Press Release

Questionable supermarket policy needs investigation: Greens

Allegations that supermarket giant Progressive Enterprises is applying pressure to its suppliers adds further impetus to the Green Party's call for a Commerce Commission inquiry into industry practices, and a code of conduct for supermarkets, Safe Food Spokesperson Sue Kedgley says.

According to a news report, grocery suppliers will be penalised for having their products promoted in rival supermarkets at or around the same time as Progressive's own advertised promotions. If this occurs, suppliers would be charged for the differential on the price offered in the opposition supermarket.

"These are precisely the kind of tactics that penalise small independent growers and suppliers who are already struggling in a highly competitive environment," Ms Kedgley says. "Progressive allegedly wants details of suppliers' supermarket specials with trade competitors - in advance - and will not accept promotions for inclusion in its mailers where there is a clash with a competitor's promotion arranged by the supplier," Ms Kedgley says.

Ms Kedgley says she is alarmed at reports that, while suppliers are furious about these practices, they fear if they don't play ball, their products would be left off supermarket shelves.

"Why should a farmer who grows and supplies broccoli to Progressive and the local New World be punished by a retrospective cut on their payment from Progressive because New World decides to have a special on broccoli in the same week?

"Most farmers and manufacturers have nowhere else to sell their produce than the two supermarket chains that control 96 percent of New Zealand's grocery market. An investigation would clarify whether there is any truth to the allegations that Progressive may be misusing its position to force small farmers and business people to take cuts in their margins.

"It would also determine whether this practice breaches the restrictive trade practices under the Commerce Act.

"New Zealanders spent $16 billion in supermarkets last year. They are a huge business, and it is essential that there are clear rules governing the trade, which prevent unfair trading practices occurring in the sector. That's why we need a Commerce Commission Inquiry into the sector and a code of conduct for supermarkets, such as exists in the United Kingdom," Ms Kedgley says

Discussion around Easter trading restrictions is being encouraged through a document launched today by Labour Minister Trevor Mallard and Justice Minister Annette King.

"Easter trading continues to attract a range of opinions, and the Labour-led government is conscious of the requirement to balance the needs of a wide variety of organisations and individuals with different beliefs and preferences," Trevor Mallard said.

"The Easter Trading and Holidays Legislation discussion document we have released today considers the different legislation that affects Easter Trading and proposes a number of options for possible change in three key areas."

The key question areas are:

• what should happen to the Shop Trading Hours Act Repeal Act 1990 and Sale of Liquor Act 1989, particularly in regard to Easter Sunday
• what should happen with the status of Easter Sunday
• whether the enforceability and penalty regime for the Shop Trading Hours Act Repeal Act 1990 needs amendment, and the issue of adequate employee/leaseholder protection against the compulsion to work/trade on Easter Sunday.

Trevor Mallard noted that none of the options proposed reducing the holiday weekend.

Annette King said officials would collect and analyse submissions and present a comprehensive set of recommendations for consideration.

The discussion document has been sent to a wide variety of individuals (including those who made submissions on Jacqui Dean’s and Steve Chadwick’s shop trading bills last year), businesses, social partners and a number of public service organisations for comment.

"This issue has been the focus of public attention for a number of years and we recognise the requirement to consult as widely as possible. We strongly encourage employers, unions, industry groups, individuals and other groups in society to consider this discussion document and provide their views," Annette King said.

The deadline for submissions is December 14.

A summary of the key options follows. The full discussion document is available now at www.dol.govt.nz/consultation/shoptrading

The options proposed for public consideration and comment reflect the differing views on how to recognise the significance of the four day Easter weekend. For example, whether continuing to recognise the significance of the Easter weekend involves ensuring that retailers and retail workers have time off work to be with their families, or whether it is about enabling shops to trade to meet tourist and consumer demand, or about preserving the religious significance of the weekend by restricting trading.

The first decision area focuses on what should happen to the Shop Trading Hours Act Repeal Act 1990 and Sale of Liquor Act 1989, particularly in regard to Easter Sunday. Three options are presented in relation to this issue, these are:

• Option 1: Retain the status quo.
• Option 2: Reinstate the exemption-making provision for shop trading to exempt specific areas from trading restrictions and enable sale of liquor exemptions to be considered at the same time.
• Option 3: Remove the trading restrictions under the Shop Trading Hours Act Repeal Act 1990 and Sale of Liquor Act 1989 for Easter Sunday.

The second decision area focuses on what should happen with the status of Easter Sunday, and four options are presented in relation to this issue, these are:

• Option 1: Retain the status quo.
• Option 2: Increase the number of public holidays to 12 by making Easter Sunday the 12th public holiday.
• Option 3: Maintain the number of public holidays at 11 by making Easter Sunday a public holiday, subject to ‘mondayisation’ arrangements similar to Christmas and New Year holidays when they fall on Sunday .
• Option 4: Treat Easter Sunday as if it were a public holiday for employees of businesses affected by new amendments to the Shop Trading Hours Act Repeal Act 1990 or the Sale of Liquor Act 1989. This would not apply to those that are currently able to trade under an exemption or exception.

The third decision area focuses on:

• whether the enforceability and penalty regime for the Shop Trading Hours Act Repeal Act 1990 needs amendment, and
• on the issue of adequate employee/leaseholder protection against the compulsion to work/trade on Easter Sunday.

NB: The full discussion document is available now at www.dol.govt.nz/consultation/shoptrading

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In its first full year as a publicly listed company, Goodman Fielder has recorded another solid earnings performance with most businesses performing above expectations.

Net profit for the year was $243.2 million, an increase of $45.7 million or 23% on the previous year. The company's businesses generally performed well with revenue increasing by 2% from the prior year to $2,426.7 million. Earnings before interest, tax, depreciation and amortisation also grew, up by 7.5% to $444.1 million.

The result includes restructuring and integration costs of $13.0 million (post tax) and foreign exchange gains of $34.1 million (post tax). This delivers a normalised NPAT of $222.1 million.

FY2007; FY2006; Variation
Revenue: $2,426.7m;$2,379.0m;+2.0%
EBITDA: $444.1m;$413.1m;+7.5%
EBIT: $388.9m;$360.1m;+8.0%
NPAT(incl. OEI): $243.2m;$197.5m;+23.1%
EPS: 18.1c;14.7c;+23.1%
Dividend: 13.5c;5.5c (1/2 year)

The year was marked by particularly strong performances from the company's Fresh Baking and Commercial divisions, continuing the momentum established over the past two years. The company's Home Ingredients division performed well in Australia but overall was held back by a weaker first half performance in New Zealand.

A highlight of the year was the company's robust management of considerably increased commodity costs. Substantial increases in commodity prices increased the company's cost base significantly, however these increases were actively managed with margins being maintained following successful cost recovery in the marketplace.

Another highlight was the good progress made on the company's growth strategy with a number of value adding acquisitions and their successful integration into the existing business.

Businesses and brands acquired during the year included, in Australia, Country Life Bakery, Flinders Bread, Moores and Early Harvest Specialty Breads, and the Copperpot dips, yoghurt and pate business. In New Zealand, the company acquired Northern Bakeries, River Mill Bakeries and Canterbury Flour Mills during the year. Since year end Goodman Fielder has acquired the dairy business of the New Zealand company IDP Mainland Limited.

The company made significant progress during the year on its plan to increase manufacturing efficiency by consolidating its manufacturing assets across its portfolio. The company closed a number of older plants and is progressively restructuring its production platform to become the lowest cost manufacturer in the industry.

Our New Zealand dairy business made a slow start to the year following a disappointing performance in the previous financial year. As a result, the business was substantially restructured to create a more focused management structure under new leadership. These changes began to take effect in the second half and the business finished the year in a much improved position.

GF Fresh Baking

The GF Fresh Baking business experienced strong earnings improvement for the 2007 financial year, with the business returning EBITDA of $175.9 million, an increase of 22% on the prior year.

FY2007;FY2006;Variation
Sales: $960.9m;$919.7m;+4.5%
EBITDA: $175.9m;$144.7m;+21.6%
EBIT: $150.9m;$125.0m;+20.7%

The company's Fresh Baking division had an excellent year and returned a fourth successive year of double digit EBITDA growth. Although commodity costs rose to record levels during the year and the company incurred cost increases in fuel, packaging, oils and labour costs, all increases were recovered through a combination of price increases and internal cost reductions.

In Australia, the manufacturing function was reorganised under new leadership and the company is moving to a production platform focused on high volume, low complexity plants supported by a number of specialised plants to cater for more complex lower volume products. During the year a number of new products were launched into the market and several existing products were extended into new regions. A major private label contract had its duration and scope extended.

Market shares in loaf bread in the supermarket chains remained solid during the financial year and the company enjoyed steady growth in the supermarket sector. The trend to healthier eating alternatives continued during the year with the company's share of these higher margin categories increasing over the period in a growing market segment. This trend sustains the strong category value growth trend.

In New Zealand the GF Fresh Baking business had a relatively poor start to the year but experienced a better second half, finishing the year strongly. As in Australia, commodity and other costs rose steeply with business results being negatively affected, but price increases and cost reduction strategies were successfully implemented. Two non-essential manufacturing plants were closed.

Going forward the focus will be on new product development, with a renewed emphasis on innovation and launches of several new products planned. The focus on business efficiency and cost reduction will continue.

GF Home Ingredients

The GF Home Ingredients business performed well in Australia during the year, but was held back by its New Zealand performance. The business returned EBITDA of $91.1 million, up 3% on the prior year.

FY2007;FY2006;Variation
Sales: $367.6m;$342.5m;+7.3%
EBITDA: $91.1m;$88.7m;+2.7%
EBIT: $89.0m;$87.3m;+1.9%

In Australia the business has performed strongly during the year and increased its market share significantly as well as outperforming the market.

The company continues to leverage off the strength of its existing brands by extending their reach into new products. The business also concentrated on forging and maintaining strong retail partnerships.

In New Zealand, the business did not perform up to expectations in the first half of the year. However a reorganisation early in the second half resulted in an improved performance with the business ending the year strongly.

The Copperpot business was acquired during the year and has now been fully integrated. This acquisition will provide the business with a competence in shorter shelf life and chilled products which can be leveraged into other areas.

Going forward there will be a continuing emphasis on the ambient and frozen product segments to maintain market share growth in these categories. Incrementally to this, the company will pursue expansion in the supermarket chiller with spreadable butter, dips and expanded yoghurt offerings to complement the existing spreads business.

GF Commercial

The GF Commercial business continued to perform solidly during the year. EBITDA was $82.4 million, up 11% on the prior year.

FY2007; FY2006; Variation
Sales: $524.5m;$498.6m;+5.2%
EBITDA: $82.4m;$74.6m;+10.5%
EBIT: $69.2m;$58.4m;+18.5%

This result follows a similar solid performance in the prior year, maintaining the momentum established over the past three years despite increases in commodity costs.

Commodity prices over the period were at historically high levels with some reaching all time highs. Despite these cost pressures, the business was able to recover the increases in the market place through quarterly price reviews and through operational improvements, particularly in the supply chain.

In Australia and New Zealand the focus continues to be on developing and marketing healthy oils and a number of lower saturated fat and virtually trans-free products were developed during the year.

Exports into Asia increased strongly continuing the recent trend. However returns from the region were impacted by the strengthening Australian dollar.

Pacific

The Pacific business returned a solid EBITDA of $33.3 million for the year, an increase of 5% on the prior year.

FY2007;FY2006; Variation
Sales: $180.3m;$178.4m;+1.1%
EBITDA: $33.3m;$31.7m;+5.0%
EBIT: $29.3m;$27.4m;+6.9%

This result follows a similar performance in the prior year. The major developments during the year were the acquisition of La Biscuitiere, a leading baking business in New Caledonia, and the divestment of a non-core stockfeed business.

The Fiji business returned a solid result despite the impact of the military coup during the year, while in Papua New Guinea the company's flour milling operations performed strongly.

GF Fresh Dairy

The GF Fresh Dairy business in New Zealand delivered an EBITDA of $61.4 million for the year, a decrease of 25% on the prior year.

FY2007; FY2006; Variation
Sales: $393.4m;$439.8m;-10.6%
EBITDA: $61.4m;$82.2m;-25.3%
EBIT: $50.5m;$70.8m;-28.7%

The business did not perform to expectations in the first half of the financial year but, following an operational reorganisation midway through the year, it closed the year in a much improved position. The restructure resulted in greater accountability with the New Zealand dairy assets being split out as a stand alone division under new leadership.

During the year the fresh milk business experienced difficult conditions with considerable downward pressure on retail pricing. This followed a substantial reduction in retail pricing of supermarket house brand milk and a significant increase in raw milk pricing. Despite these pressures brand share remained stable.

Since year end, the company announced that it had entered into an agreement to acquire the business of IDP Mainland Limited (IDP), which will increase Goodman Fielder's presence in the route trade where IDP sells its Cow & Gate brand milk. The company has also been awarded a major milk supply contract with one of New Zealand's largest supermarket chains.

In the chilled dairy category, the company performed strongly and recorded a significant increase in market share following a successful relaunch of its yoghurt range and the success of Activate, a functional food probiotic yoghurt. Going forward the company will be pursuing growth in all of its key categories with a new yoghurt production line to be installed to meet market demand and considerable effort in new product development resulting in the launch of several new products and new packaging formats. The company will also be entering new segments leveraging off the strength of its leading brands.

Dividend

Directors announced a final dividend of 7.5 cents per share, bringing the full year dividend to 13.5 cents per share. The final dividend is payable on 31 October 2007. Books close on 28 September 2007.

Board appointments and elections

During the year the Board appointed two new independent non - executive Directors, Mr Gavin Walker and Mr Clive Hooke. Mr Walker has a background in investment banking at chief executive level and has extensive business experience in New Zealand. Mr Hooke is a former Chief Financial Officer of a publicly listed food company and has broad experience in the Australian corporate environment. Mr Walker and Mr Hooke will stand for election by shareholders at the company's Annual General Meeting.

Outlook

The company is performing solidly in the first quarter of the new financial year and is well positioned to deliver further profit improvement for the 2007/08 year (compared with the normalised 2006/07 result).

*****

The FY 2006 results presented in this statement have been prepared on a pro forma basis so as to include a full 12 month performance. The pro forma numbers have not been audited. They have also been re-segmented to align the divisional results with the FY 2007 organisation structure. Divisional results have been normalised to exclude the impact of significant and one-time items.

• SALES FROM CONTINUING OPERATIONS $42.3 BILLION UP 12.6%
• EARNINGS BEFORE INTEREST AND TAX $2,111.3 MILLION UP 22.6%
• NET PROFIT AFTER TAX $1,294.0 MILLION UP 27.5%
• EARNINGS PER SHARE UP 19.7%
• DIVIDEND PER SHARE UP 25.4% TO 74 CENTS

“Overall this has been a successful year with strong results in all divisions. Our team continues to deliver on our strategy. We are continually looking for ways to improve our business by reinvesting the proceeds of our growth into even greater value, service levels and quality for our customers. We believe we are very well positioned for future growth.” Michael Luscombe

The Board of Woolworths Limited today released the profit
and dividend announcement of Woolworths Limited and its controlled entities for the 52 weeks ended 24 June 2007.

Woolworths Limited Managing Director and CEO, Michael Luscombe said, “Today we are pleased to report a net profit increase of 27.5% to $1,294.0m. This result would not be possible without the many years of hard work in establishing the foundations for the positive momentum that we are currently experiencing. Our focus on the customer, the quality of our people and the successful execution of our business strategies, highlighted by the supply chain transformation in our Supermarket Group, have all contributed to this result. We believe we are very well positioned for future growth.”

Commenting on the result, the Chairman of Woolworths Limited, James Strong said, “This result is a real credit to the people within Woolworths. The results reflect the strength of the Woolworths team and their ability to deliver sustainable profitable growth. Backed by these strong results, Woolworths is in a great position to continue to reinvest in the business, and continue to reinvigorate and enhance our offering to customers.

The 25.4% increase in Dividend Per Share (DPS) to 74 cents (1H: 35 cents, 2H: 39 cents) from 59 cents in 2006 reflects the confidence that the Board has in the company’s operations, results and the continued drive to increase future shareholder returns.”

In summary, Woolworths’ results for the year ended 24 June 2007 are as follows:

• Sales up 12.6% from continuing operations
• Total sales for this year compared with last year up 12.6% to $42,477 million
• Earnings before interest, taxation, depreciation and amortisation (EBITDA) up 20.3% to $2,700.6 million
• Earnings before interest and taxation (EBIT) up 22.6% to $2,111.3 million
• Net operating profit after tax up 27.5% to $1,294.0 million
• Earnings per share (EPS) up 19.7% to 108.8 cents
• Final dividend per share (DPS) 39 cents to bring total DPS for the year to 74 cents, up 25.4% with total dividend paid and proposed for the year amounting to approximately $892.5 million
• EBIT margins improved from 4.56% in 2006 to 4.97% in 2007.

Other highlights:

• Average return on funds employed (ROFE) was 27.1%. Normalising for the timing of acquisitions in 2006, ROFE (average) increased from 24.2% to 27.1%.
• Reduction in average inventory days from 32.7 days to 32.5 days, a reduction of 0.2 days.

Hellaby Result Reflects A Challenging Year

Press Release by Hellaby Holdings at 9:22 am, 27 Aug 2007

• * Decline in profitability due to difficult trading conditions and one-off transactions, including impairment of BBQ Factory goodwill and brands
• * Strategic review of businesses undertaken
• * Tightened investment performance criteria for all assets
• * FY2008 target for EBITDA adjusted for one-offs of around the $45 million achieved in recent years

Investment company Hellaby Holdings Limited today reported a decline in profitability for the financial year to 30 June 2007.

Hellaby's trading surplus before interest, tax, depreciation, amortisation and one-off transactions was $34.0 million, 28% lower than last year's
$47.6 million.

Hellaby Chairman Bill Falconer said the company was understandably disappointed in the result. "As we reported earlier this year, all of the company's divisions - Automotive, Industrial, Retail and Diversified - simultaneously experienced difficult trading conditions during the first half of the year. While most businesses improved performance and met their targets during the second half, all divisions returned lower trading surpluses for the year compared to the previous financial year. "

This result has been further impacted by a number of one-off costs, plus the non-recurrence of one-off gains achieved in the year to 30 June 2006, and an $18.8 million goodwill and brands impairment booked for retail subsidiary BBQ Factory. Consequently, the company has recorded a tax-paid deficit of $9.8 million, compared with last year's $23.1 million surplus.

Included in the result to 30 June 2007 are the following one-off costs:

• * $2.4 million of costs associated with forward exchange contracts required to be expensed in accordance with IAS 39 and stock adjustments;
• * $0.9 million of costs incurred in conducting a strategic review of the retail businesses;
• * $0.4 million of costs associated with the previous Chief Executive's retirement.

This result represents an after tax return of (10%) on average shareholders funds employed (last year 21%), and net asset backing of $1.61 per share (last year $2.29 per share).

In recognition of the poor results achieved, the Board of Directors had resolved not to distribute a final dividend for the year. Hellaby's total distribution for the year will be the interim dividend of 10 cents, fully imputed, and paid on 20 April 2007.  Mr Falconer said that the past year's performance had resulted in the group comprehensively reviewing its future direction. "On a positive note, this has confirmed that our core businesses are sound and can be expected to be resilient in the current economic uncertainty. There are some businesses we will divest for the right price, and there are some where value can be added before divestment would be considered. Overall however, the decks are being cleared, and the company is moving forward with a strong focus on operational performance."

The company's second half performance improved markedly in several of the businesses, compared to the same period in the previous year. The Brake & Transmission EBIT was 16% higher in the second half (excluding acquisitions during the year), the AB Equipment/AB Rental EBIT was 10% higher, and the No 1 Shoes EBIT was 20% higher in the second-half year-on-year.  Mr Falconer also advised that the strategic review of Hellaby's footwear retail division was nearing completion. "Following a detailed evaluation of our options, the Board believes that we have two excellent and well-managed assets, both of which have the potential for further profit growth. Hellaby will retain ownership of these businesses for the time being."

Recently-appointed Hellaby Chief Executive John Williamson said that a range of factors contributed towards the lower performance of the various divisions. "The Automotive and Industrial Divisions were constrained by slower than planned expansion into the Australian market, a downturn in the agricultural sectors on both sides of the Tasman, equipment supply issues due to worldwide equipment demand, and negative hedging adjustments," he said.

"Our retail businesses, like most in their sector, experienced extremely poor summer trading conditions which were not sufficiently offset by an improved performance during the second half of the year, while BBQ Factory's performance remained unsatisfactory throughout. Our new automotive investments in batteries and brake parts did not start to make their contribution to group performance until later in the year."

Mr Williamson said that while market conditions had improved for most divisions, further performance improvements were also being sought. "The majority of our companies have been performing to expectations for the past three to four months, which is a positive trend. However, we have also recently introduced a number of comprehensive operational improvement initiatives across the Hellaby group to capture more value from our businesses"

"We know we have to improve performance significantly and to this end, capital discipline and working capital efficiency has become a key focus across all business units."

Mr Williamson said that the integration of the two recently acquired packaging businesses, Wellington-based PPL Corporation and Christchurch-based Chequer Packaging (in Receivership) into the new Elldex packaging division was progressing satisfactorily. Both businesses were acquired in July 2007 subsequent to year-end. "Hellaby's packaging sales revenue and profits are on track to more than double for the year to 30 June 2008," he said.

"Importantly, we believe that this expansion in packaging represents a standard template for future investment by Hellaby. Our strategy over time will be to develop further divisions through the carefully-researched initial acquisition or development of a platform business, and subsequent growth through a combination of market development and 'bolt-on'
acquisitions."

While Hellaby continued to focus on the turnaround of the BBQ Factory, Mr Williamson said that recent initiatives, which include new outlets and refurbishments, had not yet gained traction. "Following a review of the business, the Board of Directors has concluded that it will take further time to complete, and that the Group should recognise an $18.8 million goodwill and brands impairment for the BBQ Factory in the year to 30 June 2007."

Mr Williamson noted that since the time of its acquisition by Hellaby, BBQ Factory has returned EBIT losses of $2.0 million in the year to 30 June 2007, similar to the previous year. Mr Williamson said that performance since the time of acquisition indicated that Hellaby had overpaid for the BBQ Factory. "Although measures are in place to improve performance, directors believe an impairment expensing of the full remaining goodwill and brands value is the most appropriate decision at this time," he said.

Looking ahead, Mr Falconer said that the Hellaby Board's overriding objective was to restore investor confidence in Hellaby, by driving company performance and improving total shareholder returns. "We know we have to improve performance significantly - and chase free cash flow hard. Capital discipline and efficient use of working capital has become a key focus across all business units. Assets are likely to be divested if they are not performing, if we are unable to grow them, or if we can better add value for our shareholders by investing elsewhere."

"In summary, the year to 30 June 2008 will be a year of consolidation. Our immediate priorities are achieving Hellaby group EBIT targets, improving our group net working capital efficiency, and successfully turning around the BBQ Factory. We intend to finish the next financial year with a stronger balance sheet, and are targeting revenue and profit growth in all our business units for the year to 30 June 2008."

Current expectations are that in the financial year to 30 June 2008 Hellaby's trading surplus before interest, taxation, depreciation, amortisation and one-off transactions will be around the $45 million achieved in recent years.