Woolworths Group's Endeavour Group Separation and Business Performance Highlights, Assignments of Business Accounting

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2 0 2 1 A N N U A L R E P O R T

ABN 88 000 014 675

WOOLWORTHS GROUP LIMITED

Live better

Contents

SECTION 2 BUSINESS REVIEW Australian Food 24 New Zealand Food 30 BIG W 32 Discontinued operation 34 Our material risks 36

SECTION 4

FINANCIAL REPORT

Auditor's Independence Declaration 76 Financial Report 77 Directors’ Declaration 152 Independent Auditor’s Report 153

Acknowledgement of Country

Woolworths Group acknowledges the Traditional Custodians of Country throughout Australia and recognises their continuing connection to land, waters and community. We pay our respects to them and their cultures; and to Elders both past and present.

We support the Uluru Statement from the Heart and the recognition of Aboriginal and Torres Strait Islander peoples in the Australian Constitution. We commit to continued listening and learning from First Nations voices and to work in partnership to create change. We acknowledge that we have a responsibility and must do more to truly live our purpose to create better experiences together for a better tomorrow.

SECTION 5 OTHER INFORMATION Shareholder information 158 Corporate Governance Statement 159 Glossary 161 Company directory 164

SECTION 1 PERFORMANCE HIGHLIGHTS Our impact 2 Sustainability 4 How we create value 6 Our key strategic priorities 8 Chairman's Report 14 Chief Executive Officer’s Report 16 Group financial performance 18

SECTION 3 DIRECTORS’ REPORT Governance 42 Board skills and experience 43 Board of Directors 44 Group Executive Committee 46 Directors’ Statutory Report 50 Remuneration Report 52

People

Gender Equality

WGEA Employer

of Choice for Gender

Equality citation

‘I am here’ program

32,

team members trained

to identify and support

team members that need help

Resourcing the Future Indigenous team members

~5,

Team members

210,

Product

Group Voice of Customer NPS June

57



1pt from Q3'

Customers served on average per week

27.8 M

Online visits per week

19.7 M

Customers

Removed

> 2,500 tonnes of plastic from operations in F

Animal Welfare

First Australian and

New Zealand retailer to

achieve Tier 2 in the global

Business Benchmark on

Farm Animal Welfare

Macro Whole Living Products

100 %

compliant with

Palm Oil Policy

2,905 tonnes

of soft plastic returned to store

Customers using eReceipts

> 250,

More ways to better serve our customers^3

1,

Supermarkets and

Metro Food Stores

184

Countdown

stores

176

BIG W

stores

706

Direct to boot

locations

734

Pick up

locations

875

Home

Delivery stores

10

CFCs and

eStores

LGBTQ+ Inclusion

Awarded AWEI Gold

Employer Status for LGBTQ+

workplace inclusion for the

fourth consecutive year

Our impact

1

Planet

Dividend per share 5

108 ¢

Return on funds employed 4

15.1 %

Community

Carbon emissions

27 % below 2015 baseline

Free cash flow before dividends

$ 1,089 M

Group sales

$ 67,278 M

Group EBIT

Organic waste^ $ 3,663 M

113,

tonnes diverted from landfill

Power from solar

31,480 kW

capacity installed

Food relief meals donated

> 24 M

via store network

Economic

2

Total community contribution

$ 34.9 M

In kind

$ 13.9 M

Cash donations

$ 21.0 M

Leveraged fundraising

$ 14.1 M

S.T.A.N.D. donation

$ 2.9 M

Odd Bunch fruit &

vegetables

35, tonnes purchased by customers 1 For the 2021 financial year including Endeavour Group. 2 Before significant items. 3 Including Australian and New Zealand Food and BIG W. 4 F21 ROFE calculation normalised to exclude the $7, million demerger distribution liability. 5 Full year fully franked dividend. 6 From Woolworths Group cash flow.

Tax paid 6

$ 738 M

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a significant investment in growing the industry. In June, we announced our first renewable power purchase agreement (PPA) which will inject enough green electricity into the state’s energy grid to power 30% of Woolworths Group’s NSW energy needs.

Sustainability Governance

Woolworths Group considers sustainability to be a board‑level strategic issue. The CEO and Group Executive Committee, including the Chief Sustainability Officer, have accountability for the implementation of our sustainability strategy.

Climate‑related risks and opportunities are identified through the Woolworths Group Risk Management Process in line with our Risk Management Framework (RMF) framework. The RMF framework sets out the required end‑to‑end management of our risk assessment and risk response processes, and monitoring and reporting. Climate change has been identified as a material business risk and is included in the material risk section of the Annual Report on page 36. Our response to these risks is contained in our Sustainability Plan 2025.

For more information see 2021 Sustainability Report.

Human rights key highlights in F

• Conducted a risk analysis of labour and service providers in our operations and strengthened key controls
• Developed bespoke due diligence strategies for higher risk commodities, including seafood and cotton
• Oversaw the repayment of $361,851 to 24 workers in the cleaning and trolley collector sector
• Supported our teams to manage modern slavery risks with the launch of three new resources
  • A toolkit for addressing modern slavery in our supply chains and operations
  • A guide to drafting and negotiating modern slavery contract clauses
  • Human rights due diligence maturity framework

Carbon emissions reduction

27 %

below 2015 levels

F21 Plastics reduction

> 2,500 t

Community contribution as % of EBT on a 2-year rolling average

1.23 %

Human Rights & Responsible Sourcing

As Australia’s largest retailer, with complex operations and supply chains, Woolworths Group is exposed to dynamic human rights risks. Stakeholders continue to identify human rights as one of our material risks. The human rights commitments in the Sustainability Plan 2025 articulate our ambition to build a rights‑respecting culture where human rights risks are identified, managed and mitigated in our operations and supply chain. Progress highlights against this important initiative can be found on the left bar on page 4. As outlined in our second Modern Slavery Statement we continue to scale up our human rights due diligence in non‑trade and operations, while maintaining focus on commodities and countries with higher modern slavery risks to improve outcomes for workers. Human rights due diligence is an ongoing process of bringing the concerns of potentially affected stakeholders into consideration for decision making. For more information see 2021 Modern Slavery Statement.

We act like a leader and speak up on issuesthat matter

We care for, and unlock the potential of our people

We have a positive impact on the planet

We apply circular thinking in everything we do

We embrace the power of partnerships to create change

Our plan is explicitly underpinned

by our Guiding Principles

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How we create value

Team

A diverse and inclusive environment for

our teams to work reflecting the diversity

of our communities

Customer services

Connecting customers with good food and

more everyday through convenient stores,

services and leading loyalty programs

Trusted brands and products

Providing best range and value, fresher food,

healthier options and everyday needs for our

customers in Australia and New Zealand

Sustainability

A leader in sustainability to create a

positive impact for generations to come

Business platforms

Leading business platforms built

over many years enabling our

business activities

Financial

Strong balance sheet and disciplined

capital allocation to drive sustainable

growth and shareholder value

Platforms & Partners

Technology, digital and analytics

enable retail platforms that deliver for

Woolworths Group and partners

Primary Connect

Digital Partnerships & Data

B2C Food

Our cornerstone retail food businesses,

famous for good food, prices and acts,

and always convenient

Stores eCommerce Products

Our Value Drivers Our Business Activities

In F21, the six key priorities reflect the Group’s transformation into a food and everyday needs ecosystem which is enabled by our purpose, to create better experiences together for a better tomorrow.

Better Together for a Better

Tomorrow for our Customers,

Teams and Communities

Delivering on our

strategic priorities

The Group was proud to be ranked first in Australia, and 49th globally in the 2020 Refinitiv Diversity & Inclusion Index, as the most diverse and inclusive company. In F21, we continued to make good progress on our holistic diversity and inclusion agenda, with a key focus on reconciliation, cultural inclusion, gender diversity and LGBTQ+ inclusion. Some highlights include receiving AWEI gold tier status for a fourth consecutive year and the WGEA Employer of Choice citation. We also delivered 85 actions as part of our two‑year Reconciliation Action Plan, partnered with the NAIDOC Week Committee for a third year, and continued the success of our Refugee Employment Program in partnership with Community Corporate, successfully placing 200 refugees into roles in Woolworths Supermarkets, Metro Food Stores and fulfilment centres across Australia. F22 will see an increased focus on our accessibility agenda and more work will be done to support our commitment of offering equal opportunities for all. Launch of our third mini-Supermarket for special schools at Black Mountain School in Canberra, NSW. For more information on this initiative go to page 27.

2021 Better

Tomorrow

achievements

Provided the equivalent of

> 24 M meals through our food rescue partners to alleviate food insecurity

PLANET

PRODUCT

1

Most diverse and inclusive company in Australia in the 2020 Refinitiv Diversity & Inclusion Index

PEOPLE

Animal Welfare

First Australian and New Zealand retailer to achieve Tier 2 in the global Business Benchmark on Farm Animal Welfare

WooliesX scaled

its convenience

propositions in

response to

increased demand

in F21 as more and

more customers

chose contactless,

COVIDSafe shopping

experiences.

To continue to meet rapidly increasing demand, we announced plans for our first automated customer fulfilment centre to be built in Auburn, NSW, set to open in 2024. The facility will be built in partnership with Knapp, whose automation technology will help Woolworths’ personal shoppers pick and dispatch up to 50,000 home deliveries a week in Western Sydney and better serve their growing online grocery needs. This will build on recent investments with Takeoff’s micro‑fulfilment technology (using Knapp automation) now live at Carrum Downs and Maroochydore in Australia, and Moorehouse and Penrose in New Zealand. In F21, eCommerce sales accounted for 8.5% of total sales as we continue to see more and more customers choosing eCommerce services to complement their in‑store shopping experiences.

Accelerate Digital,

eCom and Convenience

for our increasingly

Connected Customers

More

convenience

for customers

in F

629

stores with Direct to boot services

425

Same Day Delivery stores with 1 hour delivery window

232

Delivery Now stores

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Better together in partnership

The creation of a win-win partnership was at the core of the rationale for the Endeavour Group separation. Post demerger, Woolworths Group and Endeavour Group will continue to work together to retain ongoing benefits, including the infrastructure built by Woolworths Group across its core competencies. The key benefits under the partnership agreements include a framework that supports joint growth opportunities and further develops capabilities for mutual benefit; enables both groups to maintain the synergies and collaborative relationships, and supports Endeavour Group with continuity of its operations. This is enabled by key agreements in place across:

• Supply Chain & Stores
• Loyalty & Fintech
• Digital & Media
• Business Support
• International The partnership agreements between Woolworths Group and Endeavour Group also extend choice for customers to meet their everyday needs through its businesses and partners.

At the end of June, the

demerger of Endeavour

Group was successfully

completed following

a multi‑year journey to

separate the business.

The separation process formally began on 3 July 2019, when Woolworths Group announced its intention to combine its drinks and hospitality businesses to create Endeavour Group through a restructure of Endeavour Drinks and subsequent merger with ALH Group.

This was completed in February 2020; however, the separation anticipated for later that year was delayed to 2021 given the prioritisation of both groups’ COVID‑19 responses. Both businesses continued to work on the separation as well as establishing the partnership agreements to support the ongoing relationship between the groups.

Work on the separation formally recommenced in February 2021. A strong and experienced executive team and board was assembled to take the business forward following the appointment of Steve Donohue as CEO and Peter Hearl as Chairman in 2019.

Following formal approval at the General Meeting on 18 June, Endeavour Group was successfully separated on 28 June by way of a demerger, with eligible shareholders receiving one Endeavour Group share for every share held in Woolworths Group.

The demerger of Endeavour Group required an enormous combined effort from team members across both businesses and we look forward to being better together in partnership with Endeavour Group for many years to come.

Stand up

Endeavour Group

Steve Donohue, Endeavour Group CEO and Brad Banducci, Woolworths Group CEO and Managing Director.

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OUR KEY STRATEGIC PRIORITIES

Woolworths Group’s

investment in Quantium

aims to transform the

rapidly evolving retail

sector to help better

service our customers

and support our team

and supplier partners.

Announced in April of this year, Woolworths Group strengthened its partnership with Quantium by increasing its shareholding from 47% to 75%.

Quantium is an industry leader in advanced analytics, working across a broad range of industries, including retail & FMCG, banking & financial services, and health & government. For the last eight years Woolworths Group and Quantium have partnered to better understand our customers through the responsible use of data.

Quantium will become a key part of Woolworths Group, while retaining its senior leadership team and continuing to operate in sectors outside of retail. In addition to the strategic partnership, new business Q‑Retail was created to bring together the best data science and advanced analytics and retail capabilities from across Quantium and Woolworths Group. Specifically, Q‑Retail will focus on delivering Woolworths Group’s Advanced Analytics Plan and commercialising retail products globally.

Combined with the Group’s strategic focus on connected and seamless customer experiences, advanced analytics will be key to improving ranges and services as well as support provided to team members and supplier partners. As the retail industry continues to rapidly change, Woolworths Group recognises that the way in which data is gathered, interpreted and protected is becoming ever more important.

Evolve our Portfolio and

Build Strong Adjacencies

Building strong

adjacencies

AUGUST 2020

Announced a strategic investment in PFD Food Services as a logical adjacency for Woolworths Group to further support its growing food and everyday needs ecosystem.

SEPTEMBER 2020 Launched Woolworths at Work, a procurement solution that supports businesses with a streamlined shopping experience and dedicated support, transforming how they manage spending and budget.

FEBRUARY 2021

Announced the formation of a stand-alone business, Greenstock, to support the Group’s growth and deliver on the combined red meat needs of partners across retail, international and wholesale.

APRIL 2021

Announced an increase in holding in Quantium from 47% to 75%, as Quantium becomes a key part of Woolworths Group, while retaining its senior leadership team and continuing to operate in sectors outside of retail.

APRIL 2021

Woolworths Group’s venture capital arm W23 announced an investment in Australian startup Marketplacer whose platform is used by a number of global retailers exploring third-party marketplace strategies. The partnership will play a key role in powering the Group’s own digital improvements ahead of the launch of a marketplace offering for woolworths.com.au.

JUNE 2021

Woolworths Group announced the launch of Wpay to offer end-to-end payment solutions to merchants outside of the Group.

CHAIRMAN’S REPORT

Over the last 12 months we have remained committed to our purpose of being better together for a better tomorrow and have made significant progress in transforming our business for a new era of Woolworths Group. Our team also continues to operate with vigilance, great care and resilience as we manage the ongoing impacts of COVID.

Since the escalation of the Delta outbreak in Australia, I again am humbled and proud of our team and their dedication to do what is right. As part of our ambition for a better tomorrow we also recognise the role we play in creating a safe place for our team as well as our customers. This purpose has guided our response in supporting vaccination efforts where possible to protect our wider communities.

A year driven

by purpose

Delivering for our

shareholders

Our busy agenda in F21 included the successful completion of a key milestone at the end of F21 with the demerger of Endeavour Group. We are confident that it will create value for shareholders with each business now able to focus on their core customer offering and new growth opportunities while continuing to benefit from a strong partnership.

We also completed a number of investments to support our continued growth. This included our increased investment in Quantium and the completion of our strategic investment in PFD Food Services, a logical adjacency for the Group and our growing ecosystem.

Woolworths Group has declared a final dividend of 55 cents per share bringing the full year dividend to 108 cents per share. Together with the H2 dividend that Endeavour Group is expected to pay, the combined dividend is broadly in line with the improvement in Woolworths Group NPAT before significant items of 22.9%.

It is also pleasing to announce the return of $2 billion to shareholders by way of an off‑market buy‑back. Together with the final dividend, this is expected to return $1.1 billion of franking credits to shareholders. The ability to return this capital to our shareholders reflects the strength of our business and our solid balance sheet position which also provides sufficient capital to continue to invest in growth opportunities.

Doing the right thing

We have made pleasing progress on our sustainability agenda in F21; however, we recognise there is still much to do to continue to have a positive impact on our wider communities.

Across our pillars of People, Planet and Product there have been a number of achievements, including the recognition for our work to improve diversity and inclusion, the signing of our first renewable power purchase agreement, and initiatives to make being healthier easier for our customers with the launch of initiatives such as the online platform HealthyLife.

We also recognised that we need to do more to listen and learn when it comes to our commitment to reconciliation. In April of this year the Group made the decision it would not proceed with the proposed Dan Murphy's store in Darwin following an independent review of the development which was commissioned by the Group in December. The report highlighted where we failed to meet our aspirations and standards in our purpose and values, and in doing so, has emboldened us to take meaningful steps forward which are consistent with our purpose and commitment to reconciliation.

To reflect our commitment to our purpose and values, we have updated our remuneration incentives from F22 to include the Group’s reputation, which will be externally and independently measured. We considered this to be an important step to align our internal practices on meeting customers and community expectations in order to operate as a responsible corporate citizen. During the year, we made key executive appointments to provide more focus and structure for our commitment to always do the right thing. David Walker was appointed Chief Risk Officer and Alex Holt was appointed Chief Sustainability Officer to reflect the increasing focus in each area.

Late last year my fellow directors and I were pleased to welcome Maxine Brenner to the Woolworths Group Board following the retirement of long‑standing board member, Jillian Broadbent. I have no doubt that Maxine’s skills and experience will add tremendous value as Chair of the Risk Committee and to the Woolworths Group Board.

Looking ahead

I would also like to personally extend my thanks to our team, especially those at the frontline of our operations as they continue to make sure customers have access to their essential needs.

In conclusion, despite the uncertain operating environment ahead, I am excited about the next era for Woolworths Group. By focusing on our core businesses, investing in our supply chain, leveraging our strong partnerships and continuing to be guided by our purpose and values, we will continue to create value for all stakeholders while striving for a better tomorrow.

Gordon Cairns CHAIRMAN

F21 Final Dividend

55 c

 14.6% from F

F21 shareholder returns 2

$ 1.3 B

1 Group before significant items. 2 Based on payments during the year.

Net profit after tax attributable to Woolworths Group shareholders 1

$ 1,972 M

 22.9% from F

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1 Before significant items.

We have also made good progress during the year building out the Group’s ecosystem through a series of strategic partnerships, investments and new businesses. In June, we completed our strategic investment in PFD Food Services to expand our food offering into new markets. We know how important leveraging data and analytics is in the retail industry of the future, so we’ve increased our ownership of Quantium and created a partnership called Q‑Retail to accelerate our advanced analytics capabilities. We’ve also established a number of new businesses, including Greenstock, Wpay and HealthyLife to provide greater value to our customers and meet their changing needs.

We are also continuing to invest in our supply chain transformation which will deliver the capacity and capability needed to support future growth. In F we opened Melbourne Fresh DC, as well as commenced work on the Moorebank NDC. This multi‑year transformation will enable expanded range and better availability for our customers, as well as ensuring faster, fresher and more efficient deliveries to our stores and through our supply chain.

Business performance

The Group’s trading performance in F was strong with sales growth of 5.7% and Group EBIT 1 increasing by 13.7%.

In Australian Food, H1 saw strong sales growth as a result of our successful Disney+ Ooshies and glass container campaigns and elevated demand due to lockdowns, whereas H2 sales were impacted by cycling COVID in the final four months of the year. Full year Australian Food sales increased by 5.4%, with EBIT 1 increasing by 9.0%.

Our WooliesX digital and eCommerce business had another year of exceptional growth, with eCommerce sales increasing by 74.7% compared to the prior year. To meet customer demand, we continued to scale up our convenience propositions with an expanded range of Home Delivery and Pick up options.

In New Zealand Food, sales growth in H1 was impacted by low market growth, particularly during the summer tourist

season. In H2, sales declined 5.5% as the business cycled New Zealand’s restrictive lockdown period. EBIT for the year declined by 4.6% reflecting lower sales.

BIG W’s momentum continued with another strong year of improved customer scores, strong sales growth of 11.6% and EBIT increasing over 300% in the year to $172 million. H sales growth moderated as expected but remained positive with an increased focus on digital and eCommerce and providing customers with safe and convenient shopping options.

Working towards

a better tomorrow

Right from the start of COVID, we have prioritised being COVIDSafe and this has continued in F21. We’ve partnered with the Federal Government and other food retailers, to establish pop‑up vaccination clinics at our food‑related distribution centres, as well as increasing access to vaccines for our store teams, who are critical to ensure a stable supply of food and everyday needs for our customers. No team member should have to choose between their health and their pay, particularly as we know vaccination will make shopping safer for our teams and customers, and we have revised our vaccination leave policy to reflect this.

Operating sustainably is not only important to our customers, but it’s increasingly intrinsic to our business and the way we operate. Setting ambitious and measurable sustainability goals as part of our Sustainability Plan 2025 launched in November last year will help us to play our part in making the world a better place for a better tomorrow. Our people are the core of our business and we’re continuing to focus on our holistic diversity and inclusion agenda, with more work to be done in F22. I’m proud that our strong diversity has been recognised and celebrated through a number of external awards, including the WGEA Employer of Choice for gender equality citation and AWEI gold tier status for LGBTQ+ inclusion for the fourth consecutive year.

We acknowledge the environmental impact of our business and we continue to focus on reducing our footprint with the installation of solar panels in over 190 Woolworths Group sites. We also signed our first power purchase agreement in NSW in F21 as we transition to 100% renewable energy by

1. We’re also making good progress on both eliminating food waste and reducing plastic across our products.

We remain committed to resolving the salaried team underpayments announced in 2019. To date, more than $350 million has been paid to current and former salaried team members. During the year, we launched a program to enhance our pay process integrity and to help ensure it doesn’t happen again.

F22 Outlook

COVID, particularly the

Delta variant, will continue

to challenge our business

and community in F22.

While it’s difficult to predict

the environment we’ll be

operating in over the next

12 months with any certainty,

we know that operating

COVIDSafe is our priority.

I am confident that we have

the right foundations in

place to continue to deliver

value for our customers,

teams, communities

and shareholders.

Brad Banducci CHIEF EXECUTIVE OFFICER

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Group Financial Performance

F21 was a significant year in the history of Woolworths Group following the successful separation of Endeavour Group at the end of June. We also made progress in laying the foundations for the new Woolworths Group, a more focused food and everyday needs ecosystem with a customer 1st^ team 1 st^ culture at its core, and enabled by data and technology. The Group’s F21 trading performance was strong with sales growth of 5.7%, and EBIT growth of 13.7% despite H2 EBIT growth in some businesses being impacted by cycling COVID from late February in the prior year.

Group sales

$ 67,278 M

 5.7% from F Sales from continuing operations increased 4.9% with strong full year sales growth for Australian Food and BIG W, particularly in H1, somewhat offset by lower sales from New Zealand Food. Total Group sales increased by 5.7%, aided by growth of 9.3% from Endeavour Group.

Group eCommerce sales

$ 5,602 M

 58.1% from F Group eCommerce sales increased by 58.1%. Continuing operations eCommerce sales increased 63.3% with penetration on the same basis increasing 3 pts to 8.5% of sales. Average weekly traffic to Group digital assets from continuing operations also increased materially with 17.2 million visits per week during F21.

Gross profit as a % of sales 1

29.3 %

 44 bps from F Gross profit increases across the Group reflected stock loss improvements, favourable product mix changes, fewer markdowns and less clearance activity.

Significant items before tax

$ 59 M

Significant items reflect costs associated with the supply chain network review, Metro Food Stores asset impairment, gain on previously held equity interest in Quantium and transaction costs.

Finance costs 2

$ 613 M  8.5% from F

Finance costs declined on the prior year due to lower non‑lease interest expense as a result of lower average net debt and lower borrowing costs.

NPAT from continuing operations attributable to equity holders of the parent entity 1

$ 1,504 M

 20.1% from F NPAT from continuing operations increased on the prior year reflecting the increase in EBIT and a reduction in finance costs.

1 Continuing operations before significant items. 2 Group before significant items.

Group EBIT 2

$ 3,663 M

 13.7% from F Group EBIT increased by 13.7% to $3,663 million driven by a 9% increase from Australia Food, an increase of over 300% from BIG W and a 22.6% increase from Endeavour Group. EBIT from continuing operations before significant items increased 11.1%.

Cost of doing business as a % of sales 1

24.4 %

 16 bps from F Cost of doing business (CODB) % increased by 16 bps driven by higher CODB (%) in New Zealand and a higher contribution from BIG W to the Group total which has a higher‑than‑average CODB (%).