshamPartnersplusinterestsinGreshamPrivateEquityFundsWespine50.0percentinterestinaplantationsotwoodsawmillatDardanupWesternAustraliaBWPTrust24.3percentinterestinBWPTrustwhichmainlyownsBunningsWarehousestenantedbyBunningsGroupLimitedOperatingresultsanddriversGreshamcontributedaproto1millionbutGreshamPrivateEquityFundscontributedalosso11millionduetodownwardrevaluationswhichcomparedtothelosso55millionlastyearWespinecontributedearningso5millioninlinewithlastyearBWPTrustcontributedearningso27millionuprom16millionBWPTrustheld74propertiesat30June2013including67BunningswarehousesStrategiesandprospectsGreshamFocusonmaintainingactiveparticipationintheAustralianinvestmentbankingmarketandonimprovingportolioreturnsWespineIncreasedocusoncustomerserviceandmaintainingastrongpositioninamarketexpectedtoremainchallenging.BWPTrustFocusoncapitalmanagementtoimprovetheeciencysecurityandfexibilityoundingandassetmanagementtocontinuetodrivegrowthandvalueBusinessesBusinessesCorporateOperationsWesarmersCorporateprovidescorporateandgovernanceinrastructureandsupporttotheGroup.ThisincludesresponsibilityorGroup-widetreasurytaxationcapitalmanagementandworkerscompensationinsurancerequirements.ItalsoprovidesinvestmentevaluationandlegalsupportgovernshedgingandriskmanagementpoliciesacrosstheGroupmanagesaconsistentremunerationstrategyandexecutivetalentdevelopmentprocessandassistswithcorporatereputationmanagement.OperatingresultsanddriversManagedstrongcreditratingswithMoodysInvestorServiceupgradingWesarmersissuerandseniorunsecuredlong-termdebtratingromBaa1positivetoA3stableconsistentwiththeGroupscreditratingromStandardandPoorsoA-stableSettledalloutstandingdebtinthenameotheColesgroupInnovatedsaleandleasebackstructurestoprovideincreaseddiversityorcapitalrecyclinginitiativesDevelopedaccesstodiversedebtmarketsFurtherimprovedtheGroupsdebtmaturityproleAppliedinitiativestoreducetheGroupseectiveborrowingratebyover100basispointsto6.6percentContinuedtoneutralisethedilutionthatwouldotherwisehaveoccurredromtheDividendInvestmentPlanandEmployeeShareplansProposedacapitalreturno50centspershareStrategiesandprospectsSupportnetcapitalinvestmentacrosstheGroupo1.5billionto1.9billionin2014ContinuepropertyrecyclingwhichincludesthesaleandleasebacktransactionwithBWPTrustrealisingapproximately271millionandthesaleandleasebacko15Bunningswarehousepropertiesviaasecuritisedleasetransactionrealisingapproximately304millionAugust2013Targetaurtherreductionintheborrowingrateto5.8percentin2014ContinueocusoncapitalmanagementwhereitisintheinterestoshareholdersincludingneutralisationosharesissuedundertheDividendInvestmentandEmployeeShareplansandtheproposed579millioncapitalreturnandproportionateshareconsolidation 14ChairmansmessageAswellasbeingourcentenarynextyearwillbethe30thanniversaryofourpubliclistingin1984.Muchhaschangedoverthethreedecadessincewelistedbutonethingremainsconstantourobjectiveofprovidingasatisfactoryreturntoshareholders.Itgivesmegreatpleasuretointroducethe2013Wesarmersannualreport.Inachallengingenvironmentwehaveagaindeliveredsolidgrowthinrevenueandearnings.Thishighlightsonceagainthebenetsoourconglomeratemodeltheportolioobusinessesweownandourlong-terminvestmentperspective.Italsounderlinestheexpertisecapabilityanddedicationothemorethan200000employeesworkingacrossourninebusinessesandinourcorporateoce.Aswellasbeingourcentenarynextyearwillbethe30thanniversaryoourpubliclistingin1984.Muchhaschangedoverthethreedecadessincewelistedbutonethingremainsconstantourobjectiveoprovidingasatisactoryreturntoshareholders.Overthepast10yearsWesarmershasdeliveredcompoundannualgrowthintotalshareholderreturnTSRo12percent29percentmorethantherateoTSRgrowthachievedbythemarketasrepresentedbytheASX200index.Creatingvalueorourshareholderswillremaintheabsoluteocusooureortsintheuture.Thedirectorswerepleasedtodeclareaully-rankednaldividendo1.03pershareatyearsend.Thattooktheull-yeardividendto1.80pershareup9.1percent.Subjecttoshareholderapprovalatthe2013AnnualGeneralMeetingWesarmersalsoannouncedon15August2013thatitwillmakeacapitalreturno50centsperullypaidordinaryandpartiallyprotectedshare.Ourearningsgrowthcontinuedstrongcashfowsandrobustcreditmetricsmeanwecantakethissteptowardsamoreecientcapitalstructurewithoutcompromisingourabilitytogrow.BusinessperformanceIn2013ouroperatingrevenuegrewthreepercentto59.8billionandournetprotatertaxincreased6.3percentto2.26billion.Thisincludesstrongearningsromveotheninebusinessesbutreducedearningsromthosemoreexposedtotheslowingintheresourcessector.ItakethisopportunitytocomplimentIanMcLeodandhisteamontheirsuccessintransormingColesintoastronglyperormingbusinessthatisdrivenbydeliveringthebestcustomerexperience.WhenweacquiredColesin2007weoutlinedaveyearstrategytoturnthisbusinessaround.WecautionedshareholdersthatitwouldtaketimeanditisverysatisyingthatColeshascloselymetthegoalssetintheoriginalinvestmentcaseandnowhasastrongoundationorurthergrowth.Iampleasedthatwehavemadegoodprogressbutthereremainsalotmoretodothatwillcontinuetocreatevalueorshareholders.Kmartalsocontinueditsremarkableturnaroundandhasbecomethebestperormingdepartmentstoreinthecountry.WhileTargetsresultsweredisappointinganewleadershipteamhastakenactiontoprogressivelyimproveitsperormanceovertime.TheocusonthebusinesseswhichcamewiththeColesacquisitionotenovershadowsthemorelongstandingdivisionswithintheGroup.ItisabigchallengetokeepastrongbusinessgrowingandtheBunningsteamhascontinuedtodeliveroutstandingresultsthoughimprovementsinrangevalueandservice.AterseveralyearsounprecedentedcatastropheclaimsourInsurancedivisionwasrewardedwithasignicantlitinearningsromhigherpremiumsgrowthintargetedcategoriesandreducedclaimscosts.Ourindustrialbusinessescollectivelywereoperatinginamuchmoredicultexternalenvironmentduringtheyear.LowerexportcoalpricesledtoaallinearningsromtheResourcesdivisionmorepositivelyastrongocusoncostcontrolandcapacityexpansionhaspositionedthebusinesswelltotakeadvantageoanymarketimprovement.IndustrialandSaetywaschallengedbyreducedactivityandcost-cuttingamongitscustomerbaseandrespondedwithastrongocusoncostcontrolandcustomerservice.ChemicalsEnergyandFertilisersmaintainedearningsinlinewiththepreviousyear.ThechemicalsbusinessincreasedearningsollowinggoodplantproductionperormanceandstrongproductpricingbutlowerearningswererecordedbyKleenheatGasandertilisers.SustainabilityOurobjectiveissustainablesuccessinrealitythereisnootherkind.Wecanonlydelivervaluetoourshareholdersoverthelong-termiwemakeasustainedpositivedierencetoourmillionsocustomersthousandsosuppliersandthehundredsocommunitiesinwhichweoperate.Thatinturnisdependentonprovidingarewardingandsatisyingenvironmentorour200000-plusemployeeswhoengagedailywithallotherstakeholders.WegenuinelybelievethereisnomoreimportantassetatWesarmersthanourpeopleandthereisnohigherprioritythantheirsaety.Wehaveamoralobligationtoensureouremployeesgohomesaelyattheendotheirworkingday.Saetyisalsogoodbusiness.Asaeworkplacehasmoreengagedemployeesandcanexpectregulatoryinsurancelegalandreputationalbenets.Lastyeartheleadershipteamtookonthechallengeoreinvestinginandreinvigoratingoursaetyeort.Itwasanacknowledgementthatwhileoursaetyperormancehadimprovedwestillhadalongwaytogo.AteamromacrosstheGroupledbyJohnGillamtookonthetaskobenchmarkingoursaety 15WesfarmersaNNUaLreport2013perormanceagainstthebestintheworld.ThereportreceivedbytheBoardthisyearprovidedtheGroupsdiversebusinesseswithvaluableinormationonwheretheystandandclarityonpriorityareasoractiontoimprovesaetyperormance.Westillhavemuchtodoandwehavealreadytakenactiontolitoursaetyperormancebyimplementingsomeothepriorityactionsrecommendedinthereportincludingincreaseddivisionalcollaborationandtheuseomoreeectivesaetyperormanceindicatorstargetsandreporting.OneothemostpleasingaspectsoourGroup-widestudyonsaetywasthecollaborationevidentacrosstheGroup.Ourdivisionsoperateveryautonomouslybutinareassuchassaetycollaborationcanprovidemanybenefts.Ibelievewehaveseenastepchangeinoursaetycultureitisalongjourneybutwehavemadeagoodstart.DuringtheyearoursaetyperormanceasmeasuredbylosttimeinjuryrequencyrateLTIFRhasimprovedby18percentrom10.9to8.9buttherewasathreepercentincreaseinthetotalrecordableinjuryrequencyrate.Weremainhighlymotivatedtomakechangeswhichbenefttheenvironmentinwhichweandourstakeholdersliveandwork.ThisyearourScope12and3carbonemissionsacrosstheGroupdecreasedby13percent.ThischangewaslargelydrivenbyurtherimprovementsromtheuseonitrousoxideabatementtechnologyinourammoniumnitratebusinessatCSBPandenergyefciencyinitiativesatColes.Wealsocontinuedtoreduceourcarbonemissionsintensityemitting85tonnesocarbondioxideequivalentpermilliondollarsrevenuethisyeardownrom100lastyear.AcrosstheGroupwearefndingbetterwaystodealwithourwastedecreasingourwastetolandfllbyninepercentthisyear.TheBoardIthankmyBoardcolleaguesortheirdiligenceandsupportthroughouttheyear.LastyearIadvisedwehadmadeprovisioninourremunerationsettingstoappointuptotwoadditionalmemberstotheBoardtostrengthenoursuccessionandrenewalplanning.WewelcomedPaulBassattotheBoardinNovember2012.Paulco-oundedSEEKin2007andwasitschieexecutiveofcerorco-chieexecutiveofceruntil2011.Hehasatrackrecordoinnovativeleadershipandoperationalsuccessandhasbroughtinvaluableknowledgeandexpertiseinonlinebusinessande-commercetotheBoard.InAprilwewelcomedJennierWestacotttotheBoard.JennieriswellknownorherworkaschieexecutiveotheBusinessCounciloAustraliaandhasbroughtextensiveandvaluablepolicyexperienceinboththepublicandprivatesectorstotheBoard.InvestingforthefutureVolatilityanduncertaintyseemtohavebecomefxturesintheenvironmentinwhichweoperate.NotwithstandingthatweremainconfdentandexcitedabouttheuturethatliesaheadorWesarmers.Wehaveasolidplatormoruturegrowthasaresultotheboldbutdisciplinedcapitalexpendituredecisionswehavemadeoversuccessiveyears.In2013grosscapitalexpenditurewas2.3billionrepresentingcontinuedstronginvestmentinuturegrowth.Thisincludedtheadvancementotheammoniumnitrateexpansionprojectinthechemicalsenergyandertilisersbusinessandurthergrowthandimprovementoourretailnetworks.Aswemoveurtherintothedigitalagewearealsoinvestingmoreresourcesthaneverintoourdigitalstrategiesplatormsandcapability.Nextyearwewillcelebrate100yearssincetheormationoTheWestralianFarmersLtdatameetingoWestAustralianarmersbackin1914.Wesarmersmayhavedramaticallychangeditssizeandoperationsoverthattimebutthankullyithasnotgreatlychangeditsculture.WhenIbecameChairmanfveyearsagoIconsideredmygreatestresponsibilitywastobethecustodianothatculture.BythatImeanbeingboldbutdisciplinedtakingalong-termapproachtocapitalandcommercialmanagementhavingaocusoninnovationperormanceandsustainablegrowthandacommitmenttoopennessaccountabilityandintegrity.UndertheoutstandingleadershipoRichardGoyderandhismanagementteamIbelieveWesarmersiswell-placedtomeettheinevitablechallengesthatwillconrontusintheyearsaheadandcontinuetodeliversatisactoryreturnstoyouourshareholders.Wesarmersexistsoryourbeneftandwethankyouoryourongoingsupportothisgreatcompany.BobEveryAOChairman 16ManagingDirectorsreviewWesfarmersprimaryobjectiveistoprovideasatisfactoryreturntoshareholders.Ourportfolioofassetsthestrengthofourbalancesheetourstrongfocusonreturnoncapitalandthecalibreofourpeopleleaveuswellpositionedtoenhancefuturereturns.Thankstotheeortsomorethan200000teammembersacrosstheGroupyourcompanyachievedapleasingimprovementinperormanceinthe2013nancialyear.Weincreasedturnoverbythreepercentto59.8billionourprotatertaxwas2261millionup6.3percentandourearningsbeoreinterestandtaxwhichishowwemeasuredivisionalperormanceweremorethan3658million.Ourearningspersharewereup6.4percentandweachievedsolidgrowthincashfows.Onceagainthebenetsoourconglomeratestructurewereevident.FiveoourninebusinessesrecordedstrongearningsgrowthhoweverTargetsperormancewasdisappointingandtwooourthreeindustrialdivisionselttheimpactoaverydicultexternalenvironment.Inaggregateitwasapleasingoutcomeorshareholdersandreinorcedthatourgreatportolioobusinesseshasthecapacitytoperormwellinmostcircumstances.BusinessdivisionsColesdeliveredearningsgrowtho13.1percentto1533millionbuildingonthe16.3percentand21.2percentearningsgrowthinthe2012and2011nancialyearsrespectively.ThetransormationoColessinceitsacquisitionin2007progressedwithoperationalecienciescontinuingtoundreinvestmentinprice.ThecontinuingstorerenewalprogramspaceexpansionandurtherinvestmentindevelopingColesteammembersalsobenetedperormance.Thepastveyearshaveseenasustainedturnaroundothebusinessprovidingbenetsorconsumerssuppliersandemployeesanddeliveringamuchstrongerplatormoruturegrowth.Bunningsearningsincreased7.5percentto904millionaverystrongresultwithgrowthacrossallkeybusinesssegmentsascustomersrespondedtoimprovedvaluerangeandservice.Earningswereurthersupportedbycostmanagementinitiativesandtheupgradeandexpansionothestorenetworkincludingtheopeningo23newlocations.Pleasinglygrowthwasachievedacrossconsumerandcommercialareasallkeytradingregionsandallmerchandisingcategories.Oceworksearningsincreased9.4percentto93milliondespitechallengingmarketconditionsandcontinueddefationintechnology-relatedcategories.Theimprovedperormancerefectedincreasedcustomerparticipationimprovedmerchandisinganddisciplinedcostmanagement.Thenetworkexpandedby13storesincludinginJunetheopeningothe150thOceworksstore.Kmartdeliveredverystrongearningsgrowthup28.4percentto344millionbuildingonthepreviousyears31.4percentgrowth.Customersrespondedpositivelytocontinuedimprovementinrangeandwewereabletourtherreinvestinlowerpricesoneverydayitemsasaresultooperationalecienciesandbettersourcing.DuringtheyearKmartachieveditsourteenthconsecutivequarterogrowthintransactionsandunitssold.Targetsperormancewasdisappointingandbelowexpectations.Earningsell44.3percentto136millionollowingchallengingtradingconditionsincreasedcostsandclearanceactivityneededtoclearhighlevelsoexcessinventory.UnderanewleadershipteamTargethasembarkedonasignicanttransormationoitsbusiness.Earningsareexpectedtorecoverasitexecutesitstransormationbutimprovementwilltaketime.FollowingdisciplinedriskselectionandstrongunderwritingperormancetheInsurancedivisionwasrewardedwithstrongearningsgrowthto205millionuprom5millionthepreviousyear.TheResourcesdivisionsearningsell66.3percentto148millionasaresultolowerexportcoalpricesandthecontinuedstrongAustraliandollar.AstrongocusoncostcontrolattheCurraghminedidresultinimprovedoperationalperormancewithbetterthanexpectedunitmine-cash-costresults.TheChemicalsEnergyandFertilisersdivisionreportedearningso249millioninlinewiththepreviousyearaterallowanceortheterminationpaymento9millionrelatingtotheHIsmeltagreementreceivedinthepriorperiod.IncreasedproductdemandandgoodplantperormancedroveimprovedearningsinthechemicalsbusinessbutertiliserearningswerereducedduetoapoorgrainharvestandadryJune.KleenheatGascontributionellmainlyduetolowergascontentintheDampiertoBunburynaturalgaspipeline.TheIndustrialandSaetydivisioncontributedearningso165millioncomparedwith190millionthepreviousyear.Itwasasolidresultgivenchallengingconditionsascustomersreducedactivityandocusedoncostreduction.OtherbusinessesearningswereabovelastyeardespitelowerinterestrevenueaslossesintheGreshamPrivateEquityFundsreducedto11million.InadditiontheinvestmentinBWPTrustearned27millionuprom16milliononthepreviousyear.ManagementchangesInAprilStuartMachinreplacedDeneRogersasManagingDirectoroTarget.StuartwasanimportantmemberotheturnaroundteamatColesandhastheoutstandingleadership 17WesfarmersaNNUaLreport2013andexecutionskillsthatareneededtotransormTargetsperormance.InFebruarytheInsurancedivisionsManagingDirectorRobScottwasappointedFinanceDirectoratColes.Robdidanexceptionaljobduringadicultperiodintheinsurancesector.AnthonyGianottitheInsurancedivisionsFinanceDirectorsteppedintotheManagingDirectorsroleonanactingbasisandIwasdelightedtoconrmAnthonysappointmentonapermanentbasisinJuly2013.SuppliersTherehasbeencontinuedpubliccommentthisyearontherelationshipbetweenWesarmersanditssuppliersbothdomesticallyandoshore.ColesrelationshipwithoodandgrocerysuppliersinAustraliahasbeentheocusoconsiderableattentionwhileseveraloourretaildivisionshavebeendrawnintowiderscrutinyoworkplaceconditionsindevelopingcountriesromwhereweimportclothingnotablyBangladesh.Ourrelationshipwithoursuppliersisveryimportanttous.Wewanttoprovidebettervaluetoourcustomersbutinawaythatissustainableoroursuppliersandtheiremployeesandhelpsthemtogrowwithus.ColesaonceiconicAustralianbusinesswasinaspiralodeclinewhenweacquiredit.Itsproductrangewasunwieldyandexcessiveproductsweretoootenunavailableonshelvesandtheexperienceorcustomerswasunriendlyandunsatisying.Wesetouttorebuildtrustwithconsumersbyprovidingthemwithbettervalueandamuchimprovedin-storeexperience.FiveyearslatermillionsmoreAustraliansarechoosingtoshopwithColeseachweekourcustomerscollectivelyaresavingaround1billionayearandwearepurchasingbillionsodollarsayearmorereshproduceromAustralianarmers.DefationinoodandgrocerypriceshasbeenoneotheewareasorelieorthemanyAustraliansstrugglingwiththerisingcostoliving.AnessentialelementotheColesturnaroundhasbeenincreasingtheeciencyandcost-competitivenessooursupplychain.ThishasbeenchallengingorsomeindividualsuppliersbutthesupplychaininAustraliadoesneedtobecomemoreecienttoensureitscontinuedcompetitiveness.Colesisworkingcloselywithitssupplierstoensurewearegettingresherbetterproductinamoreecientway.ThisisnotonlygoodorconsumersbutanecessarytransormationothesupplychaininAustralia.Ethicalsourcingisalsoveryimportanttous.Allourretaildivisionshaveethicalsourcingcodesbasedoninternationallyacceptedcodesandguidelines.Thesecoverproperworkingconditionsairpayandlabourstandardshealthandsaetyandbusinessintegrityandregularauditstakeplacetoveriyactoriesarecomplyingwithcoderequirements.ThemediacoverageonthegarmentmanuacturingindustryinBangladeshwasdisturbing.HowevermuchoitoverlookedtheeortsWesarmersanditsretaildivisionsKmartTargetandColeshavemadeandarecontinuingtomaketoensurewesourceourproductsromsuppliersthatoperatetoastandardweandourcustomersexpect.WhiletherearemanyimprovementsstilltobemadeweareleadingthewayinAustraliainsomeareas.KmartandTargetweretherstAustralianretailerstosigntheAccordonFireandSaetyinBangladesh.MorerecentlyKmartbecametherstAustralianretailertocommittopublishingtheaddressesoallitsclothingsupplieractoriesinallcountries.LookingaheadIn2014Wesarmerswillcelebratebothitscentenaryandthe30thanniversaryoourpubliclisting.Since1914wehavegrownromasmallarmerscooperativetooneoAustraliasbiggestcompanies.OursizeandoperationstodaywouldbeunrecognisabletothehanduloarmerswhowerebehindtheormationoTheWestralianFarmersLimitedsolongago.Weowemuchtoourcooperativerootspatienceboldnessresiliencedisciplinedinvestmentourcommitmenttothecommunitieswhereweoperateandperhapsmostimportantlyawillingnesstotakealong-termviewandstarethroughcycles.Aswegoorwardwewillretainastrongocusongrowththroughinvestinginourexistingbusinesses.Ouronlinerevenuesarenowaroundthe1billionmarkjustoneindicationohowthedigitalageisimpactingourbusinesses.Theutureholdsmuchopportunityinthisareaasourbusinessesdevelopandimplementdigitalstrategiestoliteciencyandenhancethevalueweprovidetocustomers.Asalwayswewillalsolooktomakeappropriatechangestoourportoliobutremainpatientanddisciplinedindoingso.IsincerelythanktheBoardtheleadershipteamandalloour200000-plusemployeesortheireortsandcollaborationthisyear.Iamdelightedthatthegrowthinourbusinessesmeantwewereemployinganadditional4000peopleattheendotheyear.Verygoodpeopleatalllevelsarethekeytooursuccesstheyareouronlytruecompetitiveadvantageandtheyarewhatwillmakethecomingyearsevenbetterthanthepast.RichardGoyderAOManagingDirector 18Thebestthingwecandoisprovidetheresourcesthesupportandthefreedomtoouroutstandingbusinessleaderstosetandimplementthegrowthagendathatcreatesvalueandrewardsourshareholders.WesfarmersleadershipteamRichardGoyderAOManagingDirectorWesarmersLimitedRichardwasappointedChieExecutiveOfcerandManagingDirectoroWesarmersin2005.HehasheldanumberoexecutivepositionsinWesarmersincludingManagingDirectoroWesarmersLandmarkandFinanceDirectoroWesarmers.BeorejoiningWesarmersin1993RichardheldanumberoseniorpositionswithTubemakersoAustralia.TerryBowenFinanceDirectorWesarmersLimitedTerryjoinedWesarmersin1996andundertookvariousroleswithWesarmersLandmarkincludingChieFinancialOfcerrom2001.In2003hewasappointedasJetstarAirwaysinauguralChieFinancialOfcerbeorerejoiningWesarmersin2005asManagingDirectorWesarmersIndustrialandSaety.TerrybecameFinanceDirectorColesin2007beorebeingappointedFinanceDirectorWesarmersLimitedin2009.IanMcLeodManagingDirectorColesIanjoinedWesarmersasManagingDirectorColesin2008.HehasextensiveexperienceinBritishandEuropeanretailingincludingseniorexecutiverolesattheUnitedKingdomretailerAsdawhereheplayedakeyroleintherecoveryandturnaroundprogramduringthe1990s.OtherseniorretailrolesincludedChieExecutiveOfceratHalordsGroupplctheUKsleadingretailerocarpartsleisureandcyclingproductsandChieMerchandiseOfcerwithWalmartinGermany.JohnGillamManagingDirectorHomeImprovementandOfceSuppliesJohnwasappointedManagingDirectorotheHomeImprovementdivisionin2004andbecametheManagingDirectorotheexpandedHomeImprovementandOfceSuppliesdivisionin2007.JohnstartedatWesarmersin1997wasappointedChieFinancialOfceroBunningsin1999WesarmersCompanySecretaryin2001andManagingDirectoroCSBPin2002.GuyRussoManagingDirectorKmartGuywasappointedManagingDirectoroKmartin2008.PriortothathewasManagingDirectorandChieExecutiveOfceroMcDonaldsAustraliabetween1999and2005havingheldallkeyoperationalpostssince1974.GuyalsoservedasPresidentMcDonaldsGreaterChinauntil2007andiscurrentlyPresidentotheinternationalHaltheSkyFoundationororphanedchildreninChina.StuartMachinManagingDirectorTargetStuartwasappointedManagingDirectoroTargetinApril2013.PriortothisStuartwastheColesStoresDevelopmentandOperationsDirectorwithaccountabilityorstoresthroughoutAustraliaandCentralOperationsincludingColesITColesOnLineHumanResourcesSaetyLossPreventionCustomerServiceandRetailChange.Stuarthasover24yearsexperienceinretailincludingrolesatSainsburyTescoandASDAWalmartandcompletedtheAdvancedManagementProgramatHarvardBusinessSchoolin2012.AnthonyGianottiManagingDirectorWesarmersInsuranceAnthonybecameActingManagingDirectoroWesarmersInsuranceinJanuary2013andwasappointedManagingDirectorinJuly2013.AnthonyjoinedWesarmersin2004andworkedinvariousrolesinBusinessDevelopmentandInvestorRelationswithintheGroupCorporateOfce.HewasappointedHeadoBusinessDevelopmentandStrategyoWesarmersInsuranceinDecember2006andthenFinanceDirectorin2009.PriortojoiningWesarmersAnthonyworkedintheinvestmentbankingindustrywhereheheldvariousrolesincorporatefnanceandmergersandacquisitionsinAustraliaandUK.StewartButelManagingDirectorWesarmersResourcesStewartjoinedWesarmersin2000ollowingWesarmersacquisitionotheCurraghmine.In2002hewasappointedManagingDirectoroWesarmersPremierCoalandin2005hebecameDirectorCoalOperationsorWesarmersEnergy.StewartwasappointedManagingDirectoroWesarmersResourcesin2006. 19WesfarmersaNNUaLreport2013TomOLearyManagingDirectorWesarmersChemicalsEnergyandFertilisersTomjoinedWesarmersbusinessdevelopmentteamin2000andbecameGeneralManagerotheteamin2002.HewasappointedExecutiveGeneralManagerBusinessDevelopmentin2006beorehisappointmentasManagingDirectorWesarmersEnergyin2009.InJuly2010TombecameManagingDirectorothenewlyormedChemicalsEnergyandFertilisersdivision.PriortojoiningWesarmersTomworkedinfnancelawandinvestmentbanking.OlivierChretienManagingDirectorWesarmersIndustrialandSaetyOlivierjoinedWesarmersin2006asGeneralManagerCommercialWesarmersIndustrialandSaetybeorebeingappointedManagingDirectorothedivisionin2008.PriortojoiningWesarmersOlivierwasamanagementconsultantwithTheBostonConsultingGroupinFranceandAustralia.HepreviouslyworkedinlogisticsandprojectmanagementwithengineeringcontractorJacobsSerete.TimBultExecutiveGeneralManagerBusinessDevelopmentWesarmersLimitedTimjoinedWesarmersin1999workingincommercialandbusinessdevelopmentroleswithintheWesarmersEnergydivisionbeorehisappointmentasGeneralManageroWesarmersKleenheatGasin2005.HebecameManagingDirectoroWesarmersEnergyin2006.HewasappointedExecutiveGeneralManagerBusinessDevelopmentinJuly2009.PaulMeadowsGroupGeneralCounselWesarmersLimitedPaulwasappointedGroupGeneralCounseloWesarmersLimitedinMarch2010.Paulwasadmittedtopractiseasabarristerandsolicitorin1981andwasapartneroAllensArthurRobinsoninMelbournerom1989untilFebruary2010.HeworkedatLinklatersinLondonin1986and1987.Between2006andFebruary2010PaulwasalsoasenioradvisertoUBSAustralia.LindaKenyonCompanySecretaryWesarmersLimitedIn2002LindawasappointedCompanySecretaryoWesarmersandisalsocompanysecretaryoanumberoWesarmersGroupsubsidiaries.LindajoinedWesarmersin1987aslegalcounselandheldthatpositionuntil2000whenshewasappointedManagerotheresponsibleentityorthelistedBWPTrustormerlyBunningsWarehousePropertyTrust.BenLawrenceChieHumanResourcesOfcerWesarmersLimitedPriortojoiningWesarmersin2008BenwastheChieHumanResourcesOfcerorFostersGroupLimitedrom2001andhasheldavarietyoseniorrolesintheUnitedStatesincludingChieHumanResourcesOfcerBeringerWineEstatesVicePresidentInternationalHumanResourcestheCloroxCompanyandDirectorHumanResourcesFMCGoldCompany.Beniscurrentlyanon-executivedirectoroRedDustanindigenoushealthandwellnessnon-proftorganisation.AlanCarpenterExecutiveGeneralManagerCorporateAairsWesarmersLimitedAlanjoinedWesarmersasExecutiveGeneralManagerCorporateAairsinDecember2009.PriortothathewasPremieroWesternAustraliaromJanuary2006toSeptember2008andserved13yearsintheWesternAustralianParliament.AlanhasalsoworkedasajournalistwiththeSevenNetworkandtheABCandlecturedinAustralianpoliticsattheUniversityoNotreDameFremantle.FromlefttorightGuyrusumchinoliviChinInmcLdBnLwncLindKnynalnCntiBultoLytyBwnpulmdwrichdGydaoswBulJhnGillanhnyGini 20FinanceDirectorsreviewResultsoverviewNetprotatertaxortheGroupinthe2013nancialyearincreased6.3percentto2261million.Inlinewithearningsgrowthearningspershareo195.9centswereup6.4percentwhileaveragereturnonequityincreasedto8.9percentortheyear.CashfowStrongcashfowgenerationduringtheyearwasahighlight.Cashfowromoperationsincreasedby8.0percentto3931millionwithacashrealisationratioo118percentdrivenbyearningsgrowthandgoodworkingcapitalmanagement.Freecashfowsincreasedto2171millionortheyearup47.5percentonlastyeardespitethepriorperiodbenetingrom402millionincashproceedsassociatedwiththesaleothePremierminetheenGenbusinessandothersmalldivestments.Higherreecashfowwasrefectiveoincreasedretailpropertysaleandleasebackactivityandexceededcashdividendspaidduringtheyearwhichtotalled1985millionuprom1789millioninthepreviousyear.While11.2percentdownonlastyeargrosscapitalexpenditureo2331millionremainedwellaheadodepreciationduetoongoinginvestmentingrowthopportunitieswithintheGroupincludingretailnetworkexpansionandreurbishmentactivityandgoodprogressonthe260000tonneexpansionoammoniumnitratecapacityintheChemicalsEnergyandFertilisersdivision.Netcapitalexpenditureo1672millionwasdown28.9percentatertheinclusiono659millioninpropertydisposalproceeds.Includedwithinthisresultwas400millionoproceedsromthesaleandleasebackinMay2013o19Coles-ownedshoppingcentrestoanewlyestablishedjointventureowned75percentbyISPTaleadingAustralianpropertyundmanagerand25percentownedbyColes.ThecurrentoutlookisorpropertyrecyclingactivitytoremainathighlevelsgivenmoreoWesarmersretailpropertyportolioisenteringastagewherereturnoncapitalcanbeoptimisedromitssaleandleaseback.AspartothisactivitytheGrouphasbegunusingmoreinnovativestructuresthatretainoperationalfexibilityalongsideitsmoretraditionalsaleandleasebackapproach.ConsistentwiththisinAugust2013Bunningsannouncedthesaleandleasebacko10BunningsstorestotheBWPTrustand15Bunningswarehousesviaasecuritisedleasetransaction.BalancesheetThebalancesheetremainsstrongandallkeyliquidityratiosimprovedduringtheyear.Totalnetdebtat30June2013o5259millionwas7.2percenthigherthanthesametimelastyear.Despitethisincreasenancecostsdeclinedby14.5percentto432million.Thiswasduetoa118basispointreductioninaverageeectiveborrowingcoststo6.65percentdrivenbystrongrenancingoutcomesandtheprogressiveexpiryopre-globalnancialcrisisinterestswaphedges.Thevalueopropertyplantandequipmentincreasedovertheyearrom9463millionto10164millionasat30June2013duetoinvestmentingrowthcapitalexpendituremainlyinColesBunningsandtheChemicalsEnergyandFertilisersdivision.Furtherimprovementsinworkingcapitalmanagementweremadewithcapitalemployedinthisareareducingby542millionovertheyear.ThisresultwasdrivenbyextractingecienciesacrosstheGroupsretailsupplychainswhichmorethanosettheimpactoincreasedstorenumbersacrossthesebusinesses.Detailedimpairmenttestingonon-currentassetsincludinggoodwillandotherintangibleassetsrecognisedonbusinessacquisitionswascarriedoutduringtheyear.Externalexpertswereengagedtoprovidesupportonmodelinputsincludingdiscountratesandlong-termgrowthrates.Non-cashimpairmentchargestotalling49millionweremadeduringtheyearcomparedto197millionintheprioryear.Thecurrentyearimpairmentchargelargelyrelatedtoretailpropertyholdings.Inallothercasesrecoverableamountsonon-currentassetsdeterminedorimpairmenttestingexceededtheircarryingvalues.Futureimpairmenttestingonon-currentassetsremainssensitivetochangesingeneraltradingconditionsandoutlookaswellasdiscountrates.DebtmanagementWesarmersiscommittedtomaintainingastronginvestment-graderatingthroughprudentbalancesheetmanagement.AttheendotheyeartheGroupscreditratingromStandardPoorswasA-stablewhileMoodysratingwasupgradedduringtheyeartoA3stable.TheGrouphascontinuedtodiversiyitsundingsourcesandextenditsdebtmaturityprolewithanaveragetenoro4.0yearsatyearend.RenancingactivitycomprisedWesarmersrst10yearbondissueinAugust2012whichraised650millionapproximately764millionthroughEuropeandebtcapitalmarkets.InMarch2013theGroupissued350millionosevenyearunsecuredxedratemediumtermnotesintheAustralianmarketandinthesamemonthissuedUS750millionapproximately728millionoveyearnotesintheUnitedStates.Lateintheyear 21WesfarmersaNNUaLreport2013Strongcashfowgenerationduringtheyearwasahighlight.InordertoproperlyrefecttheimpactothecapitalreturnandshareconsolidationonWesarmerspartiallyprotectedsharesthefoorpriceandconversionratioattachingtothepartiallyprotectedshareswillbeadjustedto34.32and1.256respectively.EquitymanagementOvertheyearsharesonissuewerestablewith1157millionsharesonissueat30June2013madeupo1007millionordinarysharesand150millionpartiallyprotectedordinaryshares.DividendpolicyWesarmersdividendpolicyseekstodelivergrowingdividendsovertimewiththedeclaredamountrefectiveotheGroupscurrentandprojectedcashpositionprotgenerationandavailablerankingcredits.ConsistentwiththispolicyWesarmersdirectorsdeclaredaully-rankednaldividendo103centspersharebringingtheull-yeardividendto180centspershareanincreaseo9.1percentonlastyear.Thenaldividendtobepaidon27September2013isnotprovidedorintheaccounts.GivenapreerencebymanyshareholderstoreceivedividendsintheormosharesthedirectorsdecidedtocontinuetheoperationotheDividendInvestmentPlanthePlan.NodiscountappliestosharesallocatedunderthePlanandinrecognitionotheGroupscapitalstructureandstrongbalancesheetallsharesissuedunderthePlanwillbeacquiredon-marketbyabrokerandtranserredtoparticipants.RiskmanagementTheGroupmaintainsandadherestoclearlydenedpoliciescoveringareassuchasliquidityriskmarketriskincludingoreignexchangeinterestrateandcommoditypriceriskandcreditrisk.ItisandhasbeenthroughouttheyeartheGroupspolicythatnospeculativetradinginnancialinstrumentsbeundertaken.ThemainsourcesooreignexchangeriskincludethesaleoexportcoaldenominatedinUSdollarspurchasesinoreigncurrencymainlyretailinventoryinUSdollarsandcurrentUSdollarandEurodenominateddebt.Businessesexposedtooreignexchangeriskuseorwardcontractstominimisecurrencyexposure.USdollarandEurodenominateddebtandassociatedinterestcostsareullyhedgedatthetimethedebtisdrawndown.TheGroupusesxedratedebtandinterestrateandcrosscurrencyinterestrateswapstomanageinterestraterisk.Fixedratedebtandinterestrateswapscovering2.5billionodebtarecurrentlyinplaceorthe2014nancialyear.Theannualcorporateplanningprocessincludesanestablishedrameworkorassessingbroadbusinessriskaswellasconsideringappropriateriskmitigationstrategies.InternalcontrolandassuranceTheGroupmaintainsaninternalauditunctionwithaGroup-widemandatethatisullyindependentothebusinessoperationstomonitorandprovideassurancetotheBoardsAuditCommitteeandultimatelytheBoardastotheeectivenessoriskmanagementandinternalcontrolsystems.Theannualinternalauditplanisdevelopedwithinacombinedassurancerameworkandappliesarisk-basedmethodologytoensurethattheGroupskeyrisksareappropriatelyandregularlyreviewed.TheinternalauditplanisapprovedbytheAuditCommittee.Theinternalauditunctiondeliverstheapprovedinternalauditplanbyengagingasingleoutsourceauditprovider.Aspartotheannualoperatingcycleeachbusinessisalsorequiredtoreviewandreportonlegalliabilitiesnancialcontrolsinormationsystemsenvironmenthealthandsaetyplanningriskassessmentandmitigationandpostimplementationreviewsonallmajorcapitalinvestmentexpenditure.TerryBowenFinanceDirectortheGroupalsoachievedgoodoutcomesthroughtherenegotiationoapproximatelyhaloitstermloanacilities.Thisactivitycollectivelyrefectsanoveralltreasurystrategytoproactivelyre-nancematuritieswhenconditionsareavourable.Asat30June2013theGrouphadavailabletoit520millionincashatbankandondepositand3050millionincommittedbutundrawnbankacilities.StrongoperatingperormanceanddebtmanagementinitiativesresultedinimprovementsintheGroupsxedchargescoverratioto3.0timesandcashinterestcoverto12.2times.Netdebttoequityatyearendwas20.2percent.CapitalmanagementAsaresultocontinuedearningsgrowthandcashgenerationtogetherwithastrongerbalancesheetWesarmersdirectorsproposesubjecttoshareholderapprovalatthe2013AnnualGeneralMeetingthatWesarmersmakesacapitalreturno50centsperully-paidordinaryshareandpartiallyprotectedshare.Thecapitalreturnwhichwouldtotal579millioniapprovedwillreturnsurpluscapitaltoshareholdersandensurethatWesarmersmaintainsanecientcapitalstructurewithoutadverselyaectingitsnancialfexibilityandgrowthobjectives.Thecapitalreturnwillbeaccompaniedbyanequalandproportionateshareconsolidation.ThismeansWesarmerscanprovideanearningspershareoutcomesimilartothatwhichwouldresultromasharebuy-backwhilstalsoensuringthatallshareholdersreceiveanequalcashdistributionpershareandnochangeintheirproportionateinterestinWesarmers. 22ColesaimstogivethepeopleoAustraliaashoptheytrustdeliveringqualityserviceandvalue.TheColesturnaroundproducedstrongtradingresultsin2013byimprovingqualityserviceandvalue.Thebusinesscontinuedtoout-perormtheindustryandsuccessullycompletedthefnalyearoafve-yearturnaroundplan.Coles360003200030000340002800026000Revenue35780m201335780201234117201132073201030002200928799201312111009ThebusinessColesisaleadingoodliquorandconvenienceretailerwithapresenceineveryAustralianstateandterritory.Thebusinessoperates2294retailoutletsacrossColesBiLoFirstChoiceLiquorLiquorlandVintageCellarsColesExpressandSpiritHotels.Thebusinessemploysmorethan99000teammembersandhandlesmorethan19millioncustomertransactionsaweek.StrategyColesseekstogivethepeopleoAustraliaashoptheytrustdeliveringqualityserviceandvalue.In201213Colescustomer-ocusedstrategycontinuedtoimproveinefciencyandproductivityinvestinginlowerpricesdeliveringbetterqualitythroughitsAustralianFirstsourcingpolicyanddevelopingastrongerstorebasethroughnewstoreopeningsandrenewingexistingstores.ResultsThe2013fnancialyearsawColesdeliveroperatingrevenueo35.8billionup4.9percentonthepriorcorrespondingperiod.Earningsbeoreinterestandtaxgrewto1533millionup13.1percentonthepreviousyear.Foodandliquorrevenuewas27.9billionup5.2percentonthepreviousyearandcomparablestoresalesgrowth1was4.3percent.Theresultswereachievedbyinvestinginnewandbiggerstoresandinvestinginlowerpriceswhichwereundedbyachievingoperatingefcienciesacrossstoressupplychainandstoresupportunctions.ColesLiquorsperormanceimprovedduringtheyearwithproftgrowthsupportedbyabettermarginmixasaresultoimprovedpromotionaleectivenessandincreasedexclusivelabelsales.ColesExpressrevenueincludinguelroseby3.9percentto7.8billiondrivenbystrongcustomerresponsetoaqualityueloer.YearinbriefThiswasthefnalyearoColesfve-yearturnaroundplandesignatedtodeliverastepchangeinColesperormanceaterapreviousdecadeounderperormance.ColesinvestmentinlowerpricesissavingAustraliansmorethan1billionperyear.InJanuary2013Colesintroducedanother100DownDownpricecutsincludingloweringthepriceomilkandbreadatColesExpressstores.AsaresultoitsAustraliaFirstsourcingpolicysince2009Colessells20000tonnesmoreoAustralianreshruitandvegetablesandislookingtoachievemore.Forinstance4000tonnesoadditionalruitwillbesourcedrom40Queensland-basedpineapplegrowersorColesbrandtinnedpineapplereplacingpineapplesromIndonesia.Newlong-termsupplycontractswerealsoawardedtoarmer-ownedAustraliandairyprocessors-DevondaleMurrayGoulburnandNorco-tosupplyColesbrandmilkinNewSouthWalessoutheastQueenslandandVictoriarommid-2014.Togetherthecontractssupport2600memberarmswithupto10yearsotenurecertainty.InJanuary2013Colesdeliveredonitscommitmenttoimproveanimalwelarestandardsineggandporkarming.ColeswasawardedtheRSPCAGoodEggAwardorthesecondtimeinthreeyearsoritsphasingoutocageeggs.Thephase-outosow-stallproducedporkwasachievedayearearlierthanorecast.ColescontinuedtolaunchnewandinnovativeownbrandproductssuchastheColesSimplyLessandSimplyGluten-Freerange.ItalsolaunchedanewvoluntaryenvironmentstandardorvegetablegrowerswithAUSVEGtheindustrybodyrepresentingtheinterestsoAustralianvegetableandpotatogrowers.1For2013the53weeksfrom25June2012to30June2013andfor2012the53weeksfrom27June2011toJuly2012. 23WesFarmersaNNUaLreport2013KeyfnancialindicatorsGrowthstrategiesRenewedinvestmentinvalueStrongersupplierpartnershipsImprovedqualityandsimplerrangeColesbrandinnovationLeveragingsupplychainInvestmentinteammembersNewandbiggerstoresandexistingstorereurbishmentMulti-channelintegrationandfnancialservicesexpansionFortheyearended30June20092010201120122013Revenuem2879930002320733411735780Earningsbeoreinterestandtaxm831962116613561533CapitalemployedR12m1514014886150181557216114Returnoncapitalemployed5.56.57.88.79.5Capitalexpenditurem6066838401218118116001200800400EBIT1533m201315332012135620111166201096220098312013121110090 24TASWANTSAQLDNSWVIC85102685671054153243200153221326718943117213170157764Numberofteammembers99122BusinessstatisticsSupermarkets756Liquorstores810Hotels92Conveniencestores636ColesColescontinuedtolaunchnewandinnovativeownbrandproductssuchastheColesSimplyLessandSimplyGluten-Freerange.ItalsolaunchedanewvoluntaryenvironmentstandardforvegetablegrowerswithAUSVEGtheindustrybodyrepresentingtheinterestsofAustralianvegetableandpotatogrowers.Thisyear90renewalormatsupermarketstoresweredeliveredtakingthetotalrenewalormatstoresto342.Thisincluded19newsupermarkets45liquorstoresand12conveniencestores.NewandreurbishedstoresincludedanewconceptstoreatSouthlandVICandnewsupermarketsatIpswichandBundabergQLDwhichopenedtwoyearsatertheyweredevastatedbycycloneandfood.DuringtheyearColesExpresslauncheddiscountsorcustomersthroughitsnetworkoalmost600ATMsprovidingdiscountsorreshproducemeatandbakeryitems.Colesloyaltyprogramfybuyscontinuedtobuildonitssuccessulrelaunchin2012addingMedibanktotherangeopartnersanddeliveringpersonalisedoersandcommunicationstomembers.ColesInsurancegrewstronglyduringtheyearreachingover200000policiesascustomerslookedorgreatervalueincarandhomeinsurance.AnewandimprovedwebsiteorColesOnlinewastrialledduringtheyearandwillprovideabettershoppingexperienceorcustomersintheuture.ColesOnlineisnowavailableorover90percentoAustraliaspopulationandoperates264deliveryvans.BusinesssustainabilityColescontinuedtoinvestinenergyeciencyprojectstoreduceenergyconsumptionandexposuretohigherenergycosts.Initiativesincludedtheongoingintroductionovoltage 25WesFarmersaNNUaLreport2013OutlookColeshasnowmovedintoitssecondwaveotransormationstrategyexecutionwillcontinueatpacemaintainingourocusonthecustomerwithurtherimprovementsinqualityserviceandvalue.Thesuccessotheturnaroundstrategyoverthelastfveyearshasprovidedaspringboardoruturegrowthtakingadvantageoopportunitiesinstorerenewalsupplychaintransormationandcontinuedimprovementsinoperatingefciencies.ColesisalsoinvestinginarangeoinitiativestodeliversustainablegrowthoverthelongertermwhichincludescontinuedcategoryinnovationandColesbranddevelopmentmulti-channelintegrationandatailoredloyaltyoer.ThemarketenvironmentwillremainbothcompetitiveandchallengingbutColesisconfdentonmaintainingourmomentumonsecuringurthergrowth.anhnyndL-annYwfByswBullbkWaClFhpducsulifhY2013.optimisationtechnologywhichreducestheamountofelectricitydrawnfromthegridtoafurther196supermarkets.Colessoftplasticpackagingrecyclingprogramwasexpandedfrom114Victoriansupermarketstoapproximately480supermarketsnationallyand102tonnesofsoftplasticmaterialwasrecycledbycustomerscomparedwith23.5tonnesin2012.ColescontinuedtodrivediversitythroughitsFirstStepsindigenousemploymentandengagementprograms.Inthepastyeartheprogramhasprovidedover200employmentopportunitiesforindigenousAustraliansinlocationssuchasCairnsQLDAdelaideSASydneyandLiverpoolNSWtakingthetotalnumberofjobsofferedunderthisprogramto405.OursafetyperformanceasmeasuredbylosttimeinjuryfrequencyrateLTIFRimprovedby27percentwithaLTIFRof9.5comparedto13.0lastyear.Strategieswereimplementedtoimprovebehaviouralsafetymanualhandlinginjurypreventionsitesafetyandsecurity.DuringtheyearColesraisedandcontributed38.5milliontocharitiescommunityprogramsanddisasterrelief.OnAustraliaDay2013ColesannouncedRedkiteasitscharityoftheyearwithagoalofraisingover5million.Redkiteisanationalcharitythatsupportschildrenyoungpeopleandfamiliesthroughtheircancerjourney.ColesfooddonationstocommunitygroupsviaFoodbankandSecondBitetotalledoverfourmillionkilogramswhichwasmorethandoubleourdonationslastyear.InMay2013thebusinesswasrecognisedforthemillionsofnon-perishablefooddonatedtoFoodbankgoingbackover10yearsreceivingthePatronsAwardpresentedbytheGovernorGeneralHerExcellencyMsQuentinBryceAC.TheawardisgiventoacompanythathasdemonstratedleadershipinnovationcreativityandimpactovertimeinitspartnershipwithFoodbank.Businesswebsiteswww.coles.com.auwww.colesonline.com.auwww.1stchoice.com.auwww.liquorland.com.auwww.liquorlanddirect.com.auwww.mixapparel.com.auwww.vintagecellars.com.auwww.colesinsurance.com.au 26Bunningscontinuedtocreatemorevalueorcustomersandimprovetheirexperiencewhileextendingbrandreachandstrengtheningthestockowproductivityandteamaspectsothebusiness.HomeImprovementandOfceSupplies-BunningsBunningsprovidesitscustomerswiththewidestrangeohomeimprovementandoutdoorlivingproducts.1000060004000800020000Revenue9167m2013916720128644201182512010782220097151201312111009ThebusinessBunningsistheleadingretailerohomeimprovementandoutdoorlivingproductsinAustraliaandNewZealandandamajorsuppliertoprojectbuilderscommercialtradespeopleandthehousingindustry.OperatingromanetworkolargewarehousestoressmallerormatstorestradecentresandrameandtrusssitesBunningscatersorconsumerandcommercialcustomers.StrategyBunningsprovidesitscustomerswiththewidestrangeohomeimprovementandoutdoorlivingproductsandiscommittedtodeliveringthebestserviceandlowestpriceseveryday.Itsetsouttoattracthighqualityteammembersandtoprovidethemwithasaeandrewardingworkingenvironment.Bunningscontinuestoexpandandimproveitsstorenetworkthroughongoinginvestmentinexistingoutletsinnovativemerchandisinginitiativesandnewstoreopenings.Bunningshasdevelopedandcontinuestoexpandandenhanceanetworkotradecentrestoservicemajorcommercialcustomers.ResultsOperatingrevenueromBunningsincreasedby7.0percentto7.7billionortheyear.Earningsbeoreinterestandtaxgrew7.5percentto904million.Totalstoresalesgrowtho7.2percentwasachievedduringtheyearwithstore-on-storesalesincreasingby4.4percent.Commercialsaleswere9.6percenthigherthanthecomparableperiod.Salesgrowthortheyearwasachievedinbothconsumerandcommercialareasacrossallkeytradingregionsbyallmerchandisingcategories.Tradingortheyearnishedwellwithtotalsalesup10.2percentandstore-on-storegrowthup6.9percentduringtheourthquarter.Thebusinesswasurtherstrengthenedduringtheyearthroughthedeliveryobettercustomerexperiencescontinuedrangeinnovationandcategoryexpansionandurthernetworkandpropertypipelinedevelopment.YearinbriefStockfowwasimprovedtheteamisbetterequippedtodeliveronserviceobjectivesandmorevalueisbeingprovidedtocustomersundedbycostandproductivityimprovements.Duringtheyear23tradinglocationswereopenedincluding10newwarehousestores10smallerormatstoresandthreetradecentres.Attheendotheperiodtherewere210warehouses67smallerormatstoresand36tradecentresoperatingintheBunningsnetworkacrossAustraliaandNewZealand.BusinesssustainabilityWecontinuedtoworkonreducingourimpactontheenvironmentbyusinglessenergyandwaterloweringourlevelsowastetolandllandraisingawarenessosustainablelivingoptionsinthecommunity.Althoughcontinuedgrowthinnewstoresaectedthebusinesstotalcarbonootprintcarbonintensityremainedstableat3.3CO2etonnesper100000orevenue.Usinglesswaterremainedaprioritywithrainwatertanksandcapillarymatscontinuingtoberolledoutinnewwarehousestoresandhandwateringinselectednurseries.Schemewaterusewas1016megalitresanincreaseo17percentoverall.Notwithstandingthesignicantexpansioninthestorenetworktheintensityoourwaterusehasreduced15percentcomparedtotheintensityowateruseveyearsago.Ourongoingocusonloweringourwastelevelsresultedinawastediversionrateo67percentromlandllbyvolumeviavariousrecyclingandpackaginginitiativesupthreepercentromlastyear.Pleasinglywemaintainedzerogrowthinourtotaltonnesowastetolandllovertheperiod.Bunningscontinuedtoincreaseitscommunityinvolvementinalocalisedsincereandmeaningulmannerwithourteammemberssupportingover49000activitiesthroughouttheyear.Morethan104000teammemberhourssupportedtheseactivities.Bunningshelpedraiseandcontributemorethan30milliontolocalregionalandnationalcharitiesandcommunityorganisationsacrossAustraliaandNewZealand.Pleasingsaetyperormanceoutcomeswereachievedduringtheyearwitha18percentreductioninthenumberoinjuriesrecordedanda20percentreductioninthetotalrecordableinjuryrequencyrate. 27WesfarmersaNNUaLreport2013GrowthstrategiesMorecustomervalueongoingocusoncreatingbreathtakingvalueundedbyproductivityandcostactionsBettercustomerexperiencesbetterconsistencyinservicebasicshighercustomercentricityin-storeonlineandin-homeanddeepercustomerengagementwithmorepre-shoppostshopandservicesGreaterbrandreachmorestoreswithincreasedormatinnovationandexistingstorere-investmentmoredigitalandmorein-homeservicesExpandingcommercialleveragingstrengthonetworkandbrandwithtotalmarketcapabilitystorestradecentresin-feldandonlineocusingonlightandheavycommercialcustomersMoremerchandisinginnovationcreatingleveragingandrespondingtoliestyletrendsenvironmentalandeconomicchanges.AlsourtherproductandprojectinnovationwithaDIYocustoexpandthewholemarket10006004008002000EBIT997m20139972012926201188220108022009724201312111009Workwillcontinueinthenextyeartodrivesalesandearningsgrowthbycreatingmorevalueorcustomersprovidingbettercustomerexperiencesexpandingbrandreachleveragingthecommercialareaothebusinessanddeliveringmoremerchandiseinnovation.Therewillalsobecontinuinginvestmentintheteamstockowproductivityandcommunityinvolvementtourtherbuildonthoseaspectsothebusiness.Conversionothepropertypipelineintotradinglocationswilloccuratahigherratethanhistoricallyachievedwithatleast20newwarehousestorestoopeninthe2014fnancialyear.Therewillbeurtherinvestmentinthepropertypipelineandinexistingstoreswithanongoingocusontherecyclingocapital.Outlook 28TASWANTSAQLDNSWVIC310336336182107268411115168212NZnorth16252NZsouth61111142618148502HomeImprovementandOfceSupplies-OfceworksOfceworkscontinuedtostrengthenitscustomeroeraddingnewproductsandservicesandenhancingitseverychannelcapabilityexpandingandrenewingthestorenetworkandinvestinginonlineandbusiness-to-businesschannels.ThebusinessOceworksisAustraliasleadingretailerandsupplierooceproductsandsolutionsorhomebusinessandeducation.OperatingthroughanAustralia-widenetworkostoresonlineplatormscustomerservicecentresanditsbusinesssalesorceOceworkscaterstoabroadrangeocustomersincludingbusinessesoallsizesaswellasstudentsteachersandeducationalinstitutions.StrategyOceworksaimstoprovidecustomerswiththewidestrangeoproductsatthelowestpriceunderpinnedbygreatservicewhileprovidingasaerewardingandengagingplacetoworkorallitsteammembers.Oceworkshasaclearstrategicagendatoinvestinitseverychannelcapabilityincludingexpandingitsstorenetworkenhancingthecustomeroerreducingoperationalcomplexityandthecostodoingbusiness.ResultsOceworksull-yearoperatingrevenueincreasedby1.6percentto1.5billion.Earningsbeoreinterestandtaxo93milliongrew9.4percentontheprioryear.Salesgrowthwasconstrainedbydefationaryheadwindsinsomecategoriesandchallengingmarketconditionsacrossitscorecustomerbase.Increasedearningsgrowthwasachievedthroughbettercustomerservicerangingnewproductsandservicestheimplementationobusinesseectivenessinitiativesanddisciplinedcostmanagement.YearinbrieOceworkscontinuedtoexpanditsstorenetworkwith13newstoresopenedduringtheyearincludingnewCBDormatstoresinMelbourneandSydney.Oceworks150thstoreopenedinBayswaterVictoriainJune2013.Anumberoinitiativeswereintroducedtoenhancethecustomeroerthroughproductandcategoryinnovationandthroughexpandingthesalesteamtoservicethebusiness-to-businessgovernmentandeducationsegments.Oceworkscontinuedtoinvestinitseverychannelstrategywhichseekstoprovidecustomerswithaseamlessshoppingexperiencethroughallchannels.Stronggrowthintransactionsandunitsaleswasachievedacrossallchannels.BusinesssustainabilityOceworksremainscommittedtosocialresponsibilityandmakingapositivecontributiontothecommunitiesinwhichitoperates.Morethan1.1millionwasraisedduringtheyeartosupportavarietyolocalandnationalprogramsincludingtheAustralianLiteracyandNumeracyFoundationTourdeCureandvariouslocalcharitiesthroughsausagesizzleundraising.OceworkswasthebiggestcontributortotheCartridges4PlanetArkprogramcollectingmorethan850000cartridgesorrecycling.InadditionOceworkswastherstretailertooeranend-o-liesolutionorthetakebackandrecyclingocomputersandcomputeraccessories.TheBringITBackprogramhasrolledouttoover100storesandhascollected51tonnesoITequipmentorrecycling.Oceworkscommitmenttosustainableandethicalsourcingcontinuestobeapriority.TheSupplierCodeoConductandResponsibleForestProductsPurchasingPolicyStatementhavebeenrolledouttoallsuppliersandsupplierauditsareunderway.OceworksisalsoamemberoSedexanot-or-protorganisationresponsibleordrivingsupplychainimprovementsinresponsibleandethicalbusinesspractices.Throughoutthe2013nancialyearoursaetyawarenesscampaignsweredelivered.Thecampaignsallocusedonproactivesaetybehavioursandspecicproceduresrelatingtohigherriskactivities.Thesecampaignsencouragedstorestodrivetheirsaetycultureandhasresultedinthelosttimeinjuryrequencyratedroppingrom10.8to9.8.336396186NumberoteammembersNumberoteammembersWarehousestores210Smallerormatstores67Tradecentres36Ofceworksstores149HarrisTechnologybusinesscentre1Fulflmentcentres4Callcentres2Printhub1BusinessstatisticsBunningsOfceworks 29WesfarmersaNNUaLreport2013Ofceworksprimaryocusremainsoninvestingtourtherenhancethecustomeroerincludingexpandingandrenewingthestorenetworkandcategoryinnovationandexpansion.Wewillcontinuetodrivegrowthbydeliveringthewidestrangeoofcesuppliesandsolutionsatthelowestpriceswhileprovidingcustomerswithseamlessserviceacrossallchannels.UnderpinningthesestrategicinitiativeswillbeongoingworktodevelopandstrengthentheOfceworksteam.Theoutlookorsalesandmarginisexpectedtobechallenginggivencurrentmarketconditions.KeyfnancialindicatorsFortheyearended30June20092010201120122013Revenuem71517822825186449167Earningsbeoreinterestandtaxm724802882926997CapitalemployedR12-HomeImprovementm22192400286332503492Returnoncapitalemployed-HomeImprovement29.730.328.025.925.9CapitalemployedR12-Ofceworksm11451178119712101147Returnoncapitalemployed-Ofceworks5.76.36.77.18.1Capitalexpenditurem378446613587549GrowthstrategiesContinuallyenhancethecustomeroerextendreachtomorecustomersinmoreplacesandinmorewaysimprovetheoerinexistingcategoriesandexpandintonewcategoriesenhanceandexpandprintandcopyandgrowurnitureextendpriceleadershipevolvestoreormatsImprovecustomerserviceexpandbusiness-to-businessandeducationteamsbuildspecialistknowledgein-storesstreamlinenon-servicerelatedactivitiesTeamdevelopmentandengagementocusontraininganddevelopmentimprovesaetyhealthandwellbeinganddiversityReducecomplexityandcostsongoingincrementalsupplychainimprovementsinvestinstockmanagementandbackofcesystemsandprocessimprovementscontinuedocusonremovingcostsduplicationandcomplexityDriveproftablesalesgrowthcontinueeverychannelinvestmentnetworkexpansionandrenewalcategoryexpansionimprovestockmanagementbuildstrongerrelationshipswithbusinessandeducationcustomersOutlookBunningswebsiteswww.bunnings.com.auwww.bunnings.co.nzOfceworkswebsiteswww.ofceworks.com.auwww.ht.com.au 30Kmartsvisionistobeabusinesswhereamiliescomefrstorlowestpricesoneverydayitems.Kmartssalesgrowthortheull-yearwasunderpinnedbystrongtransactionandunitgrowth.Theourthquarterotheyearrepresentedtheourteenthconsecutivequarterogrowthincustomertransactionsandunitssold.Kmart42003800400036003400Revenue4167m20134167201240552011403620104019200939982013121110091For2013the53weeksfrom25June2012to30June2013andfor2012the53weeksfrom27June2011to1July2012.ThebusinessKmartisoneoAustraliaslargestretailersandwasthemostprotablediscountdepartmentstoreinAustraliain2013with190storesthroughoutAustraliaandNewZealand.Kmarthasmorethan31000teammembersincludingproductsourcingocesinHongKongChinaBangladeshandIndia.Kmartcarriesarangeogeneralmerchandiseandapparelproductsandisocusedonensuringthebusinessoerslowpricesonallproductseverydayrightacrossthestore.Kmartoersanextensiverangeohomebrandproductswhichoerexceptionalvaluetocustomers.KmartTyreAutoServiceisoneoAustraliaslargestretailautomotiveservicerepairandtyrebusinesseswithanetworkomorethan260stores.StrategyKmartsstrategywillremainconsistentoeringamiliesthelowestpriceoneverydayitems.Kmartisocusedongrowingthebusinessthroughoperationalexcellencecreatingadaptablestoresdrivingahighperormancecultureandinvestinginthestorenetwork.KeytoKmartssuccesshasbeentheestablishmentoKmartAustraliaSourcingwithocesinHongKongChinaBangladeshandIndia.Thecapabilitiesandaccountabilitiesotheteamswillcontinuetogrowanddelivercontinuedbenetstothebusinessoverthecomingyears.ResultsEarningsbeoreinterestandtaxorthenancialyearo344millionanincreaseo76milliononlastyearwereup28.4percent.ThisrepresentstheourthconsecutiveyearthatKmarthasdelivereddoubledigitearningsgrowth.Kmartsreturnoncapitalwas25.9percentanincreaseosevenpercentagepointsontheprioryearwhilecomparablesalesgrew2.1percent1ortheyear.Theincreaseinearningsrefectsincreasedsalesreducedmarkdownactivityaocusoncosteciencyandstrongworkingcapitalmanagement.Quarterourin2013representedtheourteenthconsecutivequarterotransactionandunitgrowth.YearinbriefDuringtheyearinvestmentinthenetworkcontinuedwithsixnewKmartstoresopenedand10Kmartstorereurbishmentscompleted.Atyearendtherewere190Kmartstoresand263KmartTyreAutoServicecentres.GrowthinKmartssaleswasunderpinnedbyastrongincreaseincustomertransactionsandunitssoldwhichmorethanosetpricedefationasthebusinesscontinuedtoreinvestecienciesinlowerprices.Allkeycategoriesperormedwellduringtheyeardrivenbyastrongperormanceoneverydaycorerangesandimprovementinon-shelavailability.Entertainmentwasthemostchallengingcategorywithdefationcontinuingtoaectsales.Progresswasmadeondeliveringarenewalstoreormatsuitableorabroaderstorerolloutwith10reurbishmentscompletedduringtheyear.EarlierthisyearKmarttransitionedromcommunicatingtocustomersitsocusonIrresistiblelowpriceseverydaytoWemakelowpricesirresistibleshowcasingtheantasticproductsatamazingpricesKmarthastooereveryone.KmartalsojoinedTargettobetherstAustralianretailertosigntheAccordonFireandSaetyinBangladesh. 31WesFarmersaNNUaLreport2013KeyfnancialindicatorsGrowthstrategiesIntroducemoredesirablehighvolumeownbrandedproductsIntroduceandexpandgrowthcategoriescreatingnewsalesopportunitiesContinuetoocusonlowestpriceandvolumeIntegratee-commercetoexpandreachImprovetheabilitytoprocessvolumeacrossthenetworkDierentiationoKmartsoerintheDDSmarketFortheyearended30June20092010201120122013Revenuem39984019403640554167Earningsbeoreinterestandtaxm1109196204268344CapitalemployedR12m14861335133714161329Returnoncapitalemployed7.414.715.218.925.9Capitalexpenditurem63791011369112013includ2illinningldClGuaivucingin20122illin20113illin20106illin.400300200100EBIT344m201334420122682011204201019620091092013121110090 32TASWANTSAQLDNSWVIC212825143950445195675755NZsouth3NZnorth1231266NumberofteammembersBusinessstatisticsKmartstores190KmartTyreAutoServicecentres263KmartKmarthascontinuedtoidentifyandtrialinitiativestoreducetheamountofenergyconsumedbystores.BusinesssustainabilityAspartofKmartsongoingcommitmenttosupportingcommunitiesinwhichthebusinessoperatesKmarthaspartneredwithRoomtoReadinBangladeshwhichworkstocreateaworldinwhichallchildrencanpursueaqualityeducationandtheSalaamBaalakTrustinIndiawhichworkswithhomelessanddestitutechildreninandaroundDelhi.ThisisinadditiontothesupportprovidedtotheHalftheSkyFoundationinChinaaswellasstronglocalrelationshipswithcharitiesincludingTheSalvationArmythroughtheKmartWishingTreeAppealAustraliaandNewZealandandVarietytheChildrensCharityAustralia.KmartremainscommittedtothesafetyofitsteammemberswithKmartcommittingtospendingover5milliontoupgradeequipmentinthebackofstorestoimprovetheworkingenvironment.Thebusinessrecordedaslightreductioninthelosttimeinjuryfrequencyratefrom9.3lastyearto9.2thisyearhoweverthetotalrecordableinjuryfrequencyrateincreasedfrom37.1lastyearto37.7thisyearonthebackofincreasedvolume.Kmarthascontinuedtoidentifyandtrialinitiativestoreducetheamountofenergyconsumedbystores.Initiativescurrentlyontrialaredeliveringenergysavingsofover30per 33WesFarmersaNNUaLreport2013OutlookKmartssalesandproftgrowthwillbedrivenbyacontinuedocusoneverydayvolumeretailingandoperationalexcellencelowest-costsourcingvalueenhancementacrossallrangesandacontinuedocusonthebasics.Teamandcustomersaetyremainsapriorityalongwithacontinuingocusonethicalsourcingandcontinuingtobuildstrongerrelationshipswithallsuppliers.ItisanticipatedthecomingyearwillpresentchallengesormanyretailersgiventherecentdevaluationotheAustraliandollar.Kmarthaseectivehedginginplaceandthereoreremainswellpositionedinthemarkettooervaluetocustomerseveryday.NetworkinvestmentwillcontinuewithsixnewKmartstoresplannedtoopeninthe2014fnancialyear.centoastoresairconditioningenergyuseandurtherinitiativesthatarebeingreviewedaimtoincreasetotalstoreenergysavingsaurther40.0percent.Kmarthascontinuedtoocusondevelopingteammembersandhasrecentlyintroducedatrainingprogramorbuyingassistantsandplanningassistants.ThisprogramsupportsteammembersintheserolesbygivingthemstructuredtrainingandcoachingandprovidesKmartwithapoolotalentwhenpositionsbecomevacant.Kmarthasundertakenpackagingreviewsacrossaurtherourcategorieswithopportunitiesbeingidentifedorover400products.Thebusinessiscurrentlyexploringtheseopportunitieswithactoriestoassesstheirsuitabilityromaactoryperspectivebeoreintroducingthemtotherange.KmarthasconductedaspecifcfresaetyandbuildingintegritycheckoallactoriesproducingKmartproductsinBangladeshandeachactoryhasbeengiveneedbackonspecifcopportunitiesorimprovement.Kmarthasreviewedactoryoperationsinmulti-storybuildingsandisintheprocessoexitingtheseactorieswithnourtherorderstobeplaced.InadditionKmarthasmadeadecisionthatanyactoryoundtobesub-contractingwithoutauthorisationwillbederegistered.ThebusinesscontinuestoworkcloselywithallstakeholdersinBangladeshtoensurecompliancewithlocalrequirements.Businesswebsiteswww.kmart.com.auwww.kmart.co.nzwww.ktas.com.au 34Targetsvaluepropositionistodeliverstyleandqualityeverydayatpricescustomerslove.AteradifcultyearatTargetwehaveresetourbusinessstrategywithaocusongettingbacktobasics.Akeyprioritywillbetostrengthenourteamtodriveatransormationprogramtoensurethelong-termsustainablesuccessothebusiness.Target40003000200010000Revenue3658m2013365820123738201137822010382520093788201312111009ThebusinessTargetisadepartmentstoreretaileroeringarangeowomensmensandchildrensclothingootwearaccessoriesaswellasnurseryitemshomewareselectricaltoysandothergeneralmerchandise.Wehavestoreslocatedacrossmetropolitanandregionalareasnationally.Targethasmorethan24000teammembersservingourcustomersandagrowingonlinestorewithover58000productsavailableuprom36000lastyear.StrategyTargetstransormationplantoimprovethebusinesscentresaroundsixkeystrategieswhichwillbuildaplatormoruturegrowth.Thesestrategiesincludeimprovingthecustomerexperiencereviewingproductrangesprovidinggreatstyleandqualityimprovingpricingarchitecturedrivingecientandeasybusinessoperationswithstrongleadershipandagreatculture.ResultsTargetsoperatingrevenuedecreasedby2.1percentto3.7billionwhilecomparablestoresalesortheyeardeclined3.3percent1.Earningsbeoreinterestandtaxwere136milliondown44.3percentontheprioryear.Targetssecondhalresultincludedareleaseotheremainingbalanceothesupplychainprovisionhavingutilisedhalotheoriginal40millionreserve.Increasedprovisionsrelatedtostocklossandrealisablevalueosettheotherwisepositiveaectothisrelease.Duringtheyear14storeswereopenedincludingourreplacementstoresandsevenstoresclosed.Attheendotheyeartherewere183TargetstoresincludingthreeUrbanByTargetstoresandveTargetOutletsand125TargetCountrystores.YearinbriefTargetsreducedearningsrefectedchallengingtradingconditions.Continuedpricedefationduetostrongcompetitionandcontinuingchallengesinelectricalandentertainmentcategoriesaectedsalesandtradingmargins.Ahigherthananticipatedshrinkageresultandhighlevelsoexcessinventorywhichledtoelevatedclearanceactivityduringtheourthquarteradverselyaectedearningsduringtheyear.Alatestarttowinterandpoorproductrangesalsoaectedsalesandcontributedtothehigherinventoryandclearanceactivity.HighlevelsoconsultingcostswereexperiencedinthersthalwithcostsincurredinJune2013relatedtotherestructuringothestoresupportcentre.StuartMachinwasappointedmanagingdirectorinApril2013andsincethenthebusinesshasocusedonaddressingshort-termperormanceissueswhilebuildingaplantoensurethelong-termsustainablesuccessothebusiness.1For2013the53weeksfrom24June2012to29June2013andfor2012the53weeksfrom26June2011to30June2012. 35WesFarmersaNNUaLreport2013GrowthstrategiesOutstandingcustomerexperienceRightproductchoicesGreatstyleandqualityPricescustomersloveEfcientandeasyoperationsTeamwithpersonalityandprideKeyfnancialindicatorsFortheyearended30June20092010201120122013Revenuem37883825378237383658Earningsbeoreinterestandtaxm357381280244136CapitalemployedR12m29392813287128962930Returnoncapitalemployed12.213.69.88.44.6Capitalexpenditurem9191956791400300200100EBIT136m201313620122442011280201038120093572013121110090 36TASWANTSAQLDNSWVIC191231183556484102948241Asthebusinessexecutesitstransformationearningsareexpectedtoprogressivelyrecoverbutimprovementwilltaketime.BusinesssustainabilitySustainabilitycontinuedtobeakeypriorityatTargetwithaocusonteammembersaetyreducingenergycostssupportingthecommunityandimprovingourethicalsourcingauditprocesses.Duringtheyearweintroducedgravityconveyorrollersandplasticprocessingtablesinallstores.Wealsodevelopedtrainingvideosofvecommonlyusedsaeworkpracticesorproceduresorourteammembers.Wealsointroducedstrategiestoreduceenergycostsincludingreviewingandrefningtheoperatingschedulesorlightingandairconditioningsystemsandusingreal-timemeasurementtoautomaticallyadjusttemperaturesettingsandairquantities.FollowingoursupportoKidsTeachingKidsWeekin2012thisyearweannouncedanationalcommunitypartnershipwiththisinspiringorganisation.KidsTeachingKidsallowsstudentstoswitchroleswiththeirteachersandocusonenvironmentalissuesaectingtheirschooltheircommunityandtheircountry.ThroughthisprogramwewillosterthecreativityandenthusiasmoAustralianschoolkidsandencouragethemtoleadthecountryTarget24622NumberofteammembersBusinessstatisticsTargetstores183TargetCountry125 37WesFarmersaNNUaLreport2013Keyinitiativesduringthenextfnancialyearincludeimprovingthecustomerexperienceandproductoeringresettingpricingarchitectureocusingonandbenchmarkingstyleandimprovingprocessefciencyandcostmanagement.Thechallengingtradingenvironmentexperiencedintheourthquarterothe2013fnancialyearisexpectedtocontinueintothecomingyearduemostlytohighlevelsowinterinventorythatwillrequirecontinuedclearance.Tradingwillalsobeaectedbyalatelaunchothespringsummerproducttransitionandthenon-repeatohighlevelsopromotionalactivityintheprioryear.Asthebusinessexecutesitstransormationearningsareexpectedtoprogressivelyrecoverbutimprovementwilltaketime.Targetexpectstoopen12newstoresandtworeplacementstoresinthe2014fnancialyear.Outlooktoanenvironmentallysustainableuture.Thissuccessulprogramhasalreadyreached66000Australianchildren.TargetpartneredwiththeAFLclubGeelongtosupportarangeocommunitydevelopmentprogramswithaocusonindigenouscommunitiesandyouthdevelopment.ThroughtheootballclubscommunityprogramthreeTargetteammembersexperiencedindigenousculturefrst-handintheGoveandGrooteEylandtcommunitiesotheNorthernTerritory.AsaBioCatsProgramsponsorTargetworkedwiththeGeelongCatsandDeakinUniversitytoengagelocalschoolsattheootballclubsCommunityEducationandWellnessCentre.Theprogramexploresthescienceomathsandootballtoencourageteamworkcareeraspirationsconfdenceresilienceandpersistence.In2013fnancialyearwecontinuedtoexpandourethicalsourcingauditprocessestoimprovesupplierscompliancewithourprogram.KeytothisweormalisedourCodeoConductintoacontractualagreement.Tobuildstrongerlinksoverseaswecontinuedtourtherdevelopdirectrelationshipsandlocalsupportinthecountriesinwhichweoperate.Weconductedariskprofleoallcountriestoidentiyanyissuesandensurevendorsareprovidingsaeworkconditionsthatcomplywithourcode.ThisincludedafreriskassessmentatallactoriesinBangladesh.InJunewewereamongthefrstAustralianretailerstosigntheAccordonFireandSaetyinBangladesh.Businesswebsiteswww.target.com.auwww.designersortarget.com.auwww.acebook.comtargetauswww.youtube.comuserTargetAustralia 38WesfarmersInsuranceprovidespersonalmotorandhomeinsurancethroughretailersandotherintermediaries.Strongunderwritingperformancecombinedwithcontinuedincomeandearningsgrowthinbrokingproducedthedivisionshighesteverearningsresult.Insurance25001000150020005000Revenue2083m2013208320121915201117392010169820091720201312111009ThebusinessWesarmersInsuranceprovidesinsuranceandriskmanagementsolutionstocorporatessmall-to-mediumsizedbusinessesnot-or-protorganisationsandindividualsacrossAustraliaNewZealandandtheUnitedKingdom.TheinsuranceunderwritingbrandsincludeWFIColesInsuranceLumleyAustraliaandLumleyNewZealand.TheinsurancebrokingoperationsarerepresentedbyOAMPSAustraliaOAMPSUKandCrombieLockwoodinNewZealand.ThepremiumundingoperationsinAustraliaandNewZealandincludeLumleyFinanceandMonumentPremiumFunding.StrategyTheunderwritingoperationsservebothdirectandintermediarydistributionchannels.WFIdistributesitsinsuranceproductsandservicesdirectlytoclientsthroughanationalnetworkinruralregionalandmetropolitanAustraliawhiletheAustralianandNewZealandLumleyoperationsocusonsalesthroughbrokersandotherintermediarieswithspecialisationinthefeetandcommercialmotorpropertyandliabilityengineeringandmarinesectors.WesarmersInsurancealsoprovidespersonalmotorandhomeinsurancethroughretailersandotherintermediariessuchasColesKmartTyreAutoServiceandOAMPSinAustraliaandWestpacinNewZealand.ThebrokingbusinessesoperatethroughoutAustraliaNewZealandandtheUnitedKingdomandserviceallaspectsoclientsinsuranceandriskmanagementneeds.OAMPSandCrombieLockwoodarerecognisedasleadersintheirrespectivemarketsparticularlytosmallandmedium-sizedbusinessesandindustrygroups.AllactivitiesareunderpinnedbytherequirementtoachievesatisactoryreturnstoshareholdersinlinewithWesarmersobjective.ResultsWesarmersInsuranceoperatingrevenueo2.1billionwas8.8percenthigherthanthepreviouscorrespondingperiod.EarningsbeoreinteresttaxandamortisationEBITAincreasedto218millionasignicantincreaseonthe17millionachievedinthepreviouscorrespondingperiod.EarningswerepositivelyimpactedbyasignicantincreaseinunderwritingEBITAto136millionromalosso58millioninthepreviousyear.Thepreviouscorrespondingyearwasimpactedbyanincreaseinreserveso108millionassociatedwiththeFebruary2011ChristchurchEarthquake.Thestrongunderwritingperormanceinthecurrentnancialyearwasachievedasaresultoimprovedlossratiosthroughdisciplinedunderwritingpracticeswithaocusonportolioremediationhigherearnedpremiumsfowingthroughromrateincreasesinthe2012and2013nancialyearsandacontinuedocusonexposuremanagement.InadditionclaimsromnaturalperilswerebroadlyinlinewithinternalexpectationsandmostportolioshadaavourableclaimsexperiencealthoughthiswaspartiallyosetbyadeteriorationintheBuildersWarrantyportoliowhichisinrun-o.Thereportedcombinedoperatingratioortheunderwritingoperationsimprovedrom111.2percentto95.3percent.BrokingoperationsalsogeneratedgrowthinrevenueandearningswithreportedEBITAo86millionup8.9percentrom79millionthepreviousyear.ThegrowthinearningsrefectedanincreasedcontributionromacquisitionsandstronggrowthinNewZealandosetbyhighercostsassociatedwiththeplannedinvestmentinbrokingsystems.Thelowerinterestrateenvironmentreducedinvestmentincometo71millionrom75millioninthepreviousyear.YearinbriefDuringtheyeartheAustralianunderwritingoperationscontinuedtomaintainastrongocusonunderwritingdisciplinesandexposuremanagement.ThisdisciplineresultedinastrongimprovementinthelossratiowiththebusinessdeliveringaveragerateincreasesacrosstheAustralianportolioo6.5percent.Furtherimprovementstoourreinsurancearrangementsalsocontributedtotheimprovedresult.StrongcustomerinterestinColesInsurancecontinuestodrivesubstantialincreasesinsalesomotorandhomeproductswithmorethan200000policiesinorceat30June2013. 39WesfarmersaNNUaLreport2013GrowthstrategiesImproveandgrowunderwritingmarginGrowpersonallinesanddirectcapabilitiesSalesgrowthinbrokingDeliverexceptionalcustomerexperiencesacrossourbusinessesBuildhighperormingteamsLeveragescaleandcapabilitiestodeliverleanandefcientoperationsKeyfnancialindicatorsFortheyearended30June20092010201120122013Revenuem17201698173919152083Earningsbeoreinterestandtaxandamortisationm1031313017218Earningsbeoreinterestandtaxm91122205205CapitalemployedR12m12891340124012771396Returnoncapitalemployed7.19.11.60.414.7Capitalexpenditurem262647472625015020010050EBIT205m20132052012520112020101222009912013121110090 40TASWANTSAQLDNSWVIC1222131116141162186219183NZsouth66NZnorth717UK5InsuranceLumleyAustralialauncheditsMakinglieeasierbrandcampaigntobrokers.WFIcontinuedtoexpanditsstrongruralootprintwhilegrowingitsSMEmetropolitanportoliowinningtheRoyMorganBusinessInsurerotheYearawardorthesecondyearinarow.InNewZealandtheunderwritingbusinesshasreturnedtoprotabilitydespitedealingwiththedualchallengesomanagingtheChristchurchEarthquakerepairandrebuildprogramalongwithamajormigrationtoanewtechnologyplatorm.Around60percentooutstandingEarthquakeclaimshavebeensettledandourreservingortheeventremainsbroadlyinlinewithourpositionat30June2012.TheNewZealandbusinessachievedaveragerateincreaseso5.6percentacrosstheportolio.TheunderwritingoperationscontinuedtoinvestinITandeciencyinitiativesincludingthecompletionotheimplementationothenewpolicyadministrationsysteminNewZealandthelaunchotheullpolicyliecycleprocessinLumleyAustraliaandurtherexpansionoourPartneredRepairNetworkormotorclaimsinAustralianunderwriting.BrokingrevenueandearningswerehigherthanthepreviouscorrespondingperiodhoweverplannedexpenditureoninvestmentinbrokingsystemsresultedinasmallreductioninEBITAmargin.TheNewZealandbrokingbusinessachievedstrongrevenueandearningsgrowthwiththeintegrationotheFMRandACMAhlersbusinessescompletedandperormingaheadoexpectationsandnewbusinessgrowthbenetingromincreasesinpremiumrates.RevenueandearningsgrowthinOAMPSAustraliahavebeenmorechallengingrefectingcontinueddiculttradingconditionsintheSMEsector.Thebusinessremainedocusedoncustomerretentionstrategiesandnewbusinessgrowthduringtheyear.SubduedeconomicconditionsintheUnitedKingdomhaveresultedinfatearningsacrosstheUKbrokingbusiness.FinallythedivisionsPremiumFundingbusinesscontinuedtoperormstronglyandprotably.BusinesssustainabilityKeybusinesssustainabilityinitiativesortheyearincludedthelaunchoanenhancedhealthandsaetyprogramwiththeaimoreducingthetotalrecordableinjuriesrequencyrateannuallyby10percentwithastretchtargeto20percent.Strategiesorachievingthetargetincludeimprovedriskmanagement3677NumberofteammembersBusinessstatisticsLumleyInsuranceAustralia13LumleyGeneralNewZealand13WFI89OAMPS132CrombieLockwood231oampsNewClednilctinnthwn 41WesfarmersaNNUaLreport2013OutlookFurtherimprovementinunderwritingearningsisexpectedinthe2014fnancialyearintheabsenceosignifcantcatastropheeventsbeneftingromacontinuedocusondisciplinedriskselectionandoperationalefciencies.RateincreasesarehoweverlikelytoslowacrossAustraliaandNewZealand.FurtherexpansionotheColesInsuranceoerisexpectedtoprovidestronggrowthinpersonallinespremiums.Continuedpressureoninvestmentyieldsduetothelowinterestrateenvironmentisexpectedtocontinuetoconstraininvestmentearnings.Brokingoperationswillcontinuetopursuegrowththroughtargetedrecruitmentbolt-onacquisitionsandimprovementsinproductivity.Whileurthergrowthinearningsrombrokingoperationsisexpectedcontinuedinvestmentintheplannedupgradeinbrokingsystemswillconstrainmarginintheshortterm.activitiesandtrainingaswellasattentiontothespecifcareasomotorvehicletravelmentalstressergonomicsandbuildingmanagement.Duringtheyearthetotalrecordableinjuryrequencyrateimprovedto5.1againstatargeto6.4.InadditionthedivisionundertookarangeonewandimprovedinitiativestoengageouremployeesincludingimplementingaormaltalentmanagementstrategyanddevelopmentplanningimprovedperormancemanagementtrainingorleadersimprovedincentivestructuresorhighperormersmoreWomeninLeadershipForumsthroughoutthedivisionsystemstoimprovethevisibilityojobvacanciesandcareeropportunitiesacrossthedivisioncontinuedinvestmentinourleadershipdevelopmentcurriculumincreasedocusontechnicaltraining.OuremployeesinAustraliaNewZealandandtheUKsupportedtheirlocalcommunitiesduringtheyearthroughawideanddiverserangeoeventsandinadditionpromotedhealthandwellbeingwithover970peopleparticipatingintheGlobalCorporateChallenge.ThedivisionalsocontinueditscloseengagementwiththeInsuranceCounciloAustraliawithmorethan50employeesparticipatingin35committeesandworkinggroups.TheintroductiononewAPRAcapitalrequirementschangestotheVictorianFireServicesLevyandpassageotheInsuranceContractsAmendmentBillaresomeothesignifcantissuesaddressedbythebusinessduringtheyear.KeyissuesaddressedwiththeInsuranceCounciloNewZealandincludetheintroductiononewRBNZcapitalrequirementsappetitebyglobalreinsurerstoinvestintheNewZealandmarketandtheshitromsquaremetretosuminsuredcoverordomesticpropertyinsurance.Businesswebsiteswww.wesarmersinsurance.com.auwww.wf.com.auwww.colesinsurance.com.auwww.lumley.com.auwww.lumley.co.nzwww.oamps.com.auwww.crombielockwood.co.nzwww.oampslondon.co.ukwww.lumleyfnance.com.auwww.monumentp.com.au 42WesarmersResourcesproducesmetallurgicalcoalorexporttosteelmillsworldwide.Productionromboththedivisionsmineswasupcomparedtoprioryearandcostcontrolwasalsostrong.Earningsweredowncomparedtoprioryearreectingsignifcantlylowerexportcoalprices.Resources25001000150020005000Revenue1539m2013153920122132201117782010141620092411201312111009ThebusinessWesarmersResourcesisasignicantAustralianopen-cutminerwithinvestmentsintwoworld-scalecoalmines.ThedivisionsoperationscomprisetheCurraghmineinQueenslandsBowenBasinmetallurgicalandsteamingcoalorexportanddomesticmarketsanda40percentinterestintheBengallamineintheHunterValleyoNewSouthWalessteamingcoalorexportmarkets.StrategyWesarmersResourcesvisionistobeahighperormanceresourcecompanydeliveringshareholdervaluethroughinitiativeinnovationandgrowth.Thedivisionseekstoachievethisonasustainablebasisthroughexcellenceinminingoperationsandcustomerrelationshipsthesaetyanddevelopmentoourpeoplemakingapositivecontributiontothecommunitiesinwhichthedivisionoperatesthepursuitogrowthinshareholdervaluethroughexpansionoexistingminessubjecttoappropriateopportunitiesexpansionothedivisionsportoliothroughacquisitionadditionalminesandordevelopmentogreen-eldsprojects.ResultsRevenueo1.5billionortheyearwas27.8percentbelowtheprecedingyear.Earningsbeoreinterestandtaxo148millionwere66.3percentbelowlastyear.ThekeydriverothereducedresultwassignicantlylowerexportcoalpricesexacerbatedbyahighAustraliandollarormuchotheyear.Pleasinglyminecashcostperormancewasstrongatbothmineswithbothminesachievingreductionsinunitcostsoproductioncomparedtothepreviousyear.CurraghsStanwellroyaltypaidtotheQueenslandGovernment-ownedStanwellCorporationwas154million.AdditionallythedivisionpaidordinarygovernmentroyaltiesinQueenslandandNewSouthWalestotalling108millionortheyear.YearinbriefCurraghQldMetallurgicalcoalsalesvolumeso7.21milliontonneswere0.8percentabovetheprecedingyear.Steamingcoalsalesvolumeso3.17milliontonneswere7.5percenthigherthanthepriorcorrespondingperiodrefectingcontractedcommitments.Metallurgicalcoalproductionortheyearo7.38milliontonneswas2.2percentabovethepreviousyearandsteamingcoalproductiono3.25milliontonneswas12.8percenthigher.ProductionwasconstrainedbyascheduledshutdownduringtheChristmasperiodandsignicantwetweatherwhichinterruptedrailandportactivitiesassociatedwithCycloneOswald. 43WesfarmersaNNUaLreport2013KeyfnancialindicatorsFortheyearended30June20092010201120122013Revenuem24111416177821321539Earningsbeoreinterestandtaxm885165369439148CapitalemployedR12m10751146129314881480Returnoncapitalemployed82.414.428.529.510.0Capitalexpenditurem25222837239279GrowthstrategiesBusinessoptimisationBothminesremainocusedonmaintainingstrongcompetitivepositionsinminecashcostperormanceandproductionsoastobebestplacedorsatisactoryperormanceinthepresentlowerexportpriceenvironmentaswellasmaintainingreadinesstorespondmosteectivelytoalluturemarketdevelopments.Continuousimprovementacrossallaspectsothebusinessremainsaocus.ExpansionoptionsCurraghAeasibilitystudywithrespecttoaurtherexpansionoCurraghromitspresent8.0to8.5milliontonnesnameplatecapacityto10milliontonnesannualexportcapacityiscompletewithportandrailcapacitysecured.Investmentdecisionandtimingwillbedependentuponmarketconditions.BengallaAeasibilitystudyorurtherexpansionoBengallaromitspresent9.3milliontonnesRunoMinenameplatecapacityto10.7milliontonnesRunoMineisalsocomplete.Investmentdecisionandtimingwillbedependentuponmarketconditions.BusinessoptimisationContinuousimprovementooperationsincludingsaetysustainablecostcontrolandmarketingorglobalcompetitiveness.PortoliogrowthTheDivisionevaluatesacquisitionsandotherstep-outopportunitieswhereappropriateasanestablishedlarge-scaleAustralianopen-cutminerthisincludescoalothercarbon-steelrawmaterialsandenergy.rucdivdhpiClbuininDcb2011.aginndilhiniyixcluddhdiviinlulnddnn-dingihningwihinhGuul.1000600800400200EBIT148m201314820124392011369201016520098852013121110090 44QLDNSW11Numberofteammembers659Curragh1Bengalla1BusinessstatisticsResourcesGoodoutcomeswereachievedduringtheyearinloweringproductioncosts.Goodperormancewasachievedduringtheyearinloweringproductioncosts.Thisrefectedasustainedocusoncostcontrolwithunitminecashcostsexcludingcarbontaxachievedortheyearbeing12.5percentlowerthanthepreviousyearandapproximately30.0percentlowerthanthepeakincashcostsexperiencedinthersthalothe2012nancialyear.BengallaNSWSalesvolumesromtheBengallamineinwhichWesarmersholdsa40percentinterestwereup28.5percentontheprecedingyearandproductionvolumeswerealsoup32.6percentcomparedtothesametimelastyear.Theseincreasesrefectedoperationatexpandedminecapacityo9.3milliontonnesRun-o-Minecoalperannum100percentbasisortheull-year.BusinesssustainabilityThroughoutthe2013nancialyearactionwastakenatallWesarmersResourceslocationstoimprovetheeciencyominingprocessestodevelopemployeecapabilitytosupportlocalcommunitiesandtoreduceorminimisethebusinessenvironmentalootprint. 45WesfarmersaNNUaLreport2013OutlookIncreasedexportsalesvolumesareexpectedromtheCurraghmineinthe2014fnancialyearwithBengallaexpectedtomaintainsimilarperormancelevelsto2013.Curraghsmetallurgicalexportsalesareorecasttobeintherangeo7.5to8.5milliontonnessubjectasalwaystomineoperatingperormanceandinrastructureconstraints.Theocusonoperationalproductivityandcostcontrolwillcontinue.Thedivisionremainscommittedtothesaetyandwellbeingoemployeeswiththemajorocusbeingonimprovingthesaetyperormanceachievedinthepreviousyear.Importantlythetotalrecordableinjuryrequencyratewasreducedrom18.8to14.8adecreaseo21percent.Whilethisyearsperormancewaspositiveouraimremainstoachievezeroworkplaceincidents.Therewasamarginalincreaseinthelosttimeinjuryrequencyraterom1.7in2012thisincludessixmonthsodataromPremierCoalwhichwassoldduringthatyearto1.9thisyear.DuringtheyeartheWomeninResourcesprogramwasurtherembeddedinthebusinessandcontinuedprogresswasachievedwiththeAboriginalandTorresStraitIslanderEmploymentStrategywhichsawthecommencementotheSistersinMiningprogramoremaleindigenoustraineesatCurragh.CurraghsupportedtheRockhamptoncommunityollowingthefoodingcausedbyCycloneOswaldthroughaFloodRecoveryFundwhichsaw12not-or-protcommunityorganisationsreceivedirectnancialsupporttoaidtheirrecovery.AwaterrecyclingprojectwasinitiatedtoreducetheamountorawwaterrequiredorthenewlycommissionedCoalHandlingPreparationPlantatCurragh.Theprojectwasimplementedintheourthquartero2013nancialyearandtheinitialresultsindicateareductioninrawwateruserom122to108litrespertonneocoalproduced.WesarmersResourcesandCurraghcontinuedtosupportnumerouscommunity-basedorganisationssuchasculturalandsportingassociationsclubsestivalsandschoolstohelpdevelopstrongvibrantandhealthycommunitiesinwhichtheyoperate.Businesswebsiteswww.wesresources.com.au 46TheChemicalsEnergyandFertilisersdivisionproducesandmarketschemicalsfertilisersandgasproducts.Thedivisionreportedearningsof249millionsupportedbygoodproductionperformancesandstrongproductpricinginthechemicalsbusiness.ChemicalsEnergyandFertilisers2000500100015000Revenue1805m2013180520121786201116412010157020091760201312111009ThebusinessTheactivitiesoWesarmersChemicalsEnergyFertilisersincludethemanuactureandmarketingochemicalsorminingmineralsprocessingandindustrialsectorsthroughCSBPAustralianGoldReagents75percent-ownedQueenslandNitrates50percent-ownedandAustralianVinyls.ThedivisionproducesmarketsanddistributesliqueedpetroleumgasLPGliqueednaturalgasLNGandreticulatednaturalgasthroughitsKleenheatGasbusiness.ThedivisionalsoimportsmanuacturesandmarketsbroadacreandhorticulturalertilisersthroughCSBPandmanuacturesmarketsanddistributesindustrialmedicalandspecialtygasesthroughAirLiquideWA40percentowned.StrategyDevelopaportolioosuccessulandinnovativeindustrialbusinessesthatdeliversatisactoryshareholderreturnsandcontinuallystrengthenourreputationorthemanagementohealthsaetyandtheenvironment.ResultsOperatingrevenueo1.8billionwas1.1percenthigherthanlastyearlargelyasaresultoanimprovedrevenueproductmixandrmerpricinginboththechemicalsandLPGbusinesses.Earningsbeoreinterestandtaxwere249millioncomparedtoearningso258millionromthepreviousyearwhichincludedaone-opositiveearningsimpacto9millionromtheterminationotheHIsmeltindustrialgassupplyagreementinFebruary2012andearningsromenGenandtheBangladeshLPGjointventureupuntiltheirdivestment.YearinbriefAmmoniumNitrateExpansionExpansionoammoniumnitrateproductioncapacityatKwinanaWesternAustraliaby260000tonnesperannumtpato780000tpacontinues.Constructioniswelladvancedwithallmajormodulesdeliveredtositeandinplace.Theprojectremainsontracktobeoperationalon-timeandwithinbudgetduringthersthalothe2014calendaryear.ChemicalsEarningsromthechemicalsbusinesseswereaheadolastyear.Goodproductionperormancesandstrongproductpricinginammoniaammoniumnitrateandsodiumcyanideresultedinsolidearningsuplitsorthesebusinesses.EarningsromtheQueenslandNitratesjointventureweresignicantlyaheadothepreviousyearwhichincludedamajorshutdownandsomeplantissues.AsanticipatedAustralianVinylshadanotherchallengingyearwithhigherinputcostsrelativetoPVCsellingpricesandastrongAustraliandollarimpactingmarginsandsubduedconstructionactivitydampeningvolumes.ApprovalhasbeenreceivedrombothAustralianGoldReagentsventurepartnerstoexpandsodiumcyanideproductioncapacityatKwinanarom64000tpato78000tpaandsolidproductioncapacityrom34000tpato45000tpaatacosto22million.Theexpansionisexpectedtobecompletedbytheendothe2013calendaryear.FertilisersFertiliserearningswerebelowthepreviouscorrespondingperiodasdecliningertiliserpricesapoorerharvestthantheprioryeartogetherwithaverydryJuneresultedinlowersalesvolumesandreducedmargins.KleenheatGasKleenheatGasearningscontinuetorefectdeclinesinLPGproductioneconomicsandearningswerebelowthepreviousyearbutinlinewithexpectations.LPGproductionortheyearwas145700tonnes2.9percentlowerthanlastyearduetourtherdeclinesinLPGcontentintheDampiertoBunburynaturalgaspipeline.InMarch2013KleenheatGaslaunchedanaturalgasretailingbusinessprovidingcompetitioninthedomesticretailmarketorthersttimeinthesouth-westoWesternAustralia.Earlyperormanceothebusinessisinlinewithexpectations.LNGbusinessperormanceimprovedonthepreviouscorrespondingperiod.AirLiquideWA40percentEarningswerebelowthepreviousyearonslightlyreducedmargins. 47WesarmersaNNUaLreport2013KeyfnancialindicatorsFortheyearended30June200912010220113201242013Revenuem17601570164117861805Earningsbeoreinterestandtaxm127196283258249Capitalemployedm20221371129812821400Returnoncapitalemployed6.314.321.820.117.8Capitalexpenditurem84496316752635GrowthstrategiesContinuetoinvestinourbusinessescapacitytomeettheneedsoourcustomersincludingtheammoniumnitrateandsodiumcyanideexpansionprojectsExecuteopportunitiesorgrowthinexistingandnewmarketsincludingtherecentlylaunchednaturalgasretailingbusinessFosteraculturethatrecognisesthatpeoplearecentraltooursuccessFocusonsustainableoperationsorthebeneftoourteammemberscustomersandcommunitiesinwhichweoperate12009cbinhulhengywhichincluddCgndhChiclndilidiviin.2InJuly2010hengyndChiclndilidiviingdndCglyhengydiviinwndhInduilndsydiviin.th2010guwdfch-gingucu.32011includ42illinVnuIlndinunccd.4WCedivdhnGnbuininaugu2011ndhBngldhLpGjinvnuinJnuy2012.Ginndilbhniixcluddhdiviinlulnddnn-dingiohningwihinhGuul.5excludingcilidin.30020025015050100EBIT249m201324920122582011283201019620091272013121110090 48TASWANTSAQLDNSWVIC101211128112455161514NumberofteammembersCSBPFertilisers10CSBPAmmoniaAmmoniumNitrate1AGR1AustralianVinyls2QNP1ALWA6KleenheatGas48Businessstatistics1ChemicalsEnergyandFertilisersDuringtheyearCSBPnitrousoxideabatementtechnologyinitsnitricacidplantsatKwinanaresultedinan85percentreductioninnitrousoxideemissions.BusinesssustainabilityThedivisioniscommittedtothesustainableoperationoitsbusinessesorthebeneftoitspeoplecustomersandthecommunitiesinwhichitoperates.Asat30June2013itemployed1533peopleexcludingcontractors.Duringtheyearthedivisionintroducedabroadrangeosaetyinitiativesincludingatargetedsaetybehaviourprogramandthelaunchoanewsaetyidentity-SaePersonSaeProcessSaePlace-andrecordedadecreaseintotalrecordableinjuriesrom58lastyearto48thisyearwithacommensuratedecreaseinthetotalrecordableinjuryrequencyraterom17.1lastyearto13.0thisyearthelowestlevelsincethedivisionwasormedin2010.Inthe2013fnancialyeartherewere28reportableenvironmentaleventsanincreaseosixonlastyear.Themajorityothesereportableeventsweretheresultothereintroductionolicensesatertiliseroperationsincountrycentreswithdiscussionsovermeasurementtechniquesandlimitscontinuingwithrelevantregulators.1restatedomlastyeatoefectbusinesslocations. 49WesfarmersaNNUaLreport2013OutlookThereremainsanongoingocusonthesuccessulcompletionoboththeammoniumnitrateexpansionandsodiumcyanidedebottleneckingprojectswhichareintendedtounderpingrowthinearningsromthesebusinesses.DemandorchemicalinputstotheWesternAustralianresourcessectorisexpectedtosupportstrongperormancesromtheammoniaandammoniumnitratebusinesses.Highergasinputcostsandlowerinternationalammoniapricingarehoweverexpectedtopartiallyosetthisandplannedshutdownsothenitricacidammoniumnitrateplantandtheammoniumnitrateprillplantduringthe2014fnancialyearwillalsoaectearnings.ContinuedpressureonmarginsatAustralianVinylsisexpectedasthebusinessremainschallengedbyhigherinputcostsrelativetosellingpriceswhichwouldbepartlyosetintheeventoasustainedweakeningintheAustraliandollar.Salesvolumesarealsoexpectedtoremainunderpressureasmarketdemandremainssot.KleenheatGasLPGearningscontinuetobedependentoninternationalLPGpricesandLPGcontentintheDampiertoBunburynaturalgaspipelinewiththelatterexpectedtoremainchallenging.InertilisersWesternAustraliahadoneothedriestJunesonrecordandthisreducedyieldpotentialinmuchothestate.GoodrainsinJulyandAugusthaveallowedcropsinmanypartsothestatetorecoverbuttheertiliserbusinessearningsinthe2014fnancialyearremaindependentonagoodseasonalbreakinthesecondhalandarmerstermsotrade.Inthe2013fnancialyearCSBPsnitrousoxideabatementtechnologyinitsnitricacidplantsatKwinanaresultedinan85percentreductioninnitrousoxideemissions.Continuedinvestmentinthedevelopmentopeoplecapabilityandtalentprocessesoccurredinthe2013fnancialyearwithongoingocusonbusinessleadershipandthesaeoperationoouracilitiesanddistributionassets.ThedivisionalsocontinuestoprovidesupporttoarangeocommunityorganisationsincludingkeysponsorshipswithYouthFocusandtheClontarFoundationaswellassupportingtheSalvationArmyandtheAsthmaFoundationoWA.Businesswebsiteswww.wesce.com.auwww.csbp.com.auwww.av.com.auwww.modwood.com.auwww.airliquidewa.com.auwww.kleenheat.com.auwww.turntokleenheat.com.au 50TheIndustrialandSaetydivisionisatrustedprovideroindustrialandsaetysolutionstoenableitscustomerstorunmaintainandgrowtheirbusinessesefcientlyandsaely.Thedivisiondeliveredasolidresultinchallengingmarketconditionsandiswell-placedtocontinuetogrowmarketshareandinnewsegments.IndustrialandSaety2000500100015000Revenue1647m2013164720121690201115572010141220091294201312111009ThebusinessWesarmersIndustrialandSaetyistheleadingprovideroindustrialandsaetyproductsandservicesinAustraliaandNewZealand.ItalsohasapresenceinIndonesiaexportactivitiesacrosstheregionandsourcingandlogisticsoperationsinChina.Itservicescustomersacrossminingoilandgasconstructionandinrastructureretailmanuacturinghealthandgovernment.Thedivisioncomprisesthreecustomer-ocusedstreamsGeneralistsBlackwoodsBlackwoodsProtectorSaetySpecialistsProtectorAlsaeNZSaetySaetySourceandIndustrialSpecialistsCoregasBullivantsTotalFastenersPackagingHouse.Itoperatesromanetworko222industrialandsaetylocationsand145additionalgasdistributionpointssupportedbylargedistributioncentreshundredsoexternalandinternalsalesresourcesandeBusinesswebsitesandtelesaleschannels.StrategyThebusinessesinthedivisionsupportadiverserangeocustomerneedsbyprovidingsecurityosupplyothebroadestrangeoproductswithstrongdeliveryperormanceandcustomerservice.TheydelivercosteciencythroughlocalandglobalprocurementsupplychainandeBusinesssolutionsaswellascriticalvalue-addservicessuchasVendorManagedInventorytestingolitingandriggingequipmentgasdetectionandoccupationalhealthandsaetyaccreditedtraining.Thedivisionsincreasedcustomer-centricocuswillurtherstrengthenitsrelationshipswithlargecustomersbyenhancingsalesorceeectivenessbroadeningproductrangeimprovingnetworkcapacityandcontinuouslyimprovingdeliveryperormance.Keyprioritiesorthedivisionincludethecontinuedexpansionintohighergrowthsectorsanddiversicationotherevenuebaseaswellascomplementingorganicgrowththroughvalue-creatingacquisitions.Inamorechallengingmarketenvironmentloweringthecostodoingbusinessoritscustomersandownbusinessesisakeyocusorthedivisionasisimplementingbetterprocessesanduseoworkingcapital.Thedivisionisalsoleveragingtechnologytoimprovecustomerserviceandoperationaleciencyaswellasincreasingtheuseodigitalchannels.Thedivisioniscommittedtosaetysustainabilitycommunitysupportandcontinuedinvestmentinitspeople.ResultsThedivisiondeliveredasolidresultinchallengingmarketconditionswherereducedoperatingactivityandincreasedcostcontrolbycustomersaectedsalesandmargins.Operatingrevenuedeclinedby2.5percentto1.6billion.Earningsbeoreinterestandtaxdecreasedby13.2percentto165million.Therolling12monthreturnoncapitalo14.7percentreducedrom16.0percentlastyear.YearinbriefInAustraliasalesgrowthwasachievedinCoregasBullivantsandtotheoilandgassectorhoweverthiswasosetbyreducedcustomeractivityintheminingsectorespeciallycoalmining.GoodresultsweregenerallyachievedintheNewZealandbusinesses.ThecontinuedimprovedresultsinCoregasrefectedbenetsrombusinessimprovementinitiativesinrecentyearsandincreasingcollaborationwithBlackwoods.Thedivisioncontinuedtostrengthencustomerrelationshipswithaocusoncustomerserviceandsupplysolutionsandmorestructuredkeyaccountmanagementprocessesacrossindustrysectors.Duringtheyearthedivisionrealigneditsactivitiesalongthreecustomer-ocusedstreamsgeneralistssaetyspecialistsandindustrialspecialists. 51WesarmersaNNUaLreport2013Keyfnancialindicators12009xcludhulCglyhengydiviin.22010hbndfchcundiviinlucu.Fortheyearended30June2009120102201120122013Revenuem12941412155716901647Earningsbeoreinterestandtaxm114138166190165CapitalemployedR12m8081312127211871119Returnoncapitalemployed14.110.513.116.014.7Capitalexpenditurem2529324950GrowthstrategiesEnablegrowththroughanefcientandcustomercentricorganisationMaximiseshareocustomerspendthroughsolutionsdeliveringgreatserviceandvalueDevelopnewgrowthplatormsincludingthroughacquisitions20010015050EBIT165m201316520121902011166201013820091142013121110090 52TASWANTSAQLDNSWVIC182412171631934107631712942127224271652441151INDoNESIANZ26124103572NumberfteammembersBusinessstatisticsGeneralists99Blackwds173BlackwdsPrtectr26SafetySpecialists68PrtectrAlsafe42NZSafety24SafetySurce2IndustrialSpecialists55Cregas28Cregas2145Bullivants26TtalFasteners11PackagingHuse10IndustrialandSafetyThedivisincntinuedtenhancekeysupplierrelatinshipsandbuilditsprtflifleadingprprietaryandhmebrands.BlackwoodsProtectorandTotalFastenerswererestructuredduringthelastquarter.TotalFastenerswasrepositionedtoincreasedistributionandsalesefciencieswithBlackwoodswhilekeepingaocusedspecialistteam.Theclosureo13branchesacrossthedivisionsnetworkwasalsoannouncedandwilltakeeectbetweenJuneandOctober2013.Thedivisioncontinuedtoenhancekeysupplierrelationshipsandbuilditsportoliooleadingproprietaryandhomebrands.Newgrowthalsoincludedon-siteservicesexpansiongasdistributionthroughBlackwoodstheacquisitionoasmallgasandweldingdistributorandthelaunchoonlinebusinessesinAustraliaandNewZealand.DistributioncapabilityimprovementsincludedrelocationstonewbranchesKarrathaGladstoneandnewdistributioncentresunderconstructionSydneyAdelaideMackay.AnewdistributioncentrewasalsoopenedinShanghai.TechnologywasakeyocusincludingsignifcantimprovementinelectronicdatainterchangeprocessesbetterITinrastructureincludingdatacentreoutsourcingautomationoruturedistributioncentrestoimproveproductivitynewscanningandvendingsolutionsandtheissueoarequestorquoteoranewenterpriseresourceplanningsystem.CapitalmanagementremainedakeyocusandincludedthesaleandleasebackotheBlackwoodsBrisbaneandSydneydistributioncentresinthesecondhal.1BlackwoodsincludesBakersmigoagandBlacksithJacks2Coregasincludeseightownedbranchesand145distributionpoints 53WesfarmersaNNUaLreport2013outlkInachallengingenvirnmentthedivisiniswell-placedtcntinuetgrwmarketshareandrespndtanyrecvery.Thedivisinwillcntinuetcusnsupplychainandperatinalefciencieslweringcstdingbusinessandprductrangedevelpment.Thedivisinwillcntinuettargetnewgrwthinitiativestdeliverincreaseddiversifcatinthecustmerbaseandgrwthintnewrelatedmarketsincludingservices.Thedivisinwillalstargetacquisitinpprtunitiestcmplementrganicgrwthwhereitbelievessatisactryreturnscanbeachieved.BusinesssustainabilityOngoingimprovementinsafetyperformancewasachievedacrossthebusinessasaresultofstronginvestmentintrainingwarehousefacilitiesandtechnology.Thedivisionrecordedalosttimeinjuryfrequencyrateof2.3andatotalrecordableinjuryfrequencyrateof18.0.Sustainabilityinitiativesfocusedonethicalsourcingandpackagingreviewsinthesupplychainreducingtheimpactofwastewaterenergyandrelatedgreenhousegasemissionsintheoperationsincreasingtherangeofsustainableproductsofferedtocustomersandcontinuedsupportoflocalcommunitiesandindigenousprograms.Thedivisionalsomaintainedastrongfocusonbuildingasustainableworkforcebyconcentratingonleadershipanddevelopmentprogramsandusingtargetedrecruitmentpracticestoattractandbuildadiversetalentpool.Businesswebsiteswww.blackwoods.com.auwww.blackwoodsprotector.co.nzwww.protectoralsafe.com.auwww.nzsafety.co.nzwww.safetysource.co.nzwww.coregas.comwww.bullivants.comwww.totalfasteners.com.auwww.packaginghouse.co.nz 54WesfarmersisalsamajrinvestrinGreshamPartnersWespineIndustriesandBWPTrust.otheractivitiesGreshamPartnersWesarmershasa50percentshareholdinginGreshamPartnersGroupLimitedtheholdingcompanyortheGreshamPartnersinvestmenthouseoperations.Greshamisaleadingindependentfnancialservicesbusinessocusedprimarilyontheprovisionofnancialadvisoryservicesstructuredfnanceandpropertyandprivateequityundsmanagementwhichcontributedaprofto1millionortheyear.Greshamparticipatedinanumberosignifcantcorporateadvisorytransactionsduringtheyearincludingmergersandacquisitionscorporaterestructuringsandrefnancingsonbehaloarangeodomesticandinternationalclients.Itspropertyundsmanagementbusinesswhichisthemanagerotwoestablishedundswithtotalcapitalcommitmentsosome225millioncontinuedtosupportarangeoprojectsprimarilyinNewSouthWalesVictoriaandQueensland.WesarmersisaparticipantintheGreshamPrivateEquitywholesaleinvestmentundswithunderlyinginvestmentsinminingserviceslogisticsandotherspecialistsectors.Duringthe2013fnancialyearWesarmersinvestmentinthoseundsrecordedalosso11millionduetodownwardrealisedandunrealisedrevaluations.WespineIndustriesThe50percent-ownedWespineIndustrieswhichoperatesaplantationsotwoodsawmillinDardanupinWesternAustraliacontributedearningso5millionatertaxinlinewithlastyear.Animprovedsaetyperormancewasachievedduringtheyearwithnolosttimeinjuriesanda35percentreductioninthenumberototalrecordableinjuries.Wespineistargetingaurtherreductionintotalrecordableinjuriesinthecomingyear.Thelocalhousingmarketisorecasttoimproveduringthecomingyearbutwithcontinuedimportcompetitionandsubduedhousingconstructioninoverseasmarkets.Acontinuationothechallengingmarketconditionsisexpected.BWPTrustWesarmersinvestmentinBWPTrustcontributedearningso27millioncomparedto16millionlastyear.TheTrustwasestablishedin1998withaocusonwarehouseretailingpropertiesandinparticularBunningswarehousesleasedtoBunningsGroupLimited.BWPManagementLimitedtheresponsibleentityortheTrustisawhollyownedsubsidiaryoWesarmersLimited.UnitsintheTrustarelistedontheAustralianSecuritiesExchangeandWesarmersholdsthroughawhollyownedsubsidiary24.3percentothetotalunitsissuedbytheTrustasat30June2013.Duringthe2013fnancialyeartheTrustcompletedtheacquisitionoaBunningswarehousewithbulkygoodsshowroomsanewdevelopmentsiteandlandadjoiningaBunningswarehouse.TheTrustsportolioasat30June2013consistsoatotalo74properties62establishedBunningswarehousesfveBunningswarehouseswithothershowroomsoneBunningsdistributioncentretwodevelopmentsitesoraBunningswarehousethreeindustrialpropertiesandonebulkygoodsshowroomscomplex. 55WesfarmersaNNUaLreport2013SslEcrvssefesesslssesremsrelevrskelers.PrvepprpregvercesrcressegrrevlecreLkereelseevelpmerpeplePrececerrepskelersMmserevrmelprRespslsrceprcsCrepsvelecmmescepereGRouP-widESuStainabiLityaPPRoaChorsslpprccverssxkeresWesfarmerssustainabilityapproachThecreationoflong-termvalueisonlypossiblethroughconsideringtheinterestsofallourstakeholdersourshareholdersemployeescustomerssuppliersandthecommunitiesinwhichweoperate.OurreputationOurreputationisbasedonourcorevaluesofintegrityopennessaccountabilityandboldness.Inordertoprotectthispreciousassetweconsultwithourstakeholdersregularlyandtaketheirviewsintoaccountinourbusinessdecisions.Byunderstandingandaddressingtheneedsofouremployeescustomerssuppliersandthecommunitiesinwhichweoperateweprotectourreputationensuringwewillbeabletocreatevalueintheyearstocome.OurpeopleAsoneofAustraliaslargestprivateemployerswithdiversedomesticandinternationalbusinessesweconsiderourteammemberstobecentraltooursuccess.Employingoutstandingpeopleandprovidingopportunitiesforthemtoapplytheirtalentsiscriticaltooursustainability.Whilestrongassetsandstrategiesareimportantitisourpeoplewhodeliverresults.Thisyearweinvested2.5millionhoursintraininganddevelopingourworkforceofmorethan200000people.ThisyeartheGroupslosttimeinjuryfrequencyratedecreasedby18percentto8.9buttherewasathreepercentincreaseinthetotalrecordableinjuryfrequencyratefrom42.7to43.9.Thismeasureincludeslosttimeinjuriesandmedicaltreatmentinjuries.Detailsofourapproachtogenderdiversityaresetoutonpage70ofthisannualreport.ResponsiblesourcingLong-termperformancedependsonWesfarmerscontinuingtohaveaccesstoresponsiblysourcedandcompetitively-pricedproductstodelivertoourcustomers.Theongoingsustainabilityofsupplyisimportantforbothlocalandinternationalsuppliers.AtalocallevelColesincreaseditssourcingoffreshproducefromAustraliaandcontinuedtoenterintolonger-termcontractswithpreferredsuppliersgivingthemgreatercertaintytosupportfutureinvestment.Internationallyourretailbusinessesallcontinuedtoimplementtheirethicalsourcingpoliciesenforcingtheirrequiredstandardsthroughrisk-basedfactoryauditprocesses.Thisyearweengaged2185internationaldirectsuppliersinourethicalsourcingprogram. 56westrivetobuildtheresilienceofourbusinessbyprotectingourreputationlookingafterourpeopleresponsiblysourcingproductscontributingtoourcommunitiesminimisingourenvironmentalfootprintandprovidinggovernancestructurestosafeguardfuturevaluecreation.SustainabilityOurcommunityGiventhebreadthoourbusinesseswehaveaninterestinsupportingstrongandvibrantcommunities.Wedothisthroughtheproductswesellandthejobsweprovideaswellasthroughourdirectandindirectcontributionstothecommunity.Thisyearourdirectandindirectcommunitypartnershipsandcontributionswere94.9million.Ourdirectcommunitycontributionso51.1millionequatedto1.4percentoearningsbeoreinterestandtaxand2.3percentonetproftatertax.Ourtotaldirectcommunitycontributionsthisyearincreasedby61percentrom2012duetoColesincreasedcontributionstoSecondBiteitsnewpartnershipwithRedkiteandtheestablishmentotheWesarmersChairinAustralianHistoryattheUniversityoWesternAustralia.OurenvironmentThescaleanddiversityoourbusinessesmeanswehavearesponsibilitytothenextgenerationtodowhatwecantominimiseourimpactontheenvironment.Focusingonresourceefciencyisawin-winmakingourbusinessmoreresilientandreducingtheimpactoourbusinessontheenvironment.OurScope12and3greenhousegasemissionsdecreasedby13percentthisyearlargelyduetourtherimprovementsromtheuseonitrousoxideabatementtechnologyinourammoniumnitratebusinessatCSBPandenergyefciencyatColes.Ourenergyusewasinlinewiththepreviousyeardespiteourgrowth.OurwastetolandflldecreasedbyninepercentlargelydrivenbyanorganicsrecyclingprogramandtheexpansionoSecondBiteatColes.Ourrecordedwaterusethisyearwas17682megalitresconsiderablyhigherthanpreviousyearsduetoreclaimedwaterusebeingcapturedorthefrsttimeatourCurraghcoalmine.GovernanceforvaluecreationOur500000shareholdersandmorethan200000employeeshaveaninterestintheongoingfnancialresilienceoWesarmers.Approximately70percentoourshareholdersand95percentoourrevenuecomesromAustraliasowehaveasignifcanteconomicimpactontheAustralianeconomyaswellascontributingtotheeconomiesoNewZealandandthecountriesromwhichwesourceproducts.Wecontributed1591milliontogovernmentsintheormotaxesleviesandroyalties.Thisyearweprovided7556millioninsalarieswagesandotherbeneftstoouremployeesand2083millionindividendstoourshareholders.Formoredetailonourgovernanceseepages60to71othisannualreport.SustainabilityreportTheWesarmers2013sustainabilityreportwillbepublishedinNovember2013andcontainsmuchmoredetailandmorespecifcdataonallotheaboveareas.7140120541003240206080100Greenhousegasemissions5.066TonnesCO2e000000MilliontonnesCO2eLHSTonnesCO2epermofrevenueRHS20135.06620125.82120116.35020106.13320096.299201312111009640100000080000060000030204000002000001000PetajoulesLHSMegajoulespermofrevenueRHS29.8Petajoules201329.8201230.0201133.8201032.4200929.8201312111009EnergyuseWateruse17682Megalitres20101550MegalitresLHSMegalitresnewlyreportedreclaimedwaterLHSMegalitrespermofrevenueRHS00.20.10.320131768220121315120111210820101224320099704201312111009Sustainabilityperformance 57WesarmersaNNUaLreport2013201351.1201231.8201133.8201019.6200925.8Communitycontributions94.9m6040200121110092013MilliondollarsIndirectDirect201343.8201240.4201143.8201026.2200931.950403020010Safetyincidents43.9Totalrecordableinjuryfrequencyrate201343.9201242.7201140.9201049.320091-201312111009Losttimeandmedicaltreatmentinjuriesdividedbyhoursworkedmultipliedby100000020131442012159201114720101372009303Waste399Tonnes000350250300150200501000ThousandtonnesLHSTonnesdisposedpermofrevenueRHS7652134012111009201320132552012248201121320101982009182DisposedRecycledKnVlndpjcmngsDvlnwihnngyvingLeDcilinglighofcwkBywVici.EnergyefciencyinitiativesacrosstheGroupaimtoreducetheenvironmentalootprint1pi2010wdliinjuyquncy. 58wesfrmershslenedhrd-rkingndincresinglydiverserdcmmiedprvidingsisfcryreurnsshrehldershilsdheringhehighesehiclsndrds.bEveryaoge68ChairmanBScPhDFTSEFAICDFIEAustTermChairmansinceNovember2008directorsince2006.SkillsandexperienceBobwastheChairmanoSteelandTubeHoldingsLimitedandManagingDirectorandChieExecutiveOfceroOneSteelLimited.OtherexecutivepositionspreviouslyheldincludeChieExecutiveOfceroSteelandTubeHoldingsLimitedManagingDirectoroTubemakersoAustraliaLimitedandPresidentoBHPSteel.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentChairmanoBoralLimitedsinceMay2010ChairmanoIlukaResourcesLimitedresignedMay2010DirectoroWesternAustralianInstituteoMedicalResearchIncorporatedDirectoroUNSWFoundationLimitedRichrdGyderaoge53ManagingDirectorBComFAICDTermDirectorsince2002.SkillsandexperienceRichardjoinedWesarmersin1993aterworkinginvariouscommercialrolesatTubemakersoAustraliaLimited.HewasManagingDirectoroWesarmersLandmarkLimitedin1999untilhebecameFinanceDirectoroWesarmersLimitedin2002andthenDeputyManagingDirectorandChieFinancialOfcerin2004.RichardassumedtheroleoManagingDirectorandChieExecutiveOfcerinJuly2005.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentDirectoroGreshamPartnersHoldingsLtdChairmanoAustralianB20AustralianFootballLeagueCommissionerterrybenge46FinanceDirectorBAcctFCPATermDirectorsince2009.SkillsandexperienceTerryhasheldanumberofnancepositionswithTubemakersoAustraliaLimited.TerryjoinedWesarmersin1996andundertookvariousroleswithWesarmersLandmarkLimitedincludingChieFinancialOfceruntil2003.HethenbecameChieFinancialOfcerorJetstarAirwayspriortorejoiningWesarmersasManagingDirectorWesarmersIndustrialandSaetyin2005.TerrybecameFinanceDirectorColesin2007andWesarmersFinanceDirectorin2009.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentDirectoroGreshamPartnersHoldingsLtdPresidentotheNationalExecutiveotheGroupo100IncDeputyChairmanotheWesternAustralianOperaCompanyIncorporatedPulbssge45B.CommLL.B.MelbTermDirectorsinceNovember2012.SkillsandexperiencePaulcommencedhiscareerasalawyerin1991.Heco-oundedSEEKLimitedin1997andservedasChieExecutiveOfcerandthenasjointChieExecutiveOfceruntil2011.Heisanactiveinvestorinearlystageandgrowthcompanies.PaulisadirectorothePeterMacCallumCancerFoundationthePSBassatFoundationandSquarePegCapitalPtyLtd.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentSEEKLimitedresignedJuly2011AustralianFootballLeagueCommissionerClinCreraMge70B.CommMelbMBAHarvard.TermDirectorsince2002.SkillsandexperienceColinhashadextensiveexperienceadvisingoncorporatestrategyandcorporategovernanceandhisconsultancycareerhasincludedmajorprojectsinAustraliaandoverseas.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentSEEKLimitedsince2005LendLeaseCorporationLimitedsince2012DirectoroWorldVisionAustraliaandtheLadderProjectPresidentotheGeelongFootballClubLimitedAmbassadortotheederalgovernmentsIndigenousEmploymentInitiativeJmesGrhmaMge65BEChemHonsSydMBAUNSWTermDirectorsince1998.SkillsandexperienceJameshashadanactiveinvolvementinthegrowthoWesarmerssince1976asManagingDirectorotheGreshamPartnersLimitedandpreviouslyasManagingDirectoroRothschildAustraliaLimitedandadirectoroHillSamuelAustraliaLimited.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentChairmanotheAdvisoryCouncilotheInstituteorNeuroscienceandMuscleResearchDirectoroWesarmersGeneralInsuranceLimitedbrdfdirecrs 59WesfarmersaNNUaLreport2013tnyhraoge61CitWAHon.LLDUWASFFinFAICDTermDirectorsince2007.SkillsandexperienceTonyhasmorethan30yearsexperienceinthebankingandfnanceindustry.HehasheldseveralseniormanagementpositionsduringhiscareerincludingManagingDirectoroChallengeBankLimitedandChieExecutiveOfceroHartleysLimited.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentChairmanoMermaidMarineAustraliaLimitedChairmanoHomeBuildingSocietyLimitedresignedJuly2010DeputyChairmanoBankoQueenslandLimitedresignedJuly2010AWBLimitedresignedDecember2010ChairmanoInternationalChamberoCommerceAustraliaLimitedDirectoroAlintaHoldingsCrlesMcekge66B.Ec.M.Admin.FAICDFCAFCPASFFinTermDirectorsince2001.SkillsandexperienceCharleshasastrongbackgroundincorporategovernanceandalongcareerinfnancialservicesworkingataseniorexecutivelevel.Hebringsextensiveexperienceinormulatingstrategyandadvisingoninvestmentopportunities.CharlesistheChairmanotheSustainableInvestmentResearchInstitutePtyLimitedandtheVice-ChairmanotheIFRSAdvisoryCouncil.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentFederationCentresLimitedChairmanoRacingInormationServicesAustraliaPtyLtdMemberotheAICDCorporateGovernanceCommitteewyneosbrnge62DipElectEngMBAFAICDFTSETermDirectorsince2010.SkillsandexperienceWaynecommencedworkingintheironoreindustryinthemid-1970sandjoinedAlcoain1979.HeworkedinvariousrolesacrosstheAustralianbusinessincludingaccountabilityorAlcoasAsiaPacifcoperationspriortobeingappointedManagingDirectorin2001retiringin2008.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentLeightonHoldingsLimitedresignedMarch2013ChairmanoThiessPtyLtdresignedSeptember2012IlukaResourcesLimitedsinceMarch2010ChairmanotheAustralianInstituteoMarineScienceDirectoroAlintaHoldingsdineSmi-Gnerge55B.EcMBAUWAFAICDFCSATermDirectorsince2009.SkillsandexperienceDianehasmorethan11yearsexperienceasabankingexecutivewhichculminatedinherappointmentastheheadoWestpacBankingCorporationsBusinessandTechnologySolutionsandServicesDivision.ShewasalsoaPartnerwithMcKinseyCompanyintheUSA.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentTransfeldServicesLimiteddirectorsince2010andwillcommenceintheroleoChairmanon26October2013DirectoroCo-operativeBulkHandlingLimitedandCBHGrainLimitedDeputyChairmanotheNBNCoLimitedNationalBroadbandNetworkresignedinSeptember2013CommissionerotheWesternAustralianTourismCommissionVnesswllcege50B.CommUNSWMBAIMDSwitzerlandMAICDTermDirectorsince2010.SkillsandexperienceVanessaisanexperiencedmanagementconsultantwhohasbeenwithBoozCompanyormorethan20years.ShecurrentlyleadsthefrmsfnancialservicespracticeinGlobalMarketsandpreviouslyheldmultiplegovernancerolesatthehighestlevel.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentDirectoroBoozCompanyentitiesinAustraliaNewZealandThailandandIndonesiaresignedFebruaryMarch2013ExecutiveChairmanoBoozCompanyJapanIncsinceFebruary2013ChairmansCouncilotheAustralianChamberOrchestraPtyLtdJenniferwescge53BAHonoursFAICDFIPAATermDirectorsinceApril2013.SkillsandexperienceJennierisChieExecutiveotheBusinessCounciloAustralia.PriortothatshewasaBoardDirectorandleadpartneratKPMG.JennierhasextensiveexperienceincriticalleadershippositionsintheNSWandVictorianGovernments.DirectorshipsolistedentitieslastthreeyearsotherdirectorshipsofcescurrentandrecentDirectoroUrbanRenewalAuthoritySouthAustraliaretired31July2013AdjunctProessorattheCityResearchFuturesCentreotheUniversityoNSWFromlettorighttnyHwhaoJnniWcChlmckClinCamDinsih-GndJGhamrichdGydaotyBwnBbevyaoVnWllcpulBWynobn 60CorporaegovernancesaementheboarowesarmersLimieiscommieoproviingasaisacoryreurnoisshareholersanulfllingiscorporaegovernanceoligaionsanresponsiiliiesinheesineressoheCompanyanissakeholers.RoleandresponsibilitiesoftheBoardandmanagementFuncionsoheboarTheroleotheBoardistoapprovethestrategicdirectionotheGroupguideandmonitorthemanagementoWesarmersanditsbusinessesinachievingitsstrategicplansandoverseegoodgovernancepractice.TheBoardaimstoprotectandenhancetheinterestsoitsshareholderswhiletakingintoaccounttheinterestsootherstakeholdersincludingemployeescustomerssuppliersandthewidercommunity.TheBoardhasacharterwhichclearlysetsouttheroleandresponsibilitiesotheBoardanddescribestheseparateunctionsomanagementanddelegatedresponsibilities.FuncionsomanagemenTheWesarmersManagingDirectorhasresponsibilityortheday-to-daymanagementoWesarmersanditsbusinessesandissupportedinthisunctionbytheWesarmersleadershipteamwhichcomprisesthedirectreportstotheWesarmersManagingDirectordivisionalmanagingdirectorstheExecutiveGeneralManagerBusinessDevelopmentandtheCompanySecretary.TheBoardmaintainsultimateresponsibilityorstrategyandcontroloWesarmersanditsbusinesses.KeyresponsiiliiesThekeyresponsibilitiesotheBoardandtheWesarmersManagingDirectoraresetoutinthetablebelow.FuncionsboarresponsiiliieswesarmersManagingdirecorresponsiiliiesCorporatestrategyreportingandoperationsOverseeandapprovestrategiestomaintainastrongbalancesheetandsoundcreditratingovertimeApproveandmonitorimplementationandprogressoDevelopstrategiesortheGrouptomaintainastrongbalancesheetandsoundcreditratingovertimeandmakerecommendationstotheBoardRecommendtotheBoardsignifcantoperationalchangesmajorcapitalexpenditureandacquisitionanddivestmentsabovedelegatedthresholdsDeveloptheGroupsannualbudgetManageandadministerday-to-dayoperationsotheGroupwithintheBoard-approvedstrategiesandbudgetExerciseadditionalpowersasdelegatedbytheBoardtheGroupsstrategybusinessplansandpoliciesmajorcapitalexpenditurecapitalmanagementandcapitalraisinginitiativesandacquisitionsanddivestmentsApprovetheannualreportandfnancialstatementsandotherpublishedreportingPeopleAppointremoveandoverseetheperormanceotheWesarmersManagingDirectorApprovetheoverallremunerationpolicyincludingdirectorandseniorexecutiveremunerationandincentivesAssignresponsibilitiesclearlytotheWesarmersleadershipteamSuperviseandreporttotheBoardontheperormanceotheWesarmersleadershipteamRiskandcomplianceReviewapproveandmonitortheGroupsriskmanagementsystemsApproveandmonitortheeectivenessoDevelopandmaintaintheGroupsriskmanagementsystemsincludinginternalcomplianceandcontrolmechanismsProvideassurancetotheBoardthattheriskmanagementsystemsareworkingeectivelytheGroupssystemocorporategovernanceincludingtheormationoboardcommitteesandtheirchartersGrouplevelpoliciesincludingtheCodeoConductAnti-briberyandMarketDisclosurepoliciesAppointorremovetheGroupsexternalauditorsandapproveremunerationotheauditorStakeholdercommunicationOverseethemanagementotheGroupsinteractionsandcommunicationswithshareholdersandthebroadercommunityMonitorandoverseecontinuousdisclosurecomplianceEnsurecompliancewiththeGroupscontinuousdisclosureobligationsinaccordancewiththeMarketDisclosurePolicyRegularlyreporttotheBoardwithtimelyandqualityinormationsuchthattheBoardisullyinormedtodischargeitsresponsibilities 61WesfarmersaNNUaLreport2013KeyocusareasotheBoardduringthe2013nancialyearincludedApprovingpoliciestoimprovetheGroupssystemocorporategovernanceincludingapprovingamendmentstotheBoardCharterAuditCommitteeCharterMarketDisclosurePolicyShareTradingPolicyandWhistleblowerPolicyallowhichhaveGroup-wideapplicationandadoptedaspecicConfictsoInterestPolicyordirectorsFocusingonstrategiesalignedtotheCompanysresponsibilitiestoemployeesandthecommunitiesinwhichitoperatesincludingoverseeingmanagementsinitiativestoimproveintheareasosaetyethicalsourcingdiversityandreconciliationwiththeAboriginalandTorresStraitIslanderpeopleMonitoringtheimplementationoriskmanagementplanstoaddressidentiedoperationalnancialandreputationalrisksorGroupbusinessesConsideringtheGroupsdigitalstrategywithaparticularocusonopportunitiestoenhanceonlineretailingKeyocusareasotheboardStructureandcompositionoftheBoardWesarmersiscommittedtoensuringthatthecompositionotheBoardcontinuestoincludedirectorswhobringanappropriatemixoskillsexperienceexpertiseanddiversityincludinggenderdiversitytoBoarddecisionmaking.TheBoardiscurrentlycomprisedo12directorsincluding10non-executivedirectors.TheBoardhasdeterminedthatitbenetsromavarietyoperspectivesandskillsandremainsoasizewhichacilitateseectivedecisionmaking.IntermsocompositiontheBoardisotheviewthatitscurrentdirectorspossessanappropriatemixoskillsexperienceexpertiseanddiversitytoenabletheBoardtodischargeitsresponsibilitiesanddelivertheCompanyscorporateobjectives.MrArchieNormanwhohassignicantretailexperiencewasappointedin2009asanadvisertotheBoardonretailissues.InthisroleMrNormanattendsBoardmeetingsasrequired.MrNormanhashadamajorroleinhelpingguidetheturnaroundotheormerColesgroupbusinesses.Thenon-executiveandexecutivedirectorsoWesarmersarelistedbelowtogetherwithdetailsotheperiodtheyhavebeeninoceasadirector.TheskillsexperienceandyearoappointmentotheCompanysdirectorsaredetailedonpages58and59othisannualreport.no-executivedirectorsno-executivedirectorPeriodoofceno-executivedirectorPeriodoofceBobEveryChairmanPaulBassatColinCarterJamesGrahamTonyHowarth7yearsand7months10months10yearsand11months15yearsand4months6yearsand2monthsCharlesMacekWayneOsbornDianeSmith-GanderVanessaWallaceJennierWestacott11yearsand11months3yearsand6months4yearsand1month3yearsand2months5monthsExecutivedirectorsExecutivedirectorPeriodoofceRichardGoyderManagingDirectorTerryBowenFinanceDirector11yearsand1month4yearsand4monthsPeriodooceasadirectoroWesarmersLimitedasatSeptember2013 62CorporategovernancestatementinepenenceoftheCharmanTheChairmaniselectedromtheindependentnon-executivedirectors.TheresponsibilitiesotheChairmanassetoutintheBoardCharteraretomaintaineectivecommunicationbetweentheBoardandmanagementleadtheBoardensuretheecientorganisationandconductotheBoardsunctionbriealldirectorsinrelationtoissuesarisingatboardmeetingschairgeneralmeetingsotheCompanyandexercisesuchspecicandexpresspowersasaredelegatedtotheChairmanbytheBoardromtimetotime.DrBobEveryisthepresentservingChairman.FurtherinormationaboutDrEveryissetoutonpage58othisannualreport.drectornepenenceDirectorsareexpectedtobringviewsandjudgementtoBoarddeliberationsthatareindependentomanagementandreeoanybusinessorotherrelationshiporcircumstancethatcouldmateriallyintererewiththeexerciseoobjectiveunetteredorindependentjudgementhavingregardtothebestinterestsotheCompanyasawhole.Priortoacceptinganinvitationtobecomeadirectoroanexternalcompanyeachnon-executivedirectorisrequiredtonotiytheChairman.InconsideringthenewappointmenttheChairmanistoconsideranyBoardpoliciesonmultipledirectorshipsthetermsoWesarmersConfictsoInterestPolicyandthetimecommitmentrequiredothedirectortoproperlyexercisehisorherpowersanddischargehisorherdutiesasadirectorandmemberoanyBoardcommittees.Anindependentdirectorisanon-executivedirectorwhoisnotamemberomanagementandreeoanybusinessorotherrelationshipthatcouldmateriallyintererewithorcouldreasonablybeperceivedtomateriallyintererewiththeindependentexerciseotheirjudgement.TheBoardregularlyreviewstheindependenceoeachnon-executivedirectorinlightotheinormationwhicheachdirectorisrequiredtodiscloseinrelationtoanymaterialcontractorotherrelationshipwithWesarmersinaccordancewiththeCorporationsAct2001theBoardCharterandWesarmersConfictsoInterestPolicy.Eachnon-executivedirectormaybeinvolvedwithothercompaniesorproessionalrmswhichmayromtimetotimehavedealingswithWesarmers.Detailsosomeotheocesheldbydirectorswithotherorganisationsaresetoutonpages58and59othisannualreportandontheGroupswebsite.TheBoardsassessmentoindependenceandthecriteriaagainstwhichitdeterminesthematerialityoarelationshipisormedbyhavingregardtotheASXCorporateGovernancePrinciplesandRecommendationsASXPrinciplesinparticulartherelationshipactorssetoutinrecommendation2.1thematerialityguidelinesappliedinaccordancewithAustralianAccountingStandardsanyindependentproessionaladvicesoughtbytheBoardatitsdiscretionanddevelopmentsininternationalcorporategovernancestandards.ConsideredromtheperspectiveotheCompanythedirectorandthepersonorentitywithwhichthedirectorhasarelationshipthetestowhetherarelationshipcouldorcouldreasonablybeperceivedtomateriallyintererewiththeindependentexerciseoadirectorsjudgementisbasedonthenatureotherelationshipandthecircumstancesothatdirector.TheBoardconsidersarelationshiptomateriallyintererewithorthatcouldreasonablybeperceivedtomateriallyintererewithadirectorsindependentjudgementwhereitisosuchsubstanceandconsequenceandthereisarealandsensiblepossibilitythatitwouldaectthedirectorsjudgementacrossallaspectsothedirectorsrole.TheBoardhasreviewedthepositionandrelationshipsoalldirectorsinoceasatthedateothisreportandconsidersthatnineothe10non-executivedirectorsareindependentandMrJamesGrahamisdeemednottobeindependentbyvirtueohispositionasManagingDirectoroGreshamPartnersLimitedGreshamwhichactsasaninvestmentadvisertotheCompany.DetailsoMrGrahamsassociationwithGreshamissetoutinnote32onpage169othisannualreport.TheBoardhasdeterminedthatMrGrahamsappointmentcontinuestobeinthebestinterestsoWesarmersbecauseothesubstantialknowledgetechnicalcompetenciesandexpertisethathebringstotheBoard.ThereareanumberopoliciesandprotocolsinplaceincludingWesarmersConfictsoInterestPolicytheGreshamMandateReviewCommitteeWesarmersCodeoConductWesarmersBoardCharterandDirectorsStandingNoticestoensurethatanyconfictsointerestwhichmayarisearemanagedinaccordancewiththeASXPrinciplesandallapplicablelaws.TheBoardhasalsoconsideredtheindependenceoMsVanessaWallacegivenherroleasapartneroBoozCompany.TheBoardconsidersthatMsWallaceisanindependentdirector.Sinceherappointmentthequantumoeespaidonayear-on-yearbasisbyWesarmerstoBoozCompanyorconsultancyserviceshavenotbeenmaterialinnatureandcouldnotreasonablybeperceivedtomateriallyintererewithMsWallacesexerciseoobjectiveorindependentjudgementinrelationtotheCompanysaairs.FurthersinceherappointmentasadirectorMsWallacehasnotbeeninvolvedinanyretainerbyWesarmersoBoozCompanyandtheconsultancyservicesperormedinthatperiodhavebeenprovidedatadivisionalleveloWesarmers. 63WesfarmersaNNUaLreport2013directorsrightsnoligtionsAnumberothekeyrightsandobligationsothedirectorsaresetoutbelow.Retirementnre-electionConfictsointerestaccesstoinormtionninepenentviceRelteprtytrnsctionsOnethirdodirectorsotherthantheManagingDirectormustretireateachannualgeneralmeetingDirectorsllingcasualoradditionalvacanciesmusthavetheirappointmentconrmedatthenextannualgeneralmeetingTheNominationCommitteemakesrecommendationsonthere-appointmentodirectorsTheChairmanmustretireromthispositionattheexpirationo10yearsunlesstheBoarddecidesotherwiseTheChairmansappointmentisormallyreviewedattheendoeachthree-yearperiodDirectorshaveadutynottoplacethemselvesinapositionwhichgivesrisetoarealorsubstantialpossibilityoconfictointerestordutyinrelationtoanymatterwhichisorislikelytobebroughtbeoretheBoardDirectorshaveanongoingobligationtodisclosetotheBoardimmediatelyanyrealorsubstantialpossibilityoconfictointerestordutyDirectorsarerequiredtodeclarematerialpersonalinterestsorotherconfictsrequiringdisclosurebyormalstandingnoticesTheConfictsoInterestPolicysetsoutdisclosureobligationsandprocedurestobeollowedbydirectorsintheeventoaconfictorpotentialconfictorinterestordutyDirectorsareentitledtotheollowingRelatedpartytransactionsareincludedinnote32othenancialstatementsasrequiredundertherelevantAccountingStandardsUnrestrictedaccesstoemployeesandrecordssubjecttolawIndependentproessionaladviceatWesarmersexpensewherereasonableandnecessarytoulltheirdutiesandsubjecttopriorconsultationwiththeChairmanandortheChairmanwiththeChairmanotheAuditCommitteeCommitteesotheborTheBoardhasestablishedanAuditCommitteeaNominationCommitteeaRemunerationCommitteeandaGreshamMandateReviewCommitteeasstandingcommitteestoassistwiththedischargeoitsresponsibilities.Alldirectorshaveastandinginvitationtoattendcommitteemeetingswherethereisnoconfictointerest.ThesecommitteesreviewmattersonbehalotheBoardandsubjecttothetermsotherelevantcommitteescharterreermatterstotheBoardordecisionwitharecommendationromthecommitteewherethecommitteeactsinanadvisorycapacityordeterminematterswherethecommitteeactswithdelegatedauthoritywhichitthenreportstotheBoard.Detailsothemembershipcompositionandresponsibilitiesoeachcommitteearesetoutbelowandontheollowingpage.Detailsomeetingattendanceormembersoeachcommitteearesetoutinthedirectorsreportonpage73othisannualreport.MemersKeyresponsiilitiesCompositionAuditCommitteeTonyHowarthChairmanPaulBassatsinceDec2012BobEveryCharlesMacekDianeSmith-GanderVanessaWallaceuntilJan2013JennierWestacottsinceMay2013ReviewandassessInaccordancewiththeASXPrinciplesnancialstatementsanddisclosuresmaterialchangesinaccountingorreportingexternalauditengagementsnon-auditandassuranceservicestheGroupsriskmanagementrameworkincludinginternalcontrolspoliciesandprogramstheGroupscompliancereportingprogramThreeormorenon-executivedirectorswhoaresucientlynanciallyliteratetounderstandnancialstatementsandgeneralaccountingprinciplesorthepurposeoassessingandquestioninginormationpresentedincommitteemeetingsMajorityoindependentnon-executivedirectorsAtleastonememberwithrelevantnancialqualicationsandexperience 64CorportegovernncesttementCommitteesofthebordcontinuedMemersKeyresponsiilitiesCompositionNominationCommitteeBobEveryChairmanAllothernon-executivedirectorsReviewandmakerecommendationstotheBoardinrelationtotheBoardstructuresizecompositioncompetenciesanddiversityincludingareviewotheskillsetrequiredortheeectiveoperationotheBoardDevelopandreviewBoardsuccessionplansdirectorinductionprogramsandcontinuingdevelopmentEnsurethatthereisarobustandeectiveprocessorevaluatingtheperormanceandeectivenessotheBoarditscommitteesandindividualdirectorsReviewandmakerecommendationsinrelationtoBoardappointmentsre-electionsandterminationsAllnon-executivedirectorsRemunerationCommitteeWayneOsbornChairmansinceFeb2013BobEveryChairmanuntilDec2012ColinCarterJamesGrahamCharlesMacekVanessaWallaceromJan2013ReviewandmakerecommendationsonremunerationordirectorsandseniorexecutivesandexecutiveincentiveplansDeterminetheleveloremunerationorotherseniorexecutivesontherecommendationotheManagingDirectorEnsureremunerationpackagesincludingremunerationbygenderacrosstheGroupareequitableandrewardtalentandperormanceandmakerecommendationstotheBoardasappropriateAssisttheChairmanotheBoardintheannualperormancereviewotheWesarmersManagingDirectorApprovenewemployeeincentiveplansandamendmentstoexistingplansOverseepreparationotheannualremunerationreportandrecommendthereporttotheBoardorapprovalThreeormorenon-executivedirectorsGreshamMandateReviewCommitteeAnytwooConsiderandapprovethemandateagreementtermsandalleespayabletoGreshamPartnersLimitedgroupocompanieswheretheyaretobeappointedasadviserstotheGroupReportontheapprovedmandatetermsandeestotheBoardSuchmembersastheBoarddeterminesromtimetotimeCharlesMacekChairmanColinCarterDianeSmith-GanderBoardsuccessionplanningappointmentofnewdirectorsAspartotheNominationCommitteesoversightoBoardsuccessionplanningitisalsoresponsibleoridentiyingsuitablecandidatestofllBoardvacanciesasandwhentheyariseortoidentiycandidatestocomplementtheexistingBoardandmakerecommendationstotheBoardontheirappointment.Whereappropriateexternalconsultantsareengagedtoassistinsearchingorcandidates.WhereacandidateisrecommendedbytheNominationCommitteetheBoardwillassessthatcandidateagainstarangeocriteriaincludingbackgroundexperienceproessionalqualifcationspersonalqualitiesthepotentialorthecandidatesskillstoaugmenttheexistingBoardandthecandidatesavailabilitytocommittotheBoardsactivities.IthesecriteriaaremetandtheBoardappointsthecandidateasadirectorthatdirectormusthavetheirappointmentapprovedbyshareholdersatthenextannualgeneralmeeting.DuringtheyeartheBoardmadetwoappointments.MrPaulBassatwasappointedon14November2012andhasatrackrecordoinnovativeleadershipandachievingoperationalsuccessatCEOlevel.MrBassatprovidestheBoardwithinvaluableknowledgeandexpertiseinonlinebusinessande-commerce.MsJennierWestacottwasappointedon3April2013andbringsextensivepolicyexperienceinboththepublicandprivatesectors.ShehasdemonstratedoutstandingleadershipinreocusingandengagingtheBusinessCounciloAustraliaonthemajoreconomicchallengesacingAustraliaandbringsparticularknowledgeandexpertiseinareasoimportancetoWesarmersbusinessesincludingeconomicpolicyinrastructuresustainabilityandpublicsectorpolicyandreorm.TheBoardCharterrequiresadirectortoholddirectlyorindirectlyaminimumo1000ordinarysharesinWesarmerswithintwomonthsotheirappointmentandatalltimesduringthedirectorsperiodoofce.TourtheraligntheinterestsodirectorsandshareholderseachdirectorisexpectedwithinfveyearsoappointmenttoincreasehisorherholdingsinordinarysharesintheCompanytoanumberwhichisequivalentinapproximatevaluetothegrossannualbaseeepaidtoeachnon-executivedirectorattherelevanttime. 65WesfarmersaNNUaLreport2013iductoofewdrectorsadogogdrectordevelopmetAspartoacomprehensiveinductionprogramcoveringWesarmersfnancialstrategicoperationalandriskmanagementpositionanewdirectormeetswiththeChairmantheAuditCommitteeChairmantheWesarmersManagingDirectordivisionalmanagingdirectorsandotherkeyexecutivestogainaninsightintothevaluesandcultureoWesarmers.TheprogramalsoincludessitevisitstoanumberoWesarmerskeyoperations.AlldirectorsareexpectedtomaintaintheskillsrequiredtodischargetheirobligationstotheCompany.OnanongoingbasisdirectorsareprovidedwithpaperspresentationsandbriefngsonmatterswhichmayaectthebusinessoroperationsoWesarmers.DirectorsarealsoencouragedtoundertakecontinuingeducationandtrainingrelevanttothedischargeotheirobligationsasdirectorsotheCompanyastypicallyarrangedbytheNominationCommittee.SubjecttoconsultationwiththeCompanySecretarythereasonablecostocontinuingeducationandtrainingismetbyWesarmers.ToassistthedirectorsinmaintaininganappropriateleveloknowledgeotheoperationsotheCompanydirectorsundertakesitevisitseachyeartosomeoWesarmersbusinesses.EvaluatooftheboardadtscommtteesTheNominationCommitteeisresponsibleorschedulingormalperormancereviewsotheBoardanditscommitteesatleasteverytwoyears.ThisincludestheAuditandRemunerationCommittees.TheBoardthenundertakesanevaluationprocesstoreviewitsperormance.ABoardperormancereviewwasconductedinJulyAugust2013andtheperormancereviewotheBoardcommitteeswasconductedinDecember2012.Bothwereacilitatedbyanexternalconsultant.FollowingthereceiptbyeachdirectoroareportwitheedbackontheBoardsperormancebasedonthesurveyresultstheBoardmeetstodiscussareasorimprovementandidentiyactionstobetakenorimprovement.WithrespecttotheNominationCommitteetheBoardisresponsibleorperiodicallyassessingitseectivenesswithaviewtoensuringthatitsperormanceaccordswithbestpractice.Evaluatoofo-executvedrectorsTheNominationCommitteeisresponsibleorschedulingperormancereviewsoeachnon-executivedirector.Inrelationtothere-appointmentoanon-executivedirectortheNominationCommitteereviewstheperormanceoeachnon-executivedirectorduringtheirtermoofceandmakesrecommendationstotheBoard.Annualperormancereviewsoreachnon-executivedirectororthe2013fnancialyeartookplaceinJulyAugust2013.TheperormancereviewprocesscomprisescompletionbyeachdirectoroasurveypreparedanddistributedbyanexternalconsultantandanindividualeedbacksessionconductedbytheChairmanwitheachnon-executivedirectorcoveringhisorherperormancebasedonthesurveyresults.Anon-executivedirectorisnominatedbytheBoardtoconductasimilareedbacksessionwiththeChairman.KeyocusareasotheNominationCommitteeduringthe2013fnancialyearincludedSeekingshareholderapprovaltoincreasethemaximumnumberodirectorsboardlimittoalloworboardrenewalthroughsuccessionplanningandcontinuityIdentiyingandnominatingtwonewdirectorsorelectiontotheBoardbringingskillsexperienceandexpertisetoaugmentthoseocurrentdirectorsculminatingintheappointmentoMrPaulBassatandMsJennierWestacottSchedulingaormalperormancereviewotheBoardandeachnon-executivedirectorKeyfocusareasofnomatoCommtteeRemunerationandevaluationofseniorexecutivesRemueratoFulldetailsotheremunerationpaidtonon-executiveandexecutivedirectorsandseniorexecutivesaresetoutintheremunerationreportonpages77to94othisannualreport.EvaluatooftheperformaceofseorexecutvesSeniorexecutivescomprisingmembersotheWesarmersleadershipteamhaveanannualandlong-termincentiveoratriskcomponentaspartotheirtotalremunerationpackage.ThemixoremunerationcomponentsandtheperormancemeasuresusedintheincentiveplanshavebeenchosentoensurethatthereisastronglinkbetweenremunerationearnedandtheachievementotheGroupsstrategyandbusinessobjectivesandultimatelygeneratingsatisactoryreturnsorshareholders. 66CorporategovernancestatementAnnualincentivesarebasedontheachievementoannualperormanceconditionswhicharesetatthestartothenancialyearandareheavilyweightedtoreturnandearnings-basedmeasuresandalsoincludenon-nancialmeasureswhichseektoachievetheGroupslong-termobjectivesinareassuchassaetydiversitysuccessionplanningandtalentmanagement.Awardsaredeterminedaterthepreparationothenancialstatementsattheendothenancialyearinrespectothenancialmeasuresandaterareviewoperormanceagainstthenon-nancialmeasureshasbeencarriedoutbytheWesarmersManagingDirector.InthecaseotheWesarmersManagingDirectorthisreviewisconductedbytheChairmanandtheresultsarereportedtotheBoard.TheBoardconrmsnalawardsbasedonoverallpersonalandnancialperormanceaterthereviewshavebeencompletedinAugusteachyear.TheShareTradingPolicyrefectsthestatutoryprohibitionundertheCorporationsAct2001ondirectorscertainseniorexecutivesandtheircloselyrelatedpartiesenteringintoarrangementsthathavetheeectolimitingexposuretoriskinrelationtoanelementotheirremunerationandincludesrestrictionsoncertainotherseniorexecutives.InadditiondirectorsandseniorexecutivesmustadvisetheCompanySecretaryitheyintendtoenterintoorhaveenteredintoamarginlendingorothersecurityarrangementaectingWesarmerssharesinwhichtheyhavetraded.AspartotheannualperormanceanddevelopmentreviewprocessthepotentialuturedevelopmentoanexecutiveisdiscussedalongwithanytrainingrequiredtoenhancetheprospectsoboththedevelopmentobjectivesbeingachievedandoverallprogressionwithinWesarmers.Annualperormancereviewsorthe2013nancialyearhavebeenundertakeninaccordancewiththeprocessdescribedabove.TheWesarmersLongTermIncentivePlanWLTIPorthe2013nancialyearcomprisedanallocationoperormancerightssubjecttoaour-yearperormanceperiodwithperormancehurdlesbasedongrowthinreturnonequityandrelativetotalshareholderreturn.ShareholderapprovalwillbesoughtattheannualgeneralmeetingorWLTIPallocationstoexecutivedirectors.TheBoardteststheWLTIPperormanceconditionsollowingnalisationotheannualaccountsattheendotheour-yearperormanceperiod.TheremunerationreportwhichdetailsWesarmerspolicyontheremunerationoseniorexecutivesissetoutonpages77to94othisannualreport.KeyocusareasotheRemunerationCommitteeduringthe2013nancialyearincludedareviewandrecommendationtotheBoardoFixedannualandlong-termincentiveawardsortheGroupManagingDirectorandhisdirectreportsSeniorexecutiveremunerationrameworkandpoliciesTheLongTermIncentivePlaninparticulartheperormancemetricsNon-executivedirectoreesandenhancementstotheirminimumshareholdingrequirementsKeyfocusareasforRemunerationCommitteeAsummaryothekeychangestoremuneration-relatedmattersapprovedorthe2013nancialyearissetoutintheremunerationreportonpage77othisannualreport.GovernancepoliciesTheBoardbelievesthatthegovernancepoliciesandpracticesadoptedbyWesarmersduringthereportingperiodortheyearended30June2013ollowtherecommendationscontainedintheASXPrinciples.WesarmerscompliancewiththepolicyrequirementsotheASXPrinciplesanddetailsotheassociatedcorporategovernancedocumentsaresummarisedintheollowingtable.TheAuditCommitteeconsidersreportsromthedivisionsontheircompliancewitheachothesepolicies. 67WesfarmersaNNUaLreport2013aSXPrincipleCrprteGvernncedcumentaimfcrprtegvernncedcumentothercmmentsCmplintwithaSXPrinciplesonCmpnywebsitePrinciple1BoardCharterFeb2013SetsouttheroleandresponsibilitiesotheBoardanddescribestheseparateunctionsomanagementanddelegatedresponsibilities.Seepage60orasummaryotheresponsibilitiesPrinciple2NominationCommitteeCharterSept2011SetsouttheroleandresponsibilitiesotheNominationCommittee.Seepage64orasummaryotheresponsibilitiesConfictsoInterestPolicySept2012SetsoutthedisclosureobligationsoeachdirectorwithrespecttoconfictsointerestandtheprocedurestobeollowedwhereadirectorhasdisclosedaconfictointerestinaccordancewiththepolicyortheBoardhasidentiedamatterwhichisorislikelytobebroughtbeoretheBoardwhichmayplaceaparticulardirectorinapositionoconfict.ComplementstheBoardsongoinguseoormalstandingnoticeregisterstonotiytheBoardothenatureandextentoanymaterialpersonalinterestsorotherconfictsPrinciple3CodeoConductApril2012DetailsWesarmerspoliciesproceduresandguidelinesaimedatensuringanyonewhoisemployedbyorworksintheWesarmersGroupactsinamannerconsistentwiththeprincipleohonestyintegrityairnessandrespectincludingethicalbehaviour.CompliancereportingtoAuditCommitteeGroupWhistleblowerPolicyFeb2013Promotesandsupportsacultureohonestandethicalbehaviour.ThepolicyencouragesemployeescontractorsandsupplierstoraiseanyconcernsandreportinstancesounethicalillegalraudulentorundesirableconducteitherwithmanagementwithinhisorherdivisionasapplicableorwithaProtectedDisclosureOcer.OversightbyAuditCommitteeAnti-briberyPolicyApril2012SetsouttheprohibitiononallindividualswhoareemployedbyactororrepresentWesarmersoritsGroupcompaniesromengaginginactivitythatconstitutesbriberyorcorruptionandprovidesguidelinesastowhatconstitutesbriberyorcorruption.CompliancereportingtoAuditCommitteeDiversityPolicySept2011DesignedtopromoteandacilitatediversityatalllevelswithintheGroup.Seepage70ondiversitydisclosuresPrinciple4AuditCommitteeCharterSept2012SetsouttheroleandresponsibilitiesotheAuditCommittee.Seepage63orasummaryotheresponsibilitiesPrinciple5MarketDisclosurePolicyAug2013Requirestimelydisclosureomarketsensitiveinormation.AppointsadisclosureocertoadministertheMarketDisclosurePolicyandadisclosuresub-committeetomanageandmakedeterminationswithrespecttotheGroupscontinuousdisclosureobligations.RegulartrainingandcompliancereportingtoAuditCommitteePrinciple6CommunicationsPolicyAug2013EstablishesWesarmersstrategyorengagingandcommunicatingwithshareholders.HighlevelsummarydocumenttocomplementMarketDisclosurePolicyPrinciple7RiskManagementPolicySept2013DetailstheoverarchingriskmanagementcontrolsthatareembeddedintheGroupsriskmanagementrameworkandreportingsystems.Asreerredtoonpage69Principle8RemunerationCommitteeCharterMay2011SetsouttheroleandresponsibilitiesotheRemunerationCommittee.Seepage64orasummaryotheresponsibilitiesShareTradingPolicySept2013SetsouttheprohibitiononallemployeesanddirectorsotheGroupromtradinginWesarmerssecuritiessecuritiesinotherentitiesinwhichWesarmershasaninterestoranyothersecuritiesitheyareinpossessionoinsideinormationandincludesaprohibitionondirectorsandcertainseniorexecutivestradingwithoutapprovalromtheChairmanduringblackoutperiodsandromtheCompanySecretaryatothertimesprohibitionsondirectorsandseniorexecutiveslimitingriskexposuretoremunerationandarequirementordirectorsandseniorexecutivestogivenoticeomarginlendingorothersecurityarrangements.RegulartrainingandcompliancereportingtoAuditCommitteeASXPrinciplesChecklistCross-reerencestheASXPrinciplestotherelevantsectionsothisstatementandelsewhereinthisannualreport.NAPublishedintheCorporateGovernancesectionotheCompanyswebsiteatwww.wesarmers.com.auabout-uscorporate-governance.html 68CorportegovernncesttementIntegrityinfnancialreportingRoleoftheaudtCommtteeTheAuditCommitteemonitorsinternalcontrolpoliciesandproceduresdesignedtosaeguardGroupassetsandtomaintaintheintegrityofnancialreporting.ThemembershipresponsibilitiesandcompositionotheAuditCommitteearesetoutonpage63othisannualreport.TheAuditCommitteemaintainsdirectunetteredaccesstoexternalauditorsGroupAssuranceinternalauditandmanagement.TheWesarmersManagingDirectorFinanceDirectorGroupGeneralCounselExecutiveGeneralManagerGroupAccountingAssuranceandRiskGeneralManagerGroupAssuranceandRiskCompanySecretarytheexternalauditorErnstYoungandanyotherpersonsconsideredappropriateattendmeetingsotheAuditCommitteebyinvitation.KeyocusareasotheAuditCommitteeduringthe2013fnancialyearincludedMonitoringhowthedivisionsethicallysourceproductsorresaleromgloballydispersedgeographicallocationsandensuringthatthereareappropriatesaeguardsprocessesandcross-GroupeducationinplacesothattheseactivitiesareconductedinaccordancewithWesarmerscoreprinciplesohonestyintegrityairnessandrespectAbroadriskrevieworalldivisionsandthecorporateofceoWesarmerstoensurethatallsignifcantrisksacrosstheGroupatamacroandmicrolevelarebeingidentifedratedandmanagedappropriatelyAspecifcinormationtechnologyriskreviewatadivisionalandGrouplevelgiventheimportanceothisinrastructuretotheGroupsoperationsRevieworegularreportsromtheGroupGeneralCounselonsignifcantlitigationorregulatorymattersinvolvingGroupbusinessesMonitoringtheGroupsimplementationotheAnti-briberyPolicyOverseeingthepoliciesandproceduresorensuringtheGroupscompliancewithrelevantregulatoryandlegalrequirementsKeyfocusresofaudtCommtteeRoleoftheexternludtorappontmentndrottonofudtorTheCompanysexternalauditorisErnstYoung.TheeectivenessperormanceandindependenceotheexternalauditorisreviewedannuallybytheAuditCommittee.MrGregMeyerowitzwasappointedastheleadauditpartnerorErnstYoungon3June2009andretiredon30June2013inaccordancewiththerequirementundertheCorporationsAct2001torotatetheleadauditpartneraterfveyears.MrDarrenLewsenAssuranceandAdvisoryBusinessServicesPartnerErnstYoungwasappointedasthenewleadauditpartnerrom1July2013.The2013fnancialyearannualreviewotheeectivenessperormanceandindependenceotheexternalauditorocusedonErnstYoungsabilitytotransitiontoanewleadauditpartner.IitbecomesnecessarytoreplacetheexternalauditororperormanceorindependencereasonstheAuditCommitteewillormaliseaprocedureandpolicyortheselectionandappointmentoanewauditor.independencedeclrtonErnstYounghasprovidedtherequiredindependencedeclarationtotheBoardorthefnancialyearended30June2013.Theindependencedeclarationormspartothedirectorsreportandisprovidedonpage76othisannualreport.Restrctonsontheperformnceofnon-udtndssurnce-reltedservcesTheBoardhasconsideredthenatureothenon-auditandassurance-relatedservicesprovidedbytheexternalauditorduringtheyearandhasdeterminedthattheservicesprovidedandtheamountpaidorthoseservicesarecompatiblewiththegeneralstandardoindependenceorauditorsimposedbytheCorporationsAct2001.DetailsoeespaidorpayabletoErnstYoungornon-auditandassurance-relatedservicesprovidedtotheGroupintheyearended30June2013aresetoutinthedirectorsreportonpage75othisannualreport.attendnceofexternludtorstnnulgenerlmeetngsTheleadauditpartneroErnstYoungattendstheCompanysannualgeneralmeetingandisavailabletoanswershareholderquestionsabouttheconductotheauditandthepreparationandcontentotheauditorsreport. 69WesfarmersaNNUaLreport2013RiskmanagementRiskisanacceptedpartodoingbusinessandWesarmersiscommittedtotheidentifcationmonitoringandmanagementomaterialrisksassociatedwithitsbusinessactivitiesacrosstheGrouptocreatelong-termshareholdervalue.RiskManagementPolicyTheRiskManagementPolicyoWesarmersisapprovedbytheBoard.ThepolicydetailstheoverarchingriskmanagementcontrolsthatareembeddedintheGroupsriskmanagementrameworkandreportingsystemsincludingguidelinesandlimitsorapprovaloallexpenditureincludingcapitalexpenditureandinvestmentsaGroupcomplianceprogramsupportedbyapprovedguidelinesandstandardscoveringsaetytheenvironmentlegalliabilityriskidentifcationquantifcationandreportingandfnancialreportingcontrolsacomprehensiveriskfnancingprogramincludingrisktransertoexternalinsurersandreinsurerspoliciesandproceduresorthemanagementofnancialriskandtreasuryoperationsannualbudgetingandmonthlyreportingsystemsorallbusinessesappropriateduediligenceproceduresoracquisitionsanddivestmentsandcrisismanagementsystemsorallkeybusinessesintheGroup.RiskmanagementoversightandresponsibilityThedivisionothekeyriskmanagementunctionsissetoutbelow.FunctionBoardReviewapproveandmonitortheGroupsriskmanagementsystemsincludinginternalcomplianceandcontrolmechanismsApproveandmonitorthesystemsandpoliciestoensureintegrityobudgetsfnancialstatementsandotherreportingWesarmersManagingDirectorandFinanceDirectorProvideadeclarationtotheBoardregardingthefnancialstatementsAssessandprovideassurancetotheBoardthattheGroupsriskmanagementandinternalcontrolsystemsareoperatingeectivelyinallmaterialrespectsAuditCommitteeReviewandassesstheGroupsprocesseswhichensuretheintegrityofnancialstatementsandreportingandassociatedcompliancewithlegalandregulatoryrequirementsincludingAccountingStandardsReviewthequalifcationsindependenceperormanceandremunerationoandrelationshipwiththeGroupsexternalauditorsOverseetheinternalcontrolsassurancepoliciesandprocedureswhichtheGroupusestoidentiyandmanagebusinessrisksManagementImplementandmaintainriskmanagementandinternalcontrolsystemsPreparedivisionalRiskComplianceReportsapprovedbyeachdivisionalboardPrepareaconsolidatedGroupRiskComplianceReportsettingoutkeyrisksandthecontrolsandprocessesimplementedtomitigatetheserisksapprovedbytheWesarmersleadershipteamReporttotheBoardontheadequacyothesystemsandprocessesinplacetomanagematerialbusinessrisksGroupassuranceandriskMonitortheeectivenessoriskmanagementsystemsthroughasingleoutsourcedauditproviderPrepareinternalauditreportsandreportingtotheAuditCommitteeontheadequacyoriskmanagementandtheinternalcontrolenvironmentMaintaindirectandunetteredaccesstotheAuditCommitteeortheGeneralManagerGroupAssuranceandRiskFacilitatetheannualriskcompliancereportingandpreparingtheGroupRiskCompliancereportorreviewbytheAuditCommittee 70CorportegovercesttemetRiskcertifctioFicilriskTheWesarmersManagingDirectorandtheFinanceDirectorprovideawrittenstatementtotheBoardinaccordancewithsection295AotheCorporationsAct2001.WithregardtothenancialrecordsandsystemsoriskmanagementandinternalcomplianceinthiswrittenstatementtheBoardreceivedassuranceromtheWesarmersManagingDirectorandtheFinanceDirectorthatthedeclarationwasoundedonasoundsystemoriskmanagementandinternalcontrolandthatthesystemwasoperatingeectivelyinallmaterialaspectsinrelationtonancialreportingrisks.ThisstatementwasalsosignedbytheGroupReportingManagerGroupAccounting.no-fcilriskManagementwithineachdivisionisrequiredtohaveinplaceeectiveriskmanagementpoliciesprogramsandinternalcontrolsystemstomanagethematerialbusinessrisksothedivisioninaccordancewithWesarmersriskmanagementramework.DivisionalmanagementisultimatelyresponsibletotheBoardortherelevantdivisionsinternalcontrolandriskmanagementsystems.ManagementhasreportedtotheAuditCommitteeontheeectivenessotheinternalcontrolandriskmanagementsystemsthroughouttheyearandmanagementoitsmaterialbusinessrisk.InadditiontheInsurancedivisionsAustralianlicensedinsurersaresubjecttothereportingobligationsotheAustralianPrudentialRegulatoryAuthority.ThesereportingobligationsincludingarequirementtolodgeRiskManagementStrategiesandInsuranceLiabilityValuationReportshavebeencompliedwith.diversityPolicydiversityAsadiverseworkorceisosignicantsocialandcommercialvalueWesarmersrecognisestheimportanceobeinganinclusiveemployer.Wesarmersstrivestocreateaworkenvironmentwhichisinclusivetoallpeopleregardlessogenderageracedisabilitysexualorientationculturalbackgroundreligionamilyresponsibilitiesoranyotherareaopotentialdierence.AllareasodiversityareimportantandWesarmerspaysparticularattentiontogenderdiversityandtheinclusivenessoAboriginalandTorresStraitIslanderpeople.WesarmersrecognisesthevaluethatdiversitycanbringwhichincludesbroadeningtheskillsandexperienceothelabourpoolromwhichWesarmerscandrawandattracttoptalenttoourbusinessesprovidinggreateralignmenttocustomerneedsimprovingcreativityandinnovationandmodellingresponsiblecorporatecitizenship.WesarmershasdevelopedandimplementedaDiversityPolicythataimstoosterdiversityatalllevelswithintheGroup.aborigilirs-RecocilitioactioPlWesarmersdiversitystrategyincludesacommitmentbyeverydivisiontomakeitsbusinessesaplacewhereAboriginalandTorresStraitIslanderpeopleeelwelcomeandvaluedasemployeescustomersandsuppliers.TodothisWesarmerspreparedandcommittedtoitsrstReconciliationActionPlanRAPin2009whichoutlinesspecicmeasurableactionstobeundertakenacrosstheGrouptargetingAboriginalemploymentAboriginalbusinessengagementandcommunitypartnerships.Wesarmerslong-termobjectiveistohaveaworkorcethatrefectstherepresentationoAboriginalpeopleinthebroadercommunity.MoredetailsabouttheWesarmersRAPcanbeoundonthecommunityandsustainabilitysectionotheCompanyswebsiteathttpwww.wesarmers.com.aucommunity-a-sustainabilityworking-towards-reconciliation.html.The2013RAPReviewand2014PlanwillbeavailableinNovember2013.GeeriversityOveralltheGrouphasagenderbalancedworkorcemadeupo57percent116714womenand43percent89223men.TheGroupskeyopportunityistoincreasethenumberowomeninleadershippositions.TheWesarmersDiversityPolicyoutlinesourcoreobjectiveswhichareusedtomeasureperormanceinthisarea.ThoseobjectivesareintendedtoremainrelevanttotheGroupoveranumberoyearsandarenotrevisedannually.Specictargetsarelinkedtoseniorexecutivekeyperormanceobjectivesundertheannualincentiveplan.WithadiverseportolioobusinessesandindustriesWesarmersdivisionshavedevelopedspecicgenderdiversityplansinlinewiththeGrouppolicywhicharetailoredtotakeaccountothespeciccircumstancesotheirdivision. 71WesfarmersaNNUaLreport2013Detailsotheseobjectivesandtheprogressachievedduringthe2013nancialyearareoutlinedinthetablebelowobjectivePrgressFosteraninclusiveculturethisobjectiveseekstoleverageeachindividualsuniqueskillsbackgroundandperspectives.Examplesoinitiativesandpracticesdesignedtoincreasethenumberowomeninleadershippositionsincludefexibleworkpracticesatseniorlevelspaidparentalleavekeep-in-touchprogramswhilstonparentalleaveandon-sitevacationchildcare.ToensureaconsistentandcontinuousocusongenderdiversityWesarmersbusinessesarerequiredtoreportquarterlyonkeygenderstatisticssuchasthepercentageowomenatseniorlevelsrecruitmentpromotionandexitrates.AsaGroupWesarmerscontributestodiversityinthecommunitythroughmembershipsotheDiversityCounciloAustraliaCatalystandsponsorshipoChieExecutiveWomen.Improvetalentmanagementthisobjectiveacknowledgesthatwithaworkorceomorethan200000peopleemployeesarecriticaltoWesarmerssuccess.Wearecommittedtoembeddingdiversityinitiativesintoourbroadertalentmanagementprocessesinordertosupportthedevelopmentoalltalentandtoincreasetherepresentationowomeninmanagementroles.AtleastonceayeartheGroupManagingDirectormeetswitheachdivisiontoreviewseniorleaderperormanceanddevelopmentsuccessionplansorcriticalrolesandthepipelineohigh-potentialleaders.ThisisinadditiontodetailedtalentreviewsconductedwithemployeesbyindividualbusinesseswithintheWesarmersGroup.Akeypartothisprocessistoreviewwomeninleadershiprolesaswellasdivisionalprogresstowardsincreasingthisrepresentation.ThroughouttheGroupallhigh-potentialleadersbenetromanarrayodevelopmentopportunitiessuchasinternalandexternaldevelopmentprogramsstretchassignmentsactionlearningprojectscoachingmentoringand360-degreeeedback.Enhancerecruitmentpracticesthisobjectiveisacommitmenttohiringthebestpersonorthejobwhichrequirestheconsiderationoabroadanddiversepoolotalent.Inthe2013nancialyear37percentoexternallyrecruitedpositionsand32percentointernalpromotionsallmanagerlevelandaboveroleswerelledbywomen.Ensurepayequitythisobjectiveaimstoensureequalpayorequalworkacrossourworkorce.AreviewogenderpayequityisconductedannuallyonaGroupbasisandresultsarereviewedbytheBoardanddivisionalManagingDirectors.The2013reviewdidnotindicateanyobservablediscrepanciesinpayacrosseachlevelatertakingintoaccountperormanceexperiencelocationandjobnature.Therearemanyopportunitiestoimprovegenderdiversityatseniorlevelsinlinewiththeseobjectives.Inthe2014nancialyearalldivisionswillworktoimprovegenderdiversitythroughavarietyoinitiativesincludingcontinuedimprovementodiversityinpipelinestoleadershippositionsidenticationointernaltalentandretentionoseniorwomen.DetailsoemalerepresentationacrosstheGrouparesetoutbelowPercentageffemaleemplyees30June201130June201230June2013WesarmersLimitednon-executivedirectors252530Seniorexecutivepositionsgeneralmanagerorabove222125Allmanagementandproessionalroles262828Totalworkorce575757InaccordancewiththeWorkplaceGenderEqualityAct2012WesarmershasrecentlylodgeditsannualcompliancereportwiththeWorkplaceGenderEqualityAgency.ShareholdersmayobtainacopyothereportbycallingWesarmerson0893274211. WesfarmersaNNUaLreport201372DirectorsreportWesarmersLimitedanditscontrolledentitiesTheinormationappearingonpages2to71ormspartothedirectorsreportorthefnancialyearended30June2013andistobereadinconjunctionwiththeollowinginormationResultsanddividendsYEARENDED30JUNE2013m2012mProftProftattributabletomembersotheparententity22612126DividendsTheollowingdividendshavebeenpaidbytheCompanyordeclaredbythedirectorssincethecommencementothefnancialyearended30June2013aoutotheproftsortheyearended30June2012ontheullypaidordinarysharesandpartiallyprotectedsharesiully-rankedfnaldividendo95cents201185centspersharepaidon28September2012asdisclosedinlastyearsdirectorsreport1099983boutotheproftsortheyearended30June2013andretainedearningsontheullypaidordinarysharesandpartiallyprotectedsharesiully-rankedinterimdividendo77cents201270centspersharepaidon28March2013891810iiully-rankedfnaldividendo103cents201295centspersharetobepaidon27September201311921099PrincipalactivitiesTheprincipalactivitiesoentitieswithintheconsolidatedentityduringtheyearwereretailingoperationsincludingsupermarketsgeneralmerchandiseandspecialtydepartmentstoresuelliquorandconvenienceoutletsretailingohomeimprovementandoutdoorlivingproductsandsupplyobuildingmaterialsretailingoofceandtechnologyproductscoalminingandproductiongasprocessinganddistributioninsuranceindustrialandsaetyproductdistributionchemicalsandertilisersmanuactureandinvestments.Therehavebeennosignifcantchangesinthenatureotheseactivitiesduringtheyear.DirectorsThedirectorsinofceatthedateothisreportareRLEveryChairmanRJBGoyderGroupManagingDirectorTJBowenFinanceDirectorPMBassatDirectorrom14November2012CBCarterJPGrahamAJHowarthCMacekWGOsbornDLSmith-GanderVMWallaceJAWestacottDirectorrom3April2013AlldirectorsservedontheBoardortheperiodrom1July2012to30June2013exceptorPMBassatwhowasappointedon14November2012andJAWestacottwhowasappointedon3April2013.Thequalifcationsexperiencespecialresponsibilitiesandotherdetailsothedirectorsinofceatthedateothisreportappearonpages58and59othisannualreport. 73WesfarmersaNNUaLreport2013DirectorsreportWesfarmersLimitedanditscontrolledentitiesDirectorsshareholdingsSecuritiesintheCompanyorinarelatedbodycorporateinwhichdirectorshadarelevantinterestasatthedateofthisreportareWesfarmersLimitedBWPTrustunitsWesfarmersLimitedPerformanceRightsSharesPMBassat20000TJBowen2323750000457189CBCarter30025RLEvery28373RJBGoyder1000001018095JPGraham15120807317AJHowarth14280CMacek20571WGOsborn5700DLSmith-Gander12410VMWallace7430JAWestacott1040RJBGoyderholds10000performancerightsandTJBowenhold50000performancerightsallocatedunderthe2012WesfarmersLongTermIncentivePlanWLTIP.The2012WLTIPperformancerightsaresubjecttoafour-yearperformanceperiodbeing1July2012to30June2016.IngeneraliftherelativetotalshareholderreturnandcompoundannualgrowthrateinreturnonequityperformanceconditionsaremetexecutiveswillbeallocatedWesfarmersfullypaidordinarysharesattheendoftheperformanceperiod.Forfurtherdetailspleaseseetheremunerationreportonpages77to94ofthisannualreport.DirectorsmeetingsThefollowingtablesetsoutthenumberofdirectorsmeetingsincludingmeetingsofBoardcommitteesheldduringtheyearended30June2013andthenumberofmeetingsattendedbyeachdirectorBoardAuditCommitteeRemunerationCommitteeNominationCommitteeGreshamMandateReviewCommitteeA1B2ABABABABCurrentdirectorsPMBassat3434321TJBowen99CBCarter98543311RLEvery99665533RJBGoyder99JPGraham995433AJHowarth986633CMacek9966553311WGOsborn985533DLSmith-Gander99663311VMWallace99332232JAWestacott42211111Anumberofmeetingseligibletoattend.3PMBassatwasappointedasadirectoron14November2012.2Bnumberofmeetingsattended.4JAWestacottwasappointedasadirectoron3April2013. WesfarmersaNNUaLreport201374DirectorsreportWesarmersLimitedanditscontrolledentitiesInsuranceandindemnifcationodirectorsandofcersDuringorsincetheendothefnancialyeartheCompanyhaspaidpremiumsinrespectoacontractinsuringalldirectorsandofcersoWesarmersLimitedanditsrelatedentitiesagainstcertainliabilitiesincurredinthatcapacity.Disclosureothenatureotheliabilitycoveredbytheinsuranceandpremiumspaidissubjecttoconfdentialityrequirementsunderthecontractoinsurance.InaccordancewiththeCompanysConstitutiontheCompanyhasenteredintoDeedsoIndemnityInsuranceandAccesswitheachothedirectorsotheCompany.TheseDeedsindemniyadirectortotheullextentpermittedbylawagainstanyliabilityincurredbythedirectorasanofcerotheCompanyoroarelatedbodycorporateandtoapersonotherthantheCompanyorarelatedbodycorporateunlesstheliabilityarisesoutoconductonthepartothedirectorwhichinvolvesalackogoodaithprovideorinsuranceagainstcertainliabilitiesincurredasadirectorandprovideadirectorwithcontinuingaccesswhileinofceandoraspecifcperiodaterthedirectorceasestobeadirectortocertainCompanydocumentswhichrelatetothedirectorsperiodinofce.InadditiontheCompanysConstitutionprovidesortheindemnityoofcersotheCompanyoritsrelatedbodiescorporateromliabilityincurredbyapersoninthatcapacity.Noindemnitypaymenthasbeenmadeunderanyothedocumentsreerredtoaboveduringorsincetheendothefnancialyear.IndemnifcationoauditorsTheCompanysauditorisErnstYoung.TheCompanyhasagreedwithErnstYoungaspartoitstermsoengagementtoindemniyErnstYoungagainstcertainliabilitiestothirdpartiesarisingromtheauditengagement.TheindemnitydoesnotextendtoanyliabilityresultingromanegligentwrongulorwilulactoromissionbyErnstYoung.DuringthefnancialyeartheCompanyhasnotpaidanypremiuminrespecttoanyinsuranceorErnstYoungorabodycorporaterelatedtoErnstYoungandtherewerenoofcersotheCompanywhowereormerpartnersordirectorsoErnstYoungwhilstErnstYoungconductedauditsotheCompany.DirectorsandotherofcersremunerationDiscussionotheBoardspolicyordeterminingthenatureandamountoremunerationordirectorsandseniorexecutivesandtherelationshipbetweensuchpolicyandCompanyperormancearecontainedintheremunerationreportonpages77to94othisannualreport.OptionsNooptionsoverunissuedsharesintheCompanywereinexistenceatthebeginningothefnancialyearorgrantedduringorsincetheendothefnancialyear.CompanySecretaryLindaKenyonwasappointedasCompanySecretaryoWesarmersLimitedinApril2002.LindaholdsBacheloroLawsandBacheloroJurisprudencedegreesromtheUniversityoWesternAustraliaandisaFellowoCharteredSecretariesAustralia.ShejoinedWesarmersin1987aslegalcounselandheldthatpositionuntil2000whenshewasappointedManageroBWPManagementLimitedormerlyBunningsPropertyManagementLimitedtheresponsibleentityorthelistedBWPTrustormerlyBunningsWarehousePropertyTrust.LindaisalsoCompanySecretaryoanumberoWesarmersGroupsubsidiariesandamemberotheWesarmersleadershipteam.RevieworesultsandoperationsTheoperationsfnancialpositionbusinessstrategiesandprospectsoruturefnancialyearsotheconsolidatedentityaredetailedintheoperatingandfnancialreviewonpages2to13othisreport.SignifcantchangesinthestateoaairsParticularsothesignifcantchangesinthestateoaairsotheconsolidatedentityduringthefnancialyearareasollowsrevenueuprom58080millionto59832millionproftortheyearuprom2126millionto2261milliondividendspershareuprom1.65to1.80totalassetsuprom42312millionto43155million 75WesfarmersaNNUaLreport2013DirectorsreportWesarmersLimitedanditscontrolledentitiesshareholdersequityuprom25627millionto26022millionnetborrowingsuprom4904millionto5259millionnetcashfowsromoperatingactivitiesuprom3641millionto3931millionSignifcanteventsaterthebalancedateTheollowingsignicanteventshavearisensincetheendothenancialyearDividendOn15August2013aully-rankednaldividendo103centspershareresultinginadividendo1192millionwasdeclaredorpaymenton27September2013.SaleandleasebackOn8August2013Wesarmersannouncedthesaleandleasebackoaportolioo10BunningsstorestotheBWPTrustwhichwhencompletedwillreleaseapproximately271millionocapitalemployedinBunnings.CapitalreturnOn15August2013Wesarmersannouncedtheintentiontomakeacapitalreturno50centsperully-paidordinaryshareandpartiallyprotectedsharebyearlyDecember2013accompaniedbyaproportionateshareconsolidationsubjecttoapprovaloWesarmersshareholdersattheAnnualGeneralMeetinginNovember2013.SecuritisedleasetransactionOn29August2013Wesarmersannouncedthesaleandleasebackoaportolioo15Bunningswarehousepropertiesviaasecuritisedleasetransactionwhichwhencompletedwillreleaseapproximately287millionocapitalemployedinBunnings.NonauditservicesErnstYoungprovidednon-auditservicestotheconsolidatedentityduringtheyearended30June2013andreceivedorisduetoreceivetheollowingamountsortheprovisionotheseservices000Taxcompliance840Assurancerelated1819Other363TOTAL3022Thetotalnon-auditserviceseeso3022000represents31.9percentothetotaleespaidorpayabletoErnstYoungandrelatedpracticesortheyearended30June2013.TheAuditCommitteehasollowingthepassingoaresolutionothecommitteeprovidedtheBoardwithwrittenadviceinrelationtotheprovisiononon-auditservicesbyErnstYoung.TheBoardhasconsideredtheAuditCommitteesadviceandthenon-auditservicesprovidedbyErnstYoungandissatisedthattheprovisionotheseservicesduringtheyearbytheauditoriscompatiblewithanddidnotcompromisethegeneralstandardoauditorindependenceimposedbytheCorporationsAct2001ortheollowingreasonsthenon-auditservicesprovideddonotinvolvereviewingorauditingtheauditorsownworkoractinginamanagementordecision-makingcapacityortheCompanyallnon-auditservicesweresubjecttothecorporategovernanceproceduresandpoliciesadoptedbytheCompanyandhavebeenreviewedbytheAuditCommitteetoensuretheydonotaecttheintegrityandobjectivityotheauditorandthereisnoreasontoquestiontheveracityotheauditorsindependencedeclarationacopyowhichhasbeenreproducedontheollowingpage. WesfarmersaNNUaLreport201376DirectorsreportWesarmersLimitedanditscontrolledentitiesEnvironmentalregulationandperformanceTheactivitiesotheconsolidatedentityaresubjecttoenvironmentalregulationbyvariousauthoritiesthroughoutAustraliaandNewZealand.Licencesgrantedtotheconsolidatedentityregulatethemanagementoairandwaterqualityandquantitythestorageandcarriageohazardousmaterialsthedisposalowastesandotherenvironmentalmattersassociatedwiththeconsolidatedentitysoperations.Duringtheyeartherehavebeennoknownmaterialbreachesotheconsolidatedentityslicenceconditions.ProceedingsonbehalfoftheCompanyNoproceedingshavebeenbroughtonbehalotheCompanynorhaveanyapplicationsbeenmadeinrespectotheCompanyundersection237otheCorporationsAct2001.CorporategovernanceInrecognisingtheneedorhighstandardsocorporatebehaviourandaccountabilitythedirectorsoWesarmersLimitedsupportandhaveollowedtheASXCorporateGovernanceCouncilsCorporateGovernancePrinciplesandRecommendations.TheCompanyscorporategovernancestatementisonpages60to71othisannualreport.CorporateinformationWesarmersLimitedisacompanylimitedbysharesthatisincorporatedanddomiciledinAustralia.TheCompanysregisteredofceandprincipalplaceobusinessis11thFloorWesarmersHouse40TheEsplanadePerthWesternAustralia.RoundingTheamountscontainedinthisreportandinthefnancialstatementshavebeenroundedtothenearestmilliondollarswhereroundingisapplicableundertheoptionavailabletotheCompanyunderASICClassOrder98100.TheCompanyisanentitytowhichtheclassorderapplies.AuditorsIndependenceDeclarationtotheDirectorsofWesfarmersLimitedInrelationtoourauditothefnancialreportoWesarmersLimitedorthefnancialyearended30June2013tothebestomyknowledgeandbelietherehavebeennocontraventionsotheauditorindependencerequirementsotheCorporationsAct2001oranyapplicablecodeoproessionalconduct.ErnstYoungGHMeyerowitz17September2013PartnerAmemberfrmoErnstYoungGlobalLimitedLiabilitylimitedbyaschemeapprovedunderProessionalStandardsLegislationThedirectorsreceivedtheollowingdeclarationromErnstYoung 77WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesContentsIntroduction2013overviewpage77Section1Executiveremunerationoutcomesor2013page79Section2Executiveremunerationpolicyandrameworkpage81Section3Executiveremunerationcomponentspage83Section4Serviceagreementspage91Section5Non-executivedirectorremunerationpage92Section6Otherinormationpage94Introduction2013OverviewTheWesarmersLimitedBoardiscommittedtoanexecutiveremunerationrameworkthatisocusedondrivingaperormancecultureandlinkingexecutivepaytotheachievementotheGroupsstrategyandbusinessobjectivesandultimatelygeneratingsatisactoryreturnsorshareholders.ThisreportexplainshowWesarmersperormanceorthe2013nancialyearhasdrivenremunerationoutcomesorseniorexecutives.KeychangesAsummaryothekeychangestoremuneration-relatedmattersapprovedorthe2013nancialyearissetoutbelowExecutivedirectorsandseniorexecutivesFixedremunerationTheBoarddeterminedthatnoincreasewouldbemadetothexedremunerationortheGroupManagingDirectororthe2013nancialyearand2014nancialyearasthecurrentleveloremunerationisconsideredappropriate.Seniorexecutivexedremunerationincreasedduringthe2013nancialyearbasedonbusinessandindividualperormance.Theaveragexedremunerationincreaseorkeymanagementpersonnelorthe2013nancialyearwaslessthantwopercent.VariableremunerationAcomprehensivereviewotheseniorexecutiveremunerationrameworkandpolicieswasundertakenduringtheyearwiththeBoardconrmingthatthecurrentarrangementscontinuetobeappropriate.AspartothisbroadreviewthetransitionalarrangementsorparticipantsintheColesLongTermIncentivePlanCLTIPwerealsoconsideredgiven2013wasthenalyearotheplanwiththeBoarddeterminingthatparticipantswouldtransitiontotheWesarmersLongTermIncentivePlanWLTIPorthe2014nancialyeartoalignwiththeincentiveplanoeredtootherseniorexecutives.TheBoardcontinuedtoreviewtheWLTIPduring2013inparticularthelong-termincentiveperormancemetrics.Forthe2013WLTIPtobegrantedduringthe2014nancialyeartheBoardrearmedthatgrowthinreturnonequityremainsakeynancialmetrictomeasureWesarmerslong-termsuccessasitcontainsclearlinkstoshareholdervaluecreationandtheuseototalshareholderreturnsensuresalignmentbetweenshareholderreturnandrewardorexecutives.Non-executivedirectorsTheBoarddeterminedthatnoincreasewouldbemadetonon-executivedirectoreesorthe2013nancialyear.TheBoardapprovedenhancementstotheshareholdingrequirementsornon-executivedirectors.Inadditiontotherequirementordirectorstoholdaminimumo1000WesarmersshareswithintwomonthsoappointmentdirectorsareexpectedtoincreasetheirholdingsinWesarmerssharestoanumberwhichisequivalentinapproximatevaluetothegrossannualbaseeepaidattherelevanttimewithinave-yearperiodoappointment.RemunerationCommitteemembershipchangedduringtheyearwithWGOsborntakingovertheroleocommitteechairmanromRLEveryandVMWallacejoiningthecommitteeasanadditionalmember.Twonewnon-executivedirectorsPMBassatandJAWestacottwereappointedtotheBoardduringtheyearwhichisrefectedintheoverallincreaseinnon-executivedirectorremunerationromthe2012to2013nancialyear. WesfarmersaNNUaLreport201378DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesOvervieworemunerationcomponentsRemunerationcomponentParticipantsGroupManagingDirectorFinanceDirectorseniorexecutivesManagingDirectorColesdivisionNon-executivedirectorsFixedFixedAnnualRemunerationPage83Page83Page83FeesPage92AnnualincentivePage84Page84Page84Long-termincentiveWLTIP-Page86WLTIP-Page86CLTIP-Page89Post-employmentarrangementsSuperannuationPage83Page83Page83Page93Linkto2013fnancialperormanceAnnualincentiveplanTheWesarmersGrouphadasolidperormanceorthe2013nancialyearwhichresultedinoverallpositivegrowthontheprioryear.ThenancialperormanceortheColesHomeImprovementandOceSuppliesKmartInsuranceResourcesandChemicalsEnergyandFertilisersdivisionsmetorexceededtheannualnancialtargetssetbytheBoardor2013resultingintheannualincentiveplandeliveringatorabovetargetawardsortheexecutivedirectorsandorseniorexecutivesinthosedivisions.Forexecutivesintheotherdivisionsannualincentiveawardsrefectperormanceagainstthresholdnancialandnon-nancialtargets.Furtherdetailontheannualincentiveplanandactualperormanceorthe2013nancialyearcanbeoundonpage84othisreport.Thegraphonpage79showsthelinkbetweencompanyperormanceandrewardandmeasuresWesarmersnetprotatertaxNPATagainstthetotalremunerationortheexecutivedirectorsandseniorexecutiveswhoareconsideredtobekeymanagementpersonnelotheGroupasreportedinthe2009to2013annualreports.KeymanagementpersonnelTheremunerationreportsetsoutremunerationinormationorkeymanagementpersonnelwhichencompassesthenon-executivedirectorstheexecutivedirectorscomprisingtheGroupManagingDirectorandtheFinanceDirectorandthoseexecutiveswhohaveauthorityandresponsibilityorplanningdirectingandcontrollingtheactivitiesoamajorrevenue-generatingdivisionoWesarmers.ExecutivedirectorsRJBGoyderGroupManagingDirectorTJBowenFinanceDirectorSeniorexecutivesSAButelManagingDirectorResourcesdivisionJCGillamManagingDirectorHomeImprovementandOceSuppliesdivisionIJWMcLeodManagingDirectorColesdivisionDJRogersManagingDirectorTargetdivisioncessationdate31May2013GARussoManagingDirectorKmartdivisionNon-executivedirectorsRLEveryChairmannon-executivePMBassatDirectornon-executiveappointed14November2012CBCarterDirectornon-executiveJPGrahamDirectornon-executiveAJHowarthDirectornon-executiveCMacekDirectornon-executiveWGOsbornDirectornon-executiveDLSmith-GanderDirectornon-executiveVMWallaceDirectornon-executiveJAWestacottDirectornon-executiveappointed3April2013 79WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesWesfarmersLongTermIncentivePlanAnumberoseniorexecutivesreceivedanallocationoperormancerightsduringtheyearunderthe2012WLTIPwhichissubjecttoWesarmersachievingstronggrowthinreturnonequityROEandrelativetotalshareholderreturnTSR.Inaccordancewiththeshareholderapprovalreceivedatthe2012AnnualGeneralMeetingtheGroupManagingDirectorGroupMDreceivedanallocationo100000perormancerightsunderthe2012WLTIPaward.Theseperormancerightsaresubjecttoaour-yearorward-lookingperormanceperiodandjudgedagainsttworelativeperormancehurdles.AsperormancerightsrepresentarighttobeallocatedashareintheuturetheGroupMDisnotentitledtodividendsorvotingrightsduringtheperormanceperiod.TheGroupMDstotalreportedremunerationorthe2013fnancialyearwas8593954whichincludesanaccountingexpenseo1.8millioninrelationtohisparticipationinthe2011WLTIPand2012WLTIPand1.0millioninrelationtothedeerredsharecomponentohis20112012and2013annualincentive.MrGoydersactualtakehomepayorthe2013fnancialyearwas5764180whichcomprisesfxedremunerationnon-monetarybeneftspost-employmentbeneftsincludingsuperannuationandanannualcashincentivepayment.Furtherdetailisshowninthetableonpage80.Duringthe2013fnancialyearsharesvestedunderthe2010WLTIPorparticipatingseniorexecutiveswithWesarmerscompoundaveragegrowthrateCAGRinROEoverthethree-yearperormanceperiodto30June2013atthe82ndpercentileotheSPASX50Index.Thenumberosharesthatvestedisshowninthetableonpage88.ColesLongTermIncentivePlanThiswasthefnalyearothespecialpurposeColesLongTermIncentivePlanCLTIPwhichwasoriginallyestablishedatthetimeWesarmersacquiredColes.OverthefveyearsotheplansignifcantreturnshavebeengeneratedromtheColesbusinessorWesarmersincludingan84percentincreaseinearningsbeoreinterestandtaxEBITanda73percentincreaseinreturnoncapitalROCasshowninthegraphsonpages89and90.OverthefveyearsotheCLTIPannualawardsweremadetoapoolorkeyColesexecutives.TheamountotheawardwasdeterminedbyreerencetoannualtargetsalignedtotheturnaroundstrategiesthatweredesignedtogeneratesignifcantreturnstoWesarmersanditsshareholders.Colesdeliveredstrongresultsinthe2013fnancialyearwitha13.1percentincreaseindivisionalEBITand9.2percentincreaseinROCcomparedtothe2012fnancialyear.Accordingly1.92millionhasbeencontributedtotheawardpoolundertheCLTIPortheManagingDirectorColesdivisionwithafnalyearaccountingexpenseo6.63millioninrelationtocurrentandpastyearcontributionstotheawardpool.FurtherdetailinrelationtotheCLTIPisshownonpage89.OverviewofcompanyperformanceThetablebelowsummarisesdetailsoWesarmersearningsshownintheormoNPATandearningspershareandtheconsequencesothatperormanceonshareholdervalueorthefnancialyearandthepreviousourfnancialyearsintheormodividendschangesinsharepriceanyreturnsocapitalandreturnonequity.Financialyearended30June20092010201120122013NetproftatertaxNPATm152211565192221262261Dividendspersharecents110125150165180Earningspersharecents158.51135.7166.7184.2195.9Returnonequityrolling127.316.47.78.48.91Restatedduetoachangeinaccountingpolicyorcoalrebatespayableandrightstomine.Section1Executiveremunerationoutcomesfor2013Theremunerationtableonpage80setsouttheremunerationinormationortheexecutivedirectorsandseniorexecutiveswhoareconsideredtobethekeymanagementpersonnelKMPotheGroup.09101112201310005000200015002500mGroupNPATagainstseniorexecutivetotalremunerationGroupNPATmSeniorexecutiveremunerationasaofNPATGroupGroupNPATExecREMNPATminc.ofNPAT201322616.31.62012212610.61.92011192222.82.1201015652.82.22009152243.22.44208610 WesfarmersaNNUaLreport201380DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesExecutivedirectorandseniorexecutiveremunerationor2013Short-termbeneftsPost-employmentbeneftsShare-basedpayments1TerminationbeneftsTotalPercentageperormancerelated2Cashsalary3Short-termincentiveNon-monetarybenefts4Other4Super-annuationOtherbenefts5Valueoshort-termincentiveSTISTIsharesandotherValueolong-termincentiveLTILTIeq-uityandcashsettledLTITerminationpaymentsExecutivedirectorsRJBGoyderGroupManagingDirector2013334958721036002204508964231465843310132371816537-859395457.420123284899210360017149010347481995843311847901148287-801004555.4TJBowenFinanceDirector2013171435470000038842896423146666667544711144308-445075158.42012165180110200005508310347231991033333668991178183-440884558.2SeniorexecutivesSAButelManagingDirectorResourcesdivision20139515325253004967689642314639667-751765-235005054.3201289521726400049565103474819942917202400556218-206886349.4JCGillamManagingDirectorHomeImprovementandOfceSuppliesdivision201314143548700001854896423146616661762791089782-364604558.620121349301840000173110347231991058332000931183533-371403759.9IJWMcLeodManagingDirectorColesdivision2013196425917169342014321741511647034500-6630000-1073774677.72012191245416672331673231103471577533333-10900000-1480646584.9GARussoManagingDirectorKmartdivision20131206854744000185489642314650667529212992686-355738363.72012112680172000017311034748199950009465221011083-395968367.6FormerseniorexecutivesLKInmanManagingDirectorTargetdivisionresigned30March20122012933246-13454776722631-765417282920-202543551.8DLRogersManagingDirectorTargetdivisioncessation31May2013620131011899-851757697715098-788183337791025000262674615.720128080457200003327851064118312000067532506362-221811258.3Total20131161283966598345992832959481472983115992552017127588571025000359626752012119617647334833493655220913241232458849373365316766586-41211485 81WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesExecutivedirectorandseniorexecutiveremunerationfor2013continued1Share-basedpaymentsReertopage84ordetaileddisclosuresundertheannualincentiveplanandpages86to91orthevariouslong-termincentiveplans.TheamountsincludedortheValueoshort-termincentivesharesincludestheportionothe2013annualincentivethatwasdeerredintosharesandisrecognisedoraccountingpurposesovertheperormanceandoreitureperiodswhichtogetherarereerredtoastheserviceperiod.Reertopage84oradditionalinormation.Foraccountingpurposesthe2011and2012short-termincentivesharescontinuetobeexpensedinthe2013nancialyearasthesesharesaresubjecttoperormanceandoreitureconditions.TheamountorIJWMcLeodrelatestothecashsettledawardmadeortheperiodundertheCLTIPreertopage89oradditionalinormation.TheamountorGARussoincludessharesallocatedundertheretentionincentiveplannowclosedwhicharesubjecttoutureserviceperiods.Asat30June2013atotalo44163shareshavevestedwith18119sharesvestingduringtheyear.ThesesharesremainrestricteduntiltheendoMrRussosrstveyearsoservicewiththeGroupbeing1October2013.Theremaining18119unvestedsharesarescheduledtoveston1October2013.Thesharesarerecognisedoraccountingpurposesovertheremainingserviceperiod.TheamountsincludedortheValueolong-termincentiveequityorthe2012WLTIParedetailedonpage88.Foraccountingpurposesthe2010WLTIPand2011WLTIPcontinuetobeexpensedinthe2013nancialyearasthesesharesaresubjecttoperormanceandoreitureconditionstogetherreerredtoastheserviceperiod.2Percentageperormancerelatedisthesumotheshort-termincentiveandshare-basedpaymentsdividedbythetotalremunerationrefectingtheactualpercentageoremunerationatriskortheyearascomparedtothetargetpercentageoremunerationatriskshownonpage83.3Theamountotheindividualcomponentsoxedremunerationmayvarydependingontheelectionsmadebyexecutives.4Short-termbenetsnon-monetarybenetsincludethecosttotheCompanyoprovidingparkingvehicleoverseashealthinsurancelieinsuranceandtravel.Short-termbenetsotherincludesthecostodirectorsandocerinsuranceandhousingallowance.5Post-employmentbenetsotherbenetsincludetheretentionincentiveaccrualequaltoninemonthsFARromlastyeartothisyearwhichispayableuponterminationoemploymentorTJBowenSAButelJCGillamandGARusso.6TerminationpaymentsmadetoDLRogerswereinaccordancewithhiscontractterms.Section2ExecutiveremunerationpolicyandframeworkResponsibilityforsettingremunerationTheollowingdiagramrepresentsWesarmersremunerationgovernanceramework.Provideindependentadviceinformationandrecommendationsrelevanttoremunerationdecisions.TheChairmanoftheRemunerationCommitteeappointsandengagesadvisersdirectlyinrelationtoKMPremunerationmatters.PwCwasengagedtoreviewandproviderecommendationsontheappropriatenessoftheGroupMDandseniorexecutiveremuneration.jwsconsultingwasengagedtoprovideindependentgovernanceandlegaladviceinrelationtoKMPremunerationmatters.AnyadviceorrecommendationsprovidedbyexternaladvisersareusedtoassisttheBoardtheydonotsubstitutefortheBoardandcommitteeprocesses.TheBoardapprovestheoverallremunerationpolicyandensuresitiscompetitivefairandalignedwiththelong-terminterestsoftheGroupnon-executivedirectorremunerationexecutivedirectorandseniorexecutiveremuneration.TheRemunerationCommitteeisdelegatedresponsibilitybytheBoardtoreviewandmakerecommendationsontheremunerationpoliciesandframeworkfortheGroupnon-executivedirectorremunerationremunerationforexecutivedirectorsandseniorexecutivesandexecutiveincentivearrangements.ProvidesinformationrelevanttoremunerationdecisionsandmakesrecommendationstotheRemunerationCommittee.ObtainsremunerationinformationfromexternaladviserstoassisttheRemunerationCommitteei.e.factualinformationlegaladviceaccountingadvicetaxadvice.BoardRemunerationCommitteeManagementRemunerationconsultantsandotherexternaladvisers WesfarmersaNNUaLreport201382DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesDetailothecompositionotheRemunerationCommitteeissetoutonpage92othisreport.FurtherinormationregardingtheobjectivesandroleotheRemunerationCommitteeiscontainedinitsCharterwhichisavailableontheCorporateGovernancesectionotheCompanyswebsiteatwww.wesarmers.com.auDuringthe2013nancialyearPricewaterhouseCoopersPwCprovidedremunerationrecommendationsasdenedinsection9BotheCorporationsAct2001andwaspaid12000201262000ortheseservices.ForeachotheremunerationrecommendationsprovidedtheBoardissatisedthattherecommendationsweremadereeromanyundueinfuence.InadditiontotheBoard-approvedprotocolsthathavebeenadheredtoineachcasePwCprovidedaormaldeclarationconrmingthattherecommendationwasmadereeromundueinfuencebythemembersotheKMPtowhomtherecommendationrelated.InadditiontoprovidingremunerationrecommendationsPwCprovidedadviceonotheraspectsotheremunerationotheGroupsemployeesandvariousnon-auditservicesincludingadviceinrelationtotaxationaccountingoperationstechnologyandpeoplemattersacrossallWesarmersdivisionsandwaspaidatotaloapproximately12.03million201212.57millionorservicestotheWesarmersGrouporthe2013nancialyear.RemunerationpolicyandprinciplesTheRemunerationCommitteehasadoptedourcoreguidingprinciplesthatareusedasareerencewhenconsideringremunerationplansandpoliciesthatapplytoseniorexecutives.TheCommitteereviewedtheseprinciplesduringthe2013nancialyearandagreedthattheyremainedrelevantandappropriate.Theoverridingobjectiveistoprovidesatisactoryreturnstoshareholdersandtheremunerationprinciplesareocusedondrivingtheleadershipperormanceandbehavioursconsistentwithachievingthisobjective.TheseguidingprinciplesalsorearmtheBoardscommitmenttocommunicatingKMPremunerationarrangementstokeystakeholdersinanopenandtransparentmanner.ThekeyprinciplesusedtoguideWesarmersremunerationpolicyorseniorexecutivesareownershipalignedremunerationarrangementsgenerallyencourageWesarmersseniorexecutivestobehavelikelong-termownersthroughperormance-basedequityplanstoincreaseshareholdings.Themixoremunerationcomponentsandthemeasuresusedintheperormanceincentiveplanswerechosentoensurethereisastronglinkbetweenremunerationearnedandtheachievementosustainableperormancethatleadstosatisactoryreturnsorshareholdersperormanceocusedgenerallyremunerationarrangementsrewardstrategicoperationalandnancialperormanceothebusiness.AsignicantproportionoeachexecutivesremunerationisdependentuponWesarmerssuccessandindividualperormanceconsistencyandmarketcompetitivenessacommonsetoremunerationpracticeswillgenerallyapplytoallseniorexecutiveroles.Wesarmerspositionsremunerationtobecompetitivewithanopportunityorhighlycompetitivetotalremunerationorsuperiorperormanceandopenandftorpurposeremunerationarrangementscanbeinnovativetorespondtobusinessandoperationalneeds.HoweverallremunerationarrangementsorKMPwillbecommunicatedtokeystakeholdersinanopenandtransparentmanner.ComponentsandmixoexecutiveremunerationTheexecutiveremunerationrameworkconsistsotheollowingcomponentsBasesalaryAtriskcomponentsFixedAnnualRemunerationFARShort-termincentivesSTILong-termincentivesLTITheBoardconsidersthatasignicantportionoexecutivesremunerationshouldbeatriskinordertoprovideastrongalignmentwiththeinterestsoshareholders.InsettingFARconsiderationisgiventobasedontheachievementoannualperormanceconditionsperormanceconditionsbasedonachievementoperormanceconditionsoveraour-yearperiodperormancerightsplanperormanceconditionscomprisegrowthinROEandrelativeTSRinordertoensureastronglinkwiththecreationoshareholdervaluetheopportunityorequestinguprontthatanadditionaloneorthreeyeartradingrestrictionapplytoanysharesallocatedone-ospecicplanoperatedorselectColesexecutivestheperormanceconditionsorwhicharelinkedtotheturnaroundotheColesdivisionbusinessandindividualperormanceaswellastheabilitytoretainkeytalentinternalandexternalrelativitieswithremunerationsetatcompetitivelevelsheavilyweightedtoreturnandearnings-basedmeasuresincludenon-nancialperormancemeasuressettodriveleadershipperormanceandbehavioursconsistentwithachievingtheGroupslong-termobjectivesinareasincludingsaetydiversityandsuccessionplanningandtalentmanagementvestedincentivecomprisesbothacashcomponentpaidollowingtheendotheperormanceyeararestrictedmandatorydeerredsharecomponentsubjecttooreitureinthe12monthsollowingallocationandrestrictedoraminimumothreeyearstheopportunitytoelectupronttovoluntarilydeeraportionothecashawardintosharesi.e.inadditiontothemandatorydeerralarrangementrestrictedoraminimumothreeyears 83WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesWithinthisrameworktheBoardconsidersitessentialtohaveremunerationarrangementsthatrefectthediversiednatureotheWesarmersbusinessandarestructuredtorewardexecutivesorperormanceataGrouplevelandordivisionalexecutivesalsoatadivisionallevel.Wesarmersmixoxedandatriskcomponentsoreachotheexecutivesdisclosedintheremunerationreportasapercentageototaltargetannualremunerationorthe2013nancialyearisasollowsSeniorexecutiveshareownershipTheBoardconsidersitanimportantoundationotheWesarmersexecutiveremunerationrameworkthattheseniorexecutiveteamholdasignicantnumberoWesarmerssharestoencourageexecutivestobehavelikelong-termowners.AllseniorexecutiveKMPholdatleastoneyearsFixedAnnualRemunerationinWesarmersshareswiththemajorityholdingsignicantlymore.Wesarmerssharetradingpolicyprohibitsexecutivedirectorsandseniorexecutivesromenteringintotransactionsorarrangementsthatprotectagainsttheriskoanyfuctuationinthevalueosharesobtainedunderanemployeeshareplanoraslongasthesharesremainsubjecttoarestrictionondisposalundertheplan.Strictcompliancewiththesharetradingpolicyisaconditionoemployment.Breachesothepolicyaresubjecttodisciplinaryactionwhichmayincludeterminationoemployment.ThepolicyrequiresWesarmersdirectorsandseniorexecutivestoadvisetheCompanySecretaryitheyintendtoenterorhaveenteredintoamargin-lendingorothersecurityarrangementaectingtheCompanyssecurities.TheCompanySecretaryinconsultationwiththeChairmandeterminesisucharrangementsarematerialandrequiredisclosuretothemarket.ThepolicyisavailableontheCorporateGovernancesectionotheCompanyswebsiteatwww.wesarmers.com.auSection3ExecutiveremunerationcomponentsFixedAnnualRemunerationFixedAnnualRemunerationFARconsistsobasesalaryandstatutorysuperannuationcontributions.ExecutivedirectorsandseniorexecutivesmayalsoelecttohaveacombinationobenetsprovidedoutotheirFARincludingadditionalsuperannuationandtheprovisionoamotorvehicle.Thevalueoanynon-cashbenetsprovidedtothemincludesthecostsoanyringebenetstaxpayablebyWesarmersasaresultoprovidingthebenet.Remunerationlevelsorexecutivesarereviewedannuallyhoweverthereisnoguaranteeoanincrease.TheBoardandRemunerationCommitteeobtainindependentadviceromexternalconsultantsaspartothisreviewprocess.SeniorexecutiveFARwasreviewedeective1October2012basedonbusinessandindividualperormance.Theaveragexedremunerationincreaseorkeymanagementpersonnelwaslessthantwopercent.TheBoarddeterminedthatnoincreasewouldbemadetothexedremunerationortheGroupMDorthe2013nancialyearandthe2014nancialyearasthecurrentleveloremunerationisconsideredappropriate.GroupManagingDirectorManagingDirectorColesOtherSeniorExecutives343333181171422533AtriskpayannualincentiveSTIFixedremunerationAtriskpaylong-termincentiveLTI WesfarmersaNNUaLreport201384DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesAnnualincentiveplanSummaryoplanWhatistheannualincentiveandwhoparticipatesAllseniorexecutivesparticipateintheannualincentiveplanwhichprovidesuponsatisactionoapplicableperormanceconditionsacashawardupto60percentoFARwithanyamountawardedabovethatgenerallyprovidedintheormorestrictedmandatorydeerredshares.Participantsarealsoprovidedwiththeopportunitytoelectupronttovoluntarilydeeranadditionalportionoanycashawardintosharesi.e.inadditiontothemandatorydeerralarrangement.WhatistheamounttheexecutivecanearnLeveloperormancePercentageoFARreceivedBelowthresholdorbelowexpectationsi.e.92.5or95otargetdependingonthedivision0BetweenthresholdandtargetUpto60upto100ortheGroupMDTargetormeetsexpectations60100ortheGroupMDAbovetargetorwellaboveexpectationsi.e.105or110otargetdependingonthedivisionUpto120Whatweretheperormanceconditionsorthe2013fnancialyearTheperormanceconditionsortheannualincentiveareamixbetweenfnancialandnon-fnancialmeasures.Thespecifcperormanceconditionsorthe2013fnancialyearandachievementagainstthesemeasuresisshowninthetableonpage85.WhyweretheperormanceconditionschosenThefnancialperormancemeasureswerechosenprincipallybecauseotheirimpactonROEwhichisasignifcantcontributortoachievementosatisactoryreturnstoshareholdersotheWesarmersGroup.Thenon-fnancialperormancemeasureshavebeensettodriveleadershipperormanceandbehavioursconsistentwithachievingtheGroupslong-termobjectivesinareasincludingsaetydiversitysuccessionplanningandtalentmanagement.InadditionduetothesignifcantturnaroundeortrequiredtheGroupMDhasaseparateperormancemeasurethatisdependentontheimprovementinannualperormanceotheColesdivision.WhenaretheperormanceconditionstestedIncentiveawardsaredeterminedaterthepreparationothefnancialstatementseachyearinrespectothefnancialmeasuresandaterareviewoperormanceagainstnon-fnancialmeasuresbytheGroupMDandinthecaseotheGroupMDbytheBoardattheendothefnancialyear.TheBoardconfrmsfnalawardsbasedonoverallpersonalandGroupperormance.InaccordancewiththetermsotheplantheBoardhasdiscretiontomakeadjustmentstotheperormanceconditions.AnnualincentivecashpaymentsaremadeanddeerredrestrictedsharesareallocatedinlateAugust.IsthereanyclawbackprovisionYes.ThetermsotheplancontainamechanismortheBoardtoclawbackoradjustanyincentiveawardswhichvestormayvestasaresultoamaterialmisstatementinoromissionromthefnancialstatementsorotherwiseasaresultorauddishonestyorbreachoobligations.TheBoardalsohasdiscretiontoadjustanyconditionsapplicabletoanawardiconsideredappropriate.TheBoardmayuptothevalueotheoverpaidremunerationreduceordeerorotherwiserequiretherepaymentoanyamountpaidorpayabletotheexecutivetoensurenounairbeneftisderived.WhatarethekeytermsotherestrictedsharesThesharesaresubjecttoathree-yeartradingrestrictionwhiletheexecutiveremainsanemployeeoWesarmersandtheexecutivecanelectoranadditionalrestrictionouptosevenyears.AoreitureconditionappliesonthemandatorydeerredsharessuchthattheBoardmaydeterminetooreitthesesharesianexecutiveresignsoristerminatedorcausewithinoneyearotheshareallocation.Summaryoactualperormance2013fnancialyearThetableonpage85setsouttheperormanceconditionsorthe2013annualincentiveandtheweightingbetweenthesemeasuresoreachotheexecutivedirectorsandseniorexecutives.Alsoindicatedinthetableiswhetherthethresholdortargetperormanceleveloreachothefnancialmeasureswasmetorexceeded. 85WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesNameWeightingofnancialmeasuresWeightingonon-fnancialmeasuresLinktoGroupordivisionalperormanceoutcomesGroupNPATandROEBalanceSheet1DivisionalEBITDivisionalROCStoresalesgrowthcoalsalesandminecashcostsAgreedobjectivesincludediversitytalentmanagementandsaetyRJBGoyder3010101040Grouppages2to3onColesturnaroundTJBowen2301055NANA50Grouppages2to3SAButelNA1010252520103Resourcespage42JCGillamNA3535NA20103HomeImprovementandOceSuppliespage26IJWMcLeodNA40202010103Colespage22GARussoNA40102020103Kmartpage30Thresholdperormancelevelnotmet1GroupNPATandROEappliestobothRJBGoyderandTJBowenwitha30percentweightingandBalanceSheetManagementwitha10percentweightingonlyappliestoTJBowen.2DivisionalEBITorTJBowenrefectsperormanceotheIndustrialandSaetydivisionandChemicalsEnergyandFertilisersdivisionrespectively.3Saetytargetsarebasedonanimprovementonlastyearsresult.ThesaetyperormanceortheColesandHomeImprovementdivisionsexceededtargetperormance.ThesaetytargetsorResourcesKmartandtheOceSuppliesdivisionswerenotmetinthe2013nancialyearhoweverthesaetyresultsweregenerallythesameorasmallimprovementonlastyear.ThresholdperormancelevelmetorexceededTargetperormancelevelmetorexceededSummaryoannualincentiveawards2013fnancialyearSpecicinormationrelatingtotheactualannualincentiveawardsorthe2013nancialyearincludingthebreakdownbetweencashandrestrictedshareswhereapplicableissetoutinthetablebelow.Name1Totalannualincentiveaward2Amountoawardincash2Amountoawardinshares3Numberorestrictedshares-mandatorydeerred4Numberorestrictedshares-voluntarydeerred4AllocationsharepricePercentageomaximumSTIawarded5RJBGoyder33476482103600124404830700-40.5279.6TJBowen150179670000080179611149863740.5271.5SAButel525300525300----42.5JCGillam11842138700003142137754-40.5268.1IJWMcLeod617169341716934----69.1GARusso11026477440003586478850-40.5274.11DLRogersdidnotreceiveanannualincentiveawardorthe2013nancialyearashisemploymentceasedbeoretheendothenancialyearandthereore100percentomaximumSTIwasoreited.2Annualincentiveawardsorthe2013nancialyearwerepaidincashtoamaximumo60percentoFARwiththebalancedeerredintoshares.Detailotheportionothetotalannualincentivepaidincashissetoutinthetableonpage80underthecolumntitledshort-termbenetsshort-termincentive. WesfarmersaNNUaLreport201386DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesSummaryoannualincentiveawards2013fnancialyearcontinued3Fortheannualincentivedeerredintoshares46.1percentothevalueisshowninthetableonpage80underthecolumntitledshare-basedpaymentsvalueoshort-termincentivesharesasthe2013annualincentivemandatorydeerralintosharescommencedvestingrom1July2012andmaybesubjecttooreitureitheexecutiveresignspriorto30August2014.Thesharesaresubjecttoathree-yeartradingrestrictionto1September2016whiletheexecutiveremainsanemployeeoWesarmers.RJBGoyderTJBowenJCGillamandGARussorequesteduprontthatanadditionaltradingrestrictionto28February2019applytoanysharesallocated.4Thenumberosharesisdeterminedbasedupontheallocationsharepriceon30August2013.Foraccountingpurposestheserviceperiodorthe2013annualincentiveplancommencedon1July2012andthegrantdateisSeptember2012.InadditiontothemandatorydeerralarrangementparticipantswereprovidedwiththeopportunitytoelectupronttovoluntarilydeeraportionotheFY13STIcashawardintosharesthesesharesarenotsubjecttooreiturebutaresubjecttorestrictionsondealings.5ThemaximumannualincentivepaymentaKMPcanearnorthe2013fnancialyearis120percentoFAR.Anyamountnotearnedawardedisnotpaidtotheexecutiveandisoreited.Theannualincentivepaymentorseniorexecutivesortargetperormanceis60percentoFARand100percentoFARortheGroupMD.6IJWMcLeodasatemporaryresidentinitiallyemployedonafxedtermcontractisnotmandatorilyrequiredtodeeraportionothe2013annualincentiveintoshares.Forthe2014fnancialyearMrMcLeodwillberequiredtodeeranyannualincentiveabove60percentoFARintoshares.Long-termincentiveplansSummaryoplansTheprimarylong-termincentiveplanoperatedorseniorexecutivesotheWesarmersGroupistheWesarmersLongTermIncentivePlanWLTIPseebelow.Inadditionaspecialpurposefve-yearincentiveplanhasoperatedorselectedkeyColesGroupexecutives.The2013fnancialyearwasthefnalyearooperationotheColesLongTermIncentivePlanseepage89.InadditiontheperormancerightsgrantedundertheGroupManagingDirectorRightsPlanin2008lapsedollowingtestingotheapplicableperormanceconditionsasat30June2013seepage88.2012WesarmersLongTermIncentivePlanWLTIPThe2012WLTIPgrantedduringthe2013fnancialyearcomprisedanallocationoperormancerightstoeligibleexecutives.IngeneralitherelativeTSRandCAGRinROEperormanceconditionsaremetexecutiveswillbeallocatedWesarmerssharesattheendotheour-yearperormanceperiod.SummaryoplanWhatistheWLTIPandwhoparticipatesTheWLTIPisdesignedtolinklong-termexecutiverewardwithongoingcreationoshareholdervaluewiththeallocationoequityawardsthataresubjecttosatisactionolong-termperormanceconditions.Forthe2012WLTIPawardparticipantswereallocatedperormancerightseachrepresentingarighttobeallocatedashare.Asperormancerightsrepresentarighttobeallocatedashareintheutureexecutivesarenotentitledtodividendsorvotingrightsduringtheperormanceperiod.AllseniorexecutivesincludingtheGroupMDotherthantheColesdivisionexecutivesparticipateinthe2012WLTIPgrant.HowistheWLTIPallocationdeterminedTheWLTIPawardsarebasedonapercentageofxedremunerationasat30June2012.Theawardsgrantedcommencesat80percentoFARortargetperormancealthoughtheGroupMDmayrecommendagreaterallocationupto160percentoFARtorewardexceptionalperormance.TheWLTIPortheGroupMDisdeterminedbytheBoardandsetwithintherangeo100to200percentoFAR.Thenumberoperormancerightsallocatedisdeterminedbaseduponthe10dayvolumeweightedaveragepriceoWesarmerssharesovertheperiodimmediatelyollowingthe2012resultsannouncedinAugusti.e.17to30August2012.WhatistheperormanceperiodTheperormancerightsaresubjecttoaour-yearperormanceperiodbeing1July2012to30June2016.Anyrightswhichdonotvestollowingtestingotheperormancehurdlesattheendotheperormanceperiodwilllapse. 87WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesWhataretheperormanceconditionsThe2012WLTIPissubjecttotwoperormancehurdles75percentotheperormancerightswillbetestedbasedonWesarmerscompoundaveragegrowthrateCAGRinReturnonEquityROEand25percentotheperormancerightswillbetestedbasedonWesarmersTotalShareholderReturnTSRrelativetotheCAGRinROEandTSRotheASX50Indexovertheour-yearperormanceperiod.TheollowingvestingscheduleappliestobothperormancehurdlesPercentilerankingPercentageofawardsvestingBelowthe50thpercentile0vestingEqualtothe50thpercentile50vestingBetweenthe50thand75thpercentileAnadditional2oawardsvestoreachpercentileincreaseEqualtothe75thpercentileorabove100vestingWhyweretheseperormanceconditionschosenandwhenaretheytestedForthe2012WLTIPtheBoardconsidersthatCAGRinROEisanappropriateperormancehurdleasitisusedbyWesarmerstomeasurethereturnonitsportolioobusinessesisakeymetrictomeasureWesarmerslong-termsuccessasitcontainsclearlinkstoshareholdervaluecreationandisaninternalmeasurethatanexecutivecaninfuenceandavoidstheunintendedconsequencesosharemarketvolatility.TheBoardconsidersthataTSRhurdleensuresalignmentbetweencomparativeshareholderreturnandrewardortheexecutiveandprovidesarelativeexternalmarketperormancemeasurehavingregardtoWesarmersASX50peers.TheBoardteststheperormanceconditionsollowingnalisationotheannualaccountsattheendotheperormanceperiod.ArethereanyrestrictionsonsharesallocatingonvestingSharesallocatedonvestingotherightsatertheour-yearperormanceperiodwillnotbesubjecttoanyadditionaltradingrestrictionsondealing.Seniorexecutiveshavetheopportunityorequestinguprontthatanadditionaloneorthreeyeartradingrestrictionwillapplytoanysharesallocatedtothem.Noamountispayableinrespectotheallocationoronthevestingotherights.IsthereanyclawbackprovisionYes.ThetermsotheplancontainamechanismortheBoardtoclawbackoradjustanyincentiveawardswhichvestormayvestasaresultoamaterialmisstatementinoromissionromthenancialstatementsorotherwiseasaresultorauddishonestyorbreachoobligations.TheBoardalsohasdiscretiontoadjustanyconditionsapplicabletoanawardiconsideredappropriate.TheBoardmayuptothevalueotheoverpaidremunerationreduceordeerorotherwiserequiretherepaymentoanyamountpaidorpayabletotheexecutivetoensurenounairbenetisderived.WhathappensintheeventoachangeocontrolTheBoardhasdiscretiontodeterminethetreatmentoawardsundertheWLTIPintheeventoachangeocontrol.WhathappensitheexecutiveceasesemploymentduringtheperormanceperiodIanexecutiveceasesemploymentwithWesarmersbeoretheendotheperormanceperiodtheirentitlementtotherightsianywilldependonthecircumstancesocessation.Allrightswilllapseintheeventoresignationorterminationorcause.IanexecutiveceasesemploymentduringtheperormanceperiodbyreasonoredundancyillhealthdeathorothercircumstancesapprovedbytheBoardtheexecutivewillgenerallybeentitledtoapro-ratanumberorightsbasedonachievementotheROEandTSRhurdlesovertheperormanceperioduptoceasingemploymentandtotheextenttheperormancehurdleshavebeensatisedatthetimeocessation.WhatWLTIPawardsvestedinthe2012nancialyearSharesallocatedunderthe2010WLTIPawardweresubjecttoathree-yearperormanceperiodto30June2013whichrequiredWesarmersCAGRinROEovertherelevantperormanceperiodtoexceedthe50thpercentileotheCAGRinROEotheSPASX50Indexbeoreanysharesvest.TheperormanceconditionwasmetinullwithWesarmersCAGRinROEatthe82ndpercentile.Thenumberosharesthatvestedunderthe2010WLTIPisshowninthetableonpage88. WesfarmersaNNUaLreport201388DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesGroupManagingDirectorRightsPlan2008grant-legacyplanAsdisclosedinpreviousreportstheGroupMDRightsPlanwasaone-ospecialpurposeplanpursuanttowhichperormancerightsweregrantedtotheGroupMDthatvestedsubjecttosatisyinganROEbasedvestingcondition.Asthevestingconditionwasnotmeton30June2013theapplicableperormancehurdlescannolongerbesatisedandallrightsheldbytheGroupMDlapseasshowninthetablebelow.Noexpensewasrecognisedinrespectotheserightsinthe2013nancialyear.TheBoardhassubsequenttoyearendclosedtheGMDRightsPlan.SummaryofawardsunderWesfarmerslongtermincentivearrangementsThetablebelowsetsoutdetailsoperormancerightsgrantedtoseniorexecutivesunderthe2012WLTIPallocationi.e.duringthe2013nancialyearaswellasdetailsosharesgrantedunderprioryearWLTIPawardsandtheperormancerightsgrantedtotheGroupManagingDirectorin2008undertheGroupMDRightsPlanwhichlapsedatyearend.NameHeldat1July20121Grantedduringyear2Valueatgrant3Vested4LapsedforfeitedHeldat30June20135RJBGoyderGMDRights100000---100000-Rights-1000002673000--100000Shares206480----206480TJBowenRights-500001336500--50000Shares118730----118730SAButelRights-29102784950--29102Shares68457--20718-47739JCGillamRights-407431098939--40743Shares110319--14593-95726DLRogers6Rights-34922941930373031192-Shares74206--2646447742-GARussoRights-34922941930--34922Shares94445--26423-680221Heldat1July2012sharesrefectsprioryearWLTIPallocationswhicharesubjecttoperormanceconditionsatthattimei.e.underthe2010WLTIPand2011WLTIPallocations.Asthe2012WLTIPgrantwastherstallocationoperormancerightsundertheWLTIPnoamountisshownorheldat1July2012rights.2Theperormancerightsunderthe2012WLTIPwereallocatedtoparticipantson15November2012andthenumberorightsawardedisdeterminedbaseduponthe10dayvolumeweightedaveragepriceoWesarmerssharesimmediatelyollowingthe2012resultsannouncement.Foraccountingpurposestheserviceperiodorthe2012WLTIPcommencedon1July2012andthegrantdateis14November2012orexecutivedirectorsand14September2012orallotherparticipants.The2012WLTIPissubjecttoaour-yearperormanceperiod.Sharesallocatedonvestingotherightsatertheour-yearperormanceperiodarenotsubjecttoanyadditionaltradingrestrictionsondeals.RJBGoyderJCGillamandGARussorequesteduprontthatanadditionaltradingrestrictionto15November2017or15November2019applytothesharesallocated.3ForaccountingpurposestheairvalueatgrantdateisshownaboveinaccordancewithAASB2ShareBasedPayment.TherightssubjecttomarketconditionsTSRhurdlehavebeenindependentlyvaluedusingMonteCarlosimulationusingtheBlack-Scholesramework.Therightssubjecttonon-marketconditionsCAGRinROEhurdlehavebeenvaluedusingtheBlack-Scholesoptionpricingmodel.ThevalueperrightorexecutivedirectorsortheTSRperormancehurdleandROEhurdleis20.34and28.86respectively.Thevalueorrightorallotherparticipantswas21.04and28.95respectively.4Vestedduringtheyearrefectsthesharesthatweregrantedunderthe2010WLTIP.100percentothatgrantvestedbasedonmeetingthethree-yearROEhurdleto30June2013.Thesharepriceatthedateovestingon30June2013was39.60.Thesharesremainsubjecttoatradingrestrictionto19November2013and19November2014orSAButel.5Heldat30June2013refectstheWLTIPallocationssubjecttoperormanceconditionsatthattimei.e.the2011sharesand2012WLTIPrights.6InaccordancewiththetermsotheWLTIPDLRogerswasentitledtoanumberothe2011WLTIPand2012WLTIPsharesearnedattheendotheperiodbasedontestingotheROEandTSRperormanceconditionsuptocessation.Anilbalanceisshownasheldat30June2013asDLRogersceasedemploymenton31May2013. 89WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesSummaryofdividendspaidonWLTIPsharesThetablebelowsetsoutdetailsodividendspaidonunvestedsharesallocatedunderWLTIPawardsmadepriortothe2012nancialyeartoparticipatingseniorexecutives.Unvestedsharesarethosesharesthatremainsubjecttoperormanceconditionsduringthe2013nancialyear.Thetotalothe2012naldividendpaid28September2012o95centsandthe2013interimdividendpaid28March2013o77centspaidduringtheyearontheseunvestedsharesissetoutbelow.NodividendsarepaidonWLTIPallocationswhicharemadeintheormoperormancerightsor2012andlateryears.NameTotalvalueofdividendpayments1RJBGoyder20TJBowen204216SAButel117746JCGillam189749DLRogers127634GARusso1624451Totalvalueodividendpaymentsrefectsthesharesthatweresubjecttoperormanceconditionsduringthe2013nancialyearandareconsideredunvestedsharesi.e.2010and2011WLTIPshareawardallocations.The2010and2011WLTIParesubjecttoperormanceandoreitureconditionsto30June2013and30June2015respectively.2NoneoMrGoyderslong-termincentivearrangementsi.e.2011WLTIPshareawardallocationand2008GroupMDRightsPlancarrytheentitlementtodividends.ColesLongTermIncentivePlanCLTIPThe2013nancialyearwasthenalyearothespecialpurposeCLTIP.Fromthe2014nancialyearonwardsseniorexecutiveparticipantsintheCLTIPwillbeinvitedtoparticipateintheWesarmersLongTermIncentivePlanWLTIPtoalignwiththeincentiveplanoeredtootherseniorexecutives.TheCLTIPwasestablishedtoprovideaboveaveragerewardsoraselectnumberoColesexecutivesinreturnorsuccessullyimplementingtheturnaroundstrategiesdesignedortherstveyearsoWesarmersownershipoColes.ThesestrategieshavebeendesignednotonlytodeliverstrongimprovementinColesnancialperormancebutalsototransormthewayinwhichColesoperatesincludingenhancingon-shelavailabilityoproductandrevampingColesreshoodoeringtheintroductionobrightnewstoreormatsandimprovingColessupplychaintodeliversignicantlylowerpricesalltoenhancethecustomerexperience.WhiletheawardsmadetoexecutivesundertheCLTIParesignicantthetransormationtheyhaveoverseenhasasillustratedbelowgeneratedmuchmoresignicantreturnstoWesarmersanditsshareholders.ThetransormationhasalsoraisedColestoanoperatingplatormromwhichitsbusinessisnownotonlysustainablebutpoisedorurthergrowth.80010006002004000140016001200mColesEBITEBITminc.2013153313.12012135616.32011116621.2201096215.82009831-09101112201384increaseover5years WesfarmersaNNUaLreport201390DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesSummaryoCLTIPWhatistheperormanceperiodTheplanoperatedrom1July2008to30June2013whichwasalignedtoWesarmersfve-yearperiodortheColesturnaround.Annualperormanceawardsweremadeovertheperiodbasedonperormanceandwereaccumulatedinanawardpooloreachparticipantthatwasprogressivelypaidoutrom2011throughto2013.HowwastheannualawardpoolcontributiondeterminedContributionsweremadetotheawardpooleachyearoncetheColesdivisionsEBITreachedthethresholdlevelapprovedbytheBoardsetatanaverageo94percentothebusinessplanEBITtargetineachyear.ThesizeothecontributiontotheawardpoolincreasedastheColesdivisionsEBITincreased.Inordertoencourageexceptionalperormancenoupperlimitwasplacedonthesizeotheawardpool.WhatwasthefnalyearcontributiontotheawardpoolorMrMcLeodThe2013contributiontotheawardpoolinrespectoMrMcLeodwas1.92millionorexceedingthresholdperormanceothebusinessplanorColes.ThetotalcontributiontotheawardpoolinrespectoMrMcLeodorthefveyearsotheplanhasbeen34.52million.WhatweretheperormanceconditionsTheactualentitlementoeachparticipantoutotheawardpooleachyearwasdeterminedbyperormanceagainsttheollowingperormanceconditionsFinancial80percentNon-fnancial20percentAnnualgrowthinColesrevenueexcludinguelsalesagainsttargetsReturnoncapitalinvestedbyWesarmersagainsttargetsHealthoColesbusinessinareassuchascustomerandemployeesatisactionon-shelavailabilitydeliveryonewstoressaetydiversityandsuccessionplanningandtalentmanagement.In2012and2013therewasanadditionalperormanceconditionrelatingtokeymanagementsuccessionplanning.ItheBoarddoesnotapprovethesuccessionplanineitheryearnoawardaccruesorthatyear.7.06.04.05.09.08.010.0ColesROCROC20139.520128.720117.820106.520095.5increaseover5years0910111220137324000220002600028000bColesRevenueexcludingfuelsalesbinc.2013285424.92012272024.82011259586.32010244305.5200923157-5.4bincreaseover5years091011122013 91WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesWhyweretheseperormanceconditionschosenTheperormanceconditionswereselectedasinadditiontogrowingEBITtheywereimportantindicatorsothelong-termstructuralturnaroundintheColesbusiness.InparticulartheseconditionswerechosenassustainableprotgrowthromColesandasatisactoryrateoreturnoncapitalinvestedinColesarekeydriversorWesarmersnancialperormanceocussinguponprotablerevenuegrowthwasimportanttoinormthebusinessdecisionsbeingmadethroughoutthetransormationandachievingsustainedimprovementinthenon-nancialhealthobusinessconditionsinthecompetitiveretailmarketsinwhichColesoperatesisakeyindicatorothemarketattractivenessandqualityomanagementoColesoeringswhichinturnisakeycontributortoutureprotability.AreawardspayableincashorsharesParticipantshadtheoptiontoelectearlierintheyeartotakeupto50percentoanyawardinrelationtothe2013nancialyearintheormoWesarmersshares.MrMcLeodelectedtotakehisawardsundertheCLTIPincash.HoweverasatthedateothisreportMrMcLeodholds66250Wesarmersshares.WhendoawardsbecomepayableWhilecontributionstotheawardpoolweremadeannuallypaymentopartotheaccumulatedawardpooldidnotcommenceuntil30June2011.MrMcLeodbecameentitledon1July2011toapaymento10.08mbeing40percentothecumulativeawardpool.Aurtherpaymentwasmadeoutotheaccumulatedpoolatthetimeollowing30June2012.MrMcLeodbecameentitledon1July2012toapaymento9.48mbeing60percentothecumulativecashawardpoollesstherstinterimpayment.Thepaymentothebalanceotheawardpoolistobemadearoundthetimeothisreportollowingthenaltestingothe2013perormanceconditions.WhatwasthenalamountpaidtoMrMcLeodinthe2013nancialyearMrMcLeodisentitledtoapaymento14.96millionbeingthe2013contributiontogetherwiththeaccruedbutunpaidbalanceotheawardpoolasat30June2013.ThetotalcontributiontotheawardpoolinrespectoMrMcLeodortheveyearsotheplanhasbeen34.52million.WhatamountisshowninthestatutoryreportsasremunerationorMrMcLeodinrelationtothe2013nancialyearTheaccountingaccrualorthe2013nancialyearinrelationtoMrMcLeodsawardsearnedovertheveyearsotheCLTIPasshowninthetableonpage80was6.63million.Thisamountrefectstheamortisationoannualcontributionstotheawardpoolasrequiredunderaccountingstandards.Section4ServiceagreementsTheremunerationandothertermsoemploymentortheexecutivedirectorsandseniorexecutivesarecoveredinormalemploymentcontracts.Allserviceagreementsareorunlimitedduration.Allexecutivesareentitledtoreceivepayinlieuoanyaccruedbutuntakenannualandlongserviceleaveoncessationoemployment.NameNoticeperiodsTerminationpaymentRJBGoyder12monthsnoticeorpaymentinlieuMaybeterminatedimmediatelyorseriousmisconductIJWMcLeodThenoticeperiodundertheexistingcontractistheunexpiredbalanceothatcontract.From1January2013thenoticeperiodwillbesixmonthsbyeitherpartyorpaymentinlieuMaybeterminatedimmediatelyorseriousmisconductTJBowen1ThreemonthsnoticebyeitherpartyorpaymentinlieuMaybeterminatedimmediatelyorseriousmisconductSAButelJCGillamGARusso1ThreemonthsnoticebyeitherpartyandsixmonthsnoticeinthecaseoredundancyorpaymentinlieuMaybeterminatedimmediatelyorseriousmisconduct1AportionotheretentionincentivepreviouslyearnedorsatisyingtheapplicableserviceconditionunderthelegacyretentionincentiveplanequaltoninemonthsFARispayabletotheseexecutivesatthetimeoterminationoemploymentexceptinthecaseoterminationorseriousmisconduct. WesfarmersaNNUaLreport201392DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesSection5Non-executivedirectorremunerationOvervieworemunerationpolicyandarrangementsPolicyobjectivesWesarmerspolicyregardingeesornon-executivedirectorsisintendedtobemarketcompetitiveaimtoseteesatalevelcompetitivewithnon-executivedirectorsincomparatorcompaniesandsaeguardindependencetonotincludeanyperormance-relatedelementtopreservetheindependenceonon-executivedirectors.AggregateeesapprovedbyshareholdersThecurrentaggregateeepoolornon-executivedirectorso3300000wasapprovedbyshareholdersatthe2012AnnualGeneralMeeting.Boardandcommitteeeesaswellasstatutorycontributionsmadeonbehalothenon-executivedirectorsinaccordancewithWesarmersstatutorysuperannuationobligationsareincludedinthisaggregateeepool.RegularreviewsoremunerationTheBoardperiodicallyreviewstheleveloeespaidtonon-executivedirectorsandseeksindependentadviceinthatregard.Athoroughreviewwasundertakenduringthe2012fnancialyearwiththeassistanceoPwC.TheBoarddeterminedthatnoincreasewouldbemadetonon-executivedirectoreesduringthe2013fnancialyear.Non-executivedirectorshareholdingsDuringthe2013fnancialyeartheBoardapprovedenhancementstotheshareholdingrequirementsornon-executivedirectors.Inadditiontotherequirementordirectorstoholdaminimumo1000WesarmersshareswithintwomonthsoappointmentdirectorsareexpectedtoincreasetheirholdingsinWesarmerssharestoanumberwhichisequivalentinapproximatevaluetothegrossannualbaseeepaidattherelevanttimewithinafveyearperiodoappointment.ShareacquisitionplanNon-executivedirectorshavetheacilitytoacquiresharesoutotheireesundertheWesarmersEmployeeShareAcquisitionPlanWESAP.Participationintheplanisvoluntaryandenablesnon-executivedirectorstousetheirater-taxeestoacquireWesarmersshares.Sharesarepurchasedonbehalothedirectorsonamonthlybasisexceptduringblackoutperiodsandaresubjecttoa12monthtradingrestrictionduringwhichtimethesharesareheldbytheplantrustee.Thesharesareacquiredon-marketattheprevailingmarketprice.Forthe2013fnancialyearMsWallacevoluntarilyelectedtoparticipateintheWESAPusingater-taxeestoacquireWesarmersshares.Atotalo2627shareswereallocatedtoMsWallacewithatotalvalueo99979.04atsharepricesrangingbetween34.31and42.50.ThenumberoWesarmersLimitedsharesheldbynon-executivedirectorsasatthedateothisreportisshownonpage73.Non-executivedirectoreesandotherbeneftsThetablebelowprovidesdetailsocurrentBoardandcommitteeeesinclusiveosuperannuationandcurrentcommitteemembership.Noincreaseshavebeenmadetonon-executivedirectoreessince1January2012.MembersotheNominationCommitteeandGreshamMandateReviewCommitteedonotreceiveanyadditionalees.FeesbeneftsDescriptionIncludedinshareholderapprovedcapBoardeesMainBoardYesChairmanRLEvery592800Membersallnon-executivedirectors197600CommitteeeesAuditCommitteeYesChairmanAJHowarth80000MembersPMBassatappointed14November2012RLEveryCMacekDLSmith-GanderVMWallaceuntil1February2013JAWestacottappointed3April201340000RemunerationCommitteeChairmanWGOsbornrom1February201350000MembersCBCarterRLEveryChairmanuntil1February2013JPGrahamCMacekVMWallacerom1February201325000 93WesfarmersaNNUaLreport2013DirectorsreportRemunerationreport2013auditedWesarmersLimitedanditscontrolledentitiesSuperannuationSuperannuationcontributionsaremadeonbehalothenon-executivedirectorstotheWesarmersGroupSuperannuationPlanoranotherregulatedsuperannuationund.AnamountisdeductedromgrosseesequaltotheapplicablesuperannuationguaranteepercentagewhichsatisfestheCompanysstatutorysuperannuationobligations.YesOtherGroupeesNon-executivedirectorsarepaidadditionaleesorparticipationonWesarmersdivisionalboardswhereapplicable.Theseamountsaredisclosedseparatelyinthetablebelow.NoOtherbeneftsNon-executivedirectorsareentitledtobereimbursedorbusiness-relatedexpensesincludingtravelexpensesandalsoreceivethebeneftocoverageunderadirectorsandofcerinsurancepolicy.NoNon-executivedirectorremunerationor2013Theeespaidorpayabletothenon-executivedirectorsinrelationtothe2013fnancialyeararesetoutbelowNon-executivedirectorFees-WesarmersLimitedSuperannuation1Fees-WesarmersGroupOtherbenefts2TotalPMBassat3201313932010980-5624155924CBCarter201320613016470-8964231564201220302515775-10347229147RLEvery201365591316470-8964681347201265562515775-10347681747JPGraham42013222600-10612089643376842012218800-10806010347337207AJHowarth5201326113016470701258964356689201222562238178-10347274147CMacek201324259020010-8964271564201222948529315-10347269147WGOsborn201321654716470-8964241981201220302515775-10347229147DLSmith-Gander201322113016470-8964246564201221802515775-10347244147VMWallace201321488016470-8964240314201221802515775-10347244147JAWestacott62013534824118-218659786Total20132433722133928176245795222823417201221716321463681080608277625088361Superannuationcontributionsaremadeonbehalothenon-executivedirectorsinaccordancewithWesarmersstatutorysuperannuationobligations.Alsoincludedisanypartoanon-executivedirectorseesthathavebeensacrifcedintosuperannuation.2Thebeneftincludedinthiscolumnisanapportionmentothepremiumpaidonapolicyordirectorsandofcerinsurance.3PMBassatwasappointedasadirectoron14November2012.4JPGrahamseesarepaidtoGreshamPartnersLimitedorparticipationontheboardsoWesarmersLimitedWesarmersInsurancePtyLtdandWesarmersGeneralInsuranceLimited.5AJHowarthreceiveseesorparticipationontheboardoBWPManagementLimited.6JAWestacottwasappointedasadirectoron3April2013. WesfarmersaNNUaLreport201394DirectorsreportRemunerationreport2013auditedWesfarmersLimitedanditscontrolledentitiesSection6OtherinformationIndependentauditofremunerationreportTheremunerationreporthasbeenauditedbyErnstYoung.Pleaseseepage177ofthisannualreportforErnstYoungsreportontheremunerationreport.ThisdirectorsreportincludingtheremunerationreportissignedinaccordancewitharesolutionofthedirectorsofWesfarmersLimited.RLEveryAORJBGoyderAOChairmanManagingDirectorMelbourne17September2013 95WesarmersaNNUaLreport2013Financialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentitiesContentsDirectorsdeclaration176Independentauditorsreport177Annualstatementocoalresourcesandreserves178Shareholderinormation180Five-yearnancialhistory182Investorinormation183Corporatedirectory184Incomestatement96Statementocomprehensiveincome97Balancesheet98Cashfowstatement99Statementochangesinequity100Notestothenancialstatements1011Cinin1012suyignifcnccuninglici1013sgninin1154Incndxn1185Incx1196eningh1217Dividndidndd1218Chndchquivln1229tdndhcivbl12310Invni12411Invnbckinginunccncinuncndhcvi12412Invninci12513pylnndquin12614Inngiblndgdwill12815oh13116tdndhybl13117Inbinglnndbwing13218pviin13419Inunclibilii13620ohlibilii14021Cnibudquiy14122rindning14323rv14324inncilikngnbjcivndlici14425Hdgingcivii15426Cinndcningnci15727evnhblnchd15828Ininjinlycnlld15929pndiclu16030subidii16131DdCGun16732rldyncin16933audiunin16934shbdynln17035pninln17236Dicndxcuivdiclu173 WesfarmersaNNUaLreport201396Incomestatementortheyearended30June2013WesarmersLimitedanditscontrolledentitiesCONSOLIDATED20132012Nm5746755897195517881281442822515983258080396173840679127496137514651021946236822321071995491973036316156449548982273834816275367365835494325053226304496591822612126centscents195.9184.2195.6183.9RevenueSaleogoodsRenderingoservicesInterestotherOtherTotalrevenueExpensesRawmaterialsandinventoryEmployeebeneftsexpense4NetinsuranceclaimsreinsuranceandcommissionsFreightandotherrelatedexpensesOccupancy-relatedexpenses4Depreciationandamortisation4Impairmentexpenses4Otherexpenses4TotalexpensesOtherincome4Shareoproftslossesoassociates12EarningsbeoreinterestandincometaxexpenseFinancecosts4ProftbeoreincometaxIncometaxexpense5ProftattributabletomembersotheparentEarningspershareattributabletoordinaryequityholdersotheparent6basicearningspersharedilutedearningspershare 97WesfarmersaNNUaLreport2013Statementocomprehensiveincomeortheyearended30June2013WesarmersLimitedanditscontrolledentitiesCONSOLIDATED20132012Nm226121264073712193551201252533-3291126121124523732081ProtattributabletomembersotheparentOthercomprehensiveincomeItemsthatmaybereclassifedtoproftorlossForeigncurrencytranslationreserveExchangedierencesontranslationooreignoperationsAvailable-or-salenancialassetsreserveChangesintheairvalueoavailable-or-salenancialassetsTaxeect5CashfowhedgereserveUnrealisedgainsoncashfowhedgesRealisedgainstranserredtonetprotRealisedlossestranserredtonon-nancialassetsShareoassociatesreserveTaxeect5ItemsthatwillnotbereclassifedtoproftorlossRetainedearnings22ActuarialgainlossondenedbenetplanTaxeect5OthercomprehensiveincomelossortheyearnetotaxTotalcomprehensiveincomeortheyearnetotaxattributabletomembersotheparent WesfarmersaNNUaLreport201398Balancesheetasat30June2013WesfarmersLimitedanditscontrolledentitiesCONSOLIDATED20132012Nmassets133311272341238450475006187164131616903625401058610911583361542042937047529472631721768321615116097445943934362333571931487032569314014315542312599954207016213104551379128915401635521262222019572107478205709388111171206613682661164833756159381713316685260222562723290232862631237521033832692602225627CurrentassetsCashandcashequivalents8Tradeandotherreceivables9Inventories10Derivatives25Investmentsbackinginsurancecontractsreinsuranceandotherrecoveries11Other15TotalcurrentassetsNon-currentassetsReceivables9Available-for-saleinvestmentsInvestmentsinassociates12Deferredtaxassets5Property13Plantandequipment13Goodwill14Intangibleassets14Derivatives25Investmentsbackinginsurancecontractsreinsuranceandotherrecoveries11Other15Totalnon-currentassetsTotalassetsLIaBILItIesCurrentliabilitiesTradeandotherpayables16Interest-bearingloansandborrowings17IncometaxpayableProvisions18Insuranceliabilities19Derivatives25Other20TotalcurrentliabilitiesNon-currentliabilitiesPayables16Interest-bearingloansandborrowings17Provisions18Insuranceliabilities19Derivatives25Other20Totalnon-currentliabilitiesTotalliabilitiesNetassetseQUItYEquityattributabletoequityholdersoftheparentIssuedcapital21aReservedshares21bRetainedearnings22Reserves23Totalequity 99WesfarmersaNNUaLreport2013Cashowstatementfortheyearended30June2013WesfarmersLimitedanditscontrolledentitiesCONSOLIDATED20132012NmCashowsromoperatingactivities6494662620597685786567221281444024451040835393136415516423312626659275440274445217602169205614432040901451985178919651242206230112789713331127ReceiptsfromcustomersPaymentstosuppliersandemployeesDividendsanddistributionsreceivedfromassociatesInterestreceivedBorrowingcostsIncometaxpaidNetcashowsromoperatingactivities8CashowsrominvestingactivitiesNetacquisitionofinsurancedepositsPaymentsforpropertyplantandequipmentandintangibles8Proceedsfromsaleofpropertyplantandequipmentandintangibles8ProceedsfromsaleofcontrolledentitiesNetinvestmentsinassociatesandjointventuresAcquisitionofsubsidiariesnetofcashacquiredNetcashowsusedininvestingactivitiesCashowsromfnancingactivitiesProceedsfromborrowingsRepaymentofborrowingsProceedsfromexerciseofin-substanceoptionsundertheemployeeshareplan21EquitydividendspaidNetcashowsusedinfnancingactivitiesNetincreaseincashandcashequivalentsCashandcashequivalentsatbeginningofyearCashandcashequivalentsatendoyear8 WesfarmersaNNUaLreport2013100Statementofchangesinequityortheyearended30June2013WesarmersLimitedanditscontrolledentitiesaibublquiyhldhnIudrvdrindHdgingohtlcilhningvvquiyCONSOLIDATEDN2328641177418912125329--2126--2126----77----55---29-29--4--4--4291245--212229122081-5---5-51793--1788-101793--178323286312103160109256272328631210316010925627--2261--2261----4040----22---69-69--1--1--16942112--226269422373----334----4-3---3-4---4-41990--1986451990-319782329026237522915426022Balanceat1July2011NetprotortheyearOthercomprehensiveincomeExchangedierencesontranslationooreignoperations23Changesintheairvalueoavailable-or-saleassetsnetotax23Changesintheairvalueocashfowhedgesnetotax23Actuariallossondenedbenetplannetotax22TotalothercomprehensivelossortheyearnetotaxTotalcomprehensiveincomeortheyearnetotaxProceedsromexerciseoin-substanceoptions21Equitydividends2122Balanceat30June2012Balanceat1July2012NetprotortheyearOthercomprehensiveincomeExchangedierencesontranslationooreignoperations23Changesintheairvalueoavailable-or-saleassetsnetotax23Changesintheairvalueocashfowhedgesnetotax23Actuarialgainondenedbenetplannetotax22TotalothercomprehensiveincomeortheyearnetotaxTotalcomprehensiveincomeortheyearnetotaxShare-basedpaymenttransactions23Issueoshares21Ownsharesacquired21Proceedsromexerciseoin-substanceoptions21Equitydividends2122Balanceat30June2013 101WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities1CorporateinormationThenancialreportoWesarmersLimitedreerredtoasWesarmersortheCompanyortheyearended30June2013wasauthorisedorissueinaccordancewitharesolutionothedirectorson17September2013.WesarmersisaorprotcompanylimitedbysharesincorporatedinAustraliawhosesharesarepubliclytradedontheAustralianSecuritiesExchange.ThenatureotheoperationsandprincipalactivitiesoWesarmersLimitedanditssubsidiariestheGrouparedescribedinnote3.2SummaryosignifcantaccountingpoliciesaBasisopreparationThenancialreportisageneralpurposenancialreportwhichhasbeenpreparedinaccordancewiththerequirementsotheCorporationsAct2001AustralianAccountingStandardsandotherauthoritativepronouncementsotheAustralianAccountingStandardsBoardtheAASB.Thenancialreporthasbeenpreparedonahistoricalcostbasisexceptorinvestmentsheldbyassociatesnancialinstrumentsandavailable-or-saleinvestmentswhichhavebeenmeasuredatairvalue.Thecarryingvaluesorecognisedassetsandliabilitiesthatarethehedgeditemsinairvaluehedgerelationshipswhichareotherwisecarriedatamortisedcostareadjustedtorecordchangesintheairvaluesattributabletotherisksthatarebeinghedged.ThenancialreportispresentedinAustraliandollarsandallvaluesareroundedtothenearestmilliondollars000000unlessotherwisestatedundertheoptionavailabletotheCompanyunderASICClassOrder98100.TheCompanyisanentitytowhichtheclassorderapplies.Certaincomparativeinormationhasbeenreclassiedtobepresentedonaconsistentbasiswiththecurrentyearspresentation.bStatementocomplianceThenancialreportcomplieswiththeCorporationsAct2001AustralianAccountingStandardsandInternationalFinancialReportingStandardsIFRSasissuedbytheInternationalAccountingStandardsBoardIASB.TheGrouphasadoptedallothenewandrevisedAccountingStandardsandInterpretationsissuedbytheAASBthatarerelevanttotheoperationsotheGroupandeectiveorreportingperiodsbeginningonorater1July2012.TheadoptionothesestandardsdidnotgiverisetonewpoliciesbeingadoptedanddidnothaveamaterialeectonthenancialstatementsotheGroup.ReertopolicynoteaiortheStandardsandInterpretationsrelevanttoWesarmersthathavebeenadopted.AnumberoAustralianAccountingStandardsandInterpretationsthathavebeenissuedoramendedbutarenotyeteectivehavenotbeenadoptedbytheGrouportheannualreportingperiodended30June2013.ReertopolicynoteajortheStandardsandInterpretationsrelevanttoWesarmersthatarenotyeteectiveandhavenotbeenearlyadopted.cBasisoconsolidationTheconsolidatednancialstatementscomprisethenancialstatementsotheGroup.Alistocontrolledentitiesatyearendiscontainedinnote30.Thenancialstatementsosubsidiariesarepreparedorthesamereportingperiodastheparentcompanyusingconsistentaccountingpolicies.Adjustmentsaremadetobringintolineanydissimilaraccountingpoliciesthatmayexist.Inpreparingtheconsolidatednancialstatementsallintercompanybalancesandtransactionsincomeandexpensesandprotandlossesresultingromintra-grouptransactionshavebeeneliminated.SubsidiariesareconsolidatedromthedateonwhichcontrolistranserredtotheGroupandceasetobeconsolidatedromthedateonwhichcontrolistranserredoutotheGroup.Investmentsinsubsidiariesareaccountedorbytheparentatcostlessanyallowanceorimpairment.Theacquisitionosubsidiariesisaccountedorusingtheacquisitionmethodoaccounting.Theacquisitionmethodoaccountinginvolvesrecognisingatacquisitiondateseparatelyromgoodwilltheidentiableassetsacquiredtheliabilitiesassumedandanynon-controllinginterestintheacquiree.Theidentiableassetsacquiredandtheliabilitiesassumedaremeasuredattheiracquisitiondateairvalues.dSignifcantaccountingjudgementsestimatesandassumptionsSignifcantaccountingjudgementsIntheprocessoapplyingtheGroupsaccountingpoliciesmanagementhasmadetheollowingjudgementsapartromthoseinvolvingestimationswhichhavehadasignicanteectontheamountsrecognisedinthenancialstatementsIncometaxTheGrouphasunrecognisedbenetsrelatingtocarriedorwardcapitallosseswhichcanonlybeosetagainsteligiblecapitalgains.Thesebenetsaredetailedinnote5.TheGrouphasexerciseditsjudgementthatatthisstageithasnotidentiedprobableutureeligiblecapitalgainsthatwillbeavailabletoutilisethetaxassets.MineralResourceRentTaxMRRTTheGrouphasunrecognisedbenetsrelatingtominingassetsrebatesandmininglosseswhichcanonlybeosetagainstutureminingprots.Thesebenetsaredetailedinnote5.TheGrouphasexerciseditsjudgementthatatthisstageithasnotidentiedsucientprobableutureeligibleminingprotsthatwillbeavailabletoutilisethetaxassets.SignifcantaccountingestimatesandassumptionsThecarryingamountsocertainassetsandliabilitiesareotendeterminedbasedonestimatesandassumptionsoutureevents.ThekeyestimatesandassumptionsthathaveasignicantriskocausingamaterialadjustmenttothecarryingamountsocertainassetsandliabilitieswithinthenextannualreportingperiodareImpairmentoassetsincludinggoodwillandintangibleswithindefniteuseullivesTheGroupdetermineswhetherassetsincludinggoodwillandintangibleswithindeniteuseullivesareimpairedatleastonanannualbasis.Thisrequiresanestimationotherecoverableamountothecashgeneratingunitstowhichthegoodwillandintangibleswithindeniteuseullivesareallocated.Therecoverableamountsothecashgeneratingunitshavebeendeterminedusingcashfowprojectionsaswellasothersupplementaryinormationbasedonanappropriatevaluationmodelwhichincorporatesprojectedcashfowscoveringave-yearperiod. WesfarmersaNNUaLreport2013102Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinueddSignifcantaccountingjudgementsestimatesandassumptionscontinuedTheassumptionsusedintheestimationorecoverableamountandthecarryingamountogoodwillandintangibleswithindeniteuseullivesarediscussedinnote14.On19March2012theMRRTandPetroleumResourceRentTaxPRRTlegislativepackageswerepassedbytheSenate.ThelegislationintroducedataxonAustralianironoreandcoalprojectswithsomelimitedexceptionseective1July2012andexpandedthereachothePRRT.TheintroductionotheMRRThasresultedinanumberonancialreportingconsiderationsithasnothoweverledtoanimpairmentbeingrecognisedinWesarmerscoalminingbusinessesbasedoncurrentbestestimates.Reertonote5orurtherdetails.On8November2011theSenatepassedtheCleanEnergyLegislativePackagewhichsetouttheintroductionoacarbonpriceinAustraliaasameansoreducingAustraliascarbonpollution.Thecarbonpricingmechanismhasatwo-phasedapproachaxedpricemechanismollowedbyanemissiontradingschemeETS.Underthecarbonpricingschemeaso1July2012everytonneocarbondioxideequivalentCO2-eproducedbyapproximately500oAustraliaslargestemittersispricedat23dollarspertonne.Fortherstthreeyearsthecarbonpriceisxedrisingannuallyby2.5percent.On1July2015thepricingmechanismwilltransitiontothefoatingETS.Theintroductionoacarbonpricemechanismhasresultedinanumberonancialreportingconsiderationsorthecurrentyear.Forthosedivisionsdirectlyimpactedbytheschemeithasledtoachangeinassumptionsusedorthepurposeoimpairmenttestingithasnothoweverledtoanimpairmentbeingrecognisedinthecurrentyear.InsuranceliabilitiesoutstandinginsuranceclaimsTheestimationooutstandingclaimliabilitiesisbasedlargelyontheassumptionthatpastdevelopmentsareanappropriatepredictorotheutureandinvolvesavarietyoactuarialtechniquesthatanalyseexperiencetrendsandotherrelevantactors.Theprocesscommenceswiththeactuarialprojectionotheutureclaimpaymentsandclaimhandlingcostsincurredtothereportingdate.Eachclassobusinessisusuallyexaminedseparatelyandsomeorallotheollowingwillbeconsideredoreachclassinprojectingutureclaimpaymentshistoricaltrendsinthedevelopmentandincidenceothenumberoclaimsreportednumberoclaimsnalisedclaimpaymentsandreportedincurredcostsexposuredetailsincludingpolicycountssumsinsuredearnedpremiumsandpolicylimitsclaimrequenciesandaverageclaimsizesthelegislativerameworklegalandcourtenvironmentsandsocialandeconomicactorsthatmayimpactuponeachclassobusinesshistoricalandlikelyuturetrendsinstandardinfationarypressuresrelatingtocommoditypricesandwageshistoricalandlikelyuturetrendsoinfationarypressuresinadditiontopriceorwageinfationtermedsuperimposedinfationhistoricalandlikelyuturetrendsoexpensesassociatedwithmanagingclaimstonalisationreinsurancerecoveriesavailableundercontractsenteredintobytheinsurerhistoricalandlikelyuturetrendsorecoveriesromsourcessuchassubrogationandthirdpartyactionsandinsurerspecicrelevantindustrydataandmoregeneraleconomicdataisutilisedintheestimationprocess.Projectedutureclaimpaymentsandassociatedclaimhandlingcostsarediscountedtoapresentvalueasrequiredusingappropriaterisk-reediscountrates.Aprojectionoutureclaimspaymentsbothgrossandnetoreinsuranceandotherrecoveriesisundertaken.Thisprojectionistypicallymadewithoutbiastowardoverorunderestimation.Assuchtheresultingestimateisconsideredtobeanetcentralestimateooutstandingclaimsliabilitiesthathasanapproximatelyequalchanceoprovingadequateasnot.Wherepossibleandappropriatemultipleactuarialmethodswillbeappliedtoprojectutureclaimpayments.Thisassistsinprovidingagreaterunderstandingothetrendsinherentinthepastdata.Inadditiontheprojectionsobtainedromvariousmethodsassistinsettingtherangeopossibleoutcomes.Themostappropriatemethodorblendomethodsisselectedtakingintoaccountthecharacteristicsotheclassobusinessandtheextentothedevelopmentoeachpastaccidentperiod.Wherethereisnosuitablebodyoclaimsexperienceavailableinrelationtoaparticulareventadditionaldataisobtainedandanalysedandvaluationmethodologiesandassumptionsareadoptedtomitigateasaraspossibletheseadditionalsourcesouncertainty.Asanestimateoutureoutcomesthenetcentralestimateooutstandingclaimsliabilityissubjecttouncertainty.Uncertaintyisexaminedoreachclassobusinessandexpressedasavolatilityothenetcentralestimate.Thevolatilityoreachclassisderivedaterconsiderationostochasticmodellingandbenchmarkingtoindustryanalysis.AsthevolatilityoreachclassobusinessispartiallycorrelatedwithotherclasseswhencombinedacrosstheentireGrouptheoverallvolatilitywillbelessthanthesumotheindividualclasses.Withanestimateotheoverallvolatilityorgeneralinsurancebusinessarangeoriskmarginsassociatedwithaprobabilityothetotalnetprovisionoroutstandingclaimsliabilitiesprovingadequatemaybeproduced.Reertonote19orurtherdetails.AssetsarisingfromreinsurancecontractsAssetsarisingromreinsurancecontractsarealsocomputedusingtheabovemethods.Inadditiontherecoverabilityotheseassetsisassessedonaperiodicbasistoensurethatthebalanceisrefectiveotheamountsthatwillultimatelybereceivedtakingintoconsiderationactorssuchascounterpartyandcreditrisk.ImpairmentisrecognisedwherethereisobjectiveevidencethattheGroupmaynotreceiveamountsduetoitandtheseamountscanbereliablymeasured.InventoriesThenetrealisablevalueoinventoriesistheestimatedsellingpriceintheordinarycourseobusinesslessestimatedcoststosell.Thekeyassumptionswhichrequiretheuseomanagementjudgementarethevariablesaectingestimatedcoststosellandtheexpectedsellingprice.Thesekeyassumptionsarereviewedannually.EstimationofusefullivesofassetsUseullivesandresidualvalueopropertyplantandequipmentarereviewedannually.Judgementisappliedindeterminingtheuseullivesopropertyplantandequipment.Thesejudgementsaresupportedbyconsultationwithinternaltechnicalexperts.Anyreassessmentouseullivesandresidualvalueinaparticularyearwillaectdepreciationandamortisationexpenseeitherincreasingordecreasingromthedateoreassessmentthroughtotheendothereassesseduseullieorboththecurrentandutureyears.Useullivesointangibleassetswithnitelivesarereviewedannually.Anyreassessmentouseullivesinaparticularyearwillaecttheamortisationexpenseeitherincreasingordecreasingthroughtotheendothereassesseduseullieorboththecurrentandutureyears. 103WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinueddSignifcantaccountingjudgementsestimatesandassumptionscontinuedCustomercardsandgiftvouchersThekeyassumptioninmeasuringtheliabilityorgitcardsandvouchersistheexpectedredemptionratesbycustomers.Expectedredemptionratesarereviewedannually.Anyreassessmentotheexpectedredemptionratesinaparticularyearwillaecttherevenuerecognisedromexpiryogitcardsandvoucherseitherincreasingordecreasing.LongserviceleaveManagementjudgementisappliedindeterminingtheollowingkeyassumptionsusedinthecalculationolongserviceleaveatbalancedateutureincreasesinsalariesandwagesutureon-costratesandexperienceoemployeedeparturesandperiodoservice.eBusinesscombinationsBusinesscombinationsareaccountedorusingtheacquisitionmethod.Thecostoanacquisitionismeasuredastheaggregateotheconsiderationtranserredmeasuredatacquisitiondateairvalueandtheamountoanynon-controllinginterestintheacquiree.Foreachbusinesscombinationtheacquirermeasuresthenon-controllinginterestintheacquireeeitheratairvalueorattheproportionateshareotheacquireesidentiablenetassets.Acquisitioncostsincurredareexpensed.WhentheGroupacquiresabusinessitassessesthenancialassetsandliabilitiesassumedorappropriateclassicationanddesignationinaccordancewiththecontractualtermseconomiccircumstancesandpertinentconditionsasattheacquisitiondate.Thisincludestheseparationoembeddedderivativesinhostcontractsbytheacquiree.Iabusinesscombinationisachievedinstagestheacquirershallremeasureitspreviouslyheldequityinterestintheacquireeatitsacquisitiondateairvalueandrecognisetheresultinggainorlossinprotorloss.Anycontingentconsiderationtobetranserredbytheacquirerisrecognisedatairvalueattheacquisitiondate.SubsequentchangestotheairvalueothecontingentconsiderationwhichisdeemedtobeanancialassetorliabilitywillberecognisedinaccordancewithAASB139FinancialInstrumentsRecognitionandMeasurementeitherinprotorlossorasachangetoothercomprehensiveincome.Ithecontingentconsiderationisclassiedasequityitshallnotberemeasureduntilitisnallysettledwithinequity.RevenueRevenueisrecognisedandmeasuredattheairvalueotheconsiderationreceivedorreceivabletotheextentthatitisprobablethattheeconomicbenetswillfowtotheGroupandtherevenuecanbereliablymeasured.TheollowingspecicrecognitioncriteriamustalsobemetbeorerevenueisrecognisedSaleofgoodsRevenueisrecognisedwhenthesignicantrisksandrewardsoownershipothegoodshavepassedtothebuyerandcanbemeasuredreliably.Risksandrewardsareconsideredpassedtothebuyeratthetimeodeliveryothegoodstothecustomer.Revenueromlay-bytransactionsisrecognisedaspartorevenueromsaleogoodsatthedateuponwhichthecustomersatisesallpaymentobligationsandtakespossessionothemerchandise.Revenueromthesaleogitcardsisrecognisedwhenthecardisredeemedandthecustomerspurchasegoodsbyusingthecardorwhenthecustomercardisnolongerexpectedtoberedeemedbasedonananalysisohistoricalnon-redemptionrates.TheGroupoperatesaloyaltypointsprogramwhichallowscustomerstoaccumulatepointswhentheypurchaseproductsintheGroupsretailstores.Thepointscanthenberedeemedorproductssubjecttoaminimumnumberopointsbeingobtained.Considerationreceivedisallocatedbetweentheproductssoldandthepointsissuedwiththeconsiderationallocatedtothepointsequaltotheirairvalue.Theairvalueothepointsissuedisdeerredandrecognisedasrevenuewhenthepointsareredeemed.RenderingofservicesRevenueisrecognisedorservicesthathavebeenrenderedtoabuyerbyreerencetostageocompletion.InterestRevenueisrecognisedastheinterestaccruesusingtheeectiveinterestmethodwhichistheratethatexactlydiscountsestimateduturecashreceiptsthroughtheexpectedlieothenancialinstrumenttothenetcarryingamountothenancialasset.DividendsRevenueisrecognisedwhentheshareholdersrighttoreceivethepaymentisestablished.Pre-acquisitiondividendsreceivedareosetagainstthecostotheinvestment.OperatingleaserentalrevenueOperatingleaserevenueconsistsorentalsrominvestmentpropertiesandsub-leaserentals.Rentalsreceivedunderoperatingleasesandinitialdirectcostsarerecognisedonastraightlinebasisoverthetermothelease.InsurancepremiumrevenueReertopolicynoteagortreatmentoinsurancepremiumrevenue.gFinancecostsFinancecostsarerecognisedasanexpensewhenincurredwiththeexceptionointerestchargesattributabletomajorprojectswithsubstantialdevelopmentandconstructionphases.Thecapitalisationrateusedtodeterminetheamountoborrowingcoststobecapitalisedistheweightedaverageinterestrateexcludingnon-interestcostsapplicabletotheGroupsoutstandingborrowingsduringtheyearinthiscase6.25percent20127.32percent.Provisionsandotherpayablesarediscountedtotheirpresentvaluewhentheeectothetimevalueomoneyismaterial.Thecarryingamountoaprovisionincreasesineachperiodtorefectthepassageotime.Thisincreaseisrecognisedasadiscountadjustmentinnancecosts.hLeasesThedeterminationowhetheranarrangementisorcontainsaleaseisbasedonthesubstanceothearrangementandrequiresanassessmentowhethertheullmentothearrangementisdependentontheuseoaspecicassetorassetsandwhetherthearrangementconveysarighttousetheasset.GroupasalesseeFinanceleasesFinanceleaseswhichtransertotheGroupsubstantiallyalltherisksandbenetsincidentaltoownershipotheleaseditemarecapitalisedattheinceptionotheleaseattheairvalueotheleasedassetoriloweratthepresentvalueotheminimumleasepayments.Leasepaymentsareapportionedbetweenthenancechargesandreductionotheleaseliabilitysoastoachieveaconstantrateointerestontheremainingbalanceotheliability.Financechargesarerecognisedasanexpense. WesfarmersaNNUaLreport2013104Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedhLeasescontinuedCapitalisedleasedassetsaredepreciatedovertheshorterotheestimateduseullieotheassetandtheleasetermithereisnoreasonablecertaintythattheGroupwillobtainownershipbytheendotheleaseterm.OperatingleasesOperatingleasepaymentsarerecognisedasanexpenseintheincomestatementonastraightlinebasisovertheleaseterm.Operatingleaseincentivesarerecognisedasaliabilitywhenreceivedandreleasedtoearningsonastraightlinebasisovertheleaseterm.FixedrateincreasestoleasepaymentsexcludingcontingentorindexbasedrentalincreasessuchasConsumerPriceIndexturnoverrentalandothersimilarincreasesarerecognisedonastraightlinebasisovertheleaseterm.Anassetorliabilityisrecognisedorthedierencebetweentheamountpaidandtheleaseexpenserecognisedinearningsonastraightlinebasis.iCashandcashequivalentsCashandshort-termdepositsinthebalancesheetcomprisecashatbankandonhandandshort-termdepositswithanoriginalmaturityothreemonthsorlessexcludingdepositsheldasinvestmentsbytheinsurancebusiness.Inaccordancewithlocallawsallbrokingreceiptsareheldinseparateinsurancebrokingbankaccountsandapprovedinvestments.Disbursementsothesemoniescanonlybemadeinaccordancewithlocallaws.AmountsheldbyentitieswithintheGroupintheseaccountsandinvestmentsoutstandingatbalancesheetdateareincludedincashandcashequivalents.jTradeandotherreceivablesTradereceivablesgenerallyhavetermsupto30daysarerecognisedinitiallyatairvalueandsubsequentlymeasuredatamortisedcostusingtheeectiveinterestmethodlessanallowanceorimpairment.Collectabilityandimpairmentareassessedonanongoingbasisatadivisionallevel.Individualdebtsthatareknowntobeuncollectablearewrittenowhenidentied.AnimpairmentallowanceisrecognisedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectthedebts.Financialdicultiesothedebtorprobabilitythatthedebtorwillenterbankruptcyornancialreorganisationanddeaultordelinquencyinpaymentsareconsideredobjectiveevidenceoimpairment.Theamountotheimpairmentlossisthereceivablecarryingamountcomparedtothepresentvalueoestimateduturecashfowsdiscountedattheoriginaleectiveinterestrate.Cashfowsrelatingtoshort-termreceivablesarenotdiscounteditheeectodiscountingisimmaterial.Theamountotheimpairmentlossisrecognisedintheincomestatement.Whenatradereceivableorwhichanimpairmentallowancehadbeenrecognisedbecomesuncollectableinasubsequentperioditiswrittenoagainsttheallowanceaccount.Subsequentrecoveriesoamountspreviouslywrittenoarecreditedagainstprotorloss.kInventoriesInventoriesarevaluedatthelowerocostandnetrealisablevalue.Costsincurredinbringingeachproducttoitspresentlocationandconditionareaccountedorasollowsrawmaterialspurchasecostonaweightedaveragebasismanuacturednishedgoodsandworkinprogresscostodirectmaterialsandlabourandaproportionomanuacturingoverheadsbasedonnormaloperatingcapacitybutexcludingborrowingcosts.WorkinprogressalsoincludesRun-o-MinecoalstocksortheResourcesdivisionconsistingoproductioncostsodrillingblastingandoverburdenremovalandretailandwholesalemerchandisenishedgoodspurchasecostonaweightedaveragebasisaterdeductinganysettlementdiscountandincludinglogisticsexpensesincurredinbringingtheinventoriestotheirpresentlocationandcondition.Volumerelatedsupplierrebatesandsupplierpromotionalrebateswheretheyexceedspendonpromotionalactivitiesarerecognisedasareductioninthecostoinventory.Netrealisablevalueistheestimatedsellingpriceintheordinarycourseobusinesslessestimatedcostsocompletionandtheestimatedcostsnecessarytomakethesale.lDerivativefnancialinstrumentsandhedgingTheGroupusesderivativenancialinstrumentssuchasorwardcurrencycontractsandcrosscurrencyinterestrateswapstohedgeitsrisksassociatedwithoreigncurrencyandinterestratefuctuations.Suchderivativenancialinstrumentsareinitiallyrecognisedatairvalueonthedateonwhichaderivativecontractisenteredintoandaresubsequentlyremeasuredtoairvalue.Derivativesarecarriedasassetswhentheirairvalueispositiveandasliabilitieswhentheirairvalueisnegative.Anygainsorlossesarisingromchangesintheairvalueoderivativesexceptorthosethatqualiyaseectivecashfowhedgesaretakendirectlytonetprotorlossortheyear.Theairvalueoorwardcurrencycontractsiscalculatedbyreerencetocurrentorwardexchangeratesorcontractswithsimilarmaturityproles.Theairvalueointerestrateswapcontractsisdeterminedbyreerencetomarketvaluesorsimilarinstruments.Theairvalueocrosscurrencyinterestrateswapcontractsiscalculatedbyreerencetocurrentorwardexchangeratesandorwardinterestratesorsimilarinstruments.Forthepurposesohedgeaccountinghedgesareclassiedasairvaluehedgeswhentheyhedgetheexposuretochangesintheairvalueoarecognisedassetorliabilityorcashfowhedgeswhentheyhedgeexposuretovariabilityincashfowsthatisattributableeithertoaparticularriskassociatedwitharecognisedassetorliabilityortoahighlyprobableorecasttransaction.Ahedgeotheoreigncurrencyriskoarmcommitmentisaccountedorasacashfowhedge. 105WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedlDerivativefnancialinstrumentsandhedgingcontinuedAttheinceptionoahedgerelationshiptheGroupormallydesignatesanddocumentsthehedgerelationshiptowhichtheGroupwishestoapplyhedgeaccountingandtheriskmanagementobjectiveandstrategyorundertakingthehedge.Thedocumentationincludesidenticationothehedginginstrumentthehedgeditemortransactionthenatureotheriskbeinghedgedandhowtheentitywillassessthehedginginstrumentseectivenessinosettingtheexposuretochangesinthehedgeditemsairvalueorcashfowsattributabletothehedgedrisk.Suchhedgesareexpectedtobehighlyeectiveinachievingosettingchangesinairvalueorcashfowsandareassessedonanongoingbasistodeterminethattheyactuallyhavebeenhighlyeectivethroughoutthenancialreportingperiodsorwhichtheyweredesignated.HedgesthatmeetthestrictcriteriaorhedgeaccountingareaccountedorasollowsFairvaluehedgesFairvaluehedgesarehedgesotheGroupsexposuretochangesintheairvalueoarecognisedassetorliabilitythatisattributabletoaparticularriskandcouldaectprotorloss.Forairvaluehedgesthecarryingamountothehedgeditemisadjustedorgainsandlossesattributabletotheriskbeinghedgedthederivativeisremeasuredtoairvalueandgainsandlossesrombotharetakentoprotorloss.Whenanunrecognisedrmcommitmentisdesignatedasahedgeditemthesubsequentcumulativechangeintheairvalueothermcommitmentattributabletothehedgedriskisrecognisedasanassetorliabilitywithacorrespondinggainorlossrecognisedinprotorloss.Thechangesintheairvalueothehedginginstrumentarealsorecognisedinprotorloss.TheGroupdiscontinuesairvaluehedgeaccountingithehedginginstrumentexpiresorissoldisterminatedorexercisedorthehedgenolongermeetsthecriteriaorhedgeaccountingortheGrouprevokesthedesignation.Anyadjustmenttothecarryingamountoahedgednancialinstrumentorwhichtheeectiveinterestmethodisusedisamortisedtoprotorloss.Amortisationmaybeginassoonasanadjustmentexistsandshallbeginnolaterthanwhenthehedgeditemceasestobeadjustedorchangesinitsairvalueattributabletotheriskbeinghedged.CashfowhedgesCashfowhedgesarehedgesotheGroupsexposuretovariabilityincashfowsthatareattributabletoaparticularriskassociatedwitharecognisedassetorliabilityorahighlyprobableorecasttransactionthatcouldaectprotorloss.Theeectiveportionothegainorlossonthehedginginstrumentisrecogniseddirectlyinequitywhiletheineectiveportionisrecognisedinprotorloss.Amountsrecognisedinequityaretranserredtotheincomestatementwhenthehedgedtransactionaectsprotorlosssuchaswhenhedgedincomeorexpensesarerecognisedorwhenaorecastsaleoccursortheassetisconsumed.Whenthehedgeditemisthecostoanon-nancialassetorliabilitytheamountstakentoequityaretranserredtotheinitialcarryingamountothenon-nancialassetorliability.Itheorecasttransactionisnolongerexpectedtooccuramountspreviouslyrecognisedinequityaretranserredtotheincomestatement.Ithehedginginstrumentexpiresorissoldterminatedorexercisedwithoutreplacementorrolloveroriitsdesignationasahedgeisrevokedamountspreviouslyrecognisedinequityremaininequityuntiltheorecasttransactionoccurs.Itherelatedtransactionisnotexpectedtooccurtheamountistakentotheincomestatement.mDerecognitionofnancialassetsandfnancialliabilitiesThederecognitionoanancialassettakesplacewhentheGroupnolongercontrolsthecontractualrightsthatcomprisethenancialinstrumentwhichisnormallythecasewhentheinstrumentissoldorallthecashfowsattributabletotheinstrumentarepassedthroughtoanindependentthirdparty.Anancialliabilityisderecognisedwhentheobligationundertheliabilityisdischargediscancelledorexpires.Whenanexistingnancialliabilityisreplacedbyanotherromthesamelenderonsubstantiallydierenttermsorthetermsoanexistingliabilityaresubstantiallymodiedsuchanexchangeormodicationistreatedasaderecognitionotheoriginalliabilityandtherecognitionoanewliabilityandthedierenceintherespectivecarryingamountsisrecognisedinprotorloss.nImpairmentofnancialassetsTheGroupassessesateachbalancesheetdatewhetheranancialassetorgrouponancialassetsisimpaired.FinancialassetscarriedatamortisedcostIthereisobjectiveevidencethatanimpairmentlossonloansandreceivablescarriedatamortisedcosthasbeenincurredtheamountothelossismeasuredasthedierencebetweentheassetscarryingamountandthepresentvalueoestimateduturecashfowsexcludinguturecreditlossesthathavenotbeenincurreddiscountedatthenancialassetsoriginaleectiveinterestratei.e.theeectiveinterestratecomputedatinitialrecognition.Thecarryingamountotheassetisreducedeitherdirectlyorthroughuseoanallowanceaccount.Theamountothelossisrecognisedinprotorloss.TheGrouprstassesseswhetherobjectiveevidenceoimpairmentexistsindividuallyornancialassetsthatareindividuallysignicantandindividuallyorcollectivelyornancialassetsthatarenotindividuallysignicant.Iitisdeterminedthatnoobjectiveevidenceoimpairmentexistsoranindividuallyassessednancialassetwhethersignicantornottheassetisincludedinagrouponancialassetswithsimilarcreditriskcharacteristicsandthatgrouponancialassetsiscollectivelyassessedorimpairment.Assetsthatareindividuallyassessedorimpairmentandorwhichanimpairmentlossisorcontinuestoberecognisedarenotincludedinacollectiveassessmentoimpairment.Iinasubsequentperiodtheamountotheimpairmentlossdecreasesandthedecreasecanberelatedobjectivelytoaneventoccurringatertheimpairmentwasrecognisedthepreviouslyrecognisedimpairmentlossisreversed.Anysubsequentreversaloanimpairmentlossisrecognisedinprotorlosstotheextentthatthecarryingvalueotheassetdoesnotexceeditsamortisedcostatthereversaldate.FinancialassetscarriedatcostIthereisobjectiveevidencethatanimpairmentlosshasbeenincurredonanunquotedequityinstrumentthatisnotcarriedatairvaluebecauseitsairvaluecannotbereliablymeasuredtheamountothelossismeasuredasthedierencebetweentheassetscarryingamountandthepresentvalueoestimateduturecashfowsdiscountedatthecurrentmarketrateoreturnorasimilarnancialasset.Impairmentlossesarenotreversed.Available-or-saleinvestmentsIthereisobjectiveevidencethatanavailable-or-saleinvestmentisimpairedanamountcomprisingthedierencebetweenitscostnetoanyprincipalrepaymentandamortisationanditscurrentairvaluelessanyimpairmentlosspreviouslyrecognisedinprotorlossistranserredromequitytotheincomestatement.Reversalsoimpairmentlossesorequityinstrumentsclassiedasavailable-or-salearenotrecognisedinprot. WesfarmersaNNUaLreport2013106Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedoForeigncurrencytranslationBoththeunctionalandpresentationcurrencyoWesarmersLimitedanditsAustraliansubsidiariesisAustraliandollars.Theunctionalcurrencyooverseassubsidiariesislistedinnote30.Transactionsinoreigncurrenciesareinitiallyrecordedintheunctionalcurrencyattheexchangeratesrulingatthedateothetransaction.Monetaryassetsandliabilitiesdenominatedinoreigncurrenciesaretranslatedattherateoexchangerulingatthebalancesheetdate.Allexchangedierencesintheconsolidatednancialreportaretakentotheincomestatementwiththeexceptionodierencesonoreigncurrencyborrowingsthatprovideahedgeagainstanetinvestmentinaoreignentity.Thesearetakendirectlytoequityuntilthedisposalothenetinvestmentatwhichtimetheyarerecognisedintheincomestatement.Taxchargesandcreditsattributabletoexchangedierencesonthoseborrowingsarealsorecognisedinequity.AsatthereportingdatetheassetsandliabilitiesotheseoverseassubsidiariesaretranslatedintothepresentationcurrencyoWesarmersLimitedattherateoexchangerulingatthebalancesheetdateandtheincomestatementsaretranslatedattheaverageexchangeratesortheyear.Theexchangedierencesarisingontheretranslationaretakendirectlytoaseparatecomponentoequity.pInvestmentinassociatesTheGroupsinvestmentsinitsassociatesareaccountedorusingtheequitymethodoaccounting.TheassociatesareentitiesinwhichtheGrouphassignicantinfuenceandwhichareneithersubsidiariesnorjointlycontrolledassets.Undertheequitymethodtheinvestmentinassociatesiscarriedintheconsolidatedbalancesheetatcostpluspost-acquisitionchangesintheGroupsshareonetassetsotheassociates.Goodwillrelatingtoanassociateisincludedinthecarryingamountotheinvestmentandisnotamortised.AterapplicationotheequitymethodtheGroupdetermineswhetheritisnecessarytorecogniseanyadditionalimpairmentlosswithrespecttotheGroupsnetinvestmentintheassociates.TheconsolidatedincomestatementrefectstheGroupsshareotheresultsooperationsotheassociates.WheretherehasbeenachangerecogniseddirectlyintheassociatesequitytheGrouprecognisesitsshareoanychangesanddisclosesthisintheconsolidatedstatementocomprehensiveincome.ThereportingdatesotheassociatesandtheGroupmayvarywhereuponmanagementaccountsotheassociateortheperiodtotheGroupsbalancedateareusedorequityaccounting.TheassociatesaccountingpoliciesareconsistentwiththoseusedbytheGrouporliketransactionsandeventsinsimilarcircumstances.Investmentpropertiesownedbyassociatesareinitiallymeasuredatcostincludingtransactioncosts.Subsequenttoinitialrecognitioninvestmentpropertiesarestatedatairvaluewhichrefectsmarketconditionsatthebalancesheetdate.Gainsorlossesarisingromchangesintheairvaluesoinvestmentpropertiesarerecognisedinprotorlossotheassociateintheyearinwhichtheyarise.ThisisconsistentwiththeGroupspolicy.qInterestinjointlycontrolledassetsTheGrouphasinterestsinjointventuresthatarejointlycontrolledassets.TheGrouprecognisesitsshareotheassetsliabilitiesexpensesandincomeromtheuseandoutputothejointlycontrolledasset.rTaxationIncomeTaxCurrenttaxassetsandliabilitiesorthecurrentandpriorreportingperiodsaremeasuredattheamountexpectedtoberecoveredromorpaidtothetaxationauthorities.Thetaxratesandtaxlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenactedbythebalancesheetdate.Deerredincometaxisprovidedonalltemporarydierencesatthebalancesheetdatebetweenthetaxbasesoassetsandliabilitiesandtheircarryingamountsornancialreportingpurposes.Deerredincometaxliabilitiesarerecognisedoralltaxabletemporarydierencesexceptwherethedeerredincometaxliabilityarisesromtheinitialrecognitionogoodwilloroanassetorliabilityinatransactionthatisnotabusinesscombinationandatthetimeothetransactionaectsneithertheaccountingprotnortaxableprotorloss.Inrespectotaxabletemporarydierencesassociatedwithinvestmentsinsubsidiariesassociatesandinterestsinjointventuresdeerredtaxliabilitiesarerecognisedotherthanwherethetimingothereversalothetemporarydierencescanbecontrolledanditisprobablethatthetemporarydierenceswillnotreverseintheoreseeableuture.Deerredincometaxassetsarerecognisedoralldeductibletemporarydierencescarry-orwardounusedtaxassetsandunusedtaxlossestotheextentthatitisprobablethattaxableprotwillbeavailableagainstwhichthedeductibletemporarydierencesandthecarry-orwardounusedtaxassetsandunusedtaxlossescanbeutilisedexceptwherethedeerredincometaxassetrelatingtothedeductibletemporarydierencearisesromtheinitialrecognitionoanassetorliabilityinatransactionthatisnotabusinesscombinationandatthetimeothetransactionaectsneithertheaccountingprotnortaxableprotorlossandinrespectodeductibletemporarydierencesassociatedwithinvestmentsinsubsidiariesassociatesandinterestsinjointventuresdeerredtaxassetsareonlyrecognisedtotheextentthatitisprobablethatthetemporarydierenceswillreverseintheoreseeableutureandtaxableprotwillbeavailableagainstwhichthetemporarydierencescanbeutilised.Thecarryingamountodeerredincometaxassetsisreviewedateachbalancesheetdateandreducedtotheextentthatitisnolongerprobablethatsucienttaxableprotwillbeavailabletoallowallorpartothedeerredincometaxassettobeutilised.Deerredincometaxassetsandliabilitiesaremeasuredatthetaxratesthatareexpectedtoapplytotheyearwhentheassetisrealisedortheliabilityissettledbasedontaxratesandtaxlawsthathavebeenenactedorsubstantivelyenactedatthebalancesheetdate.Incometaxesrelatingtoitemsrecogniseddirectlyinequityarerecognisedinequityandnotintheincomestatement.Deerredtaxassetsanddeerredtaxliabilitiesareosetonlyialegallyenorceablerightexiststosetocurrenttaxassetsagainstcurrenttaxliabilitiesandthedeerredtaxassetsandliabilitiesrelatetothesametaxableentityandthesametaxationauthority. 107WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedrTaxationcontinuedMineralsResourceRentTaxRoyaltiesandresourcerenttaxesareaccountedorunderAASB112IncomeTaxeswhentheyhavethecharacteristicsoatax.Thisisconsideredtobethecasewhentheyareimposedundergovernmentauthorityandtheamountpayableiscalculatedbyreerencetorevenuederivednetoanyallowabledeductionsateradjustmentortemporarydierences.Forsucharrangementscurrentanddeerredtaxisprovidedonthesamebasisasdescribedaboveorotherormsotaxation.Obligationsarisingromroyaltyarrangementsthatdonotsatisythesecriteriaarerecognisedasprovisionsandincludedinexpenses.OthertaxesRevenuesexpensesandassetsarerecognisednetotheamountogoodsandservicestaxGSTexceptwheretheGSTincurredonapurchaseogoodsandservicesisnotrecoverableromthetaxationauthorityinwhichcasetheGSTisrecognisedaspartothecostoacquisitionotheassetoraspartotheexpenseitemasapplicableandreceivablesandpayableswhicharestatedwiththeamountoGSTincluded.ThenetamountoGSTrecoverableromorpayabletothetaxationauthorityisincludedaspartoreceivablesorpayablesinthebalancesheet.CashfowsareincludedinthecashfowstatementonagrossbasisandtheGSTcomponentocashfowsarisingrominvestingandnancingactivitieswhichisrecoverableromorpayabletothetaxationauthorityisclassiedasoperatingcashfows.CommitmentsandcontingenciesaredisclosednetotheamountoGSTrecoverableromorpayabletothetaxationauthority.sCarbonTaxTheAustraliancarbonpricingschemetheschemeincorporatingaCarbonPricingMechanismcommencedon1July2012.Fromthisdateentitieswithacilitieswhoseemissionsexceed25000tonnesoCO2-einacomplianceperiodarerequiredtosurrenderoneCarbonUnitpertonneoCO2-eemitted.Undertheschemeemissions-intensivetrade-exposedindustriesreceivereeCarbonUnitsromtheAustralianGovernment.FreeCarbonUnitscanbesoldorheldandsubsequentlysurrenderedinsettlementotheemissionsobligationarisingundertheschemewithinaparticularcomplianceyear.CarbonUnitsreceivedorreeareinitiallyrecognisedatairvalueatgrantdatewithacorrespondingentrytodeerredincome.Incomeisrecognisedbasedonthesaleoproductionoutputromtherelevantacility.FreeCarbonUnitsonhandareclassiedasnancialassetsandaresubsequentlymeasuredatamortisedcost.Theemissionsliabilityisrecognisedasaprovisionandmeasuredatthebestestimateotheamountrequiredtosettlethepresentobligationatthereportingdate.WhenCarbonUnitsaresurrenderedtotheGovernmenttheassetalongwiththecorrespondingemissionsliabilityisderecognisedromthebalancesheet.tPropertyplantandequipmentPropertyplantandequipmentisstatedatcostlessaccumulateddepreciationandanyaccumulatedimpairmentlosses.Suchcostsincludethecostoreplacingpartsthatareeligibleorcapitalisationwhenthecostoreplacingthepartsisincurred.Similarlywheneachmajorinspectionisperormeditscostisrecognisedinthecarryingamountotheplantandequipmentasareplacementonlyiitiseligibleorcapitalisation.Landandbuildingsaremeasuredatcostlessaccumulateddepreciationonbuildings.DepreciationiscalculatedonastraightlinebasisovertheestimateduseullieotheassetasollowsBuildings2040yearsPlantandequipment340yearsTheassetsresidualvaluesuseullivesandamortisationmethodsarereviewedandadjustediappropriateateachnancialyearend.Expenditurecarriedorwardinrespectominingareasointerestinwhichproductionhascommencedisamortisedoverthelieotheminebasedontherateodepletionotheeconomicallyrecoverablereserves.Amortisationisnotchargedonexpenditurecarriedorwardinrespectoareasointerestinthedevelopmentphaseinwhichproductionhasnotyetcommenced.Leaseholdimprovementsareamortisedovertheperiodotheleaseortheanticipateduseullieotheimprovementswhicheverisshorter.Anitemopropertyplantandequipmentisderecognisedupondisposalorwhennoutureeconomicbenetsareexpectedtoariseromthecontinueduseotheasset.Anygainorlossarisingonderecognitionotheassetcalculatedasthedierencebetweenthenetdisposalproceedsandthecarryingamountotheitemisincludedintheincomestatementintheperiodtheitemisderecognised.uNon-currentassetsanddisposalgroupsheldorsaleanddiscontinuedoperationsNon-currentassetsanddisposalgroupsareclassiedasheldorsaleandmeasuredatthelowerotheircarryingamountandairvaluelesscoststosellitheircarryingamountwillberecoveredprincipallythroughasaletransactioninsteadouse.Theyarenotdepreciatedoramortised.Foranassetordisposalgrouptobeclassiedasheldorsaleitmustbeavailableorimmediatesaleinitspresentconditionanditssalemustbehighlyprobable.Animpairmentlossisrecognisedoranyinitialorsubsequentwritedownotheassetordisposalgrouptoairvaluelesscoststosell.Againisrecognisedoranysubsequentincreasesinairvaluelesscoststoselloanassetordisposalgroupbutnotinexcessoanycumulativeimpairmentlosspreviouslyrecognised.Againorlossnotpreviouslyrecognisedbythedateothesaleothenon-currentassetordisposalgroupisrecognisedatthedateoderecognition.Adiscontinuedoperationisacomponentotheentitythathasbeendisposedoorisclassiedasheldorsaleandthatrepresentsaseparatemajorlineobusinessorgeographicalareaooperationsispartoasinglecoordinatedplantodisposeosuchalineobusinessorareaooperationsorisasubsidiaryacquiredexclusivelywithaviewtoresale.Theresultsomaterialdiscontinuedoperationsarepresentedseparatelyontheaceotheincomestatementandtheassetsandliabilitiesarepresentedseparatelyontheaceothebalancesheet. WesfarmersaNNUaLreport2013108Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedvInvestmentsandotherfnancialassetsFinancialassetsinthescopeoAASB139FinancialInstrumentsRecognitionandMeasurementareclassiedasnancialassetsatairvaluethroughprotorlossloansandreceivablesheld-to-maturityinvestmentsoravailable-or-saleinvestmentsasappropriate.Whennancialassetsarerecognisedinitiallytheyaremeasuredatairvalueplusinthecaseoinvestmentsnotatairvaluethroughprotorlossdirectlyattributabletransactioncosts.TheGroupdeterminestheclassicationoitsnancialassetsatinitialrecognition.Allregularwaypurchasesandsalesonancialassetsarerecognisedonthetradedatei.e.thedatethattheGroupcommitstopurchasetheasset.Regularwaypurchasesorsalesarepurchasesorsalesonancialassetsundercontractsthatrequiredeliveryotheassetswithintheperiodestablishedgenerallybyregulationorconventioninthemarketplace.FinancialassetsatairvaluethroughproftorlossFinancialassetsatairvaluethroughprotorlossincludesnancialassetsheldortradingandnancialassetsdesignateduponinitialrecognitionatairvaluethroughprotorloss.Financialassetsareclassiedasheldortradingitheyareacquiredorthepurposeosellinginthenearterm.Derivativesarealsoclassiedasheldortradingunlesstheyaredesignatedaseectivehedginginstruments.Gainsorlossesoninvestmentsheldortradingarerecognisedinprotorloss.Held-to-maturityinvestmentsNon-derivativenancialassetswithxedordeterminablepaymentsandxedmaturityareclassiedasheld-to-maturitywhentheGrouphasthepositiveintentionandabilitytoholdtomaturity.Investmentsthatareintendedtobeheldoranundenedperiodarenotincludedinthisclassication.Investmentsthatareintendedtobeheld-to-maturitysuchasbondsaresubsequentlymeasuredatamortisedcost.Thiscostiscomputedastheamountinitiallyrecognisedminusprincipalrepaymentsplusorminusthecumulativeamortisationusingtheeectiveinterestmethodoanydierencebetweentheinitiallyrecognisedamountandthematurityamount.Thiscalculationincludesalleesandpointspaidorreceivedbetweenpartiestothecontractthatareanintegralpartotheeectiveinterestratetransactioncostsandallotherpremiumsanddiscounts.Forinvestmentscarriedatamortisedcostgainsandlossesarerecognisedinprotorlosswhentheinvestmentsarederecognisedorimpairedaswellasthroughtheamortisationprocess.LoansandreceivablesLoansandreceivablesarenon-derivativenancialassetswithxedordeterminablepaymentsthatarenotquotedinanactivemarket.Suchassetsarecarriedatamortisedcostusingtheeectiveinterestmethod.Gainsandlossesarerecognisedinprotorlosswhentheloansandreceivablesarederecognisedorimpairedaswellasthroughtheamortisationprocess.Available-or-saleinvestmentsAvailable-or-saleinvestmentsarethosenon-derivativenancialassetsthataredesignatedasavailable-or-saleorarenotclassiedasanyothethreeprecedingcategories.Aterinitialrecognitionavailable-or-saleinvestmentsaremeasuredatairvaluewithgainsorlossesbeingrecognisedasaseparatecomponentoequityuntiltheinvestmentisderecognisedoruntiltheinvestmentisdeterminedtobeimpairedatwhichtimethecumulativegainorlosspreviouslyreportedinequityisrecognisedinprotorloss.Interestearnedwhileholdingavailable-or-salenancialinvestmentsisreportedasinterestrevenueusingtheeectiveinterestrate.Dividendsearnedwhileholdingavailable-or-salenancialinvestmentsarerecognisedintheincomestatementasotherincomewhentherightopaymenthasbeenestablished.Theairvalueoinvestmentsthatareactivelytradedinorganisednancialmarketsisdeterminedbyreerencetoquotedmarketbidpricesatthecloseobusinessonthebalancesheetdate.Forinvestmentswithnoactivemarketairvalueisdeterminedbyreerencetothecurrentmarketvalueoanotherinstrumentwhichissubstantiallythesameoriscalculatedbasedontheexpectedcashfowsotheunderlyingnetassetbaseotheinvestment.wGoodwillGoodwillacquiredinabusinesscombinationisinitiallymeasuredatcostbeingtheexcessothecostothebusinesscombinationovertheGroupsinterestinthenetairvalueotheidentiableassetsliabilitiesandcontingentliabilities.Followinginitialrecognitiongoodwillismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillisreviewedorimpairmentannuallyormorerequentlyieventsorchangesincircumstancesindicatethatthecarryingvaluemaybeimpaired.ForthepurposeoimpairmenttestinggoodwillacquiredinabusinesscombinationisromtheacquisitiondateallocatedtoeachcashgeneratingunitorgroupsocashgeneratingunitsthatareexpectedtobenetromthesynergiesothecombinationirrespectiveowhetherotherassetsorliabilitiesotheGroupareassignedtothoseunitsorgroupsounits.Impairmentisdeterminedbyassessingtherecoverableamountothecashgeneratingunitorgroupocashgeneratingunitstowhichgoodwillrelates.Impairmenttestingisperormedeachyearorcashgeneratingunitstowhichgoodwillandindenitelieintangibleshavebeenallocated.Furtherdetailsonthemethodologyandassumptionsusedareoutlinedinnote14.EachunitorgroupounitstowhichthegoodwillissoallocatedrepresentsthelowestlevelwithintheGroupatwhichthegoodwillismonitoredorinternalmanagementpurposesandisnotlargerthananoperatingsegmentdeterminedinaccordancewithAASB8OperatingSegments.Impairmentisdeterminedbyassessingtherecoverableamountothecashgeneratingunitorgroupocashgeneratingunitstowhichthegoodwillrelates.Whentherecoverableamountothecashgeneratingunitorgroupocashgeneratingunitsislessthanthecarryingamountanimpairmentlossisrecognised.Whengoodwillormspartoacashgeneratingunitorgroupocashgeneratingunitsandanoperationwithinthatunitisdisposedothegoodwillassociatedwiththeoperationdisposedoisincludedinthecarryingamountotheoperationwhendeterminingthegainorlossondisposalotheoperation.Goodwilldisposedointhismannerismeasuredbasedontherelativevaluesotheoperationdisposedoandtheportionothecashgeneratingunitretained.Impairmentlossesrecognisedorgoodwillarenotsubsequentlyreversed. 109WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedxIntangibleassetsIntangibleassetsacquiredseparatelyorinabusinesscombinationareinitiallymeasuredatcost.Thecostoanintangibleassetacquiredinabusinesscombinationisitsairvalueasatthedateoacquisition.Followinginitialrecognitionintangibleassetsarecarriedatcostlessanyaccumulatedamortisationandanyaccumulatedimpairmentlosses.Internallygeneratedintangibleassetsexcludingcapitaliseddevelopmentcostsarenotcapitalisedandexpenditureisrecognisedintheprotorlossintheyearinwhichtheexpenditureisincurred.Theuseullivesointangibleassetsareassessedtobeeitherniteorindenite.Intangibleassetswithnitelivesareamortisedovertheuseullieandtestedorimpairmentwheneverthereisanindicationthattheintangibleassetmaybeimpaired.Theamortisationperiodandtheamortisationmethodoranintangibleassetwithaniteuseullieisreviewedateachnancialyearend.Intangibleassetswithindenitelivesaretestedorimpairmentannuallyeitherindividuallyoratthecashgeneratingunitlevelconsistentwiththemethodologyoutlinedorgoodwillabove.Suchintangiblesarenotamortised.Theuseullieoanintangibleassetwithanindeniteuseullieisreviewedeachreportingperiodtodeterminewhetherinniteuseullieassessmentcontinuestobesupportable.Inotthechangeinuseullieassessmentrominnitetoniteisaccountedorasachangeinaccountingestimateandisthusaccountedoronaprospectivebasis.AsummaryothepoliciesappliedtotheGroupsintangibleassetsisasollowsTradenamesUsefullivesIndeniteandniteAmortisationmethodusedAmortisedovertheperiodoexpecteduturebenetonastraightlinebasisImpairmenttestingAnnuallyasat31MarchandmorerequentlywhenanindicationoimpairmentexistsContractualandnon-contractualrelationshipsUsefullivesFiniteupto15yearsAmortisationmethodusedAmortisedovertheperiodoexpecteduturebenetonastraightlinebasisImpairmenttestingAnnuallyasat31Marchandmorerequentlywhenanindicationoimpairmentexists.Theamortisationmethodisreviewedateachnancialyearend.SotwareUsefullivesFiniteuptosevenyearsAmortisationmethodusedAmortisedovertheperiodoexpecteduturebenetonastraightlinebasisImpairmenttestingAnnuallyasat31Marchandmorerequentlywhenanindicationoimpairmentexists.Theamortisationmethodisreviewedateachnancialyearend.GaminglicencesUsefullivesIndeniteAmortisationmethodusedNoamortisationImpairmenttestingAnnuallyasat31MarchandmorerequentlywhenanindicationoimpairmentexistsLiquorlicencesUsefullivesIndeniteAmortisationmethodusedNoamortisationImpairmenttestingAnnuallyasat31MarchandmorerequentlywhenanindicationoimpairmentexistsyImpairmentTheGroupassessesateachreportingdatewhetherthereisanindicationthatanassetmaybeimpaired.IanysuchindicationexistsorwhenannualimpairmenttestingoranassetisrequiredtheGroupmakesanestimateotheassetsrecoverableamount.Anassetsrecoverableamountisthehigheroitsairvaluelesscoststosellanditsvalueinuseandisdeterminedoranindividualassetunlesstheassetdoesnotgeneratecashinfowsthatarelargelyindependentothoseromotherassetsorgroupsoassetsandtheassetsvalueinusecannotbeestimatedtobeclosetoitsairvalue.Insuchcasestheassetistestedorimpairmentaspartothecashgeneratingunittowhichitbelongs.Whenthecarryingvalueoanassetorcashgeneratingunitexceedsitsrecoverableamounttheassetorcashgeneratingunitisconsideredimpairedandiswrittendowntoitsrecoverableamount.Inassessingvalueinusetheestimateduturecashfowsarediscountedtotheirpresentvalueusingadiscountratethatrefectscurrentmarketassessmentsothetimevalueomoneyandtherisksspecictotheasset.Indeterminingairvaluelesscoststosellanappropriatevaluationmodelisused.Thesecalculationsarecomparedtovaluationmultiplesorotherairvalueindicatorswhereavailabletoensurereasonableness.Impairmentlossesrelatingtocontinuingoperationsarerecognisedinthoseexpensecategoriesconsistentwiththeunctionotheimpairedasset. WesfarmersaNNUaLreport2013110Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedyImpairmentcontinuedAnassessmentisalsomadeateachreportingdateastowhetherthereisanyindicationthatpreviouslyrecognisedimpairmentlossesonassetsotherthangoodwillmaynolongerexistormayhavedecreased.Isuchindicationexiststherecoverableamountisestimated.Apreviouslyrecognisedimpairmentlossisreversedonlyitherehasbeenachangeintheestimatesusedtodeterminetheassetsrecoverableamountsincethelastimpairmentlosswasrecognised.Ithatisthecasethecarryingvalueotheassetisincreasedtoitsrecoverableamount.Thatincreasedamountcannotexceedthecarryingvaluethatwouldhavebeendeterminednetodepreciationhadnoimpairmentlossbeenrecognisedortheassetinprioryears.Suchreversalisrecognisedinprotorloss.Atersuchareversalthedepreciationchargeisadjustedinutureperiodstoallocatetheassetsrevisedcarryingvaluelessanyresidualvalueonasystematicbasisoveritsremaininguseullie.zTradeandotherpayablesTradeandotherpayablesarecarriedatamortisedcostandrepresentliabilitiesorgoodsandservicesprovidedtotheGrouppriortothenancialyearendthatareunpaidandarisewhentheGroupbecomesobligedtomakeuturepaymentsinrespectothepurchaseothesegoodsandservices.Tradepayablesarenon-interest-bearingandarenormallysettledontermsupto60days.Otherpayablesalsoincludetheliabilityorcustomercardsandgitvouchers.Thekeyassumptioninmeasuringtheliabilityorgitcardsandvouchersistheexpectedredemptionratesbycustomers.Expectedredemptionratesarereviewedannually.Anyreassessmentoexpectedredemptionratesinaparticularyearwillaecttherevenuerecognisedromexpiryogitcardsandvoucherseitherincreasingordecreasing.aaInterest-bearingloansandborrowingsAllloansandborrowingsareinitiallyrecognisedatairvalueotheconsiderationreceivedlessdirectlyattributabletransactioncosts.Aterinitialrecognitioninterest-bearingloansandborrowingsaresubsequentlymeasuredatamortisedcostusingtheeectiveinterestmethod.Gainsandlossesarerecognisedinprotorlosswhentheliabilitiesarederecognised.abProvisionsProvisionsarerecognisedwhentheGrouphasapresentobligationlegalorconstructiveasaresultoapasteventitisprobablethatanoutfoworesourcesembodyingeconomicbenetswillberequiredtosettletheobligationandareliableestimatecanbemadeotheamountotheobligation.WheretheGroupexpectssomeoralloaprovisiontobereimbursedorexampleunderaninsurancecontractthereimbursementisrecognisedasaseparateassetbutonlywhenthereimbursementisvirtuallycertain.Theexpenserelatingtoanyprovisionispresentedintheincomestatementnetoanyreimbursement.Itheeectothetimevalueomoneyismaterialprovisionsaredeterminedbydiscountingtheexpecteduturecashfowsatapre-taxratethatrefectscurrentmarketassessmentsothetimevalueomoneyandtherisksspecictotheliabilitytotheextenttheyarenotalreadyrefectedinthecashfows.Wherediscountingisusedtheincreaseintheprovisionduetothepassageotimeisrecognisedasanancecost.MineandplantrehabilitationProvisionismadeortheGroupsestimatedliabilityunderspeciclegislativerequirementsandtheconditionsoitslicencesandleasesoruturecostsatdiscountedamountsexpectedtobeincurredrehabilitatingareasooperation.Theliabilityincludesthecostoreclamationothesiteusingexistingtechnologyincludingplantremovalandlandllcosts.Thisprovisionisrecognisedimmediatelyatthetimeodisturbanceorwhendevelopmentotheassetoccurs.RestructureAprovisionorrestructuringisrecognisedortheexpectedcostsassociatedwithrestructuringonceapresentobligationexists.Proft-sharingandbonusplansTheGrouprecognisesaliabilityandanexpenseorbonusesandprot-sharingbasedonaormulathattakesintoconsiderationtheprotattributabletotheCompanysshareholdersatercertainadjustments.TheGrouprecognisesaprovisionwherecontractuallyobligedorwherethereisapastpracticethathascreatedaconstructiveobligation.acEmployeeleavebeneftsWagessalariesandannualleaveLiabilitiesorwagesandsalariesincludingnon-monetarybenetsandannualleavearetobesettledwithin12monthsothereportingdateandarerecognisedinprovisionsandotherpayablesinrespectoemployeesservicesuptothereportingdate.Theyaremeasuredattheamountsexpectedtobepaidwhentheliabilitiesaresettled.LongserviceleaveTheliabilityorlongserviceleaveisrecognisedintheprovisionoremployeebenetsandmeasuredasthepresentvalueoexpecteduturepaymentstobemadeinrespectoservicesprovidedbyemployeesuptothereportingdateusingtheprojectedunitcreditvaluationmethod.Considerationisgiventoexpecteduturewageandsalarylevelsexperienceoemployeedeparturesandperiodsoservice.Expecteduturepaymentsarediscountedusingmarketyieldsatthereportingdateonnationalgovernmentbondswithtermstomaturityandcurrenciesthatmatchascloselyaspossibletheestimateduturecashoutfows.Expenseswhichareconsequentialtotheemploymentotheemployeesorexamplepayrolltaxassociatedwithemployeeentitlementsarealsorecognisedasaliabilityandincludedintheamountoremployeeentitlements.adPensionsbeneftsDefnedcontributionplanContributionstosuperannuationundsarechargedtotheincomestatementwhendue.DefnedbeneftplanTheGroupcontributestoadenedbenetpensionscheme.Thecostoprovidingbenetsundertheplanisdeterminedusingtheprojectedunitcreditactuarialvaluationmethod.Actuarialgainsandlossesarerecogniseddirectlyinequity.Thedenedbenetassetorliabilityrecognisedinthebalancesheetrepresentsthepresentvalueothedenedbenetobligationadjustedorunrecognisedpastservicecostnetotheairvalueotheplanassets.Anyassetresultingromthiscalculationislimitedtopastservicecostsplusthepresentvalueoavailablereundsandreductionsinuturecontributionstotheplan. 111WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedaeShare-basedpaymenttransactionsTheGroupprovidesbenetstoemployeesincludingexecutivedirectorsotheGroupintheormoshare-basedpaymenttransactionswherebyemployeesrenderservicesinexchangeorsharesorrightsoversharesequity-settledtransactions.TherearecurrentlyveplansinplacetoprovidethesebenetstheWesarmersEmployeeSharePlanWESPwhichprovidesbenetstoallemployees.ThelastissueunderthisplanwasinDecember2004theWesarmersLongTermIncentivePlanWLTIPwhichprovidesbenetstoseniorexecutives.TherstissueunderthisplanwasinOctober2005theColesLongTermIncentivePlanCLTIPwhichprovidesaboveaveragerewardsoraboveaverageperormanceinturningaroundtheColesdivisionsperormanceovertherstveyearsoWesarmersownershiportheColesManagingDirectorandasmallnumberoColesseniorexecutivestheGroupManagingDirectorLongTermIncentivePlanRightsPlanwhichprovidesrewardsorexceptionallong-termperormanceortheGroupManagingDirectoronlyandtheWesarmersEmployeeShareAcquisitionPlanWESAPwhichprovidesbenetstoallqualiyingemployees.TherstallocationunderthisplanwasinOctober2009.Thecostotheseequity-settledtransactionswithemployeesismeasuredbyreerencetotheairvalueatthedateatwhichtheyaregranted.Invaluingequity-settledtransactionsnoaccountistakenoanyperormanceconditionsotherthanconditionslinkedtothepriceothesharesoWesarmersLimitedmarketconditions.Thecostoequity-settledtransactionsisrecognisedtogetherwithacorrespondingincreaseinequitywhereapplicableovertheperiodinwhichtheperormanceconditionsareullledendingonthedateonwhichtherelevantemployeesbecomeullyentitledtotheawardvestingdate.Thecumulativeexpenserecognisedorequity-settledtransactionsateachreportingdateuntilvestingdaterefectstheextenttowhichthevestingperiodhasexpiredandthenumberoawardsthatareexpectedtoultimatelyvest.Thisopinionisormedbasedonthebestavailableinormationatbalancedate.Noadjustmentismadeorthelikelihoodomarketperormanceconditionsbeingmetastheeectotheseconditionsisincludedinthedeterminationoairvalueatgrantdate.Noexpenseisrecognisedorawardsthatdonotultimatelyvestexceptorawardswherevestingisonlyconditionaluponamarketcondition.Wherethetermsoanequity-settledawardaremodiedasaminimumanexpenseisrecognisedasithetermshadnotbeenmodied.Inadditionanexpenseisrecognisedoranyincreaseinthevalueothetransactionasaresultothemodicationasmeasuredatthedateomodication.Whereanequity-settledawardiscancelleditistreatedasiithadvestedonthedateocancellationandanyexpensenotyetrecognisedortheawardisrecognisedimmediately.Howeverianewawardissubstitutedorthecancelledawardanddesignatedasareplacementawardonthedatethatitisgrantedthecancelledandnewawardaretreatedasitheywereamodicationotheoriginalawardasdescribedinthepreviousparagraph.TheWESPisaccountedorasanin-substanceoptionplanduetothelimitedrecoursenatureotheloan.Thedilutiveeectianyooutstandingoptionsisrefectedasadditionalsharedilutioninthecomputationoearningspershare.SharesintheGroupheldundertheWESPareclassiedanddisclosedasreservedsharesanddeductedromequity.TheGroupalsoprovidesbenetstocertainexecutivesundertheCLTIPintheormocash-settledshare-basedpaymentswherebyexecutivescanmakeanelectiontoreceiveanawardincash.Theultimatecostothesecash-settledtransactionswillbeequaltotheactualcashpaidtotheexecutiveswhichwillbetheairvalueatsettlementdate.aContributedequityOrdinarysharesandpriceprotectedordinarysharesareclassiedasequity.Incrementalcostsdirectlyattributabletotheissueonewsharesareshowninequityasadeductionnetotaxromtheproceeds.Ordinarysharecapitalbearsnospecialtermsorconditionsaectingincomeorcapitalentitlementsotheshareholders.TheGroupoperatesadividendinvestmentplan.AnissueosharesunderthedividendinvestmentplanresultsinanincreaseinissuedcapitalunlesstheGroupelectstopurchasetherequirednumberoshareson-marketwhichineectwouldnotgiverisetoachangeinissuedcapital.agInsuranceactivitiesInsurancepremiumrevenuePremiumrevenuecomprisesamountschargedtopolicyholdersexcludingtaxescollectedonbehalothirdpartiesandanyunearnedpremiums.Theearnedportionopremiumreceivedandreceivableincludingunclosedbusinessisrecognisedasrevenue.Premiumsonunclosedbusinessarebroughttoaccountusingestimatesbasedonthepreviousyearsactualunclosedbusinesswithdueallowancemadeoranychangesinthepatternonewbusinessandrenewals.Interestrevenuerompremiumundingactivitiesisrecognisedasinterestaccruesusingtheeectiveinterestratemethod.Thisisamethodocalculatingtheamortisedcostoanancialassetandallocatingtheinterestincomeovertherelevantperiodusingtheeectiveinterestratewhichistheratethatexactlydiscountsestimateduturecashreceiptsthroughtheexpectedlieothenancialassettothenetcarryingamountothenancialasset.UnearnedpremiumUnearnedpremiumiscalculatedbasedonthetermotheriskwhichcloselyapproximatesthepatternorisksunderwritten.Ateachbalancedatetheadequacyotheunearnedpremiumliabilityisassessedonanetoreinsurancebasisagainstthepresentvalueotheexpecteduturecashfowsrelatingtopotentialutureclaimsinrespectotherelevantinsurancecontractsplusanadditionalriskmargintorefecttheinherentuncertaintyothecentralestimate. WesfarmersaNNUaLreport2013112Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedagInsuranceactivitiescontinuedOutwardsreinsurancePremiumcededtoreinsurersisrecognisedasanexpenseinaccordancewiththepatternoreinsuranceservicereceived.Accordinglyaportionooutwardsreinsurancepremiumistreatedasaprepaymentatbalancedate.OutstandingclaimsliabilityTheliabilityoroutstandingclaimsismeasuredasthecentralestimateothepresentvalueoexpectedutureclaimspaymentsplusariskmargin.TheexpecteduturepaymentsincludethoseinrelationtoclaimsreportedbutnotyetpaidinsuranceclaimsincurredbutnotreportedIBNRinsuranceclaimsincurredbutnotenoughreportedIBNERandestimatedclaimshandlingcosts.Theexpecteduturepaymentsarediscountedtopresentvalueusingarisk-reerate.Ariskmarginisappliedtothecentralestimatenetoreinsuranceandotherrecoveriestorefecttheinherentuncertaintyinthecentralestimate.Thisriskmarginincreasestheprobabilitythatthenetliabilityisadequatetoaminimumo85percent.ReinsuranceandotherrecoveriesreceivableReinsuranceandotherrecoveriesonpaidclaimsreportedclaimsnotyetpaidIBNRandIBNERarerecognisedasrevenue.Amountsrecoverableareassessedinamannersimilartotheassessmentooutstandingclaims.Recoveriesaremeasuredasthepresentvalueotheexpecteduturereceiptscalculatedonthesamebasisastheprovisionoroutstandingclaims.DeferredacquisitioncostsAportionoacquisitioncostsrelatingtounearnedpremiumsisdeerredinrecognitionthatitrepresentsauturebenet.Deerredacquisitioncostsaremeasuredatthelowerocostandrecoverableamount.Deerredacquisitioncostsareamortisedsystematicallyinaccordancewiththeexpectedpatternotheincidenceoriskunderthegeneralinsurancecontractstowhichtheyrelate.Commissionspaidinrespectopremiumundingactivitiesareamortisedovertheexpectedlieotheloanusingtheeectiveinterestratemethod.Commissionspaidinrespectogeneralinsuranceactivitiesarecapitalisedasadeerredacquisitioncostandareamortisedsystematicallyinaccordancewiththeexpectedpatternotheincidenceoriskunderthegeneralinsurancecontractstowhichtheyrelate.InsuranceinvestmentsAspartoitsinvestmentstrategytheGroupactivelymanagesitsinvestmentportoliotoensurethatinvestmentsmatureinaccordancewiththeexpectedpatternouturecashfowsarisingromgeneralinsuranceliabilities.TheGrouphasdeterminedthatallbankbillsshort-termdepositsandtradereceivablesheldbyunderwritingentitiesareheldtobackgeneralinsurancecontracts.Theseassetshavebeenvaluedatairvaluethroughtheincomestatement.FirebrigadeandotherchargesAliabilityorrebrigadeandotherchargesisrecognisedonbusinesswrittentothebalancedate.Leviesandchargespayableareexpensedonthesamebasisastherecognitionopremiumrevenuewiththeportionrelatingtounearnedpremiumbeingrecordedasaprepayment.ahEarningspershareBasicearningspershareBasicearningspershareiscalculatedasnetprotattributabletomembersotheparentadjustedtoexcludeanycostsoservicingequityotherthandividendsandpreerencesharedividendsdividedbytheweightedaveragenumberoordinarysharesadjustedoranybonuselement.DilutedearningspershareDilutedearningspershareiscalculatedasnetprotattributabletomembersotheparentadjustedorcostsoservicingequityotherthandividendsandpreerencesharedividendstheater-taxeectodividendsandinterestassociatedwithdilutivepotentialordinarysharesthathavebeenrecognisedasexpensesandothernon-discretionarychangesinrevenuesorexpensesduringtheyearthatwouldresultromthedilutionopotentialordinarysharesdividedbytheweightedaveragenumberoordinarysharesanddilutivepotentialordinarysharesadjustedoranybonuselement.aiNewandrevisedAccountingStandardsandInterpretationsAllnewandamendedAustralianAccountingStandardsandInterpretationsmandatoryasat1July2012totheGrouphavebeenadoptedincludingAmendmentstoAASB1048InterpretationofStandardsTheStandardidentiestheAustralianinterpretationsandclassiesthemintotwogroupsthosethatcorrespondtoanIASBinterpretationandthosethatdonot.EntitiesarerequiredtoapplyeachrelevantAustralianinterpretationinpreparingnancialstatementsthatarewithinthescopeothestandard.AmendmentstoAASB2010-8AmendmentstoAustralianAccountingStandards-DeferredTaxRecoveryofUnderlyingAssetsTheseamendmentsaddressthedeterminationodeerredtaxoninvestmentpropertymeasuredatairvalueandintroducearebuttablepresumptionthatdeerredtaxoninvestmentpropertymeasuredatairvalueshouldbedeterminedonthebasisthatthecarryingamountwillberecoverablethroughsale.TheamendmentsalsoincorporateSIC-21IncomeTaxes-RecoveryofRevaluedNon-DepreciableAssetsintoAASB112.AASB2011-9AmendmentstoAustralianAccountingStandardsPresentationofItemsofOtherComprehensiveIncomeThisStandardrequiresentitiestogroupitemspresentedinothercomprehensiveincomeonthebasisowhethertheymightbereclassiedsubsequentlytoprotorlossandthosethatwillnot. 113WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedajAustralianAccountingStandardsandInterpretationsissuednotyetadoptedApackageosixStandardsonconsolidationjointarrangementsassociatesanddisclosureswasissuedinAugust2011.ItisanticipatedthattheseStandardswillbeadoptedbytheGrouporthefnancialreportingperiodending30June2014.KeyrequirementsotheseStandardsareasollowsAASB10ConsolidatedFinancialStatementsAASB10establishesanewcontrolmodelthatappliestoallentities.ItreplacespartsoAASB127ConsolidatedandSeparateFinancialStatementsdealingwiththeaccountingorconsolidatedfnancialstatementsandUIG-112ConsolidationSpecialPurposeEntities.Thenewcontrolmodelbroadensthesituationswhenanentityisconsideredtobecontrolledbyanotherentityandincludesnewguidanceorapplyingthemodeltospecifcsituationsincludingwhenactingasamanagermaygivecontroltheimpactopotentialvotingrightsandwhenholdinglessthanamajorityovotingrightsmaygivecontrol.AASB11JointArrangementsAASB11replacesAASB131InterestsinJointVenturesandUIG-113Jointly-controlledEntitiesNon-monetaryContributionsbyVentures.AASB11usestheprincipleocontrolinAASB10todefnejointcontrolandthereorethedeterminationowhetherjointcontrolexistsmaychange.Inadditionitremovestheoptiontoaccountorjointlycontrolledentitiesusingproportionateconsolidation.Insteadaccountingorajointarrangementisdependentonthenatureotherightsandobligationsarisingromthearrangement.Jointoperationsthatgivetheventurersarighttotheunderlyingassetsandobligationsthemselvesisaccountedorbyrecognisingtheshareothoseassetsandobligations.Jointventuresthatgivetheventurersarighttothenetassetsisaccountedorusingtheequitymethod.AASB12DisclosureoInterestsinOtherEntitiesAASB12includesalldisclosuresrelatingtoanentitysinterestsinsubsidiariesjointarrangementsassociatesandstructuredentities.Newdisclosureshavebeenintroducedaboutthejudgementsmadebymanagementtodeterminewhethercontrolexistsandtorequiresummarisedinormationaboutjointarrangementsassociatesandstructuredentitiesandsubsidiarieswithnon-controllinginterests.TheapplicationotheseStandardswillchangetheaccountingortheGroups40percentinvestmentintheKwinanaIndustrialGasesjointventurewhichiscurrentlyproportionatelyconsolidatedbutwhichwillbeequityaccountedunderthenewStandards.Thefnancialeectothischangeisnotexpectedtobematerial.OthernewandamendedAccountingStandardsandInterpretationseectiveorannualreportingperiodsbeginningonorater1January2013andexpectedtobeinitiallyappliedbytheGroupinthefnancialyearending30June2014AASB13FairValueMeasurementandAASB2011-8AmendmentstoAustralianAccountingStandardsarisingromAASB13AASB13establishesasinglesourceoguidanceordeterminingtheairvalueoassetsandliabilities.AASB13doesnotchangewhenanentityisrequiredtouseairvaluebutratherprovidesguidanceonhowtodetermineairvaluewhenairvalueisrequiredorpermitted.AASB13alsoexpandsthedisclosurerequirementsorallassetsorliabilitiescarriedatairvalue.Thisincludesinormationabouttheassumptionsmadeandthequalitativeimpactothoseassumptionsontheairvaluedetermined.TheeectothisStandardisnotanticipatedtobematerial.AASB119EmployeeBenefts2011andAASB2011-10AmendmentstoAustralianAccountingStandardsarisingromAASB1192011Themainchangeintroducedbythisstandardistorevisetheaccountingordefnedbeneftplans.Theamendmentremovestheoptionsoraccountingortheliabilityandrequiresthattheliabilitiesarisingromsuchplansberecognisedinullwithactuarialgainsandlossesbeingrecognisedinothercomprehensiveincome.Italsorevisedthemethodocalculatingthereturnonplanassets.Therevisedstandardchangesthedefnitionoshort-termemployeebenefts.Thedistinctionbetweenshort-termandotherlong-termemployeebeneftsisnowbasedonwhetherthebeneftsareexpectedtobesettledwhollywithin12monthsaterthereportingdate.TheeectothisStandardisnotanticipatedtobematerial.Interpretation20StrippingCostsintheProductionPhaseoaSuraceMineandAASB2011-12AmendmentstoAustralianAccountingStandardsarisingromInterpretation20Thisinterpretationappliestostrippingcostsincurredduringtheproductionphaseoasuracemine.Productionstrippingcostsaretobecapitalisedaspartoanassetianentitycandemonstratethatitisprobableutureeconomicbeneftswillberealisedthecostscanbereliablymeasuredandtheentitycanidentiythecomponentoanorebodyorwhichaccesshasbeenimproved.Thisassetistobecalledthestrippingactivityasset.Thestrippingactivityassetistobedepreciatedoramortisedonasystematicbasisovertheexpecteduseullieotheidentifedcomponentotheorebodythatbecomesmoreaccessibleasaresultothestrippingactivity.Theunitsoproductionmethodshallbeappliedunlessanothermethodismoreappropriate.TheeectothisInterpretationisnotanticipatedtobematerial.AASB2012-2AmendmentstoAustralianAccountingStandards-Disclosures-OsettingFinancialAssetsandFinancialLiabilitiesTheStandardprincipallyamendsAASB7FinancialInstrumentsDisclosurestorequiredisclosureoinormationthatwillenableusersoanentitysfnancialstatementstoevaluatetheeectorpotentialeectonettingarrangementsincludingrightsoset-oassociatedwiththeentitysrecognisedfnancialassetsandrecognisedfnancialliabilitiesontheentitysfnancialposition.TheeectothisInterpretationisnotanticipatedtobematerial.AASB2012-5AmendmentstoAustralianAccountingStandardsarisingromAnnualImprovements20092011CycleThisStandardsetsoutamendmentsarisingromtheannualimprovementsprogram.Itaddressesanumberoitemsincludingtherequirementorcomparativeinormationclassifcationoservicingequipmentrequirementortaxeectingdistributionstoholdersoequityinstrumentsinterimfnancialreportingandsegmentinormationortotalassetsandliabilities.TheeectothisInterpretationisnotanticipatedtobematerial. WesfarmersaNNUaLreport2013114Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities2SummaryosignifcantaccountingpoliciescontinuedajAustralianaccountingstandardsandinterpretationsissuednotyetadoptedcontinuedAASB2012-9AmendmenttoAASB1048arisingfromthewithdrawalofAustralianInterpretation1039AASB2012-9amendsAASB1048InterpretationofStandardstoevidencethewithdrawaloAustralianInterpretation1039SubstantiveEnactmentofMajorTaxBillsinAustralia.TheeectothisInterpretationisnotanticipatedtobematerial.AASB2012-10AmendmentstoAustralianAccountingStandards-TransitionGuidanceandOtherAmendmentsTheStandardamendsAASB10ConsolidatedFinancialStatementsandrelatedstandardsbyclariyingtransitionalguidance.VariouseditorialamendmentstoarangeoAustralianAccountingStandardsandtoInterpretation12ServiceConcessionArrangementsweremadetorefectchangesmadetothetextoIFRSsbytheInternationalAccountingStandardsBoard.TheeectothisInterpretationisnotanticipatedtobematerial.AASB2011-4AmendmentstoAustralianAccountingStandardstoRemoveIndividualKeyManagementPersonnelDisclosureRequirementsThisamendmentdeletesromAASB124RelatedPartyDisclosuresindividualKeyManagementPersonnelKMPdisclosurerequirementsordisclosingentitiesthatarenotcompanies.ItalsoremovestheindividualKMPdisclosurerequirementsoralldisclosingentitiesinrelationtoequityholdingsloansandotherrelatedpartytransactions.TheapplicationothisStandardisanticipatedtochangetheKMPdisclosuresotheGroup.Eectiveorannualreportingperiodsbeginningonorater1January2014andexpectedtobeinitiallyappliedbytheGroupinthenancialyearending30June2015AASB2012-3AmendmentstoAustralianAccountingStandards-OffsettingFinancialAssetsandFinancialLiabilitiesAASB2012-3addsapplicationguidancetoAASB132FinancialInstrumentsPresentationtoaddressinconsistenciesidentiedinapplyingsomeotheosettingcriteriaoAASB132includingclariyingthemeaningocurrentlyhasalegallyenorceablerightoset-oandthatsomegrosssettlementsystemsmaybeconsideredequivalenttonetsettlement.ThepotentialeectsotheaboveStandardhasnotyetbeenullydetermined.Interpretation21LeviesThisInterpretationconrmsthataliabilitytopayalevyisonlyrecognisedwhentheactivitythattriggersthepaymentoccurs.Applyingthegoingconcernassumptiondoesnotcreateaconstructiveobligation.ThepotentialeectsotheaboveInterpretationhasnotyetbeenullydetermined.Eectiveorannualreportingperiodsbeginningonorater1January2015andexpectedtobeinitiallyappliedbytheGroupinthenancialyearending30June2016AASB9FinancialInstrumentsAASB2009-11AmendmentstoAustralianAccountingStandardsarisingfromAASB9andAASB2010-7AmendmentstoAustralianAccountingStandardsarisingfromAASB9December2010AASB9includesrequirementsortheclassicationandmeasurementonancialassetsandwasurtheramendedbyAASB2010-7torefectamendmentstotheaccountingornancialliabilities.TheserequirementsaimtoimproveandsimpliytheapproachorclassicationandmeasurementonancialassetscomparedwiththerequirementsoAASB139by1.Classiyingnancialassetsthataredebtinstrumentsbasedontheobjectiveotheentitysbusinessmodelormanagingthenancialassetsandthecharacteristicsothecontractualcashfows.2.Allowinganirrevocableelectiononinitialrecognitiontopresentgainsandlossesoninvestmentsinequityinstrumentsthatarenotheldortradinginothercomprehensiveincome.3.Allowingnancialassetstobedesignatedandmeasuredatairvaluethroughprotorlossatinitialrecognitionidoingsoeliminatesorsignicantlyreducesameasurementorrecognitioninconsistencythatwouldariserommeasuringassetsorliabilitiesorrecognisingthegainsandlossesonthemondierentbases.4.Requiringchangesinnancialliabilitiesmeasuredatairvaluetobepresentedinothercomprehensiveincomewhereitisattributabletochangesincreditriskandtheremainingchangeinprotorlosstotheextentitdoesnotcreateamismatchintheprotorloss.ThepotentialeectsotheaboveStandardhasnotyetbeenullydetermined. 115WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities3SegmentinformationTheoperatingsegmentsareorganisedandmanagedseparatelyaccordingtothenatureotheproductsandservicesprovidedwitheachsegmentrepresentingastrategicbusinessunitthatoersdierentproductsandoperatesindierentindustriesandmarkets.TheBoardandexecutivemanagementteamthechieoperatingdecisionmakersmonitortheoperatingresultsothebusinessunitsseparatelyorthepurposeomakingdecisionsaboutresourceallocationandperormanceassessment.Thetypesoproductsandservicesromwhicheachreportablesegmentderivesitsrevenuesaredisclosedbelow.Segmentperormanceisevaluatedbasedonoperatingproftorlosswhichincertainrespectsasexplainedinthetablebelowispresenteddierentlyromoperatingproftorlossintheconsolidatedfnancialstatements.Interestincomeandexpenditurearenotallocatedtooperatingsegmentsasthistypeoactivityismanagedonagroupbasis.RevenueandearningsovariousdivisionsareaectedbyseasonalityandcyclicalityasollowsorretaildivisionsparticularlyKmartandTargetearningsaretypicallygreaterintheDecemberhalothefnancialyearduetotheimpactontheretailbusinessotheChristmasholidayshoppingperiodortheResourcesdivisionthemajorityotheentityscoalcontractedtonnagesarerenewedonanannualbasisromAprileachcalendaryearandsubjecttopricerenegotiationonaquarterlybasiswhichdependinguponthemovementinprevailingcoalpricescanresultinsignifcantchangesinrevenueandearningsthroughoutthefnancialyearandortheChemicalsEnergyandFertilisersdivisionearningsaretypicallygreaterintheJunehalothefnancialyearduetotheimpactotheWesternAustralianwinterseasonbreakonertilisersales.Transerpricesbetweenbusinesssegmentsaresetatanarmslengthbasisinamannersimilartotransactionswiththirdparties.Segmentrevenuesegmentexpenseandsegmentresultincludetransersbetweenbusinesssegments.Thosetransersareeliminatedonconsolidationandarenotconsideredmaterial.TheoperatingsegmentsandtheirrespectivetypesoproductsandservicesareasollowsRetailColesSupermarketretailerLiquorretailerincludinghotelportolioRetailerouelandoperatoroconveniencestoresandColespropertybusinessoperator.HomeImprovementandOfceSuppliesRetailerobuildingmaterialandhomeandgardenimprovementproductsServicingprojectbuildersandthehousingindustryandOfcesuppliesproducts.KmartRetaileroapparelandgeneralmerchandiseincludingtoysleisureentertainmenthomeandconsumablesandProvisionoautomotiveservicerepairsandtyreservice.TargetRetaileroapparelhomewaresandgeneralmerchandiseincludingaccessorieselectricalsandtoys.InsuranceSupplierospecialistruralandsmallbusinessregionalinsuranceSupplierogeneralinsurancethroughbrokingintermediariesandSupplieroinsurancebrokingservices.IndustrialResourcesCoalmininganddevelopmentandCoalmarketingtobothdomesticandexportmarkets.IndustrialandSaetySupplieranddistributoromaintenancerepairandoperatingproductsManuactureandmarketingoindustrialgasesandequipmentandSpecialisedsupplieranddistributoroindustrialsaetyproductsandservices.ChemicalsEnergyandFertilisersManuactureandmarketingochemicalsorindustryminingandmineralprocessingManuactureandmarketingobroadacreandhorticulturalertilisersNationalmarketinganddistributionoLPGandLNGLPGandLNGextractionordomesticandexportmarketsandManuacturemarketinganddistributionoindustrialmedicalandspecialtygases.OtherForestproductsnon-controllinginterestinWespinePtyLtdwhichmanuacturesproductstoservicethewholesaletimbermarketinAustraliaPropertyincludesanon-controllinginterestinBWPTrustwhichacquirespropertiessuitableorretailpropertydevelopmentandinvestmentInvestmentbankingnon-controllinginterestinGreshamPartnersGroupLimitedwhichisaninvestmentbankprovidingfnancialadvisoryandinvestmentmanagementservicesandPrivateequityinvestmentnon-controllinginterestsinGreshamPrivateEquityFundNo.2andGreshamPrivateEquityFundNo.3whichareclosed-endprivateequityundstargetinglargersizeprivateequitytransactionsintheareasomanagementbuy-outsexpansioncapitalandcorporaterestructuring. WesfarmersaNNUaLreport2013116Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities3SegmentinformationcontinuedCOLES1HOMEIMPROVEMENTANDOFFICESUPPLIESKMART201320122013201220132012mmm357803411791678644416740551987178511451065415332454429148139716415331356997926344268203671994058885647214520571716----414536769578107506041181121854958791136------756776781210SegmentrevenueSegmentresultEarningsbeoreinteresttaxdepreciationamortisationEBITDADepreciationandamortisationEarningsbeoreinteresttaxEBITFinancecostsProftbeoreincometaxexpenseIncometaxexpenseProftattributabletomembersotheparentAssetsandliabilitiesSegmentassetsInvestmentsinassociatesTaxassetsTotalassetsSegmentliabilitiesTaxliabilitiesInterest-bearingliabilitiesTotalliabilitiesOthersegmentinormationCapitalexpenditure6ShareonetproftorlossoassociatesincludedinEBITNon-cashexpensesotherthandepreciationandamortisation1.ColesdivisionincludestheoodliquorconvenienceandColespropertybusinesses.2.TheInsurancedivisions2012resultwasadverselyaectedbyadditionalreservingo108millionabovethereinsuranceprogramlimitrelatingtotheFebruary2011Christchurchearthquakeandestimatednetclaimsexpenseinexcessoallowanceso32millionrelatingtothebushfresandstormsinWesternAustraliaandothersevereweatherevents.3.ResourcesresultincludesStanwellroyaltyexpenseso154million2012219millionandhedgegainso130million2012143million.4.TheChemicalsEnergyandFertiliserdivisions2012resultincludedproftontheterminationoitsHIsmeltagreemento9million.5.The2013Otherresultincludesinterestrevenueo13million201222millionshareoproftlossromassociateso21million201234millionandcorporateoverheadso108million2012101million.2012includedgainondisposaloEnergyGenerationPtyLtdo43milliongainondisposaloWesarmersPremierCoalLimitedo98milliongainondisposaloBoddingtonorestryassetso16milliongainondisposaloBangladeshGaso9millionimpairmentotheCoregasrelatedgoodwillplantandequipmento181millionanddepreciationandamortisationcredito11millionarisingromdepreciationoPremierbeingdiscontinueduponitsclassifcationasheldorsale.6.Capitalexpenditureincludesaccrualstorepresentcostsincurredduringtheyear.Theamountexcludingmovementinaccrualsis2331million20122626million. 117WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentitiesTARGETINSURANCE2RESOURCES3INDUSTRIALANDSAFETYCHEMICALSENERGYANDFERTILISERS4OTHER5CONSOLIDATED20132012201320122013201220132012201320122013201220132012mmmmmmm36583738208319151539213216471690180517861435983258080216317243362995891922173483481161454729454480733831151150272799903810719951362442055148439165190249258119137365835494325053226304496591822612126356135384440442319202051129213091675148510779584236541408--------97933063204204293704754315542312464575286929884204962812703033108559991104410728310455577955021713316685916726477939250492731692423422669--------2718213448163959292260992634121613183342568GeographicallocationsRevenuebygeographicallocationsisdetailedbelow.Revenueisattributedtogeographiclocationbasedonthelocationothecustomers.Australia58348567581457128327395983258080NewZealandOtheroreigncountriesTotalrevenueTheanalysisothelocationonon-currentassetsotherthanfnancialinstrumentsdeerredtaxassetsandpensionassetsisasollowsAustralia3032129471921895103853134530451NewZealandOtheroreigncountriesTotalnon-currentassets WesfarmersaNNUaLreport2013118Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities4IncomeandexpensesCONSOLIDATED20132012NmEmployeebeneftsexpense72956888524497931117912749617941673666350849623682232866807898911699107199528112114-17249197108149154219370395110497920921910911200303631612023315020421022738336941810542578723284325051679152721027714691250105811591392391109209303032478614438939116071Remunerationbonusesandon-costsAmountsprovidedoremployeeentitlementsShare-basedpaymentsexpenseOccupancy-relatedexpensesMinimumleasepaymentsContingentrentalpaymentsOtherDepreciationandamortisationDepreciationAmortisationointangiblesAmortisationotherImpairmentexpensesImpairmentoreeholdproperty13ImpairmentoplantequipmentandotherassetsImpairmentogoodwill14OtherexpensesGovernmentminingroyaltiesStanwellrebateRepairsandmaintenanceUtilitiesandofceexpensesInsuranceexpensesOtherOtherincomeGainsondisposalopropertyplantandequipmentGainsondisposalocontrolledentitiesOtherincomeFinancecostsInterestexpenseCapitalisedinterestDiscountrateadjustmentAmortisationodebtestablishmentcostsOtherincludingbankacilityandsettlementeesInsuranceunderwritingresultPremiumrevenueOutwardsreinsurancepremiumexpenseNetpremiumrevenueClaimsexpenseundiscountedReinsuranceandotherrecoveriesrevenueundiscountedDiscounteectNetclaimsincurredAcquisitioncostsOtherunderwritingexpensesNetunderwritingexpensesUnderwritingresult 119WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities5IncometaxThemajorcomponentsoincometaxexpenseareCONSOLIDATED20132012mIncomestatement9469434213146476965918291112123115CurrentincometaxCurrentincometaxchargeAdjustmentsinrespectocurrentincometaxopreviousyearsAdjustmentsinrespectodeerredtaxopreviousyearsDeferredincometaxRelatingtooriginationandreversalotemporarydierencesIncometaxexpensereportedintheincomestatementStatementochangesinequityDeferredincometaxrelatedtoitemschargedorcrediteddirectlytoequityNetgainlossonrevaluationocashowhedgesChangesintheairvalueoavailable-or-salefnancialassetsActuarialgainlossondefnedbeneftplanIncometaxexpensebeneftreportedinequityAreconciliationbetweentaxexpenseandtheproductoaccountingproftbeoretaxmultipliedbytheGroupsapplicableincometaxrateisasollowsAccountingproftbeoreincometax322630449689132819-44135212533389659182142423413147238501921231717357323298397162174-110181027648552370475Atthestatutoryincometaxrateo30percent201230percentAdjustmentsinrespectocurrentincometaxanddeerredtaxopreviousyearsCarriedorwardlossesnowrecognisedNon-deductiblewritedownsShareoassociatedcompaniesnetlossproftatertaxTaxonundistributedassociatesproftOtherIncometaxexpensereportedintheincomestatementDeerredincometaxDeerredincometaxat30JunerelatestotheollowingBalancesheetDeerredtaxassetsProvisionsEmployeebeneftsAccruedandotherpayablesBorrowingsInsuranceliabilitiesDoubtuldebtsDerivativesDeerredincomeTradingstockFixedassetsShareissuecostsGrossdeerredincometaxassetsAmountnettedagainstdeerredtaxliabilitiesNetdeerredtaxassets WesfarmersaNNUaLreport2013120Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities5IncometaxcontinuedCONSOLIDATED20132012m20219460521871442316573122198090176648552648552--4781824-1-16-3321011717220102476284272151148DeerredincometaxcontinuedDeerredtaxliabilitiesAccelerateddepreciationortaxpurposesMiningassetsrecognisedoraccountingpurposesDerivativesUnremittedearningsoassociatesAccruedincomeandotherWarehousestockIntangibleassetsDeerredacquisitioncostsGrossdeerredincometaxliabilitiesAmountnettedagainstdeerredtaxassetsNetdeerredtaxliabilitiesIncomestatementProvisionsEmployeebeneftsDoubtuldebtsDepreciationandamortisationDerivativesInsuranceliabilitiesIntangibleassetsStockMiningassetsrecognisedoraccountingpurposesAccrualsandotherDeerredtaxexpenseUnrecogniseddeerredtaxassetsCapitallossesinAustraliaavailableindefnitelysubjecttomeetingrelevantstatutorytestsMineralResourcesRentTaxminingassetsrebatesandmininglossesAdeerredtaxasseto151million2012148millionnetoincometaxassociatedwiththeMineralResourceRentTaxMRRThasnotbeenrecognisedbytheResourcesdivisionasitisnotconsideredprobablethatthedeerredtaxassetwillbeutilisedbasedoncurrentorecasts.ItisnotedthattheResourcedivisionspre-existingannualroyaltyandrebatecommitmentsoritsonlywhollyownedandoperatedmineCurragharealreadyinexcessotheeectiveMRRTrate.Forthe12monthsended30June2013theResourcesdivisionpaidinexcesso262million2012345milliontotheQueenslandGovernmentanditsinstrumentalitiesbywayostandardgovernmentroyaltiesandStanwellrebatecombined.TaxconsolidationWesarmersandits100percent-ownedAustralianresidentsubsidiarieshaveormedataxconsolidatedgroupwitheectrom1July2002.Wesarmersistheheadentityothetaxconsolidatedgroup.Membersothegrouphaveenteredintoataxsharingagreementinordertoallocateincometaxexpensetothewhollyownedsubsidiariesonastand-alonebasis.Thetaxsharingarrangementprovidesortheallocationoincometaxliabilitiesbetweentheentitiesshouldtheheadentitydeaultonitstaxpaymentobligations.Atthebalancedatethepossibilityodeaultisconsideredremote.TaxeectaccountingbymembersothetaxconsolidatedgroupMembersothetaxconsolidatedgrouphaveenteredintoataxundingagreement.Thegrouphasappliedthegroupallocationapproachindeterminingtheappropriateamountocurrenttaxestoallocatetomembersothetaxconsolidatedgroup.Thetaxundingagreementprovidesoreachmemberothetaxconsolidatedgrouptopayataxequivalentamounttoorromtheparentinaccordancewiththeirnotionalcurrenttaxliabilityorcurrenttaxasset.Suchamountsarereectedinamountsreceivableromorpayabletotheparentcompanyintheiraccountsandaresettledassoonaspracticableaterlodgmentotheconsolidatedreturnandpaymentothetaxliability. 121WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities6EarningspershareBasicearningspershareamountsarecalculatedbydividingnetproftortheyearattributabletoordinaryequityholdersotheparentbytheweightedaveragenumberoordinarysharesincludingpartiallyprotectedsharesoutstandingduringtheyearexcludingemployeereservedshares.Dilutedearningspershareamountsarecalculatedasabovewithanadjustmentortheweightedaveragenumberoordinarysharesthatwouldbeissuedonconversionoalldilutivepotentialordinaryshares.Dilutionarisesasaresultotheemployeereservedsharesissuedundertheemployeeshareplanbeingaccountedorasin-substanceoptions.WesarmerspartiallyprotectedsharesPPSareordinarysharesthatconerrightsonholdersthatarethesameinallrespectsasthoseconerredbyotherordinaryshares.InadditionPPSprovidealevelodownsidepriceprotectioninthattheymayprovideholderswithuptoanadditional0.25ordinarysharesperPPSincertaincircumstancesattheexpirationoaspecifedperiod.FulldetailsandothertermsandconditionsapplicabletothePPSareavailableromtheCompanywebsitewww.wesarmers.com.auBasicanddilutiveearningspersharecalculationsareasollowsCONSOLIDATED20132012m22612126ProftattributabletomembersotheparentsharesmhWeightedaveragenumberoordinarysharesincludingpartiallyprotectedsharesorbasicearningspershare115411542211561156EectodilutionreservedsharesWeightedaveragenumberoordinarysharesincludingpartiallyprotectedsharesadjustedortheeectodilutioncentscnEarningspersharecentspershareattributabletoordinaryequityholdersotheparentbasicearningspershare195.9184.2195.6183.9dilutedearningspershareTherehavebeennotransactionsinvolvingordinarysharesbetweenthereportingdateandthedateocompletionothesefnancialstatementsapartromthenormalconversionoemployeereservedsharestreatedasin-substanceoptionstounrestrictedordinarysharesandtheconversionopartiallyprotectedordinarysharestoordinaryshares.7DividendspaidandproposedCONSOLIDATED20132012mDeclaredandpaidduringtheperiodully-rankedat30percent1099983891810199017931192109924354511471Finalrankeddividendor20120.9520110.85Interimrankeddividendor20130.7720120.70Proposedandnotrecognisedasaliabilityully-rankedat30percentFinalrankeddividendor20131.0320120.95FrankingcreditbalanceFrankingcreditsavailableorutureyearsat30percentadjustedordebitsandcreditsarisingromthepaymentoincometaxpayableandromrecogniseddividendsreceivableorpayableImpactontherankingaccountodividendsproposedbeorethefnancialreportwasissuedbutnotrecognisedasadistributiontoequityholdersduringtheperiodTheGroupoperatesadividendinvestmentplanwhichallowseligibleshareholderstoelecttoinvestdividendsinordinaryshareswhichrankequallywithWesarmersordinaryshareswhichhasbeenappliedtothedividendspayableromMarch2007.AllholdersoWesarmersordinaryshareswithaddressesinAustraliaorNewZealandareeligibletoparticipateintheplan.TheallocationpriceorsharesisbasedontheaverageothedailyvolumeweightedaveragepriceoWesarmersordinarysharessoldontheAustralianSecuritiesExchangecalculatedwithreerencetoaperiodonotlessthanfveconsecutivetradingdaysasdeterminedbythedirectors. WesfarmersaNNUaLreport2013122Notestothenancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities8CashandcashequivalentsCONSOLIDATED20132012m61541752059819811213331127CashonhandandintransitCashatbankandondepositInsurancebrokingtrustaccounts11.Trustcashcannotbeusedtomeetbusinessobligationsoroperatingexpensesotherthantotheextentopaymentstounderwritersandreundstopolicyholders.Cashatbankearnsinterestatoatingratesbasedondailybankdepositrates.Short-termdepositsaremadeorvaryingperiodsobetweenonedayandthreemonthsdependingontheimmediatecashrequirementsotheGroupandearninterestattherespectiveshort-termdepositrates.Reconciliationonetprotatertaxtonetcashfowsromoperations226121261071995491972113348166722105425787124-11231318171624442902987425905955227414810735138179439313641734849145516601421172331262665927516722351NetproftAdjustmentsDepreciationandamortisationImpairmentandwritedownsoassetsNetlossgainondisposalonon-currentassetsShareoassociatesnetproftslossesDividendsanddistributionsreceivedromassociatesCapitalisedborrowingcostsDiscountadjustmentinborrowingcostsAmortisationodebtestablishmentcostsnetoamountspaidIneectiveinterestrateswaplossesnetoamountspaidNon-cashissueosharesrecognisedinearningsOtherIncreasedecreaseinassetsTradeandotherreceivablesInventoriesPrepaymentsReinsuranceandotherrecoveriesDeerredtaxassetsOtherassetsIncreasedecreaseinliabilitiesTradeandotherpayablesCurrenttaxpayableProvisionsOtherliabilitiesNetcashowsromoperatingactivitiesNetcapitalexpenditurePaymentorpropertyPaymentorplantandequipmentPaymentorintangiblesPaymentsorpropertyplantequipmentandintangiblesProceedsromsaleopropertyplantequipmentandintangiblesNetcapitalexpenditure 123WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities9TradeandotherreceivablesCONSOLIDATED20132012mCurrent1736178149483072643473872341238427283155833TradereceivablesAllowanceorcreditlossesFinanceadvancesandloansOtherdebtorsNon-currentFinanceadvancesandloansOtherdebtorsReertonote24orinormationontheriskmanagementpolicyotheGroupandthecreditqualityotheGroupstradereceivables.Reinsuranceandotherrecoverieshavebeendisclosedseparatelyinnote11.ImpairedtradereceivablesAsat30June2013currenttradereceivablesotheGroupwithanominalvalueo49million201248millionwereimpaired.Theamountotheallowanceaccountwas49million201248million.MovementsintheallowanceaccountorcreditlosseswereasollowsCarryingvalueatbeginningoyear485499814-14948AllowanceorcreditlossesrecognisedduringtheyearReceivableswrittenoduringtheyearasuncollectableUnusedamountreversedCarryingvalueatendoyearTradereceivablespastduebutnotimpairedAsat30June2013tradereceivableso291million2012275millionwerepastduebutnotimpaired.Theserelatetoanumberoindependentcustomersorwhomthereisnorecenthistoryodeaultorotherindicatorsoimpairment.TheageinganalysisothesetradereceivablesisasollowsUnderthreemonths24320233511522291275ThreetosixmonthsOversixmonthsWithrespecttotradereceivablesthatareneitherimpairednorpastduetherearenoindicationsasothereportingdatethatthedebtorswillnotmeettheirpaymentobligations.Customerswhowishtotradeoncredittermsaresubjecttocreditverifcationproceduresincludinganassessmentotheirindependentcreditratingfnancialpositionpastexperienceandindustryreputation.InadditionreceivablebalancesaremonitoredonanongoingbasiswiththeresultthattheGroupsexposuretobaddebtsisnotsignifcant.FinanceadvancesandloansFinanceadvancesandloansconsistonon-derivativefnancialassetswithfxedordeterminablepaymentsthatarenotquotedinanactivemarket.Ariskassessmentprocessisusedornewloanapplicationswhichrangesromconductingcreditassessmentstorelyingontheassessmentsofnancialriskprovidedbycreditinsurers.Nofnanceadvancesorloansareimpairedasat30June2013.RelatedpartyreceivablesFortermsandconditionsorelatedpartyreceivablesreertonote32.OtherdebtorsTheseamountsgenerallyariseromtransactionsoutsidetheusualoperatingactivitiesotheGroup.Theydonotcontainimpairedassetsandarenotpastdue.Basedonthecredithistoryitisexpectedthattheseotherbalanceswillbereceivedwhendue. WesfarmersaNNUaLreport2013124Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities10InventoriesCONSOLIDATED20132012m1039227394917487550475006RawmaterialsWorkinprogressFinishedgoodsTotalinventoriesatthelowerocostandnetrealisablevalueInventoriesrecognisedasanexpenseortheyearended30June2013totalled42218million201240987million.11InvestmentsbackinginsurancecontractsreinsuranceandotherrecoveriesTheollowingdisclosuresrelatetothegeneralinsurancecompaniesthatcomprisetheInsurancedivisionCONSOLIDATED20132012mCurrent15-1018115228353813161690182-175193357193InvestmentsbackinginsurancecontractscorporatebondsInvestmentsbackinginsurancecontractstermdepositsReinsuranceandotherrecoveriesNon-currentInvestmentsbackinginsurancecontracts-corporatebondsReinsuranceandotherrecoveriesInvestmentsbackinginsurancecontractsInvestmentsbackinginsurancecontractsareallfnancialassetsatairvaluethroughproftorloss.ReinsuranceandotherrecoveriesThedivisionreinsuresaportionorisksunderwrittentocontrolexposuretoinsurancelossesreducevolatilityandprotectcapital.Thedivisionsstrategyinrespectotheselectionapprovalandmonitoringoreinsurancearrangementsisaddressedbytheollowingprotocolstreatyoracultativereinsuranceisplacedinaccordancewiththerequirementsothedivisionsreinsurancemanagementstrategyreinsurancearrangementsareregularlyreassessedtodeterminetheireectivenessbasedoncurrentexposureshistoricallossesandpotentialuturelossesbasedonthedivisionsmaximumeventretentionandexposuretoreinsurancecounterpartiesandthecreditqualityothosecounterpartiesisactivelymonitored.Thereinsurancecounterpartyriskismanagedwithreerencetoananalysisoanentityscreditrating.Strictcontrolsaremaintainedoverreinsurancecounterpartyexposures.Reinsuranceisplacedwithcounterpartiesthathaveastrongcreditrating.Creditriskexposuresarecalculatedregularlyandratingsarereviewedbymanagementonaregularbasis.Theollowingtableprovidesinormationaboutthequalityothedivisionscreditriskexposureinrespectoreinsurancerecoveriesonoutstandingclaimsatthebalancedate.TheanalysisclassifestheassetsaccordingtoStandardPoorscounterpartycreditratings.AAAisthehighestpossiblerating.CREDITRATINGaaaBBBNdtlYeareNDeD30JUNe201319211813332615131-29207131143355355229-45883737--74392266-4662ReinsurancerecoveriesonoutstandingclaimsAmountsdueromreinsurersonpaidclaimsYeareNDeD30JUNe2012ReinsurancerecoveriesonoutstandingclaimsAmountsdueromreinsurersonpaidclaimsTheremainingreinsuranceandotherrecoveriesrelatetothirdpartyinsurancerecoveries.Remainingreinsuranceandotherrecoveriesarebothcurrentandnon-currentandarenotimpaired. 125WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities12InvestmentsinassociatesCONSOLIDATED20132012mInvestmentsinassociatesSharesandunitsinassociateslisted236214184207-842042948162942305141441781637083705101611132692259266959816237SharesinassociatesunlistedLoanstoassociatesatcostGroupsshareoproftslossesoassociatesFairvalueolistedinvestmentsinassociatesBWPTrustShareoassociatescommitmentsCapitalcommitmentsLeasecommitmentsOthercommitmentsSummarisedfnancialinormationinrespectotheGroupsassociatesassetoutbelowFinancialpositionoassociatesTotalassetsTotalliabilitiesNetassetsFinancialperormanceoassociatesTotalrevenueTotalproftortheyearOWNERSHIP20132012ASSOCIATEPRINCIPALACTIVITYAirLiquideWAPtyLtdIndustrialgases40.040.035.035.040.040.040.040.040.040.024.323.550.050.0aa50.050.050.050.050.050.050.050.0AlbanyWoolstoresPtyLtdWoolhandlingBengallaAgriculturalCompanyPtyLimitedAgricultureBengallaCoalSalesCompanyPtyLimitedSalesagentBengallaMiningCompanyPtyLimitedManagementcompanyBWPTrustPropertyinvestmentGreshamPartnersGroupLimitedInvestmentbankingGreshamPrivateEquityFundsPrivateequityundHALPropertyTrustPropertyownershipQueenslandNitratesManagementPtyLtdChemicalmanuactureQueenslandNitratesPtyLtdChemicalmanuactureWespineIndustriesPtyLtdPinesawmillersEachotheaboveentitiesisincorporatedinAustraliaandhasareportingdateo30JunewiththeexceptionoGreshamPartnersGroupLimitedwhichhasareportingdateo30SeptemberandtheBengallacompanieswhichhaveareportingdateo31December.aGreshamPrivateEquityFundsWhilsttheconsolidatedentitysinterestintheunitholdersundsoGreshamPrivateEquityFundNo.2and3Fundsamountstogreaterthan50.0percenttheyarenotcontrolledentitiesastheconsolidatedentitydoesnothavethecapacitytogoverndecisionmakinginrelationtotheirfnancialandoperatingpolicies.Suchcontrolrequiresaunitholdersresolutiono75.0percentovotespursuanttotheFundstrustdeeds.GreshamPrivateEquityFundNo.3issubjecttouturecapitalcalls. WesfarmersaNNUaLreport2013126Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities13PropertyplantandequipmentCONSOLIDATED20132012m192417141924171417141370359497-94761267728119219241714114110321181151023917917778387357-2-12226475192122102391739828412141073409336805737737624168155-23-4202-182682-805737121196FreeholdlandCostNetcarryingamountNetcarryingamountatbeginningoyearAdditionsTransersAssetsclassifedasheldorsaleDisposalsImpairmentchargeExchangedierencesNetcarryingamountatendoyearBuildingsCostAccumulateddepreciationandimpairmentNetcarryingamountNetcarryingamountatbeginningoyearAdditionsTransersAssetsclassifedasheldorsaleDisposalsDepreciationexpenseExchangedierencesNetcarryingamountatendoyearAssetsincourseoconstructionincludedaboveLeaseholdimprovementsCostAccumulateddepreciationandimpairmentNetcarryingamountNetcarryingamountatbeginningoyearAdditionsTransersRehabilitationprovisionassetincrementDisposalsImpairmentreversalAmortisationexpenseExchangedierencesNetcarryingamountatendoyearAssetsincourseoconstructionincludedabove 127WesfarmersaNNUaLreport2013Notestothefnancialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentities13PropertyplantandequipmentcontinuedCONSOLIDATED20132012m10821980648344165598756415641510612651492-16-1828931-5521184678642598756419706666286232031694254544544241440-1473534312-425454306527461181152947263112663115025446467072176832PlantvehiclesandequipmentCostAccumulateddepreciationandimpairmentNetcarryingamountNetcarryingamountatbeginningofyearAdditionsTransfersRehabilitationprovisionassetincrementDisposalsAcquisitionsofcontrolledentitiesSaleofbusinessImpairmentreversalchargeDepreciationexpenseExchangedifferencesNetcarryingamountatendofyearAssetsincourseofconstructionincludedaboveMineralleaseanddevelopmentcostsCostAccumulateddepreciationandimpairmentNetcarryingamountNetcarryingamountatbeginningofyearAdditionsTransfersRehabilitationprovisionassetadjustmentAmortisationexpenseExchangedifferencesNetcarryingamountatendofyearTotalpropertyCostAccumulateddepreciationandimpairmentNetcarryingamountTotalplantandequipmentCostAccumulateddepreciationandimpairmentNetcarryingamountRefertonote17forassetspledgedassecurity.PropertyplantandequipmentimpairmentsrecognisedDuringtheyeara28million201211millionimpairmentchargehasbeenrecognisedinrelationtopropertyheldbytheColesdivisionasaresultofadeclineinrentalyieldsusedtodeterminetherecoverableamount. WesfarmersaNNUaLreport2013128Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities14IntangibleassetsandgoodwillGoodwillTradenamesContractualandnon-contractualrelationshipsSotwareGamingandliquorlicencesTotalYeareNDeD30JUNe2013163743808175800158213152231374395-7051615137951014051582061016097379811033115420490---148114932-1--33-31473-90---13222-4--2616151379510140515820610163203808168661154211112231058330-6211609737981103311542049016227380011029514820580--121087127---2-26---3943----43-21374-89172---21705-1--616097379811033115420490CostAccumulatedamortisationandimpairmentNetcarryingamountNetcarryingamountatbeginningoyearAdditionsAcquisitionsocontrolledentitiesAmortisationortheyearImpairmentchargereversalExchangedierencesNetcarryingamountatendoyearYeareNDeD30JUNe2012CostAccumulatedamortisationandimpairmentNetcarryingamountNetcarryingamountatbeginningoyearAdditionsTransersDisposalsAcquisitionsocontrolledentitiesAmortisationortheyearImpairmentchargereversalExchangedierencesNetcarryingamountatendoyearFollowingtheannouncementbyBlueScopeSteelLimitedBlueScopeon22August2011thatitintendedtosignicantlyrestructureitsPortKemblaoperationsincludingashutdownoitsNo.6BlastFurnaceatPortKemblatheIndustrialandSaetydivisionsCoregasbusinessagreedtoamenditscontractwithBlueScopeorthesupplyoindustrialgasestoitssteeloperations.AsaresultotheamendmentsCoregashasbecometheprimarysupplieroindustrialgasestoBlueScopeatthePortKemblaoperationswithreducedvolumesrefectingthereduceddemandromBlueScopeunderitsnewoperatingstructure.GiventheamendmentstothisagreementandhavingregardtoanassociatedreviewotheCoregasbusinessCoregasrecognisedanimpairmentchargeagainstgoodwillandplantandequipmento172millionand9millionrespectivelyintheyearended30June2012.TherecoverableamountotheCoregasbusinesshasbeendeterminedthroughavalueinusemodelusingadiscountedcashfowvaluationtechnique. 129WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities14IntangibleassetsandgoodwillcontinuedCONSOLIDATED20132012mAllocationoindefnitelieintangibleassetstogroupsocashgeneratingunits1116016035352980297826826853553539793977CarryingamountointangiblesHomeImprovementandOfceSuppliesBunningsOfceworksIndustrialandSaetyColesKmartTargetTradenamesthebrandnamesincludedabovehavebeenassessedashavingindefnitelivesonthebasisostrongbrandstrengthongoingexpectedproftabilityandcontinuingsupport.Thebrandnameincorporatescomplementaryassetssuchasstoreormatsnetworksandproductsoerings.Gamingandliquorlicencesgamingandliquorlicenceshavebeenassessedashavingindefnitelivesonthebasisthatthelicencesareexpectedtoberenewedinlinewithbusinesscontinuityrequirements.Allocationogoodwilltogroupsocashgeneratingunits131386185079979930830881811561564344345545291025310235759759193319331615116097CarryingamountogoodwillChemicalsEnergyandFertilisersHomeImprovementandOfceSuppliesBunningsOfceworksIndustrialandSaetyBlackwoodsAustraliaCoregasOtherInsuranceLumleyAustraliaOtherColesKmartTarget WesfarmersaNNUaLreport2013130Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities14IntangibleassetsandgoodwillcontinuedKeyassumptionsusedinimpairmentcalculationsTherecoverableamountsothecashgeneratingunitshavebeendeterminedbasedoneitherairvaluelesscoststosellorvalueinuseusingdiscountedcashfowprojections.Theimpairmentcalculationshavebeenperormedtodeterminewhetherthecarryingvalueothecashgeneratingunitexceedsitsestimatedrecoverableamount.WhereavalueinusemodelhasbeenusedthecashfowprojectionsarebasedonWesarmerscorporateplansandbusinessorecastsapprovedbymanagement.Thecorporateplansaredevelopedannuallywithave-yearoutlook.Forthepurposesothevalueinusecalculationcorporateplanshavebeenadjustedtoexcludethecostsandbenetsoexpansioncapitalandhavebeenpreparedontheunderstandingthatactualoutcomesmaydierromtheassumptionsused.Indeterminingairvaluelesscoststosellthemodelincorporatescashfowsprojectedoverveyears.Inthisregardthecashfowprojectionsarebasedonassumptionsthatwouldbeavailabletoorwouldbeconsideredbyatypicalmarketparticipant.Forboththevalueinuseandairvaluelesscoststosellmodelsappliedcashfowsbeyondtheve-yearperiodareextrapolatedusingestimatedgrowthrateswhicharebasedonGroupestimatestakingintoconsiderationhistoricalperormanceaswellasexpectedlong-termoperatingconditions.Growthratesdonotexceedthelong-termaveragegrowthrateorthebusinessinwhichthecashgeneratingunitoperates.Discountratesarebasedontheweightedaveragecostocapitaldeterminedbyprevailingorbenchmarkedmarketinputs.Otherassumptionsaredeterminedwithreerencetoexternalsourcesoinormationanduseconsistentandconservativeestimatesorvariablessuchasterminalcashfowmultiples.Increasesindiscountratesorchangesinotherkeyassumptionssuchasoperatingconditionsornancialperormancemaycausetherecoverableamountstoallbelowcarryingvalues.ThekeyassumptionsusedorassessingtherecoverableamountsotheColesandTargetcashgeneratingunitsaresetoutbelowbeingthetwocashgeneratingunitsorwhichthecarryingvalueogoodwillandintangibleassetswithindeniteuseullivesaresignicantincomparisonwiththetotalcarryingvalueoWesarmersgoodwillandintangibleassetswithindeniteuseullives.WithrespecttoTargetasoutlinedbelowareasonablypossiblechangeinthediscountrateandtradingconditionscouldresultinthecarryingvalueothedivisionexceedingitsrecoverableamount.TheGroupconsidersthatorothercashgeneratingunitsanyreasonablypossiblechangeinkeyassumptionswouldnotcausethecarryingvalueothecashgeneratingunittoexceeditsrecoverableamountandresultinamaterialimpairment.KeyassumptionsusedinairvaluelesscoststosellcalculationsColesTarget20132012201320129.38.010.09.22.93.02.93.015.620.014.116.155.159.24.457.3Discountratepost-taxGrowthratebeyondve-yearnancialplanPerpetuityactororcalculationoterminalvalue1discountrategrowthrateHeadroomasapercentageothecashgeneratingunitsnetcarryingvalueOtherkeyassumptionsincluderetailsalesEBITDAmarginswhicharebasedonpastexperienceandexternalsourcesoinormationandaprogramobusinessimprovementstrategiesinparticularorTargetwhichisundergoingaturnaroundprogramundernewleadership.TherecoverableamountotheTargetcashgeneratingunitcurrentlyexceedsitscarryingvalue.Sensitivityanalysiswasperormedtodeterminethechangesinthekeyassumptionsthatwouldleadtoanimpairmentlossbeingrecognisedi.TradingconditionsThevaluationoTargetisbasedonanimprovementintheoperatingandnancialperormanceunderitsnewleadership.AlthoughthetimingothecashfowsarisingromtheseimprovementsareinfuencedbygeneralmarketconditionsWesarmersbelievesthemagnitudeothelonger-termcashfowswillbearlessaected.Thisviewisbasedonthelikelylong-termimprovementtrendsinthebusinessi.e.increasingsalesprotabilityandcashfowsandtheinherentvalueothenetwork.NotwithstandingthisshouldEBITDAmarginorsalesgrowthbemorethanvepercentlowerthanorecastorthegrowthratebeyondtheve-yearnancialplanbemorethan14percentlowerthanorecasttheimpactonthecashfowscouldresultinareductionotherecoverableamounttobelowthecarryingvalue.ii.DiscountrateThediscountrateorTargethasbeendeterminedbasedontheweightedaveragecostocapitalwithreerencetotheprevailingrisk-reeandborrowingratesandwithconsiderationtotheriskassociatedwithitscashfows.Consequentlyshouldtheseratesincreasethediscountratewouldalsoincrease.Anincreaseinthediscountrateomorethan0.3percent20123.8percentorTargetcouldresultinareductionotherecoverableamounttobelowthecarryingvalue. 131WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities15OtherassetsCONSOLIDATED20132012mCurrent1901721681334211-2436254017212433030333628724321901721242-11034664121414148704381124DeerredacquisitioncostsPrepaymentsAssetsclassifedasheldorsaleOtherfnancialassetsMovementsindeerredacquisitioncostsCarryingvalueatbeginningoyearAcquisitioncostsdeerredduringtheyearCostschargedtoproftorlossOthermovementsCarryingvalueatendoyearNon-currentDeerredacquisitioncostsDefnedbeneftassetOtherfnancialassetsInvestmentpropertyPrepaidrentOtherMovementsindeerredacquisitioncostsCarryingvalueatbeginningoyearAcquisitioncostsdeerredduringtheyearCarryingvalueatendoyear16TradeandotherpayablesCONSOLIDATED20132012mCurrent5999542059995420820820TradepayablesNon-currentOthercreditorsandaccruals WesfarmersaNNUaLreport2013132Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities17Interest-bearingloansandborrowingsCONSOLIDATED20132012mCurrent3297-40043-105134707016217671066100-48422815570938815779550214722722160340-45023564253988393777210723297-4001347093816397001650128243-5022223553050229839883937938163930502298UnsecuredCommercialpaperBankbillsBankoverdratsCorporatebondscOtherbankloansNon-currentUnsecuredTermloansabOtherbankloansCorporatebondscTotalinterest-bearingloansandborrowingsFinancingacilitiesavailableTotalacilitiesTermloansabCommercialpaperBankbillsOtherbankloansFacilitiesusedatbalancedateTermloansab1CommercialpaperBankbillsOtherbankloansFacilitiesunusedatbalancedateTermloansabCommercialpaperBankbillsOtherbankloansTotalacilitiesFacilitiesusedatbalancedateFacilitiesunusedatbalancedate1.Facilitiesusedatbalancedateincludedebtestablishmentcosts.Repaymentobligationsinrespectotheamountotheacilitiesutilisedareincludedinmaturitiesofnancialliabilitiestablesinnote24.FundingactivitiesIntheyearended30June2013totalinterest-bearingloansandborrowingsincreasedto5779millionrom5502millionasat30June2012.Duringtheyearended30June2013Wesarmersissued1842million20121000millioninnewcorporatebondsintotheAustralianEuropeanandUnitedStatescorporatebondmarkets.ThesebondissueswerecarriedoutinordertourtherimproveWesarmersliquidityanddiversityoundingsourcesaswellaslengthentheGroupsmaturityprofle.Theproceedswereutilisedtoundmaturingbankdebtandorgeneralcorporatepurposes.Furtherdetailsrelatingtoallcorporatebondsonissueandotherdebtdrawnasat30June2013canbeoundontheollowingpage. 133WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities17Interest-bearingloansandborrowingscontinuedFundingactivitiescontinuedaTermloanbilateralacilityAsat30June2013axedtermbankbilateralundingacilityo222millionremainedinplaceandwasullydrawnatthatdate.ThisacilitymaturesinFebruary2015.bTermloansyndicatedacilityOn21December2010Wesarmersenteredintoa2500millionrevolvingsyndicatedacilityundedby16domesticandinternationalbanks.Theacilitycomprisestwo1250milliontranchesmaturinginDecember2013andDecember2014respectively.On26April2013theTrancheAsyndicatedacilityrenancingo1250millionwascompleted.ThesyndicatedacilitythatwasduetomatureinDecember2013wascancelledandreplacedwithbilateralacilitieswith15primaryrelationshipbankstotalling1250million.Thenewacilitiesarespreadacrossoneandthreeyearmaturities.Asat30June2013thelimitontheoriginalacilitymaturinginDecember2014was1250millionand550millionremaineddrawnagainstthisacility.ThepurposeothesyndicatedacilityistoprovideundingorgeneralcorporatepurposesincludingongoingworkingcapitalrequirementsandtomeettheongoingliquidityrequirementsotheGroup.InterestispayableataratecalculatedastheAustralianbankbillswapyieldplusamargin.ThemarginissubjecttochangebasedontheCompanysMoodyscreditrating.Thesyndicatedacilitycontainsnancialcovenantsthatarerequiredtobemet.Asat30June2013Wesarmershascompliedwiththesecovenants.ThesyndicatedacilityalsorequiresthatwhollyownedsubsidiariesoWesarmersrepresentingatleastvepercentoEBITDAortotalassetsotheWesarmersGroupareguarantorsandthattheguarantorgrouprepresentsatleast90percentotheGroupstotalassetsand90percentotheEBITDAotheGroup.TheEBITDAandtotalassetsoregulatedsubsidiariessubsidiariesthatarerestrictedromgivingupstreamguaranteesincludingunderlawregulationoradministrativepracticeareexcludedromthecalculationsoEBITDAandtotalassetsotheGroupexcepttotheextentthattheydograntguarantees.Insuranceunderwritingsubsidiariesarenotpermittedtoguaranteetheseniordebtacilityduetoinsuranceregulatoryrestrictions.TheabovereerencestoEBITDArefectearningsbeoreinteresttaxdepreciationandamortisationasamendedbytheacilitydeed.Thecarryingamountothesyndicatedbankloanisnetoremainingcapitaliseddebteesdirectlyattributabletotheestablishmentotheacility.Thesewillbereleasedtoearningsbasedontheeectiveinterestratewhiletheloanremainsoutstanding.cCorporatebondsOn20March2013WesarmersissuedUS750millionapproximatelyA728millionxedratemedium-termnotesmaturinginMarch2018.Thenoteswerepricedat100basispointsovertheve-yearUSTreasuriesrateresultinginacoupono1.87percent.TheissuewasullyswappedbackinAustraliandollarsatamargino1.24percentoverthebankbillswaprate.On12March2013Wesarmersissuedo350millionunsecuredxedratemediumtermnotesmaturinginMarch2020.Thesenoteswerepricedat115basispointsovertheseven-yearswaprateresultinginayieldo4.79percentperannum.On2August2012Wesarmersissued650millionapproximatelyA764millionunsecuredxedratemedium-termnotesmaturinginAugust2022.Thenoteswerepricedat110basispointsovertheEUROten-yearmidswaprateresultinginacoupono2.75percent.TheissuewasullyswappedbackinAustraliandollarsresultinginatotalxedinterestcosto5.86percentperannumpayablesemi-annuallyinarrears.On21March2012Wesarmersissued500millionxedratedomesticbondsmaturinginMarch2019.Interestispayablesemi-annuallyinarrearsonthexedratedomesticbondsat6.49percentperannum.On31October2011Wesarmersissued500millionxedratedomesticbondsmaturinginNovember2016.Interestispayablesemi-annuallyinarrearsonthexedratedomesticbondsat6.17percentperannum.DuringMay2011WesarmersissuedUSbondswithaacevalueo604millionUS650millionandmaturingon18May2016.AtertheeectohedgingWesarmerspaysinterestonthesebondsatarateo126basispointsoverthesixmonthAustralianbankbillswaprate.On10March2010Wesarmersissuedbondswithaacevalueo756million500millionmaturingon10July2015.AtertheeectohedgingWesarmerspaysinterestonthesebondsatarateo228basispointsoverthesixmonthAustralianbankbillswaprate.Wesarmersissued400millionxedratedomesticbondsand100millionfoatingratedomesticbondsinSeptember2009.BothdomesticbondsmatureinSeptember2014.Interestispayablesemi-annuallyinarrearsonthexedratedomesticbondsatacouponrateo8.25percentperannum.InterestispayablequarterlyinarrearsonthefoatingdomesticbondsattheAustralianbankbillswaprateplusamargino260basispoints.WesarmersissuedUSbondsinApril2008withaacevalueo711millionUS650millionwhichmaturedon10April2013.AtertheeectohedgingWesarmerspaidinterestonthesebondsatarateo398basispointsoverthesixmonthAustralianbankbillswaprate.Thebondswererepaidromexistingacilitiesduringtheyearended30June2013.ThereisnourtherdebtoutstandinginthenameotheColesgroup.DerivativecontractsareheldtohedgeutureoreignexchangetransactiontranslationandcurrencyinterestraterisksinrelationtoUSandEuropeanbonds.Reertonote25orurtherdetails.AssetspledgedassecurityAcontrolledentityhasissuedafoatingchargeoverassetscappedat80millionassecurityorpaymentobligationstoatradecreditor.Theassetsareexcludedromnancialcovenantsinalldebtdocumentation. WesfarmersaNNUaLreport2013134Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities18ProvisionsCONSOLIDATED20132012mCurrent10259431571442558141075678367137912891771653884462142237928351051941981341117120624962495EmployeebenetsSel-insuredrisksRestructuringandmakegoodSurplusleasedspaceO-marketcontractsOtherNon-currentEmployeebenetsSel-insuredrisksMineandplantrehabilitationRestructuringandmakegoodSurplusleasedspaceO-marketcontractsOtherTotalprovisionsProvisionshavebeencalculatedusingdiscountratesbetweentwopercentandourpercent2012betweentwopercentandourpercent.Sel-insuredrisksTheGroupissel-insuredorcostsrelatingtoworkerscompensationandgeneralliabilityclaims.Provisionsarerecognisedbasedonclaimsreportedandanestimateoclaimsincurredbutnotreportedpriortoreportingdate.Theseprovisionsaredeterminedonadiscountedbasisusinganactuariallydeterminedmethodwhichisbasedonvariousassumptionsincludingbutnotlimitedtoutureinfationinvestmentreturnaverageclaimsizeandclaimadministrationexpenses.Theseassumptionsarereviewedperiodicallyandanyreassessmentotheseassumptionswillaectworkerscompensationorclaimsexpenseeitherincreasingordecreasingtheexpense.MineandplantrehabilitationInaccordancewithminingleaseagreementsandGrouppoliciesobligationsexisttoremediateareaswhereminingactivityhastakenplace.Workisongoingatvarioussitesandinsomecaseswillextendoverperiodsbeyond20years.Provisionshavegenerallybeencalculatedassumingcurrenttechnologies.Aspartothevaluationmethodologytherisksareincorporatedinthecashfowsratherthanthediscountratestoaidwithcomparability.EmployeebeneftsTheprovisionoremployeebenetsrepresentsannualleavelongserviceleaveentitlementsandincentivesaccruedbyemployees. 135WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities18ProvisionscontinuedRestructuringandmakegoodTheseprovisionsrelateprincipallytotheclosureoretailoutletsordistributioncentresthedisaggregationosharedservicesandsupplychainwithintheormerColesgroupdivisionsrestructuringandassociatedredundancies.Provisionsarerecognisedwherestepshavebeentakentoimplementtherestructuringplanincludingdiscussionswithaectedpersonnel.SurplusleasedspaceThesurplusleasedspaceprovisioncoversuturepaymentsorleasedpremiseswhichareonerousnetoactualandexpectedsubleasingrevenueandrelatestocommitmentsouptoouryears2012fveyears.Actualleasepaymentsmayvaryromtheamountsprovidedwherealternateusesareoundorthesepremisesincludingattractiononewtenants.O-marketcontractsInexistenceatthedateoacquisitionoColesgroupbyWesarmerswereanumberocontracts.Changesinmarketconditionshadresultedintheoriginaltermsothecontractbecomingunavourableincomparisontomarketsupplyconditionspresentatthedateoacquisition.Theobligationorthediscountedutureabovemarketpaymentshasbeenprovidedorcalculatedusingadiscountrateoninepercent.Thevalueothecontractisreleasedtoearningsovertheperiodothecontract.Sel-insuredrisksMineandplantrehabilitationRestructuringandmakegoodSurplusleasedspaceO-marketcontractsOtherTotalCONSOLIDATEDmmmmmmmYeareNDeD30JUNe201359022367452612011387120727616164340165-6298984409-16--8-245452143242180281129450516760363211671256221637816198047713617177946340-6----659022367452612011387CarryingamountatbeginningoyearArisingduringyearUtilisedAdjustmentCarryingamountatendoyearYeareNDeD30JUNe2012CarryingamountatbeginningoyearArisingduringyearUtilisedSaleobusinessCarryingamountatendoyear WesfarmersaNNUaLreport2013136Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities19InsuranceliabilitiesTheollowingdisclosuresrelatetothegeneralinsurancecompaniesthatcomprisetheWesarmersInsurancedivisionCONSOLIDATED20132012mUnearnedinsurancepremiums8778117385950896896861862826815792719508966638245405971203142111151328434550548184120314211540163561368221532317CurrentNon-currentCarryingamountatbeginningoyearDeerralopremiumoncontractswrittenduringyearEarningopremiumsdeerredinprioryearsOtherCarryingamountatendoyearOutstandinginsuranceclaimsCurrentNon-currentOutstandinginsuranceclaimsGrosscentralestimateooutstandingclaimsliabilitiesDiscounttopresentvalueClaimhandlingexpensesRiskmarginTotalinsuranceliabilitiesCurrentNon-currentCONSOLIDATEDGrossReinsuranceandotherrecoveries2013Net2012NmmmMovementinoutstandinginsuranceclaims1421693728556102115187094812414048377702-261203440763728CarryingamountatbeginningoyearIncurredclaimsrecognisedinproftorlossNetclaimpaymentsOtherCarryingamountatendoyearThereisnodefcitromtheliabilityadequacytestLATasat30June2013201223million. 137WesfarmersaNNUaLreport2013Notestothenancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities19InsuranceliabilitiescontinuedActuarialassumptionsandmethodsTheollowingarethekeyassumptionsusedindeterminingoutstandinginsuranceclaimsAUSTRALIANEWZEALAND2013201220132012Weightedaveragetermtosettlementyears1.71.80.90.93.7-6.04.0-6.02.82.52.0-5.02.0-5.0--2.92.72.82.51.61.60.90.914.414.320.928.7InfationSuperimposedinfationrateDiscountrateDiscountedmeantermyearsRiskmarginWeightedaveragetermtosettlementyearsTheaverageweightedtermtosettlementrelatestotheexpectedpaymentpatternorclaims.Thepaymentpatternisimportantinconsideringthetimingouturecashoutfowsandinmanagingtheassetsbackinginsuranceliabilitiestosupportthecashoutfows.Itiscalculatedseparatelybyclassobusinessandisbasedonhistoricsettlementpatterns.InfationInsurancecostsaresubjecttoinfationarypressures.Economicinfationassumptionsaresetbyreerencetocurrenteconomicindicators.SuperimposedinfationrateThereisatendencyorclaimcostsparticularlyortheliabilityclassestoincreaseatlevelsinexcessostandardinfationarypressures.Thiscanbeduetoanumberoactorsincludingcourtawardsandprecedentsandsocialandenvironmentalpressures.Thisisotentermedsuperimposedinfationandisanalysedandorecastedseparatelyromwageinfation.DiscountrateOutstandingclaimsliabilitiesrepresentpaymentsthatwillbemadeintheuture.Theseuturepaymentsarediscountedtorefectthetimevalueomoneyatthereportingdate.Theoutstandingclaimsliabilitiesarediscountedusingariskreeratederivedromgovernmentbonds.DiscountedmeantermyearsThediscountedmeantermisdenedastheweightedaveragetermtosettlementwheretheweightsarethediscountedpaymentsateachpaymentdate.RiskmarginTheoverallriskmarginisdeterminedallowingordiversicationbetweenclassesobusinessandtherelativeuncertaintyotheoutstandingclaimsestimateoreachclass.Theassumptionsregardinguncertaintyoreachclassareappliedtothenetcentralestimateandtheresultsareaggregatedallowingordiversicationinordertoarriveatanoverallnetprovisionthatisintendedtoprovideaprobabilityosuciencyo85percent.InsurancecontractsriskmanagementpoliciesandproceduresThenancialconditionandoperationothedivisionisimpactedbyanumberokeyrisksincludinginsuranceriskcreditriskmarketriskliquidityriskandoperationalrisk.Thedivisionspoliciesandproceduresinrespectomanaginginsuranceandliquidityrisksaresetoutbelow.Policiesandproceduresinrespectomanagingtheotherkeyrisksaredisclosedinnote24.InaccordancewithPrudentialStandardstheInsuranceBoardandseniormanagementothedivisionhavedevelopedimplementedandmaintainasoundprudentRiskManagementStrategyRMSandaReinsuranceManagementStrategyREMS.TheRMSandREMSidentiythedivisionspoliciesandproceduresprocessesandcontrolsthatcompriseitsriskmanagementandcontrolsystems.Thesesystemsaddressallmaterialrisksnancialandnon-nanciallikelytobeacedbythedivision.AnnuallytheInsuranceBoardcertiesthatadequatestrategieshavebeenputinplacetomonitorthoserisksandthatthedivisionhassystemsinplacetoensurecompliancewithlegislativeandprudentialrequirements. WesfarmersaNNUaLreport2013138Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities19InsuranceliabilitiescontinuedGeneralinsuranceriskmanagementpoliciesandprocedurescontinuedaInsuranceriskInsuranceriskarisesromtheuncertaintyocashfowsrominsurancecontractschangesinwhichmayresultinnanciallossoraninabilitytomeetliabilitiesasandwhentheyalldue.Thedivisionseekstocontrolinsuranceriskandtherebyminimisethevolatilityoearnings.Inadditiontotheinherentuncertaintyoinsuranceriskwhichcanleadtosignicantvariabilityinthelossexperienceprotsrominsurancebusinessareaectedbymarketactorsparticularlycompetitionandmovementsinassetvalues.Short-termvariabilityistosomeextentaeatureotheinsurancebusiness.ThekeyprocessesinplacetomitigateriskincludeThemaintenanceanduseomanagementinormationsystemswhichprovideup-to-datereliabledataontheriskstowhichthebusinessisexposedatanypointintime.Theuseomodelsbasedonhistoricaldatatoinormpremiumsettingandactuarialmodelstomonitorclaimspatterns.Thesettingandadherencetounderwritingguidelinesthatdeterminepoliciesandproceduresoracceptanceorisk.Themonitoringonaturaldisasterssuchasearthquakesfoodsstormsandothercatastrophes.Exposuretosuchrisksismonitoredusingcatastrophemodels.Theuseoreinsurancetolimitthedivisionsexposuretolargesingleclaimsandaccumulationoclaimsthatariseromthesameevent.Themonitoringoreinsurerscreditriskpoliciestocontrolexposuretoreinsurancecounterpartydeault.Themanagementoassetsandliabilitieswithrespecttotheexpectedpatternoclaimspaymentswiththematuritydatesoassets.Thereductioninvariabilityinlossexperiencethroughdiversicationoverclassesoinsurancebusinessandgeographicalsegments.TermsandconditionsofinsurancebusinessThetermsandconditionsattachingtoinsurancecontractsaecttheleveloinsuranceriskacceptedbythedivision.Themajorityodirectinsurancecontractswrittenareenteredintoonstandardorms.Therearenospecialtermsandconditionsinanynon-standardcontractsthathaveamaterialimpactonthenancialstatements.ConcentrationofinsuranceriskThedivisionsexposureisdiversiedacrossclassesobusinesswithriskspreadacrossAustraliaandNewZealand.SpecicprocessesormonitoringidentiedconcentrationsaresetoutbelowRiskSourceoconcentrationRiskmanagementmeasuresAnaccumulationolossesarisingromanaturalperilorexampleanearthquakeInsuredpropertyandmotorconcentrationsAccumulationriskmodellingreinsuranceprotectionAlargepropertylossFireorcollapseaectingonebuildingoragroupoadjacentbuildingsMaximumacceptancelimitspropertyriskgradingreinsuranceprotectionMultipleclassesobusinessintheoneeventResponsebyamultitudeothedivisionspoliciestotheoneeventorexampleaconstructionliabilityandproessionalindemnitypolicyPurchaseoreinsuranceclashcoverbLiquidityriskLiquidityriskistheriskthatpaymentoobligationsmaynotbemetinatimelymanneratareasonablecost.Thedivisionisexposedtodailycallsonitsavailablecashresourcesrompolicyclaims.Thedivisionmanagesthisriskinaccordancewithitsinvestmentpolicywherebyaminimumpercentageoinvestmentsandcashareheldinliquidshort-termmoneymarketsecuritiestoensurethattherearesucientliquidundsavailabletomeetinsuranceobligations.Forthedivisionsunderlyingactivitiesthedivisionlimitstheriskoliquidityshortallsresultingrommismatchinthetimingoclaimspaymentsandreceiptsoclaimsrecoveriesbynegotiatingcashcallclausesinreinsurancecontractsandseekingacceleratedsettlementsorlargeclaims.Thedivisionmaintainsastrongliquiditypositionwithaportolioohighlymarketableassetsthatcanbeeasilyliquidatedintheeventounoreseeninterruptionocashfow. 139WesarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities19InsuranceliabilitiescontinuedGeneralinsuranceriskmanagementpoliciesandprocedurescontinuedThematurityprofleothedivisionsdiscountednetoutstandingclaimsprovisionisanalysedbelow3-6-1-2-3-4-5YearstlcnculchfwCyingunlibiliiCONSOLIDATEDmmmmmmmmmYeareNDeD30JUNe2013274184205277113633849120312039173102102301761944044018311110317583463230763763330209285319113674256142114211611292139935231023693693169807222078443233728728GrossoutstandingclaimsReinsuranceandotherrecoveriesNetoutstandingclaimsprovisionYeareNDeD30JUNe2012GrossoutstandingclaimsReinsuranceandotherrecoveriesNetoutstandingclaimsprovisionClaimsdevelopmenttableTheollowingtableshowsthedevelopmentotheestimatedultimateincurredcostorthelongtailclassesobusinessorthesixmostrecentaccidentyears.Theestimatedultimateincurredcostateachpointintimeconsistsothepaymentstodateplustheactuarialestimateooutstandingclaims.CONSOLIDATEDACCIDENTYEARpi2007200820092010201120122013tlUltimateclaimscostestimatem-69889392127115113697-60919186221110-659-61829175240--549-57839371---304-608389----232-5879-----137-59------59-59798971240110113761-52676546693615350571224251717498416-111274925561123231647089391-111134516132443713168061014282820487110487414512619698254102419403440096118741AtendoaccidentyearOneyearlaterTwoyearslaterThreeyearslaterFouryearslaterFiveyearslaterSixyearslaterCurrentestimateoultimateclaimscostCumulativepaymentsUndiscountedcentralestimateDiscounttopresentvalueDiscountedcentralestimateClaimshandlingexpenseRiskmarginNetoutstandingclaimsliabilitiesReinsuranceandotherrecoveriesGrossoutstandingclaimsliabilitiesNewZealandclaimsincludedwithintheultimateclaimscostestimatesoryearspriorto30June2013havebeenconvertedatthe30June2013closingoreignexchangerate.Thereconciliationothemovementinoutstandingclaimsliabilitiesandtheclaimsdevelopmenttablehavebeenpresentedonanetoreinsuranceandotherrecoverybasestogivethemostmeaningulinsightintotheimpactontheincomestatement.InshorttailclassestherehasbeennomaterialmovementinnetincurredclaimsinrelationtorisksborneinpreviousyearsotherthantheclaimsdevelopmentinrelationtotheChristchurchNewZealandearthquakeevento22February2011. WesfarmersaNNUaLreport2013140Notestothefnancialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentities20OtherliabilitiesCONSOLIDATED20132012m12233522119946302672292222014833270234DeferredcoalrevenueCurrentNon-currentOtherCurrentNon-currentTotalCurrentNon-current 141WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities21ContributedequityCONSOLIDATED20132012m232902328626312326423255IssuedcapitalordinarysharesaReservedsharesbaIssuedcapitalordinarysharesAllordinarysharesareully-paid.Fully-paidordinarysharesincludingemployeereservedsharescarryonevotepershareandcarrytherighttodividends.Eachpartiallyprotectedordinaryshareconersrightsonapartiallyprotectedshareholderthatarethesameinallrespectsasthoseconerredbyanordinaryshareonanordinaryshareholderonanequalbasis.Inadditionpartiallyprotectedordinarysharesprovidealevelodownsidesharepriceprotection.Reertonote6orkeytermsandconditions.FulltermsandconditionsareavailableromtheCompanywebsitewww.wesarmers.com.auTheGroupoperatesadividendinvestmentplanthatallowseligibleshareholderstoelecttoinvestdividendsinordinarysharesthatrankequallywithWesarmersordinaryshareswhichhasbeenappliedtothedividendspayableromMarch2007.AllholdersoWesarmersordinaryshareswithaddressesinAustraliaorNewZealandareeligibletoparticipateintheplan.TheallocationpriceorsharesisbasedontheaverageothedailyvolumeweightedaveragepriceoWesarmerssharessoldontheAustralianSecuritiesExchangecalculatedwithreerencetoaperiodonotlessthanfveconsecutivetradingdaysasdeterminedbythedirectors.OrdinaryPartiallyprotectedTotalcontributedequityMovementinsharesonissuethundthundthund10056761693415139663521157072232868333583335--1006509169691505636317115707223286672--672552--552412412--1006672169751505226315115719423290At1July2011Partiallyprotectedordinarysharesconvertedtoordinarysharesat41.95pershareAt30June2012IssueoordinarysharesundertheWesarmersLongTermIncentivePlanIssueoordinarysharesundertheWesarmersEmployeeShareAcquisitionPlanPartiallyprotectedordinarysharesconvertedtoordinarysharesat41.95pershareAt30June2013bReservedsharesMovementinreservedsharesthund3780416115-53169318934104-4284826At1July2011Exerciseoin-substanceoptionsDividendsappliedAt30June2012OwnsharesacquiredExerciseoin-substanceoptionsDividendsappliedAt30June2013Sharesissuedtoemployeesundertheshareloanplanreerredtoinnote34termedasemployeereservedsharesareully-paidviaalimitedrecourseloantotheemployeeromtheparentandasubsidiaryandassuchthearrangementisaccountedorasin-substanceoptions.Loansarerepaidromdividendsdeclaredcapitalreturnsandcashrepayments.Oncetheloanisrepaidinulltheemployeereservedsharesareconvertedtounrestrictedordinaryshares. WesfarmersaNNUaLreport2013142Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities21ContributedequitycontinuedcCapitalmanagementTheBoardisresponsibleormonitoringandapprovingthecapitalmanagementprocess.Wesarmersdenescapitalasshareholdersequityandnetdebt.Wesarmersobjectivewhenmanagingcapitalistosaeguarditsabilitytocontinueasagoingconcernwhilstmeetingitsobjectiveswithvariousstakeholdersthroughtheoptimisationothedebtandequitybalances.Wesarmersaimstomaintainacapitalstructurethatisconsistentwithastableinvestmentgradecreditrating.Inordertomanagetheshortandlong-termcapitalstructuretheGroupadjuststheamountoordinarydividendspaidtoshareholdersmaintainsadividendinvestmentplanreturnscapitaltoshareholdersraisescapitalromshareholdersandarrangesdebttoundworkingcapitalrequirementscapitalexpenditureandacquisitions.Wesarmersdividendpolicyrefectsreecashfowgenerationprotgenerationavailabilityorankingcreditsandseekstodelivergrowingdividendsovertime.Wesarmerscontinuestomaintaininvestmentgradecreditratings.StandardPoorscreditratingremainedunchangedromlastyearatA-stablewithMoodysgrantinganupgraderomBaa1positivetoA3stableduringtheyear.AninvestmentgradecreditratingassistsWesarmerstoaccessglobaldebtcapitalmarketsasrequired.SomesubsidiariesintheInsurancedivisionaregeneralinsurancecompanieswhicharesubjecttoexternallyimposedcapitalrequirementssetandmonitoredbyregulatorybodies.Thesesubsidiarieshavebeenring-encedandmaintainalevelosolvencydeemedsucientbyStandardPoorstosupportatleastanA-rating.Wesarmersregularlymonitorsitscapitalrequirementsusingvariousbenchmarkswiththemainmeasuresbeingcashinterestcoverdebtcoverandxedchargescover.CashinterestcoveriscalculatedasearningsbeoreinteresttaxdepreciationandamortisationdividedbynetcashinterestpaidexcludinginterestrevenueearnedinanyInsurancebusiness.Debtcoveriscalculatedbydividingtotalnetnancialdebtbyearningsbeoreinteresttaxdepreciationandamortisation.Thexedchargescoveriscalculatedbydividingearningsbeoreinteresttaxdepreciationandamortisationandminimumleasepaymentsbynancecostsnetodiscountadjustmentandtheminimumleasepayments.Theseratiosmaybesubjecttourtheradjustmentbyexternalpartiessuchasbanksandratingsagenciesinlinewiththeirownpractices.CashinterestcoverdebtcoverandxedchargescoverwereasollowsCONSOLIDATED20132012mCashinterestcover3226304443250510719954729454438942312.210.8577955021333112744464375472945440.91.0472945441794167365236217218421213.02.9ProtbeoreincometaxFinancecostsDepreciationandamortisationEBITDANetcashinterestpaidexcludinginterestrevenueearnedinanyInsurancebusinessCashinterestcoverDebtcoverTotalinterest-bearingdebtLesscashandcashequivalentsNetnancialdebtEBITDADebtcoverFixedchargescoverEBITDAMinimumleasepaymentsEBITDAplusminimumleasepaymentsFinancecostsnetodiscountadjustmentandminimumleasepaymentsFixedchargescover 143WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities22RetainedearningsCONSOLIDATED20132012m2103177422612126199017931423752103Balanceasat1JulyNetprotDividendsActuarialgainlossondenedbenetplannetotaxBalanceasat30June23ReservesCONSOLIDATEDrucuxvCilvfigncuncynlinvHdgingvavilbl--lvsh-bdynvtl15024591896-310---557-48---172-15---92--92---3--3---28--28--7---715024661601-269---1933-196---581-59---95--95---29--29--40---40-----33150242622933383Balanceat1July2011GainslossesonnancialinstrumentsrecognisedinequityTaxeectorevaluationRealisedgainstranserredtobalancesheetnetprotShareoassociatesreservesTaxeectotransersCurrencytranslationdierencesBalanceat30June2012GainsonnancialinstrumentsrecognisedinequityTaxeectorevaluationRealisedgainstranserredtobalancesheetnetprotTaxeectotransersCurrencytranslationdierencesShare-basedpaymenttransactionsBalanceat30June2013NatureandpurposeoreservesRestructuretaxreserveTherestructuretaxreserveisusedtorecordtherecognitionotaxlossesarisingromtheequityrestructuringotheGroupunderthe2001ownershipsimplicationplan.ThesetaxlossesweregeneratedonadoptionbytheGroupothetaxconsolidationregime.CapitalreserveThecapitalreservewasusedtoaccumulatecapitalprots.Thereservecanbeusedtopaydividendsorissuebonusshares.ForeigncurrencytranslationreserveTheoreigncurrencytranslationreserveisusedtorecordexchangedierencesarisingromthetranslationothenancialstatementsooreignsubsidiaries.HedgingreserveThehedgingreserverecordstheportionothegainorlossonahedginginstrumentinacashfowhedgethatisdeterminedtobeaneectivehedge.Available-or-salereserveTheavailable-or-salereserverecordsairvaluechangesonavailable-or-saleinvestments.Share-basedpaymentsreserveTheshare-basedpaymentsreserveisusedtorecognisethevalueoequity-settledshare-basedpaymentsprovidedtoemployeesincludingkeymanagementpersonnelaspartotheirremuneration.Reertonote34orurtherdetailsotheseplans. WesfarmersaNNUaLreport2013144Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciesTheGroupsprincipalnancialinstrumentsotherthanderivativescomprisesyndicatedandotherbankloansbankacceptedbillscommercialpapercorporatebondsandcashandshort-termdeposits.ThemainpurposeothesenancialinstrumentsistoraisenanceortheGroupsoperationsorinthecaseoshort-termdepositstoinvestsurplusunds.TheGrouphasvariousothernancialassetsandliabilitiessuchastradereceivablesandtradepayableswhicharisedirectlyromitsoperations.TheGroupalsoentersintoderivativetransactionsincludingprincipallyinterestrateswapsandorwardcurrencycontractstomanagetheinterestrateandcurrencyrisksarisingromtheGroupsoperationsanditssourcesonance.ItisandhasbeenthroughouttheyeartheGroupspolicythatnospeculativetradinginnancialinstrumentsshallbeundertaken.ThemainrisksarisingromtheGroupsnancialinstrumentsareliquidityriskmarketriskincludingoreigncurrencyinterestrateandcommoditypriceriskandcreditrisk.TheBoardreviewsandagreespoliciesormanagingeachotheserisksandtheyaresummarisedbelow.Detailsothesignicantaccountingpoliciesandmethodsadoptedincludingthecriteriaorrecognitionthebasisomeasurementandthebasisonwhichincomeandexpensesarerecognisedinrespectoeachclassonancialassetnancialliabilityandequityinstrumentaredisclosedinnote2tothenancialstatements.aLiquidityriskWesarmersmaintainsafexiblenancingstructuresoastobeabletotakeadvantageonewinvestmentopportunitiesthatmayarise.TheGroupsobjectiveistomaintainabalancebetweencontinuityoundingandfexibilitythroughtheuseobankloansbankacceptedbillscommercialpapercorporatebondsandtheovernightmoneymarketacrossarangeomaturities.Althoughthebankdebtacilitieshavexedmaturitydatesromtimetotimetheyarereviewedandextendedthusdeerringtherepaymentotheprincipal.Wesarmersaimstospreadmaturitiestoavoidexcessiverenancinginanyperiod.LiquidityriskismanagedcentrallybyGroupTreasurybyconsideringoveraperiodotimetheoperatingcashfoworecastsotheunderlyingbusinessesandaccessingthedebtandequitycapitalmarkets.WesarmerscontinuestomaintaininvestmentgradecreditratingsromMoodysandStandardPoors.Wesarmersaimstomaintainundingfexibilitybykeepingcommittedcreditlinesavailablewithavarietyocounterparties.At30June2013theGrouphadunutilisedcommitteddebtacilitieso3050million20122298million.UnutilisedcommitteddebtacilitiesincludesbackupliquidityortheGroupscommercialpaperprogramsthroughcommittedcommercialpaperstandbyacilitiesowhich128millionwasavailableat30June20132012243million.Reertonote17orthenancingacilitiesusedandunused.Surplusundsaregenerallyinvestedininstrumentsthataretradeableinhighlyliquidmarketswithhighlyratedcounterparties.Liquidityriskdisclosuresorinsuranceliabilitiesareincludedinnote19.MaturitiesofnancialliabilitiesTheollowingtablesanalysetheGroupsnancialliabilitiesincludingnetandgrosssettlednancialinstrumentsintorelevantmaturityperiodsbasedontheremainingperiodatthereportingdatetothecontractualmaturitydate.Theamountsdisclosedinthetablearethecontractualundiscountedcashfowsandhencewillnotnecessarilyreconcilewiththeamountsdisclosedinthebalancesheet.Expectedutureinterestpaymentsonloansandborrowingsexcludeaccrualsalreadyrecognisedintradeandotherpayables.Fororeignexchangederivativesandcrosscurrencyinterestrateswapstheamountsdisclosedarethegrosscontractualcashfowstobepaid.Forinterestrateswapsthecashfowsarethenetamountstobepaidateachquarterexcludingaccrualsincludedintradeandotherpayablesandhavebeenestimatedusingorwardinterestratesapplicableatthereportingdate.Derivativecashfowsexcludeaccrualsrecognisedintradeandotherpayables.Reertonote26orurtherdetailsoncontingentliabilities. 145WesarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedaLiquidityriskcontinued3-6-1-2-3-4-5ytlcnculchfwCyingunlibiliiConsolidatedYeareNDeD30JUNe2013592939318----600760073535-1271160150090720506399577931329721617510593219968-59951061281495177660510002269133741178631671---16151-------11681892159544952135640713421523661401481828079663580-9154848114381453904913421047741916848463228--4243149985702879820479237--4102-62393728169--14114955235139947145390647505533942332311-1544054405474217118507221360500500561155025265136204157984663821-5938528880107788014595465641187210942-101056---961121----5512268645461448--2248-73177168711401--23491026985232547--10110295172075375852931652-407926891068770167848030550-3811-4133528049112-2682683413456130582-153155Non-derivativesTradeandotherpayablesLoansandborrowingsbeoreswapsExpectedutureinterestpaymentsonloansandborrowingsTotalnon-derivativesDerivativesHedgeinterestrateswapsnetsettledNon-hedgeinterestrateswapsnetsettledCrosscurrencyinterestrateswapsgrosssettledinfowoutfowNetcrosscurrencyinterestrateswapsHedgeoreignexchangecontractsgrosssettledinfowoutfowNetoreignexchangecontractsTotalderivativesYeareNDeD30JUNe2012Non-derivativesTradeandotherpayablesLoansandborrowingsbeoreswapsExpectedutureinterestpaymentsonloansandborrowingsTotalnon-derivativesDerivativesHedgeinterestrateswapsnetsettledNon-hedgeinterestrateswapsnetsettledCrosscurrencyinterestrateswapsgrosssettledinfowoutfowNetcrosscurrencyinterestrateswapsHedgeoreignexchangecontractsgrosssettledinfowoutfowNetoreignexchangecontractsTotalderivatives WesfarmersaNNUaLreport2013146Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedbMarketriskForeigncurrencyriskTheGroupsprimarycurrencyexposuresareinrelationtoUSdollarsandariseromsalesorpurchasesbyadivisionincurrenciesotherthanthedivisionsunctionalcurrency.AsaresultooperationsinNewZealandtheGroupsbalancesheetcanbeaectedbymovementsintheAUDNZDexchangerates.TheGroupmitigatestheeectoitsstructuralcurrencyexposurebyborrowinginNZdollarsinNewZealand.TheGrouprequiresalldivisionstohedgeoreignexchangeexposuresorrmcommitmentsrelatingtosalesorpurchasesorwhenhighlyprobableorecasttransactionshavebeenidentied.Beorehedgingthedivisionsarealsorequiredtotakeintoaccounttheircompetitiveposition.Thehedginginstrumentmustbeinthesamecurrencyasthehedgeditem.Divisionsarenotpermittedtospeculateonuturecurrencymovements.TheobjectiveoWesarmerspolicyonoreignexchangehedgingistoprotecttheGroupromadversecurrencyfuctuations.Hedgingisimplementedortheollowingreasonsprotectionocompetitivepositionandgreatercertaintyoearningsduetoprotectionromsuddencurrencymovements.TheGroupaimstohedgeapproximately45percentto55percentoverveyearsoitsoreigncurrencysalesorwhichrmcommitmentsorhighlyprobableorecasttransactionsexistedatthebalancesheetdate.ThecurrenthedgecontractsextendouttoJune2017.SuchoreigncurrencypurchasesarisepredominantlyintheResourcesdivision.TheGroupaimstohedgeapproximately70percentto100percentoitsnon-capitalexpenditurerelatedoreigncurrencypurchasesorwhichrmcommitmentsorhighlyprobableorecasttransactionsexistupto12monthsorward.TheGroupcurrentlyhedges100percentocapitalexpenditurerelatedoreigncurrencypurchasestomatchexpectedpaymentdatesandthesemayextendbeyond12months.ThecurrenthedgecontractsextendouttoOctober2014.SuchoreigncurrencypurchasesarisepredominantlyintheretailChemicalsEnergyandFertilisersandIndustrialandSaetydivisions.TheWesarmersAuditCommitteecanapprovetemporaryamendmentstothispolicysuchasthehedgingtimehorizonandhedgelevelswithsuchamendmentsreviewedonaregularbasis.Reertonote25ordetailsooutstandingoreignexchangederivativecontractsusedbytheGrouptomanageexposuretooreignexchangeriskasat30June2013.TheGroupsexposuretotheUSdollarEUROandNZdollarpriortohedgingcontractsatthereportingdatewereasollows20132012USDEURNZDUsDeUrNZDCONSOLIDATEDAmAmAmaaaFinancialassets71116970211314832421912208--2141-383--122--97195176-70--1463-271--41310333249926415121490701315648163-29-63109---604--729----3-CashandcashequivalentsTradeandotherreceivablesReinsuranceandotherrecoveriesFinanceadvancesandloansCrosscurrencyinterestrateswapHedgeoreignexchangederivativeassetsFinancialliabilitiesTradeandotherpayablesInterest-bearingloansandborrowingsCrosscurrencyinterestrateswapInsuranceliabilitiesHedgeoreignexchangederivativeliabilities 147WesarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedbMarketriskcontinuedThesensitivityanalysisbelowshowstheimpactthatareasonablypossiblechangeinoreignexchangeratesoveranancialyearwouldhaveonprotatertaxandequitybasedsolelyontheGroupsoreignexchangeriskexposuresexistingatthebalancesheetdate.TheGrouphasusedtheobservedrangeoactualhistoricalratesortheprecedingve-yearperiodwithaheavierweightingplacedonrecentlyobservedmarketdataindeterminingreasonablypossibleexchangemovementstobeusedorthecurrentyearssensitivityanalysis.Pastmovementsarenotnecessarilyindicativeouturemovements.Theollowingrateshavebeenusedinperormingthesensitivityanalysis20132012Actual10-10acul10-10USdollar0.921.010.831.001.100.900.710.780.640.810.890.73EUROTheimpactonprotandequityisestimatedbyrelatingthehypotheticalchangesintheUSdollarandEUROexchangeratetothebalanceonancialinstrumentsatthereportingdate.ForeigncurrencyrisksasdenedbyAASB7FinancialInstrumentsDisclosuresariseonaccountonancialinstrumentsbeingdenominatedinacurrencythatisnottheunctionalcurrencyinwhichthenancialinstrumentismeasured.DierencesromthetranslationonancialstatementsintotheCompanyspresentationcurrencyarenottakenintoconsiderationinthesensitivityanalysis.Theresultsotheoreignexchangeratesensitivityanalysisaredrivenbythreemainactorsasoutlinedbelowtheimpactoapplyingtheaboveoreignexchangemovementstonancialinstrumentsthatarenotinhedgerelationshipswillberecogniseddirectlyinprottotheextentthattheoreigncurrencydenominatedderivativesonbalancesheetormpartoaneectivecashfowhedgerelationshipanyairvaluemovementscausedbyapplyingtheabovesensitivitymovementswillbedeerredinequityandwillnotaectprotandmovementsinnancialinstrumentsormingpartoaneectiveairvaluehedgerelationshipwillberecognisedinprot.Howeverasacorrespondingentrywillberecognisedorthehedgeditemtherewillbenoneteectonprot.At30June2013hadtheAustraliandollarmovedagainsttheUSdollarandEUROasillustratedinthetableabovewithallothervariablesheldconstanttheGroupsprotatertaxandotherequitywouldhavebeenaectedbythechangeinvalueoitsnancialassetsandnancialliabilitiesasollowsAUDUSD10AUDUSD-10AUDEUR10AUDEUR-10UsDxuIcnfIcnquiyIcnfIcnquiyeUrxuIcnfIcnquiyIcnfIcnquiyCONSOLIDATEDaaaaaaaaaaYeareNDeD30JUNe2013715-5-1----14810-103----195964118514748665880146-44-553-4-541329-29-101-1-151296-118-149048-58-14401450170185FinancialassetsCashandcashequivalentsTradeandotherreceivablesCrosscurrencyinterestrateswapHedgeoreignexchangederivativeassetsFinancialliabilitiesTradeandotherpayablesInterest-bearingloansandborrowingsNetimpact WesarmersaNNUaLreport2013148Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedbMarketriskcontinuedaUDUsD10aUDUsD-10aUDeUr10aUDeUr-10UsDxuIcnfIcnquiyIcnfIcnquiyeUrxuIcnfIcnquiyIcnfIcnquiyCONSOLIDATEDaaaaaaaaaaYeareNDeD30JUNe2012705-5-2----19113-13-2----271-96-119-----24917-17-91-1-131584-103-64842-52-78431034109422523-----3-3-31931115111-FinancialassetsCashandcashequivalentsTradeandotherreceivablesHedgeoreignexchangederivativeassetsFinancialliabilitiesTradeandotherpayablesInterest-bearingloansandborrowingsCrosscurrencyinterestrateswapHedgeoreignexchangederivativeassetsNetimpactInterestrateriskTheGroupsexposuretotheriskochangesinmarketinterestratesrelatesprimarilytotheGroupsdebtobligationsthathavefoatinginterestrates.TheGroupspolicyistolimittheGroupsexposuretoadversefuctuationsininterestrateswhichcoulderodeGroupprotabilityandadverselyaectshareholdervalue.ThepolicyrequiresthataninterestrateriskmanagementIRRMplanbedevelopedbasedoncashfoworecasts.AcommitteecomprisingseniormanagementmeetsperiodicallytoreviewtheIRRMplanandmakeinterestratehedgingrecommendationswhichareprovidedtotheFinanceDirectororapproval.TheGroupsinterestratehedgingproleisregularlyreportedtotheWesarmersBoardandseniorexecutives.TomanagetheinterestrateexposuretheGroupgenerallyentersintointerestrateswapsinwhichtheGroupagreestoexchangeatspeciedintervalsthedierencebetweenxedandvariablerateinterestamountscalculatedbyreerencetoanagreed-uponnotionalprincipalamount.Theseswapsaredesignatedtohedgeinterestcostsassociatedwithunderlyingdebtobligations.At30June2013atertakingintoaccounttheeectointerestrateswapseconomichedgingrelationshipsandearlyrepaymentoaportionocoredebtacilitiesapproximately33percentotheGroupscoreborrowingsareexposedtomovementsinvariablerates2012approximately42percent.Reertonote25ordetailsooutstandinginterestrateswapderivativecontractsusedtomanagetheGroupsinterestrateriskasat30June2013.FromaGroupperspectiveanyinternalcontractsareeliminatedaspartotheconsolidationprocessleavingonlytheexternalcontractsinthenameoWesarmersLimited.AlthoughWesarmershasissuedUSandEURObondscrosscurrencyswapsareinplacewhichremoveanyexposuretoUSandEUROinterestrates.ThesecrosscurrencyswapsensurethattheeectiveinterestratetoWesarmersisreerencedtoAustralianinterestrates.AsatthereportingdatetheGrouphadtheollowingnancialassetsandliabilitieswithexposuretointerestraterisk.Interestonnancialinstrumentsclassiedasfoatingrateisrepricedatintervalsolessthanoneyear.Interestonnancialinstrumentsclassiedasxedrateisxeduntilmaturityotheinstrument.Theclassicationbetweenxedandfoatinginteresttakesintoaccountapplicablehedgeinstruments.OthernancialinstrumentsotheGroupthatarenotincludedintheollowingtablearenon-interest-bearingandarethereorenotsubjecttointerestraterisk. 149WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedbMarketriskcontinuedCONSOLIDATED20132012BalanceWeightedaverageinterestrateBlncWighdvginmFinancialassets33417.8929218.17--87.0017.8917.871974.96--10184.8011525.597182.547103.353.984.746.036.565457.449949.411007.60----4008.5620925.9814846.416.337.7448.4537.072226.12726.74343.45703.35323.05973.3227504.7523826.194.826.025.546.926.257.326.657.83FixedrateFinanceadvancesandloansLoanstoassociatesWeightedaverageeectiveinterestrateonxedrateassetsFloatingrateInvestmentsbackinginsurancecontracts-corporatebondsInvestmentsbackinginsurancecontracts-termdepositsCashassetsWeightedaverageeectiveinterestrateonfoatingrateassetsTotalweightedaverageeectiveinterestrateonnancialassetsatbalancedateFinancialliabilitiesFixedrateTermloansOtherbankloansBankbillsCorporatebondsWeightedaverageeectiveinterestrateonxedrateliabilitiesFloatingrateBankoverdratTermloansOtherunsecuredbankloanCommercialpaperCorporatebondsWeightedaverageeectiveinterestrateonfoatingrateliabilitiesTotalweightedaverageeectiveinterestrateonnancialliabilitiesatbalancedateduringtheyearduringtheyearincludingbankandliquiditychargesTheollowingsensitivityanalysisshowstheimpactthatareasonablypossiblechangeininterestrateswouldhaveonGroupprotatertaxandequity.Theimpactisdeterminedbyassessingtheeectthatsuchareasonablypossiblechangeininterestrateswouldhavehadontheinterestincomeexpenseandtheimpactonnancialinstrumentairvalues.Thissensitivityisbasedonreasonablypossiblechangesoveranancialyeardeterminedusingobservedhistoricalinterestratemovementsortheprecedingve-yearperiodwithaheavierweightinggiventomorerecentmarketdata.Pastmovementsarenotnecessarilyindicativeouturemovements.Theresultsothesensitivityanalysisaredrivenbythreemainactorsasoutlinedbeloworunhedgedfoatingratenancialinstrumentsanyincreaseordecreaseininterestrateswillimpactprottotheextentthatderivativesormpartoaneectivecashfowhedgerelationshiptherewillbenoimpactonprotandanyincreasedecreaseintheairvalueotheunderlyingderivativeinstrumentswillbedeerredinequityandmovementsintheairvalueoderivativesinaneectiveairvaluehedgerelationshipwillberecogniseddirectlyinprot.Howeverasacorrespondingentrywillberecognisedorthehedgeditemtherewillbenonetimpactonprot. WesarmersaNNUaLreport2013150Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedbMarketriskcontinuedTheollowingsensitivityanalysisisbasedontheAustralianvariableinterestrateriskexposuresinexistenceatbalancesheetdate.Iinterestrateshadmovedandwithallothervariablesheldconstantprotatertaxandequitywouldhavebeenaectedasollows20132012ImpactonproftImpactonequityIcnfIcnquiyCONSOLIDATEDAmAmaa1223912229Australianvariableinterestrate100bps2012100bpsAustralianvariableinterestrate-100bps2012-100bpsCommoditypriceriskTheGroupsexposuretocommoditypriceriskariseslargelyromcoalpricefuctuationswhichimpactitscoalminingoperations.ExcludingtheoreignexchangeriskcomponentwhichismanagedaspartotheGroupsoveralloreignexchangeriskmanagementpoliciesandproceduresreerredtopreviouslythisexposureisnothedgedasthecoaltypepredominantlysoldbytheGroupisnotareadilytradedcommodityonamarketexchange.NosensitivityanalysisisprovidedortheGroupscoalandgasownusecontractsastheyareoutsidethescopeoAASB139FinancialInstrumentsRecognitionandMeasurement.Suchcontractsaretobuyorsellnon-nancialitemsandwereenteredintoandcontinuetobeheldorthepurposeothereceiptordeliveryothenon-nancialiteminaccordancewiththedivisionsexpectedpurchasesaleorusagerequirements.cCreditriskCreditriskistheriskthatacontractingentitywillnotcompleteitsobligationunderanancialinstrumentorcustomercontractthatwillresultinananciallosstotheGroup.TheGroupisexposedtocreditriskromitsoperatingactivitiesprimarilyromcustomerreceivablesandromitsnancingactivitiesincludingdepositswithbanksandnancialinstitutionsoreignexchangetransactionsandothernancialinstruments.CreditriskrelatedtotradeandotherreceivablesCustomercreditriskismanagedbyeachdivisionsubjecttoestablishedpoliciesproceduresandcontrolsrelatingtocustomercreditriskmanagement.TheGrouptradeswithrecognisedcreditworthythirdparties.Dependingonthedivisioncredittermsaregenerally14to30daysromdateoinvoice.ItistheGroupspolicythatcustomerswhowishtotradeoncredittermsaresubjecttocreditvericationproceduresincludinganassessmentotheirindependentcreditratingnancialpositionpastexperienceandindustryreputation.Inadditiontradeandotherreceivablesbalancesaremonitoredonanongoingbasis.AnimpairmentallowanceisrecognisedwhenthereisobjectiveevidencethattheGroupwillnotbeabletocollectthedebts.Financialdicultiesothedebtorprobabilitythatthedebtorwillenterbankruptcyornancialreorganisationanddeaultordelinquencyinpaymentsareconsideredobjectiveevidenceoimpairment.TheGroupsexposuretobaddebtsisnotsignicantanddeaultrateshavehistoricallybeenverylow.Anageingotradereceivablespastdueisincludedinnote9.ThecarryingamountsotheGroupstradeandotherreceivablesaredenominatedinAustraliandollarsUSdollarsorNZdollars.SincetheGrouptradesonlywithrecognisedthirdpartiesnorequestsorrequirementorcollateralcoveringtradeandotherreceivablesbalanceshavebeenmade.Theollowingconcentrationsothemaximumcreditexposureocurrenttradeandotherreceivablesareshownortheconsolidatedentity2013201212.311.68.77.81.11.20.40.649.952.16.88.09.79.48.87.62.31.7100.0100.0ColesHomeImprovementandOceSuppliesKmartTargetInsuranceResourcesIndustrialandSaetyChemicalsEnergyandFertilisersCorporateCreditriskrelatedtofnancialinstrumentsandcashdepositsCreditriskrombalanceswithbanksandnancialinstitutionsismanagedbyGroupTreasuryinaccordancewithBoardapprovedpolicy.InvestmentsosurplusundsaremadeonlywithapprovedcounterpartiesorcounterpartiesratedAAorhigherbyStandardPoors.Surplusundsareinvestedwithincreditlimitsassignedtoeachcounterpartyunlessappropriateapprovalisprovided. 151WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinuedcCreditriskcontinuedCreditriskromcorporatebondsismanagedbyanexternalinvestmentadviserasappointedinaccordancewiththeWesarmersGeneralInsuranceLimitedsInvestmentPolicy.InvestmentsindiversiedxedinterestinvestmentsarelimitedtocounterpartieswithacreditratingbetweenBBBandAAAbyStandardPoors.Thelimitsoutlinedabovearesettominimisetheconcentrationorisksandthereoremitigatenanciallossthroughpotentialcounterpartyailure.Thecarryingamountonancialassetsrepresentsthemaximumcreditexposure.ThereisalsoexposuretocreditriskwhentheGroupprovidesaguaranteetoanotherparty.Detailsocontingentliabilitiesaredisclosedinnote26.TherearenosignicantconcentrationsocreditriskwithintheGroup.dFairvaluesThecarryingamountsandestimatedairvaluesoalltheGroupsnancialinstrumentsrecognisedinthenancialstatementsareasollowsCARRYINGAMOUNTFAIRVALUE2013201220132012CONSOLIDATEDNotemmFinancialassets13331127133311271687173316871733334292334292378392378392197-197-1018115210181152458731458731615615-8-8230294230294223322333717037170599954205999542082082076710667671066134701347032973297-400-40043434842386653094004812681268448442917229172Cashandcashequivalents8Tradereceivables9Financeadvancesandloans9Otherdebtors9InvestmentsbackinginsurancecontractsCorporatebonds11Termdeposits11Reinsuranceandotherrecoveries11Available-or-saleinvestmentsLoanstoassociates12Forwardcurrencycontracts25Interestrateswaps25Crosscurrencyinterestrateswaps25FinancialliabilitiesTradepayables16Othercreditorsandaccruals16Interest-bearingloansandborrowingsSyndicatedbankloans17Unsecuredbankloans17Commercialpaper17Bankbills17Bankoverdrat17Corporatebonds17Forwardcurrencycontracts25Interestrateswaps25Crosscurrencyinterestrateswaps25ThemethodsandassumptionsusedtoestimatetheairvalueonancialinstrumentsareasollowsCashThecarryingamountisairvalueduetotheliquidnatureotheseassets.ReceivablespayablesDuetotheshort-termnatureothesenancialrightsandobligationstheircarryingamountsareestimatedtorepresenttheirairvalues.OtherfnancialassetsliabilitiesMarketvalueshavebeenusedtodeterminetheairvalueolistedavailable-or-saleinvestmentsandcorporatebondsusingaquotedmarketprice.Theairvaluesoderivativesandborrowingshavebeencalculatedbydiscountingtheexpecteduturecashfowsatprevailinginterestratesusingmarketobservableinputs.Theairvaluesoloannotesandothernancialassetshavebeencalculatedusingmarketinterestrates. WesfarmersaNNUaLreport2013152Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinueddFairvaluescontinuedInterest-bearingliabilitiesQuotedmarketpricesordealerquotesorsimilarinstrumentsareusedorlong-termdebtinstrumentsheldorbasedondiscountingexpecteduturecashfowsatmarketrates.ValuationofnancialinstrumentsFornancialinstrumentsmeasuredandcarriedatairvaluetheGroupusestheollowingtocategorisethemethodusedLevel1theairvalueiscalculatedusingquotedpricesinactivemarkets.Level2theairvalueisestimatedusinginputsotherthanquotedpricesincludedinLevel1thatareobservableortheassetorliabilityeitherdirectlyaspricesorindirectlyderivedromprices.Level3theairvalueisestimatedusinginputsortheassetorliabilitythatarenotbasedonobservablemarketdata.TheairvalueothenancialinstrumentsaswellasthemethodsusedtoestimateairvaluearesummarisedinthetablebelowQuotedmarketpriceLevel1ValuationtechniquemarketobservableinputsLevel2Valuationtechniquenon-marketobservableinputsLevel3TotalConsolidatedmmmmYeareNDeD30JUNe2013--66-197-197-1018-1018-230-230-22-22-371-371-183861844-81-81-8-8-29-29-118-118FinancialassetsmeasuredatairvalueAvailable-or-saleinvestmentsSharesinunlistedcompaniesatairvalueInvestmentsbackinginsurancecontractsCorporatebondsTermdepositsDerivativeinstrumentsForwardcurrencycontractsInterestrateswapsCrosscurrencyinterestrateswapsTotalnancialassetsmeasuredatairvalueFinancialliabilitiesmeasuredatairvalueDerivativeinstrumentsForwardcurrencycontractsInterestrateswapsCrosscurrencyinterestrateswapsTotalfnancialliabilitiesmeasuredatairvalueTherewerenotransersbetweenLevel1andLevel2duringtheyear.TherewerenomaterialLevel3airvaluemovementsduringtheyear. 153WesfarmersaNNUaLreport2013Notestothefnancialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentities24FinancialriskmanagementobjectivesandpoliciescontinueddFairvaluescontinuedQudkicLvl1VluinchniqukbvblinuLvl2Vluinchniqunn-kbvblinuLvl3tlConsolidatedYeareNDeD30JUNe2012--1515-1152-1152-294-294-33-33-70-70-1549151564-26-26-44-44-172-172-242-242FinancialassetsmeasuredatairvalueAvailable-or-saleinvestmentsSharesinunlistedcompaniesatfairvalueInvestmentsbackinginsurancecontractsTermdepositsDerivativeinstrumentsForwardcurrencycontractsInterestrateswapsCrosscurrencyinterestrateswapsTotalfnancialassetsmeasuredatairvalueFinancialliabilitiesmeasuredatairvalueDerivativeinstrumentsForwardcurrencycontractsInterestrateswapsCrosscurrencyinterestrateswapsTotalfnancialliabilitiesmeasuredatairvalueTherewerenotransfersbetweenLevel1andLevel2duringtheyear.TherewerenomaterialLevel3fairvaluemovementsduringtheyear. WesfarmersaNNUaLreport2013154Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities25HedgingactivitiesForeignexchangecontractsThetermsotheorwardcurrencycontractshavebeennegotiatedtomatchthetermsotheunderlyinghedgeditemsandassuchthehedgesareexpectedtobehighlyeectiveinosettingchangesincashowsattributabletomovementsintheoreignexchangerates.FAIRVALUEInstrumentNotionalamountAveragerateExpiryHedgetype20132012mForeignexchangeorwards2013US2168.6million2012US2482.7millionAUDUSD0.90272012AUDUSD0.8891July2012toJune2017CashowhedgeorwardsalescontractsrelatingmainlytoUSDcoalandLPGsalesandhavematuritiesouttoJune20174277139533311492682013US1566.8million2012US1084.5millionAUDUSD1.00132012AUDUSD1.0053July2012toOctober2014CashowhedgeorwardpurchasescontractsrelatingmainlytocapitalexpenditureorthepurchaseoinventoryandhavematuritiesouttoOctober2014201340.7million201234.3millionAUDEUR0.75142012AUDEUR0.7518July2012toMay20142013NZ61million2012NZ40.7millionNZDUSD0.81092012NZDUSD0.7842July2012toOctober2014TotaloreignexchangecontractsInterestrateswapcontractsThetermsotheinterestratecontractsmatchthetermsotheunderlyingdebtitemsandassuchthehedgesareexpectedtobehighlyeectiveinosettingchangesincashowsattributabletomovementsininterestrates.Notede-designatedhedgesthathaveequalandoppositeosettinghedgesarenotdisclosedbelow.FAIRVALUEInstrumentNotionalamountRateExpiryHedgetype20132012mInterestrateswapsAUD2013650million20121500millionReceiveBBSWorBBSYoatingPay5.7fxed20127.1October2010toJuly2014CashowhedgetohedgeexposurestovariabilityinAUDcashowsattributabletomovementsinthethreemonthbenchmarkreerencerateBBSWorBBSYinrelationtooatingratebankbilltermloansorcommercialpaperdebt732-71320913156AUD2013nil2012300millionReceiveBBSWorBBSYoating2012pay4.51fxedJanuary2013toJuly2014CashowhedgedelaystartinterestrateswapstohedgeexposurestovariabilityinAUDcashowsattributabletomovementsinthethreemonthbenchmarkreerencerateBBSWorBBSYinrelationtooatingratebankbilltermloansorcommercialpaperdebtAUD2013400million2012400millionReceive8.25fxed20128.25fxedPayBBSWoatingSeptember2014Fairvaluehedgetoswapthe2014400millionAUDbondromafxedratetooatingrateexposureAUD2013712million2012601millionReceive5.2fxed20125.6PayBBSWoatingApril2014toSeptember2024FairvaluehedgetohedgetheexposuretochangesintheairvalueotheoutstandinginsuranceclaimsarecognisedliabilityattributabletochangesinfxedinterestratesTotalinterestrateswapcontracts 155WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities25HedgingactivitiescontinuedCrosscurrencyinterestrateswapcontractsFAIRVALUEInstrumentNotionalamountRateExpiryHedgetype20132012mFixedoroatingcrosscurrencyinterestrateswapUSD2013settledduringtheyear2012US650millionReceivenil20126.998Paynil2012BBSWplus3.979oatingApril2013CashowhedgetoeliminatevariabilityincashowsduetooreignexchangeriskonthemarginorportionotheinterestcoupononthedebtabovetheUSdollarLIBORbenchmarkcurveorthetermothehedgedbondandcrosscurrencyinterestrateswapCCIRS-5-58-63522410729109176-176-781196212670FairvaluehedgetoeliminatevariabilityinthechangesintheairvalueotheremainingportionocouponandprincipalcashowsotheUSdollarbondduetochangesinspotoreignexchangeratesandcurrencyinterestratesFixedoroatingcrosscurrencyinterestrateswapEUR2013500million2012500millionReceive3.875fxed20123.875PayBBSWplus2.295oating20122.295July2015CashowhedgetoeliminatevariabilityincashowsduetooreignexchangeriskonthemarginorportionotheinterestcoupononthedebtabovetheEuriborbenchmarkcurveorthetermothehedgebondandCCIRSFairvaluehedgetoeliminatevariabilityinthechangesintheairvalueotheportionothecouponbasedontheEuriborbenchmarkcurveduetochangesinspotoreignexchangeratesandinterestratesFixedorfxedcrosscurrencyinterestrateswapEUR2013650million2012nilReceive2.750fxed2012nilPay5.865fxed2012nilAugust2022CashowhedgetoeliminatevariabilityincashowsduetooreignexchangeriskontheinterestcoupononthedebtorthetermothehedgebondandCCIRSFixedoroatingcrosscurrencyinterestrateswapUSD2013US650million2012US650millionReceive2.983fxed20122.983PayBBSWplus1.265oating20121.265May2016CashowhedgetoeliminatevariabilityincashowsduetooreignexchangeriskonthemarginorportionotheinterestcoupononthedebtabovetheUSdollarLIBORbenchmarkcurveorthetermothehedgedbondandCCIRSFairvaluehedgetoeliminatevariabilityinthechangesintheairvalueotheremainingportionothecouponandprincipalcashowsotheUSdollarbondduetochangesinspotoreignexchangeratesandCCIRS WesfarmersaNNUaLreport2013156Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities25HedgingactivitiescontinuedCrosscurrencyinterestrateswapcontractscontinuedFAIRVALUEInstrumentNotionalamountRateExpiryHedgetype20132012mFixedoroatingcrosscurrencyinterestrateswapUSD2013US750million2012nilReceive1.874fxed2012nilPayBBSWplus1.243oating2012nilMarch2018CashowhedgetoeliminatevariabilityincashowsduetooreignexchangeriskonthemarginorportionotheinterestcoupononthedebtabovetheUSdollarLIBORbenchmarkcurveorthetermothehedgedbondandCCIRS8-61-69-34210250616015505155FairvaluehedgetoeliminatevariabilityinthechangesintheairvalueotheremainingportionocouponandprincipalcashowsotheUSdollarbondduetochangesinspotoreignexchangeratesandcurrencyinterestratesTotalcrosscurrencyinterestrateswapcontractsTotalderivativesineectivehedgerelationshipsTotalderivativesinineectivehedgerelationshipsTotalderivativesinhedgerelationshipsFAIRVALUE20132012mTotalderivativescomprise1821515131871644814319181806217204362334425-5-5873414521263715224107-5-166116505155CurrentassetsForwardcurrencycontractscashowhedgesInterestrateswapsairvaluehedgesTotalcurrentassetsNon-currentassetsForwardcurrencycontractscashowhedgesCrosscurrencyinterestrateswapcashowhedgeCrosscurrencyinterestrateswapairvaluehedgeInterestrateswapsairvaluehedgesTotalnon-currentassetsCurrentliabilitiesForwardcurrencycontractscashowhedgesCrosscurrencyinterestrateswapcashowhedgeCrosscurrencyinterestrateswapairvaluehedgeInterestrateswapscashowhedgesInterestrateswapsclassifedasheldortradingTotalcurrentliabilitiesNon-currentliabilitiesForwardcurrencycontractscashowhedgesCrosscurrencyinterestrateswapcashowhedgeCrosscurrencyinterestrateswapairvaluehedgeInterestrateswapscashowhedgesInterestrateswapsclassifedasheldortradingTotalnon-currentliabilitiesTotalderivativesDerivativeinstrumentsclassifedasheldortradingprimarilyconsistoderivativespreviouslyineectivehedgerelationshipsthatnolongersatisytherequirementsorhedgeaccounting.Thesederivativeinstrumentsareinosettingrelationshipstominimisetheeectonearnings. 157WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities26CommitmentsandcontingenciesCONSOLIDATED20132012mOperatingleasecommitmentsGroupaslessee1794172056135267643355321384012519222839566126796334458254135949967701051232062924473355488618TheGrouphasenteredintocommercialleasesonofceretailanddistributionpropertiesmotorvehiclesandofceequipment.Theleasetermsandimplicitinterestratesvarysignifcantly.Fortheleaseobuildingstheleasetermsrangeromoneyearto25yearsandhavevariousrenewalorpurchaseoptionsescalationclausesterminationrightsandresidualliabilityclauses.Futureundiscountedminimumrentalspayableundernon-cancellableoperatingleasesnotincludedwithinthisfnancialreportwereasollowsWithinoneyearGreaterthanoneyearbutnotmorethanfveyearsMorethanfveyearsOperatingleasecommitmentsGroupaslessorContractednon-cancellableutureminimumleasepaymentsexpectedtobereceivedinrelationtonon-cancellablesub-leasesnotincludedinthisfnancialreportwereasollowsWithinoneyearGreaterthanoneyearbutnotmorethanfveyearsMorethanfveyearsCapitalcommitmentsCommitmentsarisingromcontractsorcapitalexpenditurecontractedoratbalancedatenotincludedinthisfnancialreportwereasollowsWithinoneyearGreaterthanoneyearbutnotmorethanfveyearsCommitmentsarisingromagreementstoinvestinGreshamPrivateEquityFundscontractedoratbalancedatenotincludedinthisfnancialreportwereasollowsDuewithinoneyearOtherexpenditurecommitmentsContractedotherexpenditurecommitmentsnotincludedinthisfnancialreportwereasollowsWithinoneyearGreaterthanoneyearbutnotmorethanfveyearsMorethanfveyearsCommitmentsrelatingtojointlycontrolledassetsAt30June2013theGroupsshareotheBengallaJointVenturecommitmentswas2million201213millionprincipallyrelatingtooperatingleasesallowhichispayablewithinoneyear.TheGroupsshareotheKwinanaSodiumCyanideJointVenturecapitalcommitmentswas4million20125millionrelatingtotheacquisitionoplantandequipmentallowhichispayablewithinoneyear.ShareocapitalcommitmentsojointventuresDuewithinoneyear WesfarmersaNNUaLreport2013158Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities26CommitmentsandcontingenciescontinuedCONSOLIDATED20132012mContingenciesContingentliabilitiesatbalancedatenotincludedinthisfnancialreportwereasollowsTradingguarantees13491198TheGrouphasissuedanumberobankguaranteestothirdpartiesorvariousoperationalandlegalpurposes.Itisnotexpectedthattheseguaranteeswillbecalledon.OnacquisitionotheColesgroupWesarmersassumedresponsibilityortheguaranteesenteredintobytheColesgrouprelatingtothesaleoitsMyerbusinessinJune2006underwhichColesgrouphadguaranteedtheperormanceocertainleaseagreementsheldbyMyerLtd.Theguaranteesamountto19million201219million.Theairvalueotheseguaranteesisnotconsideredtobematerialandhasnotbeenrecognisedinthisfnancialreport.OtherCertaincompanieswithintheGrouparepartytovariouslegalactionsthathaveariseninthenormalcourseobusiness.ItisexpectedthatanyliabilitiesarisingromsuchlegalactionwouldnothaveamaterialadverseeectontheGroupsfnancialreport.27EventsafterthebalancesheetdateDividendAully-rankeddividendo103centspershareresultinginadividendo1192millionwasdeclaredorapaymentdateo27September2013.Thedividendhasnotbeenprovidedorinthe30June2013ull-yearfnancialstatements.SaleandleasebackOn8August2013Wesarmersannouncedthesaleandleasebackoaportolioo10BunningsstorestoBWPTrustwhichwhencompletedwillreleaseapproximately271millionocapitalemployedinBunnings.CapitalreturnOn15August2013Wesarmersannouncedtheintentiontomakeacapitalreturno50centsperully-paidordinaryshareandpartiallyprotectedsharebyearlyDecember2013accompaniedbyaproportionateshareconsolidationsubjecttoapprovaloWesarmersshareholdersattheAnnualGeneralMeetinginNovember2013.SecuritisedleasetransactionOn29August2013Wesarmersannouncedthesaleandleasebackoaportolioo15Bunningswarehousepropertiesviaasecuritisedleasetransactionwhichwhencompletedwillreleaseapproximately287millionocapitalemployedinBunnings. 159WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities28InterestinjointlycontrolledassetsTheGrouphastheollowinginterestsinjointventuresinAustraliaINTEREST20132012JointventurePrincipalactivitySodiumCyanideJVSodiumcyanidemanuacture75754040404025-BengallaJVCoalminingKwinanaIndustrialGasesJVOxygenandnitrogenmanuactureISPTJVPropertyownershipTheshareotheassetsrevenueandexpensesothejointlycontrolledassetswhichareincludedintheconsolidatedfnancialstatementsareasollowsCONSOLIDATED20132012mCurrentassets11171567242344034023-463340487363413413276252172612013536418494CashandcashequivalentsInventoriesOtherTotalcurrentassetsNon-currentassetsPropertyplantandequipmentOtherTotalnon-currentassetsTotalassetsRevenueCostsosalesAdministrativeexpensesProftbeoreincometaxIncometaxexpenseNetproftReertonote26ordetailoncapitalcommitments.Therewerenoimpairmentlossesinthejointlycontrolledassets. WesfarmersaNNUaLreport2013160Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities29ParentdisclosuresPARENT20132012massets8710794923166230003187630949-10517186897181740570938815317376240461869586358249182459123284232801928137312111501501302224918245912152186023031880880452CurrentassetsNon-currentassetsTotalassetsLIaBILItIesCurrentinterest-bearingloansandborrowingsOthercurrentliabilitiesTotalcurrentliabilitiesNon-currentinterest-bearingloansandborrowingsNon-currentotherliabilitiesTotalnon-currentliabilitiesTotalliabilitiesNetassetseQUItYEquityattributabletoequityholdersotheparentIssuedcapitalEmployeereservedsharesRetainedearningsRestructuretaxreserveHedgingreserveTotalequityProftattributabletomembersotheparentTotalcomprehensiveincomeortheyearnetotaxattributabletomembersotheparentContingenciesContingentliabilitiesatbalancedatenotincludedinthisfnancialreportwereasollowsTradingguaranteesWesarmersLimitedhasissuedanumberobankguaranteestothirdpartiesorvariousoperationalandlegalpurposes.Itisnotexpectedthattheseguaranteeswillbecalledon.Wesarmersispartytovariouslegalactionsthathaveariseninthenormalcourseobusiness.ItisexpectedthatanyliabilitiesarisingromsuchlegalactionwouldnothaveamaterialadverseeectontheGroupsfnancialreport.Reertonote31ordetailsotheWesarmersDeedoCrossGuarantee.CapitalcommitmentsTherewerenocommitmentsarisingromcontractsorcapitalexpenditurecontractedoratbalancedatenotincludedinthisfnancialreport2012nil. 161WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities30SubsidiariesTheconsolidatedfnancialstatementsincludethefnancialstatementsoWesarmersLimitedandthesubsidiarieslistedintheollowingtableBENEFICIALINTERESTCunyincinfuncinlcuncy20132012AALARARiskManagementPtyLtdAustraliaAUD50501001001001001001001001001001001001001001001001001001007575100100100100100100100100-100100100100100100100100100100100100100100100100100100100100100100100100-100-100-100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100A.C.N.003921873PtyLimitedAustraliaAUDA.C.N.008734567PtyLtdAustraliaAUDA.C.N.081459878PtyLtdAustraliaAUDA.C.N.082931486PtyLtdAustraliaAUDA.C.N.112719918PtyLtdAustraliaAUDAllTransportInsuranceBrokersPtyLtdAustraliaAUDALWNewcoPtyLimitedAustraliaAUDAndearpPtyLtdAustraliaAUDAranaHillsPropertiesPtyLimitedAustraliaAUDAustralianGoldReagentsPtyLtdAustraliaAUDAustralianGraphicsPtyLtdAustraliaAUDAustralianGroceryHoldingsPtyLtdAustraliaAUDAustralianInternationalInsuranceLimitedAustraliaAUDAustralianLiquorGroupLtdAustraliaAUDAustralianTaxiInsuranceUnderwritingAgencyPtyLtdAustraliaAUDAustralianUnderwritingHoldingsLimitedAustraliaAUDAustralianUnderwritingServicesPtyLtdAustraliaAUDAustralianVinylsCorporationPtyLtdAustraliaAUDAVCHoldingsPtyLtdAustraliaAUDAVCTradingPtyLtdAustraliaAUDBakopPtyLtdAustraliaAUDBarrierInvestmentsPtyLtdAustraliaAUDBBCHardwareLimitedAustraliaAUDBBCHardwarePropertiesNSWPtyLtdAustraliaAUDBBCHardwarePropertiesVicPtyLtdAustraliaAUDBi-LoPtyLimitedAustraliaAUDBlacksmithJacksPtyLtdAustraliaAUDBPIManagementPtyLtdAustraliaAUDBPINo1PtyLtdAustraliaAUDBrianPtyLtdAustraliaAUDBullivantsPtyLimitedAustraliaAUDBunningsGroupLimitedAustraliaAUDBunningsJoondalupPtyLtdAustraliaAUDBunningsLimitedNewZealandNZDBunningsManagementServicesPtyLtdAustraliaAUDBunningsManuacturingPtyLtdAustraliaAUDBunningsNZLimitedNewZealandNZDBunningsPropertiesPtyLtdAustraliaAUDBunningsPulpMillPtyLtdAustraliaAUDBWPManagementLimited WesfarmersaNNUaLreport2013162Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities30SubsidiariescontinuedBENEFICIALINTERESTCunyincinfuncinlcuncy20132012CMTIPtyLtdAustraliaAUD100100-10097.597.5100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100ColacFoodProcessorsPtyLtdAustraliaAUDColesAnsettTravelPtyLtdAustraliaAUDColesGroupAsiaPtyLtdAustraliaAUDColesGroupDepositServicesPtyLtdAustraliaAUDColesDirectSourcingPrivateLimitedIndiaINRColesGroupEmployeeSharePlanPtyLtdAustraliaAUDColesGroupFinanceLimitedAustraliaAUDColesGroupFinanceUSAPtyLtdAustraliaAUDColesGroupInternationalPtyLtdAustraliaAUDColesGroupLimitedAustraliaAUDColesGroupNewZealandHoldingsLimitedNewZealandNZDColesGroupPropertiesHoldingsLtdAustraliaAUDColesGroupPropertiesPtyLtdAustraliaAUDColesGroupPropertyDevelopmentsLtdAustraliaAUDColesGroupSuperannuationFundPtyLtdAustraliaAUDColesGroupSupplyChainPtyLtdAustraliaAUDColesLDAustraliaPtyLtdAustraliaAUDColesMelbourneLtdAustraliaAUDColesOnlinePtyLtdAustraliaAUDColesPropertiesWALtdAustraliaAUDColesPropertyManagementPtyLtdAustraliaAUDColesRetailGroupPtyLtdAustraliaAUDColesRetailServicesPtyLtdAustraliaAUDColesStoresNewZealandLimitedNewZealandNZDColesSupercentresPtyLtdAustraliaAUDColesSupermarketsAustraliaPtyLtdAustraliaAUDComnetPtyLtdAustraliaAUDComprehensiveHolidayInsuranceUnderwritingAgentsPtyLtdAustraliaAUDConsortiumCoPtyLtdAustraliaAUDCoo-eeInvestmentsPtyLimitedAustraliaAUDCoregasPtyLtdAustraliaAUDCrombieLockwoodNZLimitedNewZealandNZDCSARetailFinancePtyLtdAustraliaAUDCSBPAmmoniaTerminalPtyLtdAustraliaAUDCSBPLimitedAustraliaAUDCumingSmithandCompanyLimitedAustraliaAUDCurraghCoalSalesCoPtyLtdAustraliaAUDCurraghQueenslandMiningPtyLtdAustraliaAUDDairyPropertiesPtyLtdAustraliaAUDDennisonAssociatesPtyLtdAustraliaAUDDirectFulflmentGroupPtyLtdAustraliaAUDe.colesgroupPtyLtdAustraliaAUDe.tailingColesGroupPtyLtdAustraliaAUDEastarmersPtyLtdAustraliaAUDEskdaleHoldingsPtyLtdAustraliaAUDEurekaOperationsPtyLtdAustraliaAUDExpresspakPtyLtdAustraliaAUDFBPAwardsFundPtyLtdAustraliaAUDFIFInvestmentsPtyLimitedAustraliaAUDFinancialNetworkCardServicesPtyLtdAustraliaAUDFitzgibbonsHotelPtyLtdAustraliaAUDFitzinnPtyLtdAustraliaAUD 163WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities30SubsidiariescontinuedBENEFICIALINTERESTCunyincinfuncinlcuncy20132012FosseysAustraliaPtyLtdAustraliaAUD100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100100100100100100100100100100FraserMacAndrewRyanLimitedNewZealandNZDFulthomPtyLimitedAustraliaAUDGJColesCoyPtyLimitedAustraliaAUDGaultArmstrongKemblePtyLtdAustraliaAUDGaultArmstrongSARLNewCaledoniaXPFGBPLPtyLtdAustraliaAUDGeneralMerchandiseApparelGroupPtyLtdAustraliaAUDGotStockPtyLtdAustraliaAUDGPMLPtyLtdAustraliaAUDGroceryHoldingsPtyLtdAustraliaAUDGuidelPtyLtdAustraliaAUDHadrillInsuranceBrokersPtyLtdAustraliaAUDHarrisTechnologyNZPtyLtdAustraliaAUDHarrisTechnologyPtyLtdAustraliaAUDHedzNo2PtyLtdAustraliaAUDHedzNo3PtyLtdAustraliaAUDHedzNo4PtyLtdAustraliaAUDHedzNo5PtyLtdAustraliaAUDHedzNo6PtyLtdAustraliaAUDHedzNo7PtyLtdAustraliaAUDHillsEnvironmentalLimitedUnitedKingdomGBPHotelWickhamInvestmentsPtyLtdAustraliaAUDHouseWorksCoPtyLtdAustraliaAUDHowardSmithLimitedAustraliaAUDHowardSmithNomineesPtyLimitedAustraliaAUDHTColesgroupPtyLtdAustraliaAUDIdobentPtyLtdAustraliaAUDJBlackwoodSonPtyLtdAustraliaAUDKatiesFashionsAustPtyLimitedAustraliaAUDKleenheatGasHouseFranchisingPtyLtdAustraliaAUDKmartAustraliaLimitedAustraliaAUDKnoxLiquorAustraliaPtyLtdAustraliaAUDKwinanaNitrogenCompanyProprietaryLimitedAustraliaAUDLawvalePtyLtdAustraliaAUDLHGPtyLtdAustraliaAUDLHG2PtyLtdAustraliaAUDLHG3PtyLtdAustraliaAUDLitcoPtyLimitedAustraliaAUDLiquorlandAustraliaPtyLtdAustraliaAUDLiquorlandQldPtyLtdAustraliaAUDLoggiaPtyLtdAustraliaAUDLoyaltyPacifcHongKongLimitedHongKongHKDLoyaltyPacifcPtyLtdAustraliaAUDLumleyCorporationPtyLimitedAustraliaAUDLumleyFinanceNZLimitedNewZealandNZDLumleyGeneralInsuranceNZLimitedNewZealandNZDLumleyInsuranceGroupLimitedAustraliaAUDLumleyManagementServicesPtyLimitedAustraliaAUDLumleySuperannuationPtyLimitedAustraliaAUDLumleyTechnologyPtyLtdAustraliaAUDManacolPtyLimitedAustraliaAUDMastersHardwareLimitedNewZealandNZD WesfarmersaNNUaLreport2013164Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities30SubsidiariescontinuedBENEFICIALINTERESTCunyincinfuncinlcuncy20132012MastersHomeImprovementLimitedNewZealandNZD100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-1001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001001005050MawhinneyInsuranceBrokersPtyLtdAustraliaAUDMeredithDistributionNSWPtyLtdAustraliaAUDMeredithDistributionPtyLtdAustraliaAUDMIBInsuranceBrokersPtyLtdAustraliaAUDMillarsWAPtyLtdAustraliaAUDModwoodTechnologiesPtyLtdAustraliaAUDMonumentFinanceLimitedNewZealandNZDMonumentInsuranceNZLimitedNewZealandNZDMorleyShoppingCentrePtyLimitedAustraliaAUDMultimediaServicesPtyLtdAustraliaAUDMycarAutomotivePtyLtdAustraliaAUDNewmartPtyLtdAustraliaAUDnow.com.auPtyLtdAustraliaAUDNZFinanceHoldingsPtyLimitedNewZealandNZDOAMPSUKLimitedUnitedKingdomGBPOAMPSAgencyPtyLtdAustraliaAUDOAMPSConsultingPtyLtdAustraliaAUDOAMPSCorporateRiskPtyLtdAustraliaAUDOAMPSCreditPtyLtdAustraliaAUDOAMPSGaultArmstrongPtyLtdAustraliaAUDOAMPSInsuranceBrokersLtdAustraliaAUDOAMPSLieSolutionsLtdAustraliaAUDOAMPSLtdAustraliaAUDOAMPSSpecialRisksLtdUnitedKingdomGBPOAMPSSportsServicesPtyLimitedAustraliaAUDOfceworksBusinessdirectPtyLtdAustraliaAUDOfceworksPropertyPtyLtdAustraliaAUDOfceworksSuperstoresNZLimitedNewZealandNZDOfceworksSuperstoresPtyLtdAustraliaAUDOshoreMarketPlacementsLimitedNewZealandNZDOHESEnvironmentalLimitedUnitedKingdomGBPOMPInsuranceBrokersLtdAustraliaAUDORZOPtyLimitedAustraliaAUDOsmondHotelPtyLtdAustraliaAUDOutrontLiquorServicesPtyLtdAustraliaAUDPacifcLiquorWholesalersPtyLtdAustraliaAUDPailouPtyLtdAustraliaAUDParksInsurancePtyLtdAustraliaAUDPatrickOperationsPtyLtdAustraliaAUDPenneysPtyLimitedAustraliaAUDPetersenBrosPtyLtdAustraliaAUDPhilipMurphyMelbournePtyLtdAustraliaAUDPhilipMurphyNiddriePtyLtdAustraliaAUDPhilipMurphyToorakPtyLtdAustraliaAUDPhilipMurphyWineSpiritsPtyLtdAustraliaAUDPowertrainPtyLimitedAustraliaAUDPremierPowerSalesPtyLtdAustraliaAUDPricePointPtyLtdAustraliaAUDProcurementOnlinePtyLtdAustraliaAUDProtectorAlsaePtyLtdAustraliaAUDPTBlackwoodsIndonesiaIndonesiaIDRQ.R.L.InsuranceFinanceAgencyPtyLtdAustraliaAUD 165WesfarmersaNNUaLreport2013Notestothefnancialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentities30SubsidiariescontinuedBENEFICIALINTERESTCunyincinfuncinlcuncy20132012RNPalmerPtyLtdAustraliaAUD1001001001001001001001001001001001001001001001001001001001001001005050100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100-100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100RelationshipServicesPtyLimitedAustraliaAUDRetailAustraliaConsortiumPtyLtdAustraliaAUDRetailInvestmentsPtyLtdAustraliaAUDRonellPtyLtdAustraliaAUDSBSRuralIAMAPtyLimitedAustraliaAUDSconesJamnCreamPtyLtdAustraliaAUDSellersSAPtyLtdAustraliaAUDShareNomineesLimitedAustraliaAUDSorchaPtyLtdAustraliaAUDSoticoPtyLtdAustraliaAUDSportsurePtyLtdAustraliaAUDTargetAustraliaPtyLtdAustraliaAUDTGTBusinessConsultingServicesShanghaiCoLtdChinaCNYTGTProcurementAsiaLimitedHongKongHKDTGTSourcingAsiaLimitedHongKongHKDTGTSourcingIndiaPrivateLimitedIndiaINRTheBuildersWarehouseGroupPtyLimitedAustraliaAUDTheFrankedIncomeFundAustraliaAUDTheGrapeManagementPtyLtdAustraliaAUDTheosLiquorPtyLtdAustraliaAUDTickothPtyLtdAustraliaAUDToorongaHoldingsPtyLtdAustraliaAUDToorongaShoppingCentrePtyLtdAustraliaAUDTotalGuardPtyLimitedAustraliaAUDTyremasterWholesalePtyLtdAustraliaAUDTyremasterPtyLtdAustraliaAUDUconePtyLtdAustraliaAUDUniversalUnderwritingServicesPtyLimitedAustraliaAUDValleyInvestmentsPtyLtdAustraliaAUDVigilUnderwritingAgenciesPtyLtdAustraliaAUDVikingDirectPtyLimitedAustraliaAUDWFBrokingUKLimitedUnitedKingdomGBPW4K.World4KidsPtyLtdAustraliaAUDWaratahCovePtyLtdAustraliaAUDWesfarmersAgribusinessLimitedAustraliaAUDWesfarmersBengallaLimitedAustraliaAUDWesfarmersBioenergyPtyLtdAustraliaAUDWesfarmersBrokingNZLimitedNewZealandNZDWesfarmersBunningsLimitedAustraliaAUDWesfarmersChemicalsEnergyFertilisersLimitedAustraliaAUDWesfarmersCoalResourcesPtyLtdAustraliaAUDWesfarmersCurraghPtyLtdAustraliaAUDWesfarmersEmergingVenturesPtyLtdAustraliaAUDWesfarmersEnergyGasSalesLimitedAustraliaAUDWesfarmersEnergyIndustrialGasPtyLtdAustraliaAUDWesfarmersFederationInsurancePtyLtdAustraliaAUDWesfarmersFertilizersPtyLtdAustraliaAUDWesfarmersGasLimitedAustraliaAUDWesfarmersGeneralInsuranceLimitedAustraliaAUDWesfarmersHoldingsPtyLtdAustraliaAUDWesfarmersIndustrialSafetyHoldingsNZLimitedNewZealandNZDWesfarmersIndustrialSafetyNZLimitedNewZealandNZD WesfarmersaNNUaLreport2013166Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities30SubsidiariescontinuedBENEFICIALINTERESTCunyincinfuncinlcuncy20132012WesarmersIndustrialandSaetyPtyLtdAustraliaAUD100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100100-100100100100100100100100100100100100100100100100WesarmersInsuranceInvestmentsPtyLtdAustraliaAUDWesarmersInsurancePtyLtdAustraliaAUDWesarmersInvestmentsPtyLtdAustraliaAUDWesarmersKleenheatGasPtyLtdAustraliaAUDWesarmersLNGPtyLtdAustraliaAUDWesarmersLoyaltyManagementPtyLtdAustraliaAUDWesarmersLPGPtyLtdAustraliaAUDWesarmersPrivateEquityPtyLtdAustraliaAUDWesarmersProvidentFundPtyLtdAustraliaAUDWesarmersRailroadHoldingsPtyLtdAustraliaAUDWesarmersResourcesLimitedAustraliaAUDWesarmersRetailHoldingsPtyLtdAustraliaAUDWesarmersRetailPtyLtdAustraliaAUDWesarmersRiskManagementLimitedBermudaAUDWesarmersRiskManagementSingaporePteLtdSingaporeSGDWesarmersSecuritiesManagementPtyLtdAustraliaAUDWesarmersSugarCompanyPtyLtdAustraliaAUDWesarmersSuperannuationPtyLtdAustraliaAUDWesarmersTransportIndonesiaPtyLtdAustraliaAUDWesarmersTransportLimitedAustraliaAUDWeskemPtyLtdAustraliaAUDWestralianFarmersCo-operativeLimitedAustraliaAUDWestralianFarmersSuperphosphatesLimitedAustraliaAUDWFCLInvestmentsPtyLtdAustraliaAUDWIPremiumFundingLimitedAustraliaAUDWidelandInsuranceBrokersPtyLtdAustraliaAUDWidelandLieInsuranceAgencyPtyLtdAustraliaAUDWISAustraliaPtyLtdAustraliaAUDWISInternationalPtyLtdAustraliaAUDWISSolutionsPtyLtdAustraliaAUDWPPHoldingsPtyLtdAustraliaAUDXCCRetailPtyLtdAustraliaAUDZIBGroupHoldingsCompanyLimitedAustraliaAUDZIBHoldingsPtyLimitedAustraliaAUDZIBInsuranceBrokersHoldingsLimitedAustraliaAUDZIBTrustAustraliaAUDEntityacquiredincorporatedduringtheyear.Entitydisolvedderegisteredduringtheyear.AuditedbyfrmsoErnstYoungInternational.Auditedbyotherfrmsoaccountants.AnASICapprovedDeedoCrossGuaranteehasbeenenteredintobyWesarmersLimitedandtheseentities.Reernote31orurtherdetails.WesarmersLimitedincorporatedinAustraliaistheultimateAustralianparententityandtheultimateparentotheGroup. 167WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities31DeedofCrossGuaranteePursuanttotheWesarmersDeedoCrossGuaranteetheDeedandinaccordancewithASICClassOrder981418thesubsidiariesidentifedwithainnote30arerelievedromtherequirementsotheCorporationsAct2001relatingtothepreparationauditandlodgementotheirfnancialreports.Thesubsidiariesidentifedwithainnote30andWesarmersLimitedtogetherreerredtoastheClosedGroupeitheroriginallyenteredintotheDeedon27June2008orhavesubsequentlyjoinedtheDeedbywayoanassumptiondeed.TheeectotheDeedisthateachpartytoithasguaranteedtopayanydefciencyintheeventothewindingupoanyotheentitiesintheClosedGroup.WhereentitiespreviouslyincludedintheClosedGrouphavebeendisposedointhecurrentyearthoseentitiesarereleasedromtheirobligationsundertheDeedprovidedthatnoneothepartiestotheDeedarewoundupandnowindingupothosepartiesiscommencedwithinsixmonthsaterthenoticeodisposalwaslodgedwithASIC.NoentitieshavelettheClosedGroupbywayodisposalinthecurrentyear.TheconsolidatedincomestatementotheentitiesthataremembersotheClosedGroupisasollows20132012DeedDdmConsolidatedincomestatement29392862872923206719391665953-566373234581990179317421665ProftromcontinuingoperationsbeoreincometaxIncometaxexpenseNetproftortheyearRetainedearningsatbeginningoyearAdjustmentorcompaniestranserredintooutotheClosedGroupTotalavailableorappropriationDividendsprovidedororpaidRetainedearningsatendoyear WesfarmersaNNUaLreport2013168Notestothefnancialstatementsfortheyearended30June2013WesfarmersLimitedanditscontrolledentities31DeedofCrossGuaranteecontinuedTheconsolidatedbalancesheetoftheentitiesthataremembersoftheClosedGroupisasfollows20132012DeedDdmConsolidatedbalancesheet1025107215991590482148011821512904457917805972712125051505811193187402481276024307022665215228158134379430243223327333622236402441394446158965485102914522834781190114052126330220878089013000511957093881120612406611617329998103881877819289253612517223290232862631174216653552522536125172assetsCurrentassetsCashandcashequivalentsTradeandotherreceivablesInventoriesDerivativesOtherTotalcurrentassetsNon-currentassetsReceivablesInvestmentincontrolledentitiesAvailable-for-saleinvestmentsInvestmentsinassociatesDeferredtaxassetsPropertyPlantandequipmentGoodwillIntangibleassetsDerivativesOtherTotalnon-currentassetsTotalassetsLIaBILItIesCurrentliabilitiesTradeandotherpayablesInterest-bearingloansandborrowingsIncometaxpayableProvisionsDerivativesOtherTotalcurrentliabilitiesNon-currentliabilitiesPayablesInterest-bearingloansandborrowingsProvisionsDerivativesOtherTotalnon-currentliabilitiesTotalliabilitiesNetassetseQUItYIssuedcapitalReservedsharesRetainedearningsReservesTotalequity 169WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities32RelatedpartytransactionsCONSOLIDATED20132012mAssociates109-41049813-8ManagementeesreceivedProftonsaleorentalpropertiesOperatingleaserentpaidFinancialadvisoryeespaidLoansreceivableManagementeeshavebeenpaidbyassociatedentitiesAirLiquideWAPtyLtdandBWPTrusttotheconsolidatedentityonnormalcommercialtermsandconditionsorstaandotherservicesprovidedtotheassociates.RentorretailwarehouseshasbeenpaidbytheconsolidatedentitytoanassociatedentitytheBWPTrust.DuringtheyeartheBWPTrustacquiredrentalpropertiesromtheconsolidatedentityandgainsandlossesweremadeondisposalaportionowhichwaseliminatedintheconsolidatedaccountsunderequityaccounting.MrGrahamadirectoroWesarmershasamajorityshareholdinginterestinacompanywhichjointlyownsGreshamPartnersGroupLimitedonanequalbasiswithawhollyownedsubsidiaryoWesarmers.ApartlyownedsubsidiaryoGreshamPartnersGroupLimitedhasprovidedfnancialadvisoryservicestoWesarmersandwaspaideeso1024279in201320121988644.MsWallaceadirectoroWesarmersisapartneroBoozCompany.BoozCompanyhaspreviouslyprovidedconsultancyservicestoWesarmersandwaspaideeso230893in2012.Noconsultancyserviceshavebeenprovidedandnoeeshavebeenpaidin2013.Loanshavepreviouslybeenmadetoanassociatedentity.Loansaresubordinatedtoasyndicateoprojectfnancingbanksandneitherisrepayablenorinterest-bearinguntilanumberofnancialcovenantshavebeenachieved.Theseloansweresettledduringtheyear.33AuditorsremunerationCONSOLIDATED20132012000000TheauditoroWesarmersLimitedisErnstYoungAustralia.AmountsreceivedordueandreceivablebyErnstYoungAustraliaor5832649161876018127793636158625864560660522212372835730302994909404anauditorreviewothefnancialreportotheentityandanyotherentityintheconsolidatedgroupotherservicesinrelationtotheentityandanyotherentityintheconsolidatedgrouptaxcomplianceassurancerelatedotherAmountsreceivedordueandreceivablebyrelatedpracticesoErnstYoungAustraliaoranauditorreviewothefnancialreportosubsidiariesotherservicesinrelationtotheentityandanyotherentityintheconsolidatedgrouptaxcomplianceassurancerelatedAmountsreceivedordueandreceivablebynonErnstYoungauditfrmsorassurancerelatedservices WesfarmersaNNUaLreport2013170Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities34Share-basedpaymentplansWesarmersEmployeeSharePlanWESPTheWESPwasapprovedbyshareholdersinApril1985withthelastissueundertheplanbeingmadeinDecember2004.Undertheplanallpermanentemployeesover18yearsoagecontinuouslyemployedbytheGrouporaminimumperiodooneyearwereinvitedannuallytoapplyoraspecifednumberoully-paidordinarysharesintheCompanyundedbyalimited-recourseinterest-reeloanromtheGroup.UndertheplanshareswereallottedattheweightedaveragepriceoWesarmersLimitedsharespostedontheAustralianSecuritiesExchangeoneweekuptoandincludingthedayoallotment.Thesharesarenotsubjecttoanyspecifcvestingconditions.TheemployeesobligationorrepaymentotheloansislimitedtothedividendsdeclaredandcapitalreturnsbytheCompanyandintheeventtheemployeeceasesemploymentthemarketpriceachievedonthesaleothesharesheldassecuritybytheCompanyortheloans.Theplanisaccountedorasanin-substanceoptionplanwiththecontractuallieoeachoptionequivalenttotheestimatedloanlieandnomaximumterm.Repaymentotheloanconstitutesexerciseotheoptionwiththeexercisepricebeingtheremainingloanbalancepershare.TheollowingtablesetsoutthenumberandweightedaverageexercisepricesWAEPoandmovementsinin-substanceshareoptionsduringtheyear20132012NumberNubThousandsWAEPthundWaep31699.87378010.834109.716118.8027598.4231699.8737.2130.31OutstandingandexercisableatthebeginningotheyearExercisedduringtheyearOutstandingandexercisableattheendotheyearWeightedaveragesharepriceorWesarmersLimitedTheweightedaverageexercisepricesaterreductionsordividendspaidreturnsocapitalandvoluntarypaymentsorin-substanceoptionsissuedduringtheollowingyearsended30Juneare20014.876.156.408.128.7710.4122.0023.56200220032004WesarmersLongTermIncentivePlanWLTIPTheWLTIPwasintroducedinSeptember2005.Undertheplanin2013eligibleseniorexecutiveswereinvitedtoreceiveperormancerightsintheCompanysubjecttotheachievementoutureperormancehurdlesbasedontheGroupachievingabenchmarkgrowthrateinreturnonequityandtotalshareholderreturnagainstacomparativegroupocompaniesandcontinuationoemployment.Eligibilityisdependentuponanin-serviceperiodandbeingapermanentemployee.ItheperormancehurdlesotheperormancerightsaremetseniorexecutiveswillbeallocatedWesarmersLimitedsharesattheendotheouryearperormanceperiod.Sharesmaybeeitheracquiredon-marketissuedbytheparentororeitedsharesreissued.Duringthecurrentfnancialyear34905shareswereacquiredon-marketand66648shareswereissuedbytheparentandtreatedasreservedshares.Theairvalueotheawardisexpensedoverthevestingperiodrom1July2012to30June2016.Theairvalueotheservicesreceivedromemployeesandotheequityinstrumentsgrantedwasdeterminedbyreerencetotheairvalueotheperormancerights.AdditionallyasrequiredundertheannualincentiveplancertaineligibleseniorexecutivesreceivedarestrictedmandatorilydeerredshareawardundertheWLTIP.Thesharesaresubjecttoathree-yeartradingrestrictionwhiletheexecutiveremainsanemployeeoWesarmersandtheexecutivecanelectoranadditionalrestrictionoaurtherouryears.AoreitureconditionappliesonthemandatorydeerredsharessuchthattheBoardmaydeterminetooreitthesesharesianexecutiveresignsoristerminatedorcausewithinoneyearotheshareallocation.Theimpactontheproftorlossissetoutinnote4.CONSOLIDATED20132012607405114779326.9026.28SharesandrightsgrantedduringtheyearundertheplanFairvalueperperormanceright2012pershare 171WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities34Share-basedpaymentplanscontinuedWesarmersLongTermIncentivePlanWLTIPcontinuedTheairvalueperperormancerightongrantdatewasdeterminedasollowsGrantdate14Nov201214Sep2012Grantdateshareprice33.9434.55Volatilitypercent17.6418.15Dividendyieldpercent4.574.77Riskreeratepercent2.562.71WesarmersEmployeeShareAcquisitionPlanWESAPTheWESAPwasintroducedinOctober2009.Undertheplanalleligibleemployeesareinvitedtoacquireully-paidordinarysharesintheCompany.ThesharesareeitheracquiredunderasalarysacrifcearrangementoraregrantedasanawardsubjecttotheGroupachievinganetproftatertaxperormancehurdle.Eligibilityoranawardosharesisdependentuponanin-serviceperiodwithaparticipatingdivisionandbeingapermanentemployee.ThePlanqualifesasanondiscriminatoryemployeeshareschemecomplyingwiththerequirementsoDivision83AotheIncomeTaxAssessmentAct1997asamendedorAustralianresidentemployees.Sharesmaybeeitheracquiredon-marketorissuedbytheparent.Duringthecurrentfnancialyear2752109awardshareswereacquiredon-marketbytheparent54788shareswereissuedbytheparentand160148oreitedshareswerereissued.Theairvalueotheequityinstrumentsgrantedisexpensedoverthevestingperiodrom1July2012to30November2015asservicesarerendered.Theimpactontheproftorlossissetoutinnote4.CONSOLIDATED201320122967045282327837.1632.00SharesgrantedduringtheyearFairvaluepershareColesLongTermIncentivePlanCLTIPTheGroupprovidesbeneftstocertainexecutivesundertheCLTIPintheormocash-settledshare-basedpaymentswherebyexecutivescanmakeanelectiontoreceiveanawardincash.Theultimatecostothesecash-settledtransactionswillbeequaltotheactualcashpaidtotheexecutiveswhichwillbetheairvalueatsettlementdate.Theimpactontheproftorlossissetoutinnote4.CONSOLIDATED2013201285701236734.5432.34SharesacquiredundertheplanFairvaluepershare WesfarmersaNNUaLreport2013172Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities35PensionplanTheGroupoperatedadefnedbeneftpensionplanthePensionPlanduringtheyear.ThePensionPlanprovidesoraClosedGroupoliepensionersonlyhencetherearenoactivedefnedliabilitiesinthePensionPlan.AllothermembersothePensionPlanreceivebeneftsonanaccumulationbasis.TheGrouphasalegalobligationtoensurethePensionPlanremainsinasatisactoryfnancialpositionbutnolegalrighttobeneftromanysurplusexcepttotheextentacontributionholidaycanbetaken.Actuarialgainsandlossesarerecogniseddirectlyinretainedearnings.TheollowingdisclosureisorundsrelatedtothedefnedbeneftplanCONSOLIDATED20132012m463722335104046454222332442452222--4046424521ChangesinthepresentvalueothedefnedbeneftobligationareasollowsOpeningdefnedbeneftobligationInterestcostBeneftspaidActuarialgainslossesClosingdefnedbeneftobligationChangesintheairvalueothedefnedbeneftsportionoplanassetsareasollowsOpeningairvalueoplanassetsExpectedreturnBeneftspaidActuariallossesgainsClosingairvalueoplanassetsTheairvalueoplanassetsdoesnotincludeamountsrelatingtotheGroupsownfnancialinstrumentsnoranypropertyorotherassetsusedbytheGroup.NetexpenserecognisedinproftorlossInterestcostExpectedreturnonplanassetsDefnedbeneftplanexpenseBeneftassetrecognisedinthebalancesheetsDefnedbeneftobligationFairvalueoplanassetsNetbeneftassetliabilityTheprincipalactuarialassumptionsusedindeterminingpensionbeneftobligationsare201320123.803.004.504.502.502.50DiscountrateExpectedrateoreturnonplanassetsExpectedpensionincreaserate 173WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities36DirectorandexecutivedisclosuresDetailsokeymanagementpersonnelduringtheyearended30June2013Non-executivedirectorsPMBassatappointed14November2012CBCarterRLEveryJPGrahamAJHowarthCMacekWGOsbornDLSmith-GanderVMWallaceJAWestacottappointed3April2013ExecutivedirectorsRJBGoyderGroupManagingDirectorTJBowenFinanceDirectorSeniorexecutivesSAButelManagingDirectorResourcesdivisionJCGillamManagingDirectorHomeImprovementandOfceSuppliesdivisionIJWMcLeodManagingDirectorColesdivisionGARussoManagingDirectorKmartdivisionFormerkeymanagementpersonnelDLRogersresignedasManagingDirectorTargetdivision31May2013CompensationokeymanagementpersonnelTheremunerationdisclosuresareprovidedinsectionsonetosixotheremunerationreportonpages77to94othisannualreportdesignatedasauditedandormingpartothedirectorsreport.CONSOLIDATED2013201200000021857223745938461025-15311205003878643720Short-termbeneftsPost-employmentbeneftsTerminationbeneftsShare-basedpayments WesfarmersaNNUaLreport2013174Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities36DirectorandexecutivedisclosurescontinuedHoldingsoequityinstrumentsinWesarmersLimitedokeymanagementpersonnelWesarmersLimitedordinarysharesandpartiallyprotectedordinarysharesShares30June2013BalanceatbeginningoyearGrantedasremunerationNetchangeotherBalanceatendoyearNon-executivedirectors10000-100002000029031-9943002528373--28373817957--81795713781-4991428021367-396209715552-1700725212410--124104320-26276947--10001000102339619833-104322945264811342-463990180393-19203161190482980592-48357265276-974662503705339015-37954874206437278578-359222345154803833556994PMBassat1CBCarterRLEveryJPGrahamAJHowarthCMacekWGOsbornDLSmith-GanderVMWallaceJAWestacottExecutivedirectorsRJBGoyderTJBowenSeniorexecutivesSAButelJCGillamIJWMcLeodGARussoFormerkeymanagementpersonnelDLRogers21.Shareswereacquiredpriortoappointmentasnon-executivedirector.2.Ceasedtobenon-executivedirectorexecutivedirectororkeymanagementpersonnelduringthe2013fnancialyear.WesarmersLimitedperormancerightsRights-30June2013Heldat1July2012Grantedduringtheyear3VestedLapsedoreitedHeldat30June2013Executivedirectors100000100000-100000100000-50000--50000-29102--29102-40743--40743-34922--34922-34922373031192-1000002896893730131192254767RJBGoyder1TJBowenSeniorexecutivesSAButelJCGillamGARussoFormerkeymanagementpersonnelDLRogers21.The100000perormancerightsheldbyRJBGoyderundertheGroupManagingDirectorRightsPlanlapsedatyearend.2.Ceasedtobenon-executivedirectorexecutivedirectororkeymanagementpersonnelduringthe2013fnancialyear.3.Reertopage88othe2013remunerationreport. 175WesfarmersaNNUaLreport2013Notestothefnancialstatementsortheyearended30June2013WesarmersLimitedanditscontrolledentities36DirectorandexecutivedisclosurescontinuedHoldingsoequityinstrumentsinWesarmersLimitedokeymanagementpersonnelcontinuedShares30June2012BlncbginningyGnduninNchnghBlncndyNon-executivedirectors27948-10832903124873-350028373968352-15039581795713239-5421378121571-204213671202-4350555212089-321124101000-33204320770193253203-1023396327748124900-4526481553844773922730180393379047103933-48298064217-105965276-74206-7420630251168022-370533304138-18096012317833735126720033401143705401CBCarterRLEveryJPGrahamAJHowarthCMacekWGOsbornDLSmith-GanderVMWallaceExecutivedirectorsRJBGoyder1TJBowenSeniorexecutivesSAButelJCGillamIJWMcLeodDLRogersGARussoFormerkeymanagementpersonnelLKInman21.RJBGoyderalsoheld100000perormancerightsundertheGroupManagingDirectorRightsPlan.Reertopage88othe2013remunerationreportorperormanceconditions.2.Ceasedtobenon-executivedirectorexecutivedirectororkeymanagementpersonnelduringthe2012fnancialyear.OthertransactionsandbalanceswithkeymanagementpersonnelReertonote32inrelationtotransactionswithGreshamPartnersGroupLimitedowhichJPGrahamisadirector.Reertonote32inrelationtotransactionswithBoozCompanyowhichVMWallaceisapartner.FromtimetotimedirectorsotheCompanyoritscontrolledentitiesortheirdirector-relatedentitiesmaypurchasegoodsorservicesromtheconsolidatedentity.Thesepurchasesareonthesametermsandconditionsasthoseenteredintobyotherconsolidatedentityemployeesorcustomersandaretrivialordomesticinnature. WesfarmersaNNUaLreport2013176DirectorsdeclarationWesarmersLimitedanditscontrolledentitiesInaccordancewitharesolutionothedirectorsoWesarmersLimitedwestatethat1.Intheopinionothedirectors1.1thefnancialstatementsnotesandtheadditionaldisclosuresincludedinthedirectorsreportdesignatedasauditedotheconsolidatedentityortheull-yearended30June2013areinaccordancewiththeCorporationsAct2001includingagivingatrueandairviewotheconsolidatedentitysfnancialpositionasat30June2013andoitsperormanceortheyearendedonthatdateandbcomplyingwithAustralianAccountingStandardsincludingtheAustralianAccountingInterpretationsandtheCorporationsRegulations2001and1.2thefnancialstatementsandnotescomplywithInternationalFinancialReportingStandardsasdisclosedinnote2band1.3therearereasonablegroundstobelievethattheCompanywillbeabletopayitsdebtsasandwhentheybecomedueandpayable.2.Thisdeclarationhasbeenmadeaterreceivingthedeclarationrequiredtobemadetothedirectorsinaccordancewithsection295AotheCorporationsAct2001orthefnancialyearended30June2013.3.IntheopinionothedirectorsasatthedateothisdeclarationtherearereasonablegroundstobelievethatthemembersotheClosedGroupcomprisingtheCompanyandthecontrolledentitiesmarkedasidentifedinnote30willbeabletomeetanyobligationsorliabilitiestowhichtheyareormaybecomesubjecttobyvirtueotheDeedoCrossGuaranteereerredtoinnote31.OnbehalotheBoardRLEveryAORJBGoyderAOChairmanManagingDirectorMelbourne17September2013 177WesfarmersaNNUaLreport2013IndependentauditorsreporttothemembersoWesarmersLimitedReportonthefnancialreportWehaveauditedtheaccompanyingnancialreportoWesarmersLimitedwhichcomprisestheconsolidatedbalancesheetasat30June2013theconsolidatedincomestatementtheconsolidatedstatementocomprehensiveincometheconsolidatedstatementochangesinequityandtheconsolidatedcashfowstatementortheyearthenendednotescomprisingasummaryosignicantaccountingpoliciesandotherexplanatoryinormationandthedirectorsdeclarationotheconsolidatedentitycomprisingthecompanyandtheentitiesitcontrolledattheyearsendorromtimetotimeduringthenancialyear.DirectorsresponsibilityorthefnancialreportThedirectorsothecompanyareresponsibleorthepreparationothenancialreportthatgivesatrueandairviewinaccordancewithAustralianAccountingStandardsandtheCorporationsAct2001andorsuchinternalcontrolsasthedirectorsdeterminearenecessarytoenablethepreparationothenancialreportthatisreerommaterialmisstatementwhetherduetoraudorerror.InNote2thedirectorsalsostateinaccordancewithAccountingStandardAASB101PresentationofFinancialStatementsthatthenancialstatementscomplywithInternationalFinancialReportingStandards.AuditorsresponsibilityOurresponsibilityistoexpressanopiniononthenancialreportbasedonouraudit.WeconductedourauditinaccordancewithAustralianAuditingStandards.Thosestandardsrequirethatwecomplywithrelevantethicalrequirementsrelatingtoauditengagementsandplanandperormtheaudittoobtainreasonableassuranceaboutwhetherthenancialreportisreerommaterialmisstatement.Anauditinvolvesperormingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthenancialreport.Theproceduresselecteddependontheauditorsjudgmentincludingtheassessmentotherisksomaterialmisstatementothenancialreportwhetherduetoraudorerror.Inmakingthoseriskassessmentstheauditorconsidersinternalcontrolsrelevanttotheentityspreparationandairpresentationothenancialreportinordertodesignauditproceduresthatareappropriateinthecircumstancesbutnotorthepurposeoexpressinganopinionontheeectivenessotheentitysinternalcontrols.Anauditalsoincludesevaluatingtheappropriatenessoaccountingpoliciesusedandthereasonablenessoaccountingestimatesmadebythedirectorsaswellasevaluatingtheoverallpresentationothenancialreport.Webelievethattheauditevidencewehaveobtainedissucientandappropriatetoprovideabasisorourauditopinion.IndependenceInconductingourauditwehavecompliedwiththeindependencerequirementsotheCorporationsAct2001.WehavegiventothedirectorsothecompanyawrittenAuditorsIndependenceDeclarationacopyowhichisincludedinthedirectorsreport.OpinionInouropiniona.thenancialreportoWesarmersLimitedisinaccordancewiththeCorporationsAct2001includingi.givingatrueandairviewotheconsolidatedentitysnancialpositionasat30June2013andoitsperormanceortheyearendedonthatdateandii.complyingwithAustralianAccountingStandardsandtheCorporationsRegulations2001andb.thenancialreportalsocomplieswithInternationalFinancialReportingStandardsasdisclosedinNote2.ReportontheremunerationreportWehaveauditedtheremunerationreportincludedinpages77to94othedirectorsreportortheyearended30June2013.Thedirectorsothecompanyareresponsibleorthepreparationandpresentationotheremunerationreportinaccordancewithsection300AotheCorporationsAct2001.OurresponsibilityistoexpressanopinionontheremunerationreportbasedonourauditconductedinaccordancewithAustralianAuditingStandards.OpinionInouropiniontheremunerationreportoWesarmersLimitedortheyearended30June2013complieswithsection300AotheCorporationsAct2001.ErnstYoungGHMeyerowitzPartnerPerth17September2013AmemberrmoErnstYoungGlobalLimitedLiabilitylimitedbyaschemeapprovedunderProessionalStandardsLegislation WesfarmersaNNUaLreport2013178Annualstatementocoalresourcesandreservesasat30June2013CoalresourcesThetablebelowdetailsthecoalresourcesortheWesarmersGroupasat30June2013CoalresourcestonnesmillionsResourcesqualityinsituMineOwnershipBenefcialInterestLocationotenementsLikelyminingmethodCoaltypeMeasuredIndicatedInerredTotalAshCVMJkgSulphurVMCurraghWesarmersCurraghPtyLtd100equityNote5BowenBasinQueenslandOpencutMetallurgicalandsteaming39715614770018.028.20.518.6BengallaWesarmersBengallaLimited40Note6HunterValleyNewSouthWalesOpencutandundergroundMetallurgicalandsteaming681126624619.225.80.6-Resourcenotes1Curraghscoalresourcesarereportedasbeinginclusiveocoalreserves.2Bengallascoalresourcesarereportedasbeinginadditiontocoalreserves.3Curraghsinsituresourcequalityparametersarequotedonanair-driedbasis.4Bengallasinsituresourcesqualityparametersarequotedonanair-driedbasis.5CurraghsresourcesasstatedincorporateallresourcesintheCurraghandCurraghNorthminingleaseareastheProjectwithbothWesarmersCurraghPtyLtdandStanwellCorporationsharingvaluegeneratedromtheProjectpursuanttocontract.aWesarmersCurraghPtyLtdhasownershipotherelevantminingleasesandwiththeexceptionnotedinbbelowhaspresententitlementtoextractcoalromtheProject.bAnestimated316milliontonnesotheresourcesreportedorCurraghwhilewithintheCurraghNorthMiningLeaserequireurtheragreementwithStanwellCorporationinorderorWesarmersCurraghPtyLtdtoaccess.ThiscomponentotheresourceisknownastheStanwellReservedArea.6Bengallasresourcesasstatedare100percentothesiteresourceswithWesarmersBengallaLimitedsbenefcialinterestintheBengallajointventurebeing40percent.7BengallasresourcesincluderecentlydelineatedcoalinanadditionaltenementAssessmentLease13.Newdrillingtogetherwitheconomicrankinghasallowednewresourcestobedeclared.CoalreservesThetablebelowdetailsthecoalreservesortheWesarmersGroupasat30June2013CoalreservetonnesmillionsReservequalityinclusiveolossanddilutionMineOwnershipBenefcialInterestLocationotenementsLikelyminingmethodCoaltypeProvedProbableTotalAshCVMJkgSulphurVMCurraghWesarmersCurraghPtyLtd100equityNote3BowenBasinQueenslandOpencutMetallurgicalandsteaming2201123220.724.8-16.3BengallaWesarmersBengallaLimited40Note4HunterValleyNewSouthWalesOpencutSteaming1561016628.822.30.6-Reservenotes1CurraghsreservequalityparametersarequotedataRun-o-Minemoisturebasis.2Bengallasreservequalityparametersarequotedonanair-driedbasis.3CurraghsreservesasstatedincorporateallreservesintheCurraghandCurraghNorthminingleaseareastheProjectwithbothWesarmersCurraghPtyLtdandStanwellCorporationsharingvaluegeneratedromtheProjectpursuanttocontract.WesarmersCurraghPtyLtdhasownershipotherelevantminingleasesandhaspresententitlementtoextractallstatedreservesromtheProject.StanwellsvalueshareincludesrebatepaymentswhicharevariabledependentuponexportpricesandvolumesWesarmersLimitedreportstwiceannuallytotheAustralianStockExchangewithrespecttorebatepaymentsmadetoStanwell.4Bengallasreservesasstatedare100percentothesitereserveswithWesarmersBengallaLimitedsbenefcialinterestbeing40percent. 179WesfarmersaNNUaLreport2013Annualstatementofcoalresourcesandreservesasat30June2013CharacteristicsofcoalreservesandresourcesCurraghThecoalisbituminousandisusedorpowergenerationprincipallydomesticandmetallurgicalprocessesprimarilysteelproductionoverseas.Theresourceiscontainedinveseamsovaryingthicknessandqualitycharacteristics.Coalisproducedromallotheseseams.Coalisextractedbyopencutmethodsandprocessedthroughawashplantusingdensemediumcyclonesandrothfotation.BengallaThecoalisbituminousandusedindomesticandexportmarketsorpowergeneration.Coalisextractedromeightseamsovaryingthicknessandqualitycharacteristics.Theseamsoccuratrelativelyshallowdepthsanddipgentlytothewest.Coalisextractedbyopencutmethods.JORCCodecomplianceThestatementocoalresourcesandcoalreservespresentedinthisreporthasbeenproducedinaccordancewiththeAustralasianCodeorReportingoExplorationResultsMineralResourcesandIronOreReservesDecember2004theJORCCode.TheinormationinthisreportrelatingtocoalresourcesandreservesisbasedoninormationcompiledbyCompetentPersonsasdenedintheJORCCodeandlistedbelow.AllcompetentpersonshaveatthetimeoreportingsucientexperiencerelevanttothestyleomineralisationandtypeodepositunderconsiderationandtotheactivitytheyareundertakingtoqualiyasaCompetentPersonasdenedbytheJORCCode.EachCompetentPersonconsentstotheinclusioninthisreportothemattersbasedontheirinormationintheormandcontextinwhichitappears.CompetentPersonsCurraghMrBarrySaundersDirectoroQGESSPtyLtdMemberAusIMMCPMemberAIGMrJohanBallotaull-timeemployeeoCurraghQueenslandMiningPtyLtdawhollyownedsubsidiaryoWesarmersCurraghPtyLtdMemberAusIMMBengallaMrJonathonBuddeeaull-timeemployeeoRioTintoCoalAustraliaPtyLimitedMemberAusIMMMrRichardRuddockaull-timeemployeeoRioTintoCoalAustraliaPtyLimitedMemberAusIMM WesfarmersaNNUaLreport2013180ShareholderinformationWesfarmersLimitedanditscontrolledentitiesSubstantialshareholdersAsatthedateofthisreporttherewerenopersonswithasubstantialshareholdingintheCompanyforthepurposesofPart6C.1oftheCorporationsAct2001.VotingrightsWesfarmersfully-paidordinarysharescarryvotingrightsofonevotepershare.Wesfarmerspartiallyprotectedsharescarryvotingrightsofonevotepershare.DistributionofmembersandtheirholdingsSizeofholdingsWesfarmersfully-paidordinarysharesnumberofshareholdingsWesfarmerspartiallyprotectedsharesnumberofshareholdings11000394195261587100150007995694315001100008827620100011000004779254100001andover18743Therewere13682holdersholdinglessthanamarketableparcelofWesfarmersfully-paidordinaryshares.Therewere4659holdersholdinglessthanamarketableparcelofWesfarmerspartiallyprotectedshares.Therewere1.24percentofshareholderswithregisteredaddressesoutsideAustralia.TwentylargestshareholdersFully-paidordinarysharesThe20largestshareholdersofordinarysharesontheCompanysregisterasat17September2013wereNameNumberofsharesofissuedcapitalHSBCCustodyNomineesAustraliaLimited16247062816.14JPMorganNomineesAustraliaLimited11597984211.52NationalNomineesLimited786979617.82CiticorpNomineesPtyLimited509182655.06CiticorpNomineesPtyLimitedColonialFirstStateInvAC234444512.33BNPParibasNomsPtyLtdDRP220141562.19JPMorganNomineesAustraliaLimitedCashIncomeAC134340331.33RBCInvestorServicesAustraliaNomineesPtyLimitedPIPooledAC76545670.76AMPLifeLimited70769290.70AustralianFoundationInvestmentCompanyLimited62479510.62ArgoInvestmentsLimited52132770.52CPUSharePlansPtyLimitedWESWLTIPControlAC44263960.44CPUSharePlansPtyLimitedWESAPDFEControlAC42623550.42 181WesfarmersaNNUaLreport2013ShareholderinformationWesfarmersLimitedanditscontrolledentitiesTwentylargestshareholdersFully-paidordinarysharescontinuedNameNumberofsharesofissuedcapitalUBSWealthManagementAustraliaNomineesPtyLtd29240340.29BelikeNomineesPtyLimitedDivReinvestmentPlanAC26110000.26MiltonCorporationLimited26069370.26HSBCCustodyNomineesAustraliaLimitedNt-ComnwlthSuperCorpAC25554320.25CPUSharePlansPtyLimitedWESExuControlAC21977320.22NavigatorAustraliaLtdMLCInvestmentSettAC21255920.21NulisNomineesAustraliaLimitedNavigatorMastPlanSettAC17395310.17Thepercentageholdingofthe20largestshareholdersofWesfarmersfully-paidordinaryshareswas51.52.PartiallyprotectedsharesThe20largestshareholdersofpartiallyprotectedsharesontheCompanysregisterasat17September2013wereNameNumberofsharesofissuedcapitalNationalNomineesLimited2248045214.94JPMorganNomineesAustraliaLimited133216168.85HSBCCustodyNomineesAustraliaLimited69110114.59JPMorganNomineesAustraliaLimitedCashIncomeAC58532023.89CiticorpNomineesPtyLimited49941693.32CSFourthNomineesPtyLtd46796083.11HSBCCustodyNomineesAustraliaLimitedAC337101882.46AMPLifeLimited27820421.85EcapitalNomineesPtyLimitedSettlementAC23623541.57RBCInvestorServicesAustraliaNomineesPtyLimitedBKCUSTAC19275291.28BNPParibasNomsPtyLtdDRP16752881.11HSBCCustodyNomineesAustraliaLimitedNt-ComnwlthSuperCorpAC14655000.97AustralianFoundationInvestmentCompanyLimited14001200.93BNPParibasNomineesPtyLtdAgencyLendingCollateral12000000.80UBSNomineesPtyLtd10691500.71UBSWealthManagementAustraliaNomineesPtyLtd7446610.49MrPeterAlexanderBrown6844540.45CiticorpNomineesPtyLimitedColonialFirstStateInvAC4762530.32AustralianExecutorTrusteesLimitedNo1Account4747060.32ArgoInvestmentsLimited3920240.26Thepercentageholdingofthe20largestshareholdersofWesfarmerspartiallyprotectedshareswas52.22. WesfarmersaNNUaLreport2013182FiveyearfnancialhistoryWesarmersLimitedanditscontrolledentitiesAllfguresinmunlessshownotherwise20132012201120102009SUMMARISEDINCOMESTATEMENTSalesrevenue5942257685545135148550641Otheroperatingrevenue410395362342341Operatingrevenue5983258080548755182750982Operatingproftbeoredepreciationandamortisationfnancecostsandincometax47294544415537863803Depreciationandamortisation1071995923917856EBIT36583549323228692947Financecosts432505526654951Incometaxexpense965918784650474OperatingproftaterincometaxattributabletomembersoWesarmersLimited22612126192215651522CAPITALANDDIVIDENDSOrdinarysharesonissuenumber000sasat30June11571941157072115707211570721157072Paidupordinarycapitalasat30June2329023286232862328623286Fully-rankeddividendperordinarysharedeclaredcents180165150125110FINANCIALPERFORMANCEEarningspershareweightedaveragecents195.9184.2166.7135.7158.5Earningspersharegrowth6.410.522.814.49.0ReturnonaverageordinaryshareholdersequityR128.98.47.76.47.3FixedchargescoverR12times3.02.92.82.52.2Netinterestcover-cashbasisR12times12.210.89.56.85.0FINANCIALPOSITIONASAT30JUNETotalassets4315542312408143923639062Totalliabilities1713316685154851454214814Netassets2602225627253292469424248Nettangibleassetbackingperordinaryshare4.694.454.123.613.13Netdebttoequity20.219.117.116.318.3Totalliabilitiestotalassets39.739.437.937.137.9STOCKMARKETCAPITALISATIONASAT30JUNE4593634846369133317126337 183WesfarmersaNNUaLreport2013InvestorinformationWesarmersLimitedanditscontrolledentitiesManagingyourshareholdingThecompanysshareregistryismanagedbyComputershareInvestorServicesPtyLimitedComputershare.TheInvestorCentrewebsiteistheastesteasiestandmostconvenientwaytoviewandmanageyourshareholding.InvestorCentreenablesashareholdertoviewthecompanysharepricechangethebankingdetailschangeyouraddressornon-CHESSsponsoredholdingsupdateyourdividendinstructionsupdateyourTaxFileNumberTFNAustralianBusinessNumberABNorexemptionselectemailandcommunicationpreerencesandviewtransactionhistory.Visitwww.wesdirect.com.auandclickonRegisterorportoliomembershiporclickonMyHoldings.WhencommunicatingwithComputershareoraccessingyourholdingonlineyouwillneedyourSecurityholderReerenceNumberSRNorHolderIdentifcationNumberHINasshownonyourIssuerSponsoredCHESSstatements.YoucanalsocontactComputersharebyPostGPOBox2975MelbourneVictoria3001AustraliaTelephoneAustralia1300558062International61394154631FacsimileAustralia0394732500International61394732500Websitewww.investorcentre.comcontactTaxFileNumbersWhileitisnotcompulsorytoprovideaTaxFileNumberTFNishareholdershavenotprovidedaTFNandWesarmerspaysanunrankedorpartlyrankeddividendthecompanywillberequiredtodeducttaxromtheunrankedportionothedividendatthetopmarginalrate.ShareholderscangoonlinetoupdatetheirTFNordownloadtheormbyvisitingwww.wesdirect.com.auandclickingonDownloadableFormsintheInormationtab.ChangeofnameorconsolidationofholdingsNamechangesorconsolidationomultipleholdingsintoonesingleholdingmustbemadeinwritingbyusingtherequiredormswhichcanbedownloadedromwww.wesdirect.com.auandclickingonDownloadableFormsintheInormationtab.UncertifcatedShareRegisterTheWesarmersshareregisterisuncertifcated.TwoormsouncertifcatedholdingsareavailabletoshareholdersissuersponsoredholdingstheseholdingsaresponsoredbyWesarmersandthereisnoneedorshareholderstobesponsoredbyastockbrokerandbrokersponsoredholdingsshareholdersmayarrangetobesponsoredbyastockbrokerwhowillrequireasignedsponsorshipagreement.Holdingstatementsareissuedtoshareholderswithinfvebusinessdaysatertheendoanymonthinwhichtransactionsoccurthatalterthebalanceotheirholding.Shareholderscanalsoaccessdetailsotheirshareholdingsanddividendspaidontheirholdingsbyvisitingwww.wesdirect.com.auInformationonWesfarmersWesfarmerswebsiteUp-to-dateinormationonthecompanycanbeobtainedromthecompanyswebsitewww.wesfarmers.com.auSecuritiesExchangelistingWesarmerssharesarelistedontheAustralianSecuritiesExchangeundertheollowingcodesWESordinarysharesWESNpartiallyprotectedsharesSharepricescanbeaccessedrommajorAustraliannewspapersontheWesarmerswebsiteoratwww.asx.com.auDividendinvestmentplanThecompanysdividendinvestmentplanwasreinstatedwitheectrom27February2007.DetailsotheplancanbeobtainedromtheshareregistryortheWesarmerswebsite.PrivacyAcopyotheWesarmersPrivacyPolicyisavailableontheWesarmerswebsite.WesfarmersCorporateAffairsdepartmentFurtherinormationandpublicationsaboutthecompanysoperationsareavailableromtheCorporateAairsdepartmentontelephone0893274366withinAustraliaor61893274366InternationalorromtheWesarmerswebsite. WesfarmersaNNUaLreport2013184RegisteredofceLevel11WesarmersHouse40TheEsplanadePerthWesternAustralia6000Telephone61893274211Facsimile61893274216Websitewww.wesfarmers.com.auEmailinowesarmers.com.auExecutivedirectorsRichardGoyderAOGroupManagingDirectorandChieExecutiveOfcerTerryBowenFinanceDirectorNon-executivedirectorsBobEveryAOChairmanPaulBassatColinCarterAMJamesGrahamAMTonyHowarthAOCharlesMacekWayneOsbornDianeSmith-GanderVanessaWallaceJennierWestacottCompanySecretaryLindaKenyonShareregistryComputershareInvestorServicesPtyLimitedYarraFalls452JohnstonStreetAbbotsordVictoria3067TelephoneAustralia1300558062International61394154631FacsimileAustralia0394732500International61394732500Websitewww.investorcentre.comcontactFinancialcalendarRecorddateorfnaldividend26August2013Finaldividendpaid27September2013Annualgeneralmeeting7November2013Hal-yearend31December2013Hal-yearproftannouncementFebruary2014RecorddateorinterimdividendFebruary2014InterimdividendpayableMarch2014Yearend30June2014Timingoeventsissubjecttochange.AnnualgeneralmeetingThe32ndAnnualGeneralMeetingoWesarmersLimitedwillbeheldatthePerthConventionandExhibitionCentreMountsBayRoadPerthWesternAustraliaonThursday7November2013at100pmPerthtime.WebsiteToviewthe2013annualreportshareholderandcompanyinormationnewsannouncementsbackgroundinormationonWesarmersbusinessesandhistoricalinormationvisittheWesarmerswebsiteatwww.wesfarmers.com.auCorporatedirectoryWesarmersLimitedABN28008984049 Thecoverandpages1to96areprintedonMonza.MonzaRecycledisCertifedCarbonNeutralbyTheCarbonReductionInstituteCRIinaccordancewiththeglobalGreenhouseProtocolandISO14040ramework.MonzaRecycledcontains55recycledfbre25postconsumerand30preconsumerandisFSCMixCertifedwhichensuresthatallvirginpulpisderivedromresponsiblesources.ItismanuacturedbyanISO14001certifedmill.Thepaperusedrompage97to184isprintedonwhiteosetlaser.ThisisanenvironmentallyresponsiblepapermanuacturedundertheenvironmentalmanagementsystemISO14001usingElementalChlorineFreeECFpulpderivedromresponsiblesources.ThispaperisFSCMixedSourcesChainoCustodyCoCcertifed.DesignedbyClarityCommunicationsFormoreinormationaboutWesarmersactivitiesincludingfnancialupdatessustainabilityreportsASXannouncementskeydatesandotherWesarmerscorporatereportsvisittheInvestorCentreatwww.wesfarmers.com.auoralternativelyscanthisQRcodewhichwilltakeyoutoWesfarmersInvestorCentre.Furtherinformation www.wesfarmers.com.au