RNS Number:7927I
Coles Myer Ld
17 March 2003

Coles Myer Ltd.

ABN 11 004 089 936

800 Toorak Road, Tooronga, 3146

Telephone (03) 9829 3111

Facsimile (03) 9829 6787

Postal Address: PO Box 2000, Glen Iris, 3146

News Release

--------------------------------------------------------------------------------

Monday, 17 March 2003

Coles Myer underlying half year profit up 28%1

  * Underlying net profit after tax $272.4 million


    - Up 28.2% on last year

  * Full year profit guidance unchanged
  * Food & Liquor underlying earnings2 up 11.3%
  * Kmart and Target - excellent progress
  * Myer Grace Bros recovery underway
  * Strong balance sheet
  * Interim dividend 13.5 cents


Coles Myer Ltd (CML) today announced underlying net profit after tax of $272.4
million for the half year ended 26 January 2003, up 28.2% on prior year. Sales
rose by 5.5% to $13.8 billion.


Coles Myer Chief Executive Officer, John Fletcher, said the underlying result
reflected margin expansion by the Food & Liquor Group and Kmart/Officeworks,
Myer Grace Bros and Target, despite a very competitive market.


"Our Food & Liquor business has delivered strong interim earnings growth. The
turnaround at Kmart and Target also continues to accelerate, with both brands
reporting substantial earnings improvement over the period. The recovery signs
at Myer Grace Bros continue to be encouraging," Mr Fletcher said.


"The balance sheet was further strengthened over the period, featuring improved
stock quality and lower gearing. Higher stock turns were achieved by all our
major businesses, with Group inventory flat despite a 5.5% sales increase."


"Operating cashflow was $624 million, with free cashflow of $239 million.


"We have further improved our underlying cost of doing business (CODB) to sales
ratio, with a reduction across the group of 12 basis points2. This includes a
substantial fall in the major non-food brands' combined CODB ratio of 93 basis
points to 28.32%. After the significant savings achieved last year, well ahead
of schedule, we are on track to exceed our $210 million target for FY2003. We
continue to forecast total CODB savings of at least $300 million by the end of
FY2004. Our focus on reducing costs has been on doing business better while we
maintain our customer service levels in our brands.


"Our new heads of Supply Chain and IT are now identifying opportunities in their
key functions. Our focus is on running our operations faster, cheaper and
smarter," Mr Fletcher said.


"Overall this result demonstrates progress against strategy and the underlying
strength of our business. We remain focussed on delighting our customers
everyday, by offering the best service and the best range of the best products
at the best prices," Mr Fletcher said.


CML is committed to the highest standards of international financial reporting.
Therefore as foreshadowed in the 2002 Annual Report and at the Annual General
Meeting, the Company has adopted new US guidance for the accounting of supplier
promotional rebates. As a result of this policy change, a one-time, non-cash
adjustment of $76.5 million was made to the interim earnings. Although not
compulsory in Australia, we have introduced this policy because it represents
global best practice. CML also complies with US standards in accordance with its
listing on the NYSE.


After the one-off effect of the accounting policy changes, net profit after tax
for the half year was $217.9 million.


Directors have declared a fully franked interim dividend of 13.5 cents per
share.






                        RESULTS SUMMARY                                      2003             2002         Change
                                                                         26 weeks         26 weeks
                                                                               $m               $m
Sales1                                                                     13,845           13,119           5.5%
Underlying retail EBIT2                                                     475.8            372.3          27.8%
% to Sales2                                                                 3.44%            2.84%
   Food & Liquor Group                                                      291.0            261.5          11.3%
   % to Sales                                                               3.51%            3.32%
   Kmart, Officeworks, MGB, Target                                          192.3            119.9          60.5%
   % to Sales                                                               3.53%            2.32%
   Emerging Businesses                                                      (7.5)            (9.1)          17.6%
   % to Sales                                                              (7.5)%          (11.6)%
Exited businesses                                                           (1.3)              2.5
Property                                                                     18.5             18.5
Unallocated costs                                                          (55.6)           (50.0)
Underlying EBIT                                                             437.4            343.3          27.4%
Net borrowing costs                                                        (39.0)           (47.5)
Underlying net profit before tax                                            398.4            295.8          34.7%
Income tax expense on underlying profit                                   (126.0)           (83.3)
Underlying net profit after tax                                             272.4            212.5          28.2%
Accounting policy changes3
- Promotional rebates - relating to prior periods                          (76.5)                -
- relating to H1 03                                                        (13.0)                -
- Liquor licenses                                                             5.0                -
- Logistics administration expenses                                           4.5                -
Associated income tax benefits                                               25.5                -
Net profit after tax                                                        217.9            212.5           2.5%
Underlying2 earnings per share (basic) (cents)                               21.0             16.1
Earnings per share (basic) (cents)                                           16.4             16.1
Ordinary dividend per share                                                  13.5             13.5
Underlying operating gross margin (%)2                                      27.41            26.95           46bp
- Food & Liquor                                                             24.52            23.90           62bp
- Kmart, Officeworks, MGB, Target                                           31.85            31.58           27bp
Cost of doing business / sales (%)2                                         24.24            24.36         (12)bp
- Food & Liquor                                                             21.02            20.58           44bp
- Kmart, Officeworks, MGB, Target                                           28.32            29.25         (93)bp
Return on investment (%)4                                                    16.0             12.8
Operating cash flow                                                         624.3            652.1
Free cashflow                                                               238.8            379.6
Net debt/Net debt & equity (%)                                               14.2             20.4
Fixed charges cover (times)                                                   2.4              2.1

  1    Excludes the exited businesses of Myer Direct (sold Jan 2002) & Red 
       Rooster (sold May 2002). Including these businesses, CML sales were: 
       2003 $13,845m, 2002 $13,273m representing sales growth of 4.3%.

  2    Excluding exited businesses (Myer Direct: 2003 loss $0.7m, 2002 profit 
       $2.4m; Red Rooster: 2003 loss $0.6m, 2002 profit $0.1m).

       Excluding accounting policy changes.

  3    Refer page 8 for details.

  4    Annualised underlying EBIT as a percentage of net assets employed.

RETAIL OPERATIONS

Food and Liquor Group
                                                                  2003           2002         Change
Sales ($m)                                                       8,295          7,881          5.3%
Comparative store sales growth                                                                 1.3%
Underlying retail EBIT ($m)                                      291.0          261.5          11.3%
Underlying retail margin (%)                                      3.51           3.32          19bp
Net assets employed (NAE) ($m)                                   1,925          1,789


  * Underlying retail EBIT up 11.3%1

  * Efficiency gains drive margin improvement

  * Totally price competitive

  * Continued network expansion


The Food and Liquor Group (F&L), comprising Coles, Bi-Lo and Liquorland,
reported a strong 11.3% increase in underlying retail EBIT over the half.


Alan Williams, Chief Operating Officer - Food and Liquor - said that despite
intense competition, the business continued to expand margins and deliver
double-digit profit growth in line with strategy.


"While we remain totally price competitive, our sales have been impacted by
intensified fuel discounts in the market. Our continuing focus on efficiency
initiatives, however, has underpinned and enabled strong growth in our bottom
line," Mr Williams said.


The F&L underlying EBIT margin rose by 19 basis points to 3.51% over the half.
This was driven by underlying gross margin expansion of 62 basis points to
24.52%, reflecting considerable gains in shrinkage and waste, reduced product
cost and expansion of our high margin house-brands. These initiatives, together
with reinvestment of the shareholder discount reduction, have enabled us to
maintain and improve our price competitiveness for all customers.


While the lower than expected sales growth reduced our fixed cost leverage, our
underlying cost base remains very competitive in the marketplace.


Mr Williams said that while the completion of a fuel offer was the Company's
highest priority, the F&L Group was also focussed on a number of initiatives to
further improve the customer offer and back office efficiencies. These included:


  * Improved fresh offer with better quality, merchandising and service
    standards

  * Reinforcement of Coles' and Bi-Lo's competitive price position:

  * Expanding successful house-brands

  * Consistently strong promotional offers

  * Competitive everyday shelf pricing

  * To be supported by new marketing program

  * Raised customer service standards

  * Continuing operational efficiencies - shrinkage, store administration,
    store fit-out costs


Mr Williams said the store expansion program was continuing to plan, with 17 new
supermarkets opened during the half, in addition to 6 acquisitions. A further 21
openings were expected over the year.


Liquorland opened 32 new stores and two hotels in the half, with a further 27
stores to open in the second half. The Theo's acquisition in NSW would
contribute a further 47 stores and four hotels in April 2003. Another 33
supermarkets and 5 liquor stores were refurbished during the first half.


Kmart and Officeworks
                                                       2003               2002             Change
Sales ($m)                                            2,291              2,091              9.6%
Comparative store sales growth                                                              7.7%
Underlying5 retail EBIT ($m)                           85.1               43.5              95.6%
Underlying retail margin (%)                           3.71               2.08              163bp
NAE ($m)                                               794                793


Kmart and Officeworks reported a substantial 95.6% ($41.6 million) increase in
combined underlying retail EBIT to $85.1 million, on strong sales growth of
9.6%.


"Our strong result is a direct reflection of the strategy we put in place last
year to move Kmart to the leadership position in discount department store
retailing," Kmart MD Hani Zayadi said.


"In line with strategy, significant margin improvement was driven by continued
reduction in the cost of doing business and leveraging this against sales
volume.


"Customers have responded positively to our offer of the best prices on wanted
ranges and brands. We will continue to improve this offer and our store
environment, underpinned by our 'Lowest price guarantee' and our 'Cutting the
cost of living' marketing campaign.


"Kmart opened three new stores and three Garden Super Centres over the first six
months, with a new Kmart store and Garden Super Centre scheduled to open in the
second half," Mr Zayadi said.


Officeworks delivered another impressive performance. Officeworks MD Peter Scott
said the business continued to strengthen its position as the number one choice
for small businesses.


"Our margin expansion reflected strong sales growth, improved category mix and
efficient business practices. The store rollout strategy is proceeding to plan,
with the Officeworks network increasing by 4 stores over the half to 63
locations across Australia. A further 7 openings are expected in the second
half. Our recent Viking acquisition, which included 7 Sands and McDougall
stores, was completed on 3 January and is performing in line with expectations,"
Mr Scott said.


Myer Grace Bros & Megamart

                                                    2003                  2002               Change
Sales ($m)                                          1,741                 1,764              (1.3)%
Comparative store sales growth                                                               (1.4)%
Underlying5 retail EBIT ($m)                        38.9                  36.4                6.9%
Underlying retail margin (%)                        2.23                  2.06                17bp
NAE ($m)                                             622                   788


Myer Grace Bros (MGB), including Megamart, reported a 6.9% increase in
underlying retail EBIT to $38.9 million.


"MGB's performance reflects encouraging progress in our turnaround program," MGB
MD Dawn Robertson said.


"While the sales result was in line with our expectations, given the temporary
closure of the Bondi store and shareholder discount reduction, the quality of
our sales has shown solid improvement.


"The underlying retail margin increased by 17 basis points to 2.23%, reflecting
better planning and execution in our merchandise management and marketing
program, and more efficient capital investment.


"The quality of our inventory continued to improve, with stock levels down 8% on
last year following successful summer clearance activity. Importantly,
stock-turn increased by a strong 9.4% to 3.5 times over the half (H1 2002 3.2
times).


"We are looking forward to an improved winter season, which has been launched
under our new 'my store' marketing program. The season will feature further
range enhancements across our apparel, cosmetics and home offers, including the
recently released Basque and Urbane private womenswear brands, which are already
receiving a very good customer response.


"Improvements in service quality and in-store environment have also continued,
resulting in positive customer feedback.


"We are committed to our strategic positioning, as we enter the second half of
the year in a much stronger position than 2002. As a result, MGB is expected to
report a profit for the full year.


"Megamart produced another year of strong sales growth, with the opening of our
new stores in Auburn (Sydney) and Narre Warren (Melbourne). Megamart is a key
part of MGB's plan to expand its share of the growing furniture and electrical
markets," Ms Robertson said.


Target

                                                    2003                  2002               Change
Sales ($m)                                          1,418                 1,305               8.7%
Comparative store sales growth                                                                9.1%
Underlying5 retail EBIT ($m)                        68.3                  40.0                70.8%
Underlying retail margin (%)                        4.82                  3.06                176bp
NAE ($m)                                             457                   489


Target MD Larry Davis said that Target continued to make significant progress in
its rebuild, reporting a 70.8% increase in underlying retail EBIT to $68.3
million on a sales lift of 8.7%.


"Target is clearly delivering on its strategy of on-trend, high quality ranges
at very affordable prices. Customers have responded very well to our exciting
offer, particularly in apparel and manchester, and the success of the '100%
Happy' marketing campaign has exceeded our expectations," Mr Davis said.


"Target's underlying retail margin is the strongest in three years, having risen
a substantial 176 basis points to 4.82%. Our merchandising improvements reflect
better management of product cost and promotional program, combined with strong
inventory control.


"Stock levels have fallen a further 8%, on top of the 26% reduction in H1 2002,
and our stock-turn has increased from 3.3 times to 4.0 times.


"Our merchandise initiatives have been supported by much improved in-store
execution. The stores are brighter, cleaner and better presented, improving the
ease of shopping for our customers.


"While much has been achieved in Target's recovery program, we will continue to
drive sales and margin growth through quickly identifying new merchandising
trends, ongoing improvements to merchandise flow and cost efficiencies," Mr
Davis said.


Emerging Businesses

                                              2003                  2002                  Change
Sales ($m)                                     114                   85                   33.9%
Underlying5 retail EBIT ($m)                  (7.5)                 (9.1)                 17.6%
NAE ($m)                                       28                    23


Emerging Businesses reduced its underlying retail EBIT loss from $9.1 million to
$7.5 million, through improved performances from Harris Technology and
ColesOnline. Sales in the division, excluding the exited Myer Direct, increased
by 33.9% over the half, led by continued strong growth in Harris Technology.


Following our agreement with Australia Post to provide pick, pack and delivery
services for ColesOnline, we have recently strengthened our marketing activity
for this business.


While the performance of the underlying businesses continues to improve, it is
anticipated that costs will increase in the second half of FY2003 as we increase
the marketing of the ColesOnline business.


PROPERTY AND Unallocated EBIT

$m                                                          2003                        2002
Unallocated and head office costs                          (55.6)                      (50.0)
Gain on sale of property                                     0.3                         1.4
Property operating earnings                                 18.2                        17.1
Property and Unallocated EBIT                              (37.1)                      (31.5)


Unallocated and head office costs rose by $5.6 million to $55.6 million, driven
by:


  * Additional costs associated with the Annual General Meeting in November
    2002

  * Restructuring and project costs


In the second half, unallocated and head office costs are expected to be in line
with prior year. Excluding the one-off charges, full year unallocated and head
office costs are anticipated to be mid-$90 million.


The total earnings contribution from property was in line with prior year at
$18.5 million. Under fair value accounting, Sydney Central Plaza was revalued at
period end, which was the key contributor to the increase in the property
portfolio book value to $745 million (2002: $630 million).


Post balance date, Sydney Central Plaza was sold to Westfield Trust for $390
million. Due to the revaluation of the property, the profit on sale is not
material. The funds will be used for the new store growth program, debt
reduction and other strategic initiatives. Going forward, Property operating
earnings will be reduced by the loss of income previously generated from the
Sydney site, although interest savings from debt reduction will largely
compensate.




Interest and Tax


Net borrowing costs decreased from $47.5m in 2002 to $39.0m, predominantly as a
result of lower average net debt levels. In addition, Coles Myer received $1.5m
(2002: $2.0m) in interest from the Coles Myer Employee Share Plan for the
funding facility, first provided by the Company in 1994. Total interest income
for the first half was $9.3m (2002: $7.9m).


Income tax expense on underlying profit of $126.0 million reflects an effective
tax rate of 31.6%. The tax rate for the full year is expected to be in excess of
30%.


ACCOUNTING POLICY CHANGE - PROMOTIONAL REBATES


  * Highest standards of reporting

  * One-time adjustment

  * Non-cash


As foreshadowed in our FY2002 annual accounts and the 2002 Annual General
Meeting, CML has been reviewing its long established policy on the treatment of
supplier promotional rebates. Under the previous policy, which many other
Australian retailers continue to follow, the portion of supplier rebates that
supported promotional activities was taken to income to offset product promotion
costs, as and when the rebate became due and payable.


As anticipated, guidance was issued by the Emerging Issues Task Force in the US
in late 2002 (EITF No. 02-16), whereby virtually all forms of rebates are
treated as a reduction of inventory cost.


CML is committed to the highest standards of financial reporting and also
complies with US requirements associated with its listing on the NYSE. In the
absence of sufficient guidance from Australian GAAP or other international
standards, CML is taking cognisance of the US guidance.


Under this guidance, virtually all forms of rebates (including those previously
taken directly to income under earlier accounting guidance) are treated as a
reduction in the cost of inventory, deferring recognition of the income to as
and when the inventory is sold.


While US companies are allowed a transitional framework for implementation,
Australian GAAP requires us to implement a policy change in full in the year in
which the change is made. As a result, the following one-time, non-cash
adjustments were made at the half year end to account for all stock on hand:
inventory reduction of $76.5 million and a corresponding reduction in underlying
profit before tax of $76.5 million.


If the policy change was applied to the movement between opening and closing
inventory in the half year period, underlying profit before tax would have
decreased by $13.0 million (H1 2002 equivalent $4.1 million).


ACCOUNTING POLICY CHANGE - LIQUOR LICENCE AMORTISATION


Liquor licences are considered to retain their value indefinitely. To bring our
policy in line with other retailers, CML is no longer amortising liquor
licences. The carrying value of liquor licences will be reassessed each
reporting period and adjusted accordingly if there is any diminution in value.
The non-cash change of policy increased EBIT in the first half by $5.0 million.


ACCOUNTING POLICY CHANGE - LOGISTICS ADMINISTRATION EXPENSES


Consistent with other logistics expenses, logistics administration expenses are
now capitalised into stock and expensed as goods are sold. Previously, these
costs were expensed as incurred. The one-time, non-cash change of policy
increased EBIT in the first half by $4.5 million.




BALANCE SHEET

$m                                                                 2003                     2002
Inventory                                                         2,932.4                 2,928.0
Trade creditors                                                  (1,897.7)               (1,892.3)
Net investment in inventory                                       1,034.7                 1,035.7
Other current net assets                                           206.5                   170.9
Working capital                                                   1,241.2                 1,206.6
Intangible assets                                                  361.3                   348.1
Property, plant & equipment                                       3,579.9                 3,488.2
Other net liabilities                                            (1,057.0)                (973.2)
Funds Employed                                                    4,125.4                 4,069.7
Net Tax Balances                                                   90.0                     82.5
Net assets employed                                               4,215.4                 4,152.2
Net debt                                                          (599.6)                 (845.5)
Shareholders' funds                                               3,615.8                 3,306.7


Net debt fell by 29% to $599.6 million, resulting in net debt to capital
employed (net debt plus equity) down to 14.2% (2002: 20.4%). This arose from the
improvement in trading results and working capital management.


Annualised ROI increased strongly to 16.0%, up from 12.8% in H1 2002.


Inventory was relatively flat, despite sales growth of 5.5%. This reflects
higher stock turns and the continued improvement in the quality of the stock. In
particular, total stock turn for the combined Kmart, Officeworks, MGB and Target
businesses has increased by a substantial 12.5% since January 2002, from 3.2
times to 3.6 times.


Working Capital increased at a lower rate than sales, with a 3% increase to
$1,241m.


Cash flow and capital expenditure

$m                                                                   2003                   2002
Operating cash flow                                                   624                    652
Capex, acquisitions & investments                                    (385)                  (272)
Free cash flow                                                        239                    380
Dividends paid                                                       (136)                  (135)
Share buy back                                                         -                     (2)
Net cash flow                                                         103                    243


Operating cash flow fell by $28 million to $624 million, primarily reflecting
the lower improvement in working capital change relative to last year, when a
$307 million improvement was generated by the targeted GM&A stock reductions.
Notwithstanding this, improved operating earnings, lower interest and further
working capital improvements contributed strongly.


Total capital expenditure of $385 million (2002: $272 million) reflects our
strengthened new store program and the acquisition of Viking by Officeworks. As
a result, free cash flow to was reduced to $239 million (2002: $380 million).
Excluding acquisitions, underlying capital expenditure of approximately $800
million is expected for the full year.




OUTLOOK


Mr Fletcher reaffirmed the Group earnings guidance for FY2003 of underlying net
profit after tax of $425 - 435 million.


"Group sales in the first 5 weeks of Q3 2003 rose by 5.6%, in line with
expectations," Mr Fletcher said.


"We confirm our full year expectations of mid single digit sales growth for the
Food & Liquor business, pending the commencement of a petrol offer for our
customers. Finalising our petrol offer remains our highest priority and we are
making good progress in this regard.


"We expect competition in all our markets to remain intense," Mr Fletcher said.


                                     */*/*

More information:

Media:      Scott Whiffin          03 9829 5548

Analysts:      Amanda Fischer     03 9829 4521

      Half Year Report

Name of entity

      COLES MYER LTD.

     ABN or equivalent              Half yearly       Preliminary        Half year/financial year ended ('current
     company reference                 (tick)         final (tick)       period')

       11 004 089 936                    u                                       26 weeks ended 26 January 2003

For announcement to the market
                                                                                                                     $M
Sales revenues from ordinary activities (item 1.1)                       up                  4.31%  to         13,844.9

Profit (loss) from ordinary activities after tax attributable to
members (item 1.12)                                                      up                  2.54% to         217.9 (*)

Profit (loss) from extraordinary items after tax attributable to
members (item 2.5)                                                       gain (loss)                                NIL

Net profit (loss) for the period attributable to members (item
1.12)                                                                    up                  2.54% to         217.9 (*)


Dividends (distributions)                                                            Amount per       Franked amount
                                                                                      security       per security at
                                                                                                         30% tax

Interim dividend (Half yearly report only - item 15.6)                                 13.5c                 13.5c

Previous corresponding period (Half yearly report - item 15.7)                         13.5c                 13.5c

Record date for determining entitlements to the dividend,
(in the case of a trust, distribution) (see item 15.2)                                        17 April 2003

Brief explanation of omission of directional and percentage changes to profit in accordance with Note 1
and short details of any bonus or cash issue or other item(s) of importance not previously released to
the market:
NIL

This Half yearly report is to be read in conjunction with the most recent annual financial report.

(*) Please note that profit after tax is after adjusting for the cumulative effect of the change in accounting
for supplier promotional rebates. This adjustment of $76.5 million before tax relates to prior years. The
previous corresponding period results have not been adjusted. Refer page 24 for full detail of accounting
policy changes.

Condensed consolidated statement of financial performance
                                                                                                          Previous
                                                                                    Current            corresponding
                                                                                    period                 period
                                                                                      $M                     $M
1.1     Sales                                                                            13,844.9               13,272.5
1.2     Cost of goods sold                                                             (10,037.5)             (10,036.5)
1.3     Gross profit                                                                      3,807.4                3,236.0
1.4     Other revenue from operating activities                                               7.9                  378.8
           Cumulative effect of change in accounting
           policy for supplier promotional rebates                                         (76.5) *
1.5     Revenue from non-operating activities                                               121.6                  154.9
1.6     Borrowing costs                                                                    (48.3)                 (55.4)
1.7     Advertising expenses                                                              (198.7)                (178.1)
1.8     Selling and occupancy expenses                                                  (2,682.4)              (2,652.2)
1.9     Administrative expenses                                                           (612.6)                (588.2)
1.10    Profit (loss) from ordinary activities before                                       318.4                  295.8
        income tax expense
1.11    Income tax expense                                                                (100.5)                 (83.3)
1.12    Net profit for the period attributable to members                                   217.9                  212.5
Non-owner transaction changes in equity
1.13    Net increase in asset revaluation reserve                                            86.6                    2.8
1.14    Total transactions and adjustments recognised directly
        in equity                                                                            86.6                    2.8
1.15    Total changes in equity other than those resulting
        from transactions with owners as owners                                             304.5                  215.3
        Earnings per share
1.16    Basic earnings per share                                                  16.4 cents             16.1 cents
1.17    Diluted earnings per share                                                16.7 cents             16.8 cents

      * Please note that profit after tax is after adjusting for the cumulative 
        effect of the change in accounting for supplier promotional rebates. 
        This adjustment of $76.5 million before tax relates to prior years.
        The previous corresponding period results have not been adjusted. Refer 
        page 24 for full detail of accounting policy changes.

Notes to the condensed consolidated statement of financial performance
Profit (loss) from ordinary activities attributable to members
                                                                                                          Previous
                                                                                      Current           corresponding
                                                                                       period              period
                                                                                         $M                  $M
1.18    Profit (loss) from ordinary activities after tax (item 1.12)                           217.9               212.5

1.19    Less (plus) outside equity interests

1.20    Profit (loss) from ordinary activities after tax,
        attributable to members                                                                217.9               212.5

Revenue and expenses from ordinary activities

                                                                                                          Previous
                                                                                      Current           corresponding
                                                                                       period              period
                                                                                         $M                  $M
1.21    Revenue from sales and operating activities                                         13,852.8            13,651.3
1.22    Interest revenue                                                                         9.3                 7.9
1.23    Other revenue from non-operating activities                                            112.3               147.0
1.24    Depreciation and amortisation excluding amortisation
        of intangibles (see item 2.3 and 20.5)                                               (230.9)             (229.3)

Capitalised outlays
1.25    Interest costs capitalised in asset values
1.26    Outlays capitalised in intangibles (unless arising from
        an acquisition of a business)                                                           18.7                24.7


                                                                                                          Previous
Consolidated retained profits                                                         Current           corresponding
                                                                                       period              period
                                                                                         $M                  $M
1.27    Retained profits at the beginning of the financial period                              872.9               866.0
1.28    Net profit attributable to members (item 1.12)                                         217.9               212.5
1.29    Net transfers from (to) reserves
1.30    Net effect of adoption of revised accounting standard
        (amendments to AASB 1028 "Employee Benefits")                                          (9.7)
1.31    Net effect of adoption of new accounting standard
        (AASB 1044: "Provisions, Contingent Liabilities and
        Contingent Assets")                                                                    149.7
1.32    Dividends and other equity distributions paid or payable                             (164.9)             (182.0)
1.33    Retained profits at end of financial period                                          1,065.9               896.5


Intangible and extraordinary items
                                                             Consolidated - current period
                                                      Before tax   Related tax    Related outside    Amount (after tax)
                                                                                  equity interests    attributable to
                                                                                                          members
                                                          $M            $M               $M                  $M
2.1     Amortisation of goodwill                              3.5                                                    3.5
2.2     Amortisation of other intangibles                    11.8          (3.5)                                     8.3
        (Refer item 20.5 for change in
        accounting estimate with respect
        to liquor licenses)
2.3     Total amortisation of
        intangibles                                          15.3          (3.5)                NIL                 11.8
2.4     Extraordinary items
2.5     Total extraordinary items                             NIL            NIL                NIL                  NIL


Comparison of half year profits
(Preliminary final report only)                                                       Current             Previous
                                                                                        year                year
                                                                                         $M                  $M
3.1     Consolidated profit from ordinary activities after
        tax attributable to members reported for the 1st half
        year (item 1.12 in the half yearly report)                                      N/A                 N/A

3.2     Consolidated profit (loss) from ordinary activities after                       N/A                 N/A
        tax attributable to members for the 2nd half year

Condensed consolidated statement of financial position
                                                                                     As shown in
                                                                  At end of          last annual       As in last half
                                                                current period         report           yearly report
                                                                      $M                 $M                  $M
        Current assets
4.1     Cash assets                                                        278.4               274.6               293.3
4.2     Receivables                                                        882.7               887.1               560.7
4.3     Investments
4.4     Inventories                                                      2,932.4             2,808.9             2,928.0
4.5     Tax assets
4.6     Other                                                               33.8                53.2                74.9
4.7     Total current assets                                             4,127.3             4,023.8             3,856.9
        Non-current assets
4.8     Receivables                                                        120.5               122.6               151.3
4.9     Investments                                                        123.4               109.2               113.5
4.10    Inventories
4.11    Exploration and evaluation expenditure
        capitalised (see para .71 of AASB 1022)
4.12    Development properties (mining entities)
4.13    Other property, plant and equipment (net)                        3,579.9             3,422.0             3,488.2
4.14    Intangibles (net)                                                  361.3               315.7               348.1
4.15    Deferred tax assets                                                279.5               258.3               225.3
4.16    Other                                                               30.1                37.8                40.1
4.17    Total non-current assets                                         4,494.7             4,265.6             4,366.5
4.18    Total assets                                                     8,622.0             8,289.4             8,223.4
        Current liabilities
4.19    Payables                                                         2,518.7             2,270.7             2,435.2
4.20    Interest bearing liabilities                                        18.6                15.3                19.7
4.21    Loans
4.22    Tax liabilities
4.23    Provisions (excluding tax liabilities)                             507.2               640.6               705.2
4.24    Other
4.25    Total current liabilities                                        3,044.5             2,926.6             3,160.1
        Non-current liabilities
4.26    Payables
4.27    Interest bearing liabilities                                     1,452.4             1,552.8             1,375.2
4.28    Loans                                                                                                        1.1
4.29    Tax liabilities                                                    203.7               249.5               214.7
4.30    Provisions (excluding tax liabilities)                             254.1               204.3               115.5
4.31    Other                                                               51.5                48.6                50.1
4.32    Total non-current liabilities                                    1,961.7             2,055.2             1,756.6
4.33    Total liabilities                                                5,006.2             4,981.8             4,916.7
4.34    Net assets                                                       3,615.8             3,307.6             3,306.7

Condensed consolidated statement of financial position continued
                                                                                     As shown in
                                                                  At end of          last annual       As in last half
                                                               current period          report           yearly report
        Equity                                                       $M                  $M                  $M
4.35    Contributed equity                                               2,060.9             2,032.3             2,000.8
4.36    Reserves                                                           489.0               402.4               409.4
4.37    Retained profits (accumulated losses)                            1,065.9               872.9               896.5
4.38    Equity attributable to members of the
        parent entity                                                    3,615.8             3,307.6             3,306.7
4.39    Outside equity interests in controlled
        entities
4.40    Total equity                                                     3,615.8             3,307.6             3,306.7
4.41    Preference capital included as part of 4.38                        680.6               680.6               680.6

Notes to the condensed consolidated statement of financial position

Exploration and evaluation expenditure capitalised
                                                                                                          Previous
                                                                                       Current          corresponding
                                                                                       period              period
                                                                                         $M                  $M
5.1     Opening balance
5.2     Expenditure incurred during current period
5.3     Expenditure written off during current period
5.4     Acquisitions, disposals, revaluation increments, etc.
5.5     Expenditure transferred to Development Properties
5.6     Closing balance as shown in the consolidated
        balance sheet (item 4.11)                                                                NIL                 NIL

Development properties
                                                                                                          Previous
                                                                                       Current          corresponding
                                                                                       period              period
                                                                                         $M                  $M
6.1     Opening balance
6.2     Expenditure incurred during current period
6.3     Expenditure transferred from exploration and evaluation
6.4     Expenditure written off during current period
6.5     Acquisitions, disposals, revaluation increments, etc.
6.6     Expenditure transferred to mine properties
6.7     Closing balance as shown in the consolidated
        balance sheet (item 4.12)                                                                NIL                 NIL

Condensed consolidated statement of cash flows
                                                                                                          Previous
                                                                                     Current           corresponding
                                                                                      period               period
                                                                                        $M                   $M
        Cash flows related to operating activities
7.1     Receipts from customers (inclusive of goods and
        services tax)                                                                      14,879.1             14,271.7
7.2     Payments to suppliers and employees (inclusive of
        goods and services tax)                                                          (14,086.1)           (13,453.5)
7.3     Cash distributions received from associated entities                                    2.9                  2.8
7.4     Interest and other items of similar nature received                                     7.8                  5.6
7.5     Interest and other costs of finance paid                                             (55.2)               (65.2)
7.6     Income taxes paid                                                                   (124.2)              (109.3)
7.7     Net operating cash flows                                                              624.3                652.1
        Cash flows related to investing activities
7.8     Payment for purchases of property, plant and equipment                              (305.3)              (250.8)
7.9     Proceeds from sale of property, plant and equipment                                    21.6                 23.9
7.10    Payment for purchases of businesses and controlled
        entities (net of cash acquired)                                                     (103.2)               (50.5)
7.11    Repayment of loan from other entities                                                   5.7                  7.3
7.12    Payment for purchases of investments                                                  (3.7)                (2.4)
7.13    Payment for purchase of associated entity                                             (0.6)
7.14    Net investing cash flows                                                            (385.5)              (272.5)
        Cash flows related to financing activities
7.15    Proceeds from issues of securities (shares, options, etc.)
7.16    Payment for shares bought back                                                                             (1.4)
7.17    Proceeds from borrowings                                                              279.8                676.6
7.18    Repayment of borrowings                                                             (377.5)              (951.9)
7.19    Dividends paid                                                                      (136.2)              (135.0)
7.20    Net financing cash flows                                                            (233.9)              (411.7)
        Net increase/(decrease) in cash held                                                    4.9               (32.1)
7.21    Cash at beginning of period (see Reconciliation of cash)                              866.0                578.1
7.22    Exchange rate adjustments to item 7.21
7.23    Cash at end of period
        (see Reconciliation of cash)                                                          870.9                546.0

Non-cash financing and investing activities

Coles Myer Ltd. issued ordinary shares under the Dividend Reinvestment Plan of $28.6
million (2002 $28.5 million).

During 2002, the CML Group disposed of its investment in Investment Funding Pty.
Ltd., Label Developments Pty. Ltd. and Power Investment Funding Pty. Ltd. for
$NIL consideration. Current receivables and loans decreased $115.3m and non-
current receivables and loans decreased $17.2m on disposal.

Reconciliation of cash
                                                                                                          Previous
Reconciliation of cash at the end of the period (as                                  Current           corresponding
shown in the consolidated statement of cash flows) to                                 period               period
the related items in the accounts is as follows:                                        $M                   $M
8.1     Cash on hand and at bank                                                              278.4                293.3
8.2     Deposits at call                                                                      593.0                257.2
8.3     Bank overdraft                                                                        (0.5)                (4.5)
8.4     Other (provide details)
8.5     Total cash at end of period (item 7.23)                                               870.9                546.0

Other notes to the condensed financial statements
Ratios
        Profit before tax / revenue
9.1     Consolidated profit (loss) from ordinary activities before
        tax (item 1.10) as a percentage of sales revenue (item
        1.1)                                                                                   2.3%                 2.2%
        Profit after tax / equity interests
9.2     Consolidated net profit (loss) from ordinary activities
        after tax attributable to members (item 1.12) as a
        percentage of equity (similarly attributable) at the end of
        the period (item 4.38)                                                                 6.0%                 6.4%

Earnings per security (EPS)

10.1    Refer Appendix A

NTA backing                                                                                               Previous
                                                                                     Current           corresponding
                                                                                      period               period
11.1    Net tangible asset backing per ordinary security                                      $2.16                $1.93

Discontinuing operations

12.1    Discontinuing operations
                     NIL

Control gained over entities having material effect

13.1    Name of entity (or group of entities)                          NIL
13.2    Consolidated profit (loss) from ordinary activities and
        extraordinary items after tax of the entity (or group of
        entities) since the date in the current period on which
        control was acquired
13.3    Date from which such profit has been calculated
13.4    Profit (loss) from ordinary activities and extraordinary
        items after tax of the entity (or group of entities) for the
        whole of the previous corresponding period

Loss of control of entities having material effect

14.1    Name of entity (or group of entities)                                                       NIL
14.2    Consolidated profit (loss) from ordinary activities and extraordinary                       $
        items after tax of the entity (or group of entities) for the current period to
        the date of loss of control
14.3    Date to which the profit (loss) in item 14.2 has been calculated
14.4    Consolidated profit (loss) from ordinary activities and extraordinary                       $
        items after tax of the entity (or group of entities) while controlled during
        the whole of the previous corresponding period
14.5    Contribution to consolidated profit (loss) from ordinary activities and                     $
        extraordinary items from sale of interest leading to loss of control

Dividends (in the case of a trust, distributions)

15.1    Date the dividend (distribution) is payable                                           12 May 2003
15.2    Record date to determine entitlements to the dividend
        (distribution) (ie, on the basis of registrable transfers
        received up to 5.00 pm if paper based, or by "End of                                 17 April 2003
        Day" if a proper SCH transfer)
15.3    If this is a final dividend, has it been declared?

Amount per security
                                                               Amount per            Franked             Amount per
                                                                security            amount per          security of
                                                                                 security at 30%       foreign source
                                                                                       tax                dividend
15.4      Not applicable to this Half yearly report
15.5      Not applicable to this Half yearly report
15.6      Interim dividend:      Current Year                     13.5c               13.5c
15.7                             Previous Year                    13.5c               13.5c

Total dividend (distribution) per security (interim plus final)
(Preliminary final report only)
                                                                               Current year         Previous year
15.8      Ordinary securities                                                          N/A                  N/A
15.9      Preference securities                                                        N/A                  N/A

Half yearly report - interim dividend (distribution) on all securities
                                                                                                          Previous
                                                                                     Current           corresponding
                                                                                      period               period
                                                                                        $M                   $M
15.10     Ordinary securities                                                                   0.0                159.3
15.11     Preference securities                                                                 0.0                 22.7
15.12     Total                                                                                 0.0                182.0

The dividend plan shown below is in operation.

          A Shareholders' Dividend Reinvestment Plan is in operation.

The last date(s) for receipt of election notices for the dividend                            17 April 2003

          NIL

Details of aggregate share of profits (losses) of associates and
joint venture entities
                                                                                                           Previous
                                                                                        Current         corresponding
                                                                                         period             period
Group's share of associates' and joint venture entities':                                  $M                 $M
16.1    Profit (loss) from ordinary activities before income tax
16.2    Income tax on ordinary activities
16.3    Profit (loss) from ordinary activities after income tax
16.4    Extraordinary items net of tax
16.5    Net profit (loss)
16.6    Outside equity interests
16.7    Share of net profit (loss) of associates and joint venture
        entities                                                                                  NIL                NIL

Material interests in entities which are not controlled entities

Name of entity                               Percentage of ownership

                                             interest held at end of period        Contribution to net profit (loss)
                                             or date of disposal                   (item 1.12)
                                                                     Previous                              Previous
                                                  Current         corresponding         Current         corresponding
                                                   period             period             period             period
                                                     $M                 $M                 $M                 $M
17.1    Equity accounted
        associates and joint
        venture entities
17.2    Total                                               NIL                NIL                NIL                NIL
17.3    Other material interests
17.4    Total                                               NIL                NIL                NIL                NIL

Segment Reporting

18.1    Refer Appendix B

Issued and quoted securities at end of current period

Category of securities                                Total                Number         Issue price     Amount paid
                                                      Number               Quoted         per security      up per
                                                                                                           security
                                                                                            (cents)         (cents)
19.1      RESET CONVERTIBLE
          PREFERENCE SHARES
19.2      Balance 28 July 2002                            7,000,000            7,000,000
19.3      Issued during the period
19.4      Balance 26 January 2003                         7,000,000            7,000,000
19.5      ORDINARY SHARES
          -FULLY PAID
19.6      Balance 28 July 2002                        1,184,579,882        1,184,579,882
19.7      Dividend Reinvestment
          Plan issue                                      4,727,522
19.8      Converted from partly paid
          shares                                              4,000
19.9      Balance 26 January 2003                     1,189,311,404        1,184,579,882
19.10     PARTLY PAID ORDINARY
          SHARES
19.11     Balance 28 July 2002                              128,000                  NIL            200               1
19.12     Converted to ordinary
          shares                                            (4,000)                  NIL
19.13     Balance 26 January 2003                           124,000                  NIL            200               1
19.14     OPTIONS                                                                        Exercise Price   Expiry Date
19.15     Balance 28 July 2002                           37,670,000
19.16     Issued during the period                        2,350,000                  NIL       a               b
19.17     Exercised during the period
19.18     Expired during the period                     (1,802,000)
19.19     Balance 26 January 2003                        38,218,000                  NIL

a         Exercise prices range from $5.88 to $8.32.
b         Expiry dates range from December 2006 to December 2007

Coles Myer Ltd. ordinary shares are listed on the New York Stock Exchange in the
form of American Depository Shares (ADS). Each ADS represents eight ordinary
shares. An American Depository Receipt is the certificate issued to the holder,
and can represent any number of ADS. As at 26 January 2003, there were 728,319
(2002 674,041) ADS on issue.

Comments by directors

Basis of accounts preparation

20.1    This general purpose financial report for the interim half-year
        reporting period ended 26 January 2003 has been prepared in accordance
        with Accounting Standard AASB 1029 Interim Financial Reporting, other
        mandatory professional reporting requirements (Urgent Issues Group
        Consensus Views), other authoritative pronouncements of the Australian       
        Accounting Standards Board and the Corporations Act 2001.

        This interim financial report does not include all the notes of the type
        normally included in an annual financial report. Accordingly, this 
        report is to be read in conjunction with the annual report for the year 
        ended 28 July 2002 and any public announcements made by Coles Myer Ltd.
        during the interim reporting period in accordance with the continuous
        disclosure requirements of the Corporations Act 2001.

        Except as stated in 20.5 below, the accounting policies adopted are 
        consistent with those of the previous financial year. Where necessary, 
        comparative figures have been adjusted to conform to changes in 
        presentation in the current year.

20.2    Material factors affecting the revenues and expenses of the economic 
        entity for the current period

        Refer accompanying commentary and other public documents.

20.3    A description of each event since the end of the current period which 
        has had a material effect and which is not already reported elsewhere in
        this Appendix or in attachments, with financial effect quantified 
        (if possible).

        On 10 March 2003, the company announced the sale of Sydney Central Plaza
        shopping centre to Westfield Trust for $390.0 million.

20.4    Franking credits available and prospects for paying fully or partly 
        franked dividends for at least the next year

        The consolidated franking balance of $143.9 million is after allowing 
        for current tax payments, and franking credits the CML Group is 
        prevented from distributing. It is expected that future tax payments 
        within the CML Group will create sufficient franking credits to enable 
        the payment of fully franked dividends for at least the subsequent year.

Comments by directors

Basis of accounts preparation (continued)

20.5   Unless disclosed below, the accounting policies, estimation methods and 
       measurement bases used in this report are the same as those used in the 
       last annual report. Any changes in accounting policies, estimation 
       methods and measurement bases since the last annual report are disclosed 
       as follows:

       Inventory Valuation

       (a) Supplier Promotional Rebates

       Effective 29 July 2002, the CML Group has revised its policy of 
       accounting for supplier promotional rebates such that accounting for all
       forms of rebates is reflective of the guidance given by the recent 
       Emerging Issues Task Force in the U.S. (EITF Issue No. 02-16, 
       " Accounting by a Customer (including a Reseller) for Certain 
       Consideration Received from a Vendor.")

       Under this guidance, virtually all forms of rebates (including some which
       under previous accounting guidance were able to be taken directly to 
       income) are treated as a reduction in the cost of inventory, deferring 
       the recognition of the income to as and when the inventory is sold. The 
       only exception is in limited circumstances in relation to the 
       reimbursement of direct advertising costs incurred on behalf of the 
       supplier.

       On initial adoption of the change at 29 July 2002, the CML Group 
       inventory decreased by $76.5 million (July 2001 $76.7 million). If the 
       accounting policy had always been applied, the impact of the change would
       have been a decrease to profit before tax of $4.1 million for the 
       half-year ended 27 January 2002 and $13.0 million for the half-year ended
       26 January 2003.

       Under the proposed international accounting standards coming into effect 
       in 2005, voluntary changes to accounting policies such as this would be
       made by an adjustment to retained earnings, rather than through the 
       Statement of Financial Performance.

       (b) Indirect Logistics Expenses

       Effective 29 July 2002, the CML Group made a modification to its policy 
       of recognising indirect costs of operating distribution centres as a 
       component of the cost of inventory.
       Previously, these indirect costs were expensed as incurred. The  
       modification was made to improve the relevance and reliability of the 
       information presented in the financial report and to further comply with 
       AASB 1019 Inventories.

       On initial adoption of the change at 28 July 2002, the CML Group's 
       inventory increased by $4.5 million. For the half-year ended 26 
       January 2003, the change in accounting policy was an increase to the CML 
       Group's profit before tax of $4.5 million.
       Had this policy been applied for the previous corresponding period the 
       effect would have been materially consistent.

Comments by directors

Basis of accounts preparation (continued)

20.5    Continued

        Liquor Licenses

        Effective 29 July 2002, the CML Group changed its accounting estimate 
        with respect to the useful life of liquor licenses. The previous 
        estimate recognised that liquor licenses had a useful life not exceeding
        twenty years.

        The revised accounting estimate recognises that in all material 
        respects, liquor licenses have an indefinite life as they have unlimited
        legal lives and are unlikely to become commercially obsolete.

        As a consequence, no amortisation of liquor licenses has been charged 
        for the period to 26 January 2003. Had a change in estimate of useful 
        life not taken place, then an amount of $5.0 million relating to 
        amortisation expense would have been charged in the half-year to 26 
        January 2003 ($4.8m charge for the half-year ended 27 January 2002).

20.6    Changes in contingent liabilities and contingent assets since the last 
        annual report.
        Contingent liabilities as at 26 January 2003 were $233.8m, a decrease of
        $11.9m since 28 July 2002, mainly associated with trading guarantees.

Additional disclosure for trusts

20.7    Number of units held by the management company or
        responsible entity or their related parties                                           Not Applicable

20.8    A statement of the fees and commissions payable to the
        management company or responsible entity.                                             Not Applicable

        Identify:
        - initial service charges
        - management fees
        - other fees

Annual meeting

(Preliminary final report only)

The annual meeting will be held as follows:
Place
Date
Time
Approximate date the annual report will be available

Compliance statement

   1     This report has been prepared in accordance with AASB Standards, other 
         AASB authoritative prouncements and Urgent Issues Group Consensus Views
         or other standards acceptable to the ASX.

         Identify other standards used                                                          NONE

   2     This report, and the accounts upon which the report is based (if 
         separate), use the same accounting policies.

   3     This report does give a true and fair view of the matters disclosed.

   4     This report is based on accounts to which one of the following applies.

                    The financial statements have                          -/       The financial statements
                    been audited.                                                   have been subject to review.

                    The financial statements are                                    The financial statements
                    in the process of being                                         have not yet been audited or
                    audited or subject to review.                                   reviewed.

   5     If the audit report or review by the auditor is not attached, details 
         of any qualifications will follow immediately they are available.

   6     The entity has a formally constituted audit committee.

Sign here:          .....................................    Date: 17 March 2003

Company Secretary

Print name:         Kevin Elkington

Directors' Report

The directors present their report for the 26 weeks ended 26 January 2003.

Directors

The names of the directors in office at the date of this report are:

Richard (Rick) H. Allert, AM            Chairman
John E. Fletcher                        Managing Director and Chief Executive Officer
Patricia (Patty) E. Akopiantz           Non-executive Director
Richard (Ric) M. Charlton, AM           Non-executive Director
William (Bill) P. Gurry, AO             Non-executive Director
Mark M. Leibler, AO                     Non-executive Director
Helen A. Lynch, AM                      Non-executive Director
Martyn K. Myer                          Non-executive Director

The above directors each held office during and since the end of the period.

Rick Allert was appointed Chairman on 10 October 2002.

In addition, Solomon Lew and Stanley (Stan) D.M. Wallis retired as non-executive
directors on 20 November 2002, Stan Wallis having stepped down as Chairman on 
10 October 2002.

Review of operations

The results of the operations of the CML Group during the period are reviewed on
pages 1 to 10.

Rounding of amounts

CML is a company of the kind referred to in the Australian Securities & 
Investments Commission Class Order 98/0100 dated 10 July 1998. As a result, 
amounts in the accompanying financial report have, where appropriate, been 
rounded to the nearest one hundred thousand dollars except where otherwise 
indicated.

Directors' Declaration

The directors declare that the financial statements and the notes set out on 
pages 11 to 25:

a.  comply with the Accounting Standards and the Corporations Regulations 2001; 
    and
b.  give a true and fair view of the CML Group's financial position at 26 
    January 2003 and its performance for the 26 weeks ended on that date.

The directors further declare that in their opinion there are reasonable grounds
to believe that CML will be able to pay its debts as and when they become due 
and payable.

This directors' report and declaration are made in accordance with a resolution 
of the directors.


Rick Allert                        John Fletcher

Chairman                           Managing Director and Chief Executive Officer

Melbourne, 17 March 2003

Earnings per
share
                                                                   January
                                                                    (cents)
                                                                2003        2002
Basic earnings per                                              16.4        16.1
share

Diluted earnings per                                            16.7        16.8
share                                                                                                                   
                                                              Number      Number
Weighted average number of shares used as the                   '000        '000
demoninator

Weighted average number of shares used as the 
demoninator in calculating basic earnings per              1,186,557   1,178,070
share

Weighted average number of ordinary shares and 
potential ordinary shares used as the
demoninator in
calculating diluted earnings per                           1,301,401   1,266,596
share

Reconciliation of earnings used in calculating earnings        $'000       $'000
per share

Basic earnings per
share
                                                          
Net                                                          217,892     212,465
profit

Dividends on preference shares                              (22,750)    (22,750)

Earnings used in calculating basic earnings                  195,142     189,715
per share

Diluted earnings per
share

Net                                                          217,892     212,465
profit

Earnings used in calculating diluted earnings                217,892     212,465
per share

Segment Performance

SEGMENT REVENUE
                                                                                                          Previous
                                                                                     Current           corresponding
                                                                                      period               period
                                                                                        $M                   $M
Food & Liquor                                                                               8,299.3              8,342.5
Kmart & Officeworks                                                                         2,329.3              2,164.7
Myer Grace Bros and Megamart                                                                1,756.7              1,833.0
Target                                                                                      1,422.5              1,312.1
Emerging Businesses                                                                           108.8                136.0
Property and Unallocated                                                                      702.5                644.4
Eliminated on consolidation                                                                 (730.5)              (634.4)
Sub-total                                                                                  13,888.6             13,798.3
Interest income (item 1.22)                                                                     9.3                  7.9
Total Revenue                                                                              13,897.9             13,806.2

SEGMENT RESULT
                                                                                                          Previous
                                                                                     Current           corresponding
                                                                                      period               period
                                                                                        $M                   $M
Food & Liquor                                                                                 246.7                261.6
Kmart & Officeworks                                                                            67.8                 43.5
Myer Grace Bros and Megamart                                                                   26.2                 36.4
Target                                                                                         62.0                 40.0
Emerging Businesses                                                                           (8.2)                (6.7)
Property and Unallocated                                                                     (37.1)               (31.5)
Sub-total                                                                                     357.4                343.3
Net borrowing costs                                                                          (39.0)               (47.5)
Profit before tax                                                                             318.4                295.8

Please note that the Segment Performance results are after adjusting for the 
accounting policy changes as detailed on page 24.


Independent review report to the members of

Coles Myer Ltd.

Statement

Based on our review, which is not an audit, we have not become aware of any
matter that makes us believe that the financial report, comprising pages 10 to
24 of the half yearly report included in the attached Appendix 4B of the
Australian Stock Exchange (ASX) Listing Rules and the directors' declaration
attached thereto is not presented in accordance with :

  * the Corporations Act 2001 in Australia, including giving a true and fair
    view of the financial position of the Coles Myer Ltd. Group as at 26 January
    2003 and of its performance for the 26 weeks ended on that date
  * Accounting Standard AASB 1029: Interim Financial Reporting and other
    mandatory professional reporting requirements in Australia, the Corporations
    Regulations 2001 and ASX Listing Rules.

This statement must be read in conjunction with the following explanation of the
scope and summary of our role as auditor.

Scope and summary of our role

The financial report - responsibility and content

The preparation of the financial report for the 26 weeks ended 26 January 2003
is the responsibility of the directors of Coles Myer Ltd. It includes the
financial statements for the Coles Myer Ltd. Group (the Group), which
incorporates Coles Myer Ltd. (the Company) and the entities it controlled during
the 26 weeks ended 26 January 2003.

The auditor's role and work

We conducted an independent review of the financial report in order for the
Company to lodge the financial report with the Australian Securities &
Investments Commission and the ASX. Our role was to conduct the review in
accordance with Australian Auditing Standards applicable to review engagements.
Our review did not involve an analysis of the prudence of business decisions
made by the directors or management.

This review was performed in order to state whether, on the basis of the
procedures described, anything has come to our attention that would indicate
that the financial report does not present fairly a view in accordance with the
Corporations Act 2001, Accounting Standard AASB 1029: Interim Financial
Reporting and other mandatory professional reporting requirements in Australia,
the Corporations Regulations 2001 and ASX Listing Rules relating to half yearly
financial reports, which is consistent with our understanding of the Group's
financial position, and its performance as represented by the results of its
operations and cash flows.

The review procedures performed were limited primarily to:

  * inquiries of company personnel of certain internal controls, transactions
    and individual items
  * analytical procedures applied to financial data.

These procedures do not provide all the evidence that would be required in an
audit, thus the level of assurance provided is less than that given in an audit.
We have not performed an audit, and accordingly, we do not express an audit
opinion.

Independence

As auditor, we are required to be independent of the Group and free of interests
which could be incompatible with integrity and objectivity. In respect of this
engagement, we followed the independence requirements set out by The Institute
of Chartered Accountants in Australia, the Corporations Act 2001 and the
Auditing and Assurance Standards Board.

In addition to our statutory audit and review work, we were engaged to undertake
other services for the Group. In our opinion the provision of these services has
not impaired our independence.

PricewaterhouseCoopers

Dale McKee     Melbourne

Partner     17 March 2003


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