Corporate Social Responsibility Report 2005 CSR report.pdf · Corporate Social Responsibility Report 2005 Corporate Governance – Combined Code Statement The Company recognises the

Corporate SocialResponsibility Report 2005

Woolworths Group plcwww.woolworthsgroupplc.com

This report was published on 09 May 2005

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Corporate Social Responsibility Report 2005

Contents

03 Chief Executive’s Introduction

04 Chief Executive’s Letter

06 Corporate Governance

10 Guiding Principles

12 How We Do Business – In Our Marketplace

15 How We Do Business – In Our Workplace

19 How We Do Business – In Our Environment

22 How We Do Business – In Our Community

Case studies

25 In Our Marketplace – Customer Support

28 In Our Workplace – Pension Scheme

31 In Our Community – Playground Partnerships

Appendices

36 Appendix 1 – Woolworths Group at a Glance

38 Appendix 2 – Background on BiTC

39 Appendix 3 – Samples of Our Policies – WorkplaceWoolworths Business policy – Voicing concerns

42 Appendix 4 – Samples of Our Policies – WorkplaceEqual Opportunities Policy – Entertainment UK

44 Appendix 5 – Samples of Our Policies – WorkplaceCode of Conduct

“It gives me great pleasure to be introducing our third online CSR reporton how we do business. We havecontinued in our evolutionary approachto CSR during the financial year 2004/5and continue to build on our success in several key areas.”

Trevor Bish-Jones, Chief Executive, 22 March 2005

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Trevor Bish-Jones, Chief Executive

Chief Executive’s Introduction

It gives me great pleasure to be introducing our thirdonline CSR report on how we do business. We havecontinued in our evolutionary approach to CSR during the financial year 2004/5 and continue to build on oursuccess in several key areas.

We continue to recognise the importance of balancing the interests of all our key stakeholders – our customers,our shareholders, our employees, our suppliers and the communities in which we work. Management of theenvironmental and social issues that play a part in ourbusiness is a key factor in our continued growth andsuccess and is the foundation of good corporategovernance.

Proper CSR management will influence our reputationalstanding, the attraction of our stores and products, ourability to secure and retain staff, supplier relationshipsand good standing in the financial arena.

The work of the CSR Committee has continued this year.Our report provides further focus on our activities in theCommunity with Playground Partnerships. We also lookat the re-launch of the Group pension scheme. I ampleased to be able to report that we have retained thisvaluable benefit for our employees at a time when manyother schemes are closing.

In our Environment we have been working hard on thelaunch of our new DC due to become operational in July2005. Whilst the key environmental benefits of this sitehave yet to be seen “in operation” the site represents oneof the UK’s first distribution sites designed and built withan eye upon our impact upon renewable energy andenvironmental efficiency.

In the marketplace this year our CSR efforts have beenfocussed on retail as well as the supply chain and inparticular on the work of our Customer Support Team.This dedicated team provide many avenues of support for our customers and have been recognised for theirprofessionalism, not only by their colleagues andcustomers, but also by their peers in the CustomerSupport industry.

This year we again participated in Business in theCommunity’s Corporate Responsibility Index.

We welcome engagement and debate with ourstakeholders and trust that this report provides a useful insight into CSR within Woolworths Group plc.

This report marks a year of good progress for our CSR agenda. I am pleased to say that since theGroup’s creation in 2001, commitment to responsible business practices has remained an integralpart of the way we operate.

From product sourcing through to the point of sale and beyond, our quality assurance processesensure that we incorporate within our ‘bottom line’ plans a focus on being socially responsible,environmentally friendly and safe. Likewise, we employ health and safety best practice for ourcolleagues and customers alike and our colleagues are given every encouragement to developtheir careers within the Group.

As our business develops, good governance should be at the heart of everything we do. We continue to focus our activities in the four key areas of our Marketplace, our Workplace, our Environment and our Community.

We are particularly proud this year of Playground Partnerships – an exciting new initiative that has been developed to award grants to primary schools to improve their playgrounds and the quality of pupils’ playtime. Playground Partnerships encourage primary school children to develop creative proposals explaining why their playgrounds need improving and the changesthey would make if they had sufficient funds.

The scheme encourages teamwork within schools to design and develop their play areas.Proposals are independently judged by a panel comprising educationalists, landscape architectsand play experts, and grants are awarded to the best entries. Eighty grants totalling £250,000were awarded in 2004 enabling the proposals to become reality. This initiative has also wonsignificant praise within the retail sector with Woolworths Kids First winning the 2005 Retail WeekCorporate Responsibility award for its work in the community.

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Chief Executive’s Letter

Playground Partnerships £10,000 Award Winners at BriaryCounty Primary School, Herne Bay.

We value the huge contribution of our employees and are committed to offering the opportunityfor them to develop by providing a rewarding graduate training scheme and varied andchallenging career opportunities. At a time when some companies are closing down their finalsalary pension schemes, I am pleased to report that the Woolworths Group pension scheme was updated in April 2004 enabling us to retain this valuable benefit for our employees.

For a full report on the Group’s activities in CSR, please refer to the Company’s website.Alternatively, for a hard copy of the 2005 CSR report please contact the Company Secretary.

Yours sincerely

Trevor Bish-JonesChief Executive22 March 2005

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Chief Executive’s Letter

continued

Chillingham Primary School at new store in Byker.

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Corporate Governance – Combined Code StatementThe Company recognises the importance of, and iscommitted to, high standards of Corporate Governance.During the financial year, the Group has complied withthe main and supporting principles of the 2003 FinancialReporting Committee (FRC) Combined Code. Compliancewith the principles of good governance and the specificprovisions of Section 1 of the Combined Code has beeneffected by the Company in the following way:

The Board of DirectorsThe Board comprises the Chairman, the Chief Executive,the Finance Director and three Non-Executive Directors,appointed for periods of three years. The Board issatisfied that, having considered the background andcurrent circumstances of each of the Non-ExecutiveDirectors, there are no relationships or other matterswhich could affect their respective judgement in carryingout their duties. Accordingly, the Non-Executive Directorsare considered by the Board to be independent ofmanagement. Their biographies illustrate the Directors’range of backgrounds which provides an experiencedand balanced Board to lead and control the Group.Andrew Beeson is the senior independent Non-ExecutiveDirector. The Non-Executive Directors have disclosed tothe Chairman and the Company Secretary their significantcommitments other than their directorship of theCompany. Similarly, the Chairman has discussed with theBoard the time commitment expected from his variousroles outside the Group. For both the Chairman and theNon-Executives, it has been agreed that all are able tomeet their respective obligations to the Company,provided that any proposed changes or additionalcommitments are notified to the Board. All Directors haveaccess to the Company Secretary and may takeindependent professional advice at the Company’sexpense. Each Director may also receive appropriatetraining as necessary and a record of training undertakenis maintained by the Company Secretary.

The Board meets not less than 11 times a year and hasadopted a schedule of matters reserved for its decision.The Board receives detailed proposal papers in advanceof meetings, together with management presentations tofacilitate proper consideration and debate of mattersbrought before it.

The Board is primarily responsible for the strategicdirection of the Group. Major strategic initiatives involvingsignificant cost or perceived risk are only undertakenfollowing their full evaluation by the Board. Matters of an operational nature are delegated to the Group’smanagement. Progress on key initiatives is reportedregularly and minuted, together with routine matters suchas financial performance and current trading in each ofthe Group’s business divisions.

In accordance with Combined Code principles, the Boardundertook a formal and rigorous evaluation of its ownperformance both as a board and on an individual basis(including the performance of the Chairman), and that of its core standing Committees. The evaluation wasperformed and administered by an external consultanttogether with the Company Secretary and consisted of formal interviews and completion of a detailedquestionnaire followed by group and individual feedback.In addition, where appropriate, the views of managementand the Internal Audit function were also sought.

The focus of the evaluation was to assess theperformance of the Directors in leading the Group towardits strategic and financial objectives, the respective skillsand competencies of each of the Directors and toformulate areas of potential development to furtherenhance the Board’s ability to both challenge and supportthe Group. The conclusions of this year’s assessmentwere considered by the Board and a number ofrecommendations have been put in place at Board and Committee level to ensure continued operationaleffectiveness.

Corporate Governance

“The conclusions of this year’s assessment were considered by the Board and a number of recommendations have been put in place at Board and Committee level to ensure continued operational effectiveness.”

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During the year 11 Board meetings were held. The Directors attended as follows:

In addition, three further Board meetings were convenedduring the year to deal with corporate transactions andthe exercise of share options previously sanctioned bythe Board.

The Board has established three core standingcommittees, with defined terms of reference, as follows:

The Audit CommitteeChaired by Roger Jones, the Committee comprises the three independent Non-Executive Directors. ThisCommittee is responsible for providing the Board withindependent and objective assurance on the controlenvironment across the Group, for ensuring that thesubsidiary companies are subject to an internal audit of the required quality and for making recommendationsto the Board on the appointment of auditors and theaudit fee. It also reviews the performance of the Group’s auditors to ensure an independent, objective,professional and cost-effective relationship is maintained.The Committee’s terms of reference are available on theGroup’s website.

As well as reviewing the Company’s published financialresults, the Committee reviews the Group’s corporategovernance processes (including risk analysis),accounting policies and procedures, reporting to theBoard on any control issues identified.

Internal audit plans and the relationship between theinternal audit function and the external auditors areroutinely assessed at Committee meetings. The AuditCommittee has also sponsored the development of arrangements throughout the Group to deal, inconfidence, with complaints from colleagues about any accounting or financial management impropriety or other questionable business practice or conduct.These arrangements are periodically reviewed.

To ensure the independence of the Group’s auditors, the Committee has reviewed the relevant policies andpractices of the external auditor. The rotation of keypartners at appropriate intervals and monitoring theextent of non-audit work and related fees are establishedprinciples which are implemented as necessary andregularly reviewed by the Committee to safeguard theindependence and objectivity of the external auditor.

Each of the Non-Executive Directors has, through theirother business activities, significant experience infinancial matters. Andrew Beeson (a non-executivedirector of Schroders plc and former chairman ofEvolution Group plc, a leading Corporate Finance andStockbroking business) has significant, recent andrelevant experience of financial and accounting issues.

The Committee is also responsible for the properreporting of the financial performance of the Group andfor reviewing financial statements before publication.

The meetings of the Audit Committee are also the forumused by the Non-Executive Directors to meet without the Executive Directors present to discuss theperformance of the Group, its management and theirongoing stewardship of shareholders’ interests. The Non-Executive Directors and the auditors have theopportunity at this time to raise and discuss any issues of concern in this regard.


continued

Board of Directors Attendance

Andrew Beeson 10

Trevor Bish-Jones 11

Gerald Corbett 11

Roger Jones 11

Prue Leith OBE 9

Christopher Rogers 10

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During the year three Audit Committee meetings wereheld. The Committee members attended as follows:

The Nominations CommitteeComprising the Chairman and the Non-ExecutiveDirectors, the Committee is chaired by Gerald Corbett(succeeding Prue Leith OBE), and is responsible formonitoring and reviewing the composition, balance and expertise of the Board and for reviewing andrecommending appointments to the Board. Prospectiveappointments are considered by the Committee whichagrees a detailed job description and the capabilitiesrequired for the role. The Committee generally engagesexternal consultants to administer the search process,prepare a shortlist of potentially suitable candidates andto advise generally on prospective appointees. Only after a rigorous interview process is any appointmentrecommended to the Board. The terms of reference of the Committee are available on the Group’s website.The meetings of the Nominations Committee are also the forum used by the Chairman to meet with the Non-Executive Directors without the executives present todiscuss any concerns about the running of the Company.

During the year five Nominations Committee meetingswere held. The Committee members attended as follows:

The Remuneration CommitteeComprising the Non-Executive Directors, the Committeeis chaired by Andrew Beeson. The Committee’s terms of reference are available on the Group’s website. TheCommittee’s aim is to ensure that the Executive Directorsare rewarded for their contribution to the Group andmotivated to enhance the return to shareholders. TheRemuneration Committee is responsible, on behalf of the Board, for the Group’s policy on the grant of shareincentives to Executive Directors and other seniormanagement as well as the specific remuneration andbenefits packages for Executive Directors.

During the year three Remuneration Committee meetingswere held. The Committee members attended as follows:

The Corporate Social Responsibility CommitteeFurther details can be found in this report and in the 2005CSR report.

Accountability and AuditGoing ConcernA statement in accordance with the going concernprinciple is included in the Financial Review.

Relations with Shareholders and BondholdersThe Company maintains an active dialogue with itsinvestors through a planned programme of investorrelations activities. This is a key component of itscorporate communications programme and is headed bythe Finance Director. The Chairman and Chief Executivealso attend the majority of these shareholder meetings.

The investor relations programme includes formalpresentations in the UK and overseas (where appropriate)on full-year and interim results. One-to-one meetingsbetween institutional investors and senior managementare also held regularly.


continued

Audit Committee Attendance

Andrew Beeson 2

Roger Jones 3

Prue Leith OBE 2

Nominations Committee Attendance

Andrew Beeson 3

Gerald Corbett 5

Roger Jones 5

Prue Leith OBE 5

Remuneration Committee Attendance

Andrew Beeson 3

Roger Jones 3

Prue Leith OBE 3

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Feedback from these meetings (including the non-attributed views of major institutional shareholders) isreported back to the Board. The Company Secretary isalso charged with bringing to the attention of the Boardany material matters of concern raised by the Company’sstakeholders, including private investors.

Communication with investors also takes place throughthe Annual and Interim Reports and via the Groupwebsite. In addition, the Annual General Meetingprovides an important opportunity for communicationwith both institutional and private shareholders.

Internal ControlThe Board of Directors has overall responsibility for the system of internal control and for reviewing itseffectiveness throughout the Group. However, such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can provide only reasonable and not absolute assuranceagainst material misstatement or loss. The effectivenessof the Group’s systems of internal control is reviewed bythe Audit Committee on behalf of the Board.

The Board considers risk assessment and control to befundamental to achieving its corporate objectives withinan acceptable risk/reward profile, and confirms that thereis an ongoing process for identifying and evaluating thesignificant risks faced by the Group and the effectivenessof related controls. This process is regularly reviewed bythe Audit Committee. The key procedures in place toenable this responsibility to be discharged are:

The Board of Directors• has approved a set of policies, procedures and

frameworks that are designed to facilitate theoperation of effective internal control and whichinclude the provision of quality internal and externalreporting and compliance with applicable laws and regulations. These are periodically reviewed and updated;

• regularly reviews the Group’s strategy and thestrategies of the subsidiary companies;

• reviews and assesses the Group’s key risks at leastannually;

• reviews performance through a comprehensivesystem of reporting, based on an annual budget with monthly business reviews against actual results,analysis of variances, key performance indicators andregular forecasting;

• has well defined policies governing appraisal andapproval of capital expenditure and treasuryoperations;

• seeks assurance that effective control is beingmaintained through regular reports from the AuditCommittee and the Internal and External Auditfunctions.

Each Operating Company Board• maintains systems for the continuous identification

and evaluation of significant risks resulting from theirstrategies and their areas of the business;

• self certifies that it is clearly accountable forestablishing and monitoring internal controls within its business, that processes are in place to providereasonable assurance that material business risks areidentified and managed appropriately, that internalcontrols have been effected and that they comply with the Group’s policies; and reports on any controlweaknesses or breakdown considered as material tothe Group;

• reviews and monitors the effectiveness of the systemof internal control through reports from the GroupInternal and External Audit functions.

The Internal Audit Function• is responsible for providing the Board with

independent and objective assurance on the controlenvironment across the Group and for ensuring thatthe subsidiary companies are subject to internal auditof the required quality.

These processes and organisational procedures enablethe Directors to confirm that they have reviewed theeffectiveness of the system of internal control.


continued

In Our Marketplace

We will act with integrity at all times and will treat all tradingtransactions as an opportunity to build sustainable tradingrelationships for the Group and our trading partners.

The following basic principles should guide everything that we do:

• We will be truthful and fair in all aspects of our business;

• We will abide by the law;

• We value our good reputation with customers and business partners;

• We will favour suppliers who implement ethical trading standards and will provide them with the support to develop these policies further.

In Our Workplace

The Group is committed to the principle of equal opportunity inemployment. That commitment extends to ensuring that no applicantor employee receives less favourable treatment on any of the followinggrounds: gender, marital status, race, colour, nationality, ethnic or national origin, religion, HIV status, disability, sexuality, or unrelatedcriminal convictions. We also require that no applicant or employee isfurther disadvantaged by conditions or requirements that cannot beshown to be justified.

The Group applies fair and equitable employment policies to support dignity for all colleagues asthey go about their work and to enhance entry into and progression within the Group. We supportan open and practical approach to employing disabled people wherever suitable opportunitiesexist. As one of the UK’s largest employers of part-time staff, we also try to agree flexible workingpatterns that allow our people to balance their home and family life.

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Guiding Principles

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Guiding Principles

continued

In Our Environment

Our policies can help to sustain and improve our environment for thebenefit of all. We promote good environmental practice by our peopleand our suppliers and aim to take an active part in reducing theGroup’s impact upon the environment.

The following principles guide our activities:

• We are committed to continual improvement of our environmental performance. We aim toensure that all of the Group’s activities comply with environmental standards and legislation.

• We will work with relevant industry bodies to ensure that products are marked with recyclinginformation at source.

• We aim to minimise the quantities of packaging and stationery that we use while ensuring theefficient operation of our business.

• We aim to manage our resources to save energy, reduce waste, promote re-use and recycling,avoid damage to the environment, and prevent pollution.

• We aim to implement best practice in our processes and procedures to support our employeesin carrying out their jobs in an environmentally responsible way.

In Our Community

We are active members of the communities in which we work. The following principles guide our approach to the communities that surround our operations:

• We seek to be sponsors of local and national causes, particularly those associated with children.

• We aim to behave as a good neighbour wherever we operate a business.

• We recruit our workforce locally from the communities that we serve and aspire to be an employer of choice.

• Whenever possible, we allow our colleagues to choose which charities or causes to support,allowing them to make a difference through fundraising or practical support.

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How We Do BusinessIn Our Marketplace

We strongly endorse the BiTC premise that a socially responsiblecompany should be profitable first and foremost. It is important that the measures we take in dealing with our supplier base aresustainable in the long term and do not distract from the Group’sability to succeed and be profitable.

Supply ChainOur Guiding Principles present a constant challenge to the buying teams to ensure the mostinnovative, high-quality products are sourced both ethically and profitably. We believe that both our business decisions and our supply base must be sustainable for us to succeed in the longer term.

As a leading general merchandise retailer and purchaser of goods from around the world,Woolworths aims to ensure that its products are sourced from suppliers and manufacturers thatcomply with our Trading Terms and Conditions, and operate their businesses in accordance with our Environmental and Ethical Code of Conduct.

We also ensure that, wherever reasonably possible, our suppliers can demonstrate comprehensivemanagement of their supply chains. This has the aim of ensuring that production of ourmerchandise meets specified quality standards, without compromising any of our sourcingpolicies.

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Regular checks are made at factories during the pre-shipment inspection stage and there are now morethan 900 reports on file. Virtually all audit reports contain a corrective action plan, as it is rare to find a perfectfactory. Where necessary, follow up meetings are heldwith suppliers to discuss audit results and ensure there is a mutual understanding of what is required with agreedtimescales. Confirmation of the improvements made is verified through the submission of documents,photographs, etc. and by a re-audit visit. Providingguidance to help factories develop and improve isfundamental to raising standards and creating theopportunity for employees to benefit from a betterworking environment.

During 2004 a small number of unannounced ethicalaudits were carried out during the peak productionperiod. Additional funds have been allocated in 2005 to extend this programme, which will contribute furtherdiligence to the routine activities currently in place.

There is evidence that the efforts being made byWoolworths to monitor and improve the social issues in manufacturing are having the desired effect on supplierand factory management. There is recognition that theguidance being provided usually results in meaningfulbusiness benefits. By improving working conditions,showing greater concern for their employees’ welfare,etc. staff turnover is reduced and results in a moreeffective operation. Facilities such as improved medicalcover, genuine acceptance of worker representation,training, air conditioning, better lighting and the provisionof leisure activities, etc. are now becoming more commonin Chinese factories.


Woolworths has a well-defined and developed processfor managing the ethical and environmental standards of suppliers. Our Environmental and Ethical Code ofConduct is the key tool for implementing our tradingprinciples.

We do this by auditing our suppliers against a detailedassessment questionnaire, which is used initially indetermining appropriate suppliers/factories.

Our entertainment companies, including ourentertainment distribution business, EUK, are in anunusual position, in that many of the products that they buy and sell are only available from one supplier.Therefore, supplier selection criteria do not feature ashighly on the agenda as they do for Woolworths. EUKsources all of its products for resale within the EuropeanEconomic Area, and so does not encounter the range ofenvironmental and ethical issues that can be experiencedby other Group companies.

Our Woolworths Group Asia (WGAL) buying office inHong Kong continues to progress in determining prioritiesfor continuous improvement and establishing long-termbusiness partnerships throughout Asia.

Supplier and factory audits remain the primary means of gathering information to decide on the suitability ofmanufacturing locations and to this end more than 500reports were filed in 2004. The procedure for assessingpotential new factories is robust and has beensupplemented by a schedule of re-audits at existingsources. These visits have been planned on a risk basis, taking account of previous findings, location, the production calendar and other associated criteria.

continued

It is also worth recognising the excellent work being funded by one of Woolworths’ Clothingsuppliers in Bangladesh. Following the outlay for the planning and building of a small hospitalnorth of Dhaka in 2001, our supplier has increased expenditure for doctors’ salaries, drugs,medical care, etc. for the local community. Donations to other medical centres, schools, charitiesand religious groups now total more than USD 100k each year. Woolworths is proud to work withsuppliers who actively contribute in helping to improve the lives of others.

RetailThis year we want to focus as well on the retail side of our operations in the marketplace.

The Woolworths Customer Support Department handles all customer enquiries and complaints for all our 843 stores and also our websites.

Please refer to our case study for an in-depth view of how this team operates and some of itsrecent achievements.

Woolworths Asia Facts and Figures

No. of containers (TEUs) shipped 16,160No. of purchase orders processed 16,134No. of Letters of credit raised 1,819 (-19% year on year)No. of products managed 6,013 (+ 4.8% year on year)No. of ports used to ship 40 ports in 21 different countriesNo. of suppliers used 418No. of factories used 753

NB: Figures for 2004 include direct business for Woolworths, including clothing from India

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continued

Codes and PoliciesWe are guided in our day-to-day dealings with colleagues by our Guiding Principles.

In addition, the Woolworths Group Code of Conduct defines our minimum standards for ethicalbusiness practice. It applies to all employees, consultants and agents. Each Operating Companyis permitted to adapt or translate the code into local policy provided it does not reduce theobligations that it places upon itself and its business partners.

As a consequence, each of the Operating Companies has in place a suite of supporting policies to govern ways of behaving and doing business. For example:

Woolworths Group plc’s Guiding principles, Code of Conduct, Woolworths Business Behaviour(Voicing Concerns) and Entertainment UK’s Equal Opportunities policy are available as part of this report.

Developing our ColleaguesTraining is important for the professional and personal development of our colleagues and isavailable to all managers and employees within the Group.

The approach we take within Woolworths is to ensure that everybody is clear about what his orher role is; that employees have the skills and capabilities necessary to carry out that role; thatthey are told how they are performing against that role; and that they have opportunities toprogress their careers and develop into other roles within the Company.

Employment within the Woolworths Group offers training opportunities, clear codes and principles.

To ensure that this approach is carried out we have implemented the following programmes:

• We have career and development frameworks across the business. For example, within ourretail operations we have a programme that takes colleagues from Saturday Assistant to themanager of our largest stores in a number of clear steps.

• The Woolworths Group Leadership Programme (WGLP) provides career and leadershipdevelopment at all levels in the Group for colleagues who are the potential senior managers of the future. It starts at graduate-entry level direct from university.

• Office-based colleagues have access to an internet-based Learning Zone so that developmentand training can be carried out at the individual’s convenience at his or her own desk.

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How We Do BusinessIn Our Workplace

We recognise that none of our plans for success can be achievedwithout the hard work and commitment of our colleaguesthroughout the Group. They are entitled to equality of opportunity,dignity and respect as they go about their work.

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continued

The structure varies across operating company but eachH&S team has a network of supporters, be they LossPrevention Co-Ordinators, (LPCs) at Woolworths or H&Srepresentatives at EUK. These teams serve as the eyesand ears across the business.

The LPCs within Woolworths have basic H&S training and can respond to and investigate minor incidents which are above the store managers’ remit but do notwarrant a full scale H&S investigation. At EUK teamleaders receive full H&S training and are responsible for implementing and maintaining policy and safetyprocesses within their own areas of the distribution centre operation.

CommunicationEmployee involvement in decision-making at Woolworthscomplies with European Works Council legislation.Approximately 10% of Woolworths store employees are members of unions.

Woolworths ‘Two Way Communications’ is an innovativeand effective way of publicly raising colleagues’questions and concerns and providing feedback onactions taken. This initiative provides support toViewpoint, the Company’s employee attitude survey.

Viewpoint has been underway now for over four yearsand provides direct feedback to leaders across theorganisation as to how colleagues are feeling and theissues that they consider to be important. It operates as a rolling survey whereby employees are questioned in ten out of the twelve months of the financial year. Thissystem allows us to respond more quickly to employeeconcerns and stay in touch with their views at all times.We also monitor voluntary employee turnover closelyacross all populations – another indicator of employeewell-being.

The Group routinely circulates important announcementsand business developments by email and holdsconferences and briefings to deal with major corporateevents such as Christmas planning and resultsannouncements. A number of internal magazines are also published, containing key management messages,product updates, and colleague feedback.

PayWe aim to provide an attractive level of pay and benefitsfor everybody across the Group relative to their job andskill level. Our Share Save scheme is a popular way ofsaving whilst investing in the success of the Group and isavailable to all employees, regardless of level or income.

In December 2004, more than 3,000 colleagues in the Group saw their first Woolworths Group ShareSaveoption mature. This enabled participants to buyshares in the Company at a price of 30.5 pence. More than 700 employees chose to exercise options and keep their shares.

DiversityAll new employees receive an ‘equal opportunities’booklet.

The Group is also a member of the Employers’ Forum on Disability – an employers’ organisation focused on theissue of disability in the workplace, funded and managedby companies. With over 365 members, the Forumrepresents organisations that employ over 20% of the UK workforce.

The Forum is recognised as the authoritative voice on theway in which disability issues affect employers andservice providers. Since its establishment in 1986, theForum has worked closely with government and otherstakeholders, sharing best practice to make it easier toemploy disabled people and serve disabled customers.

Health and SafetyThe well-being and health and safety of our employeesand visitors to any of our stores and other sites is ofutmost importance. Each operating company within theGroup has a director with responsibility for H&S and aHealth and Safety Manager and team.

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There is recognition of colleagues’ performance via a three-badge system:

• “I know”: a white badge with black smile – Awardedafter attending a Service into Sales workshop.

• “I give”: a white badge with red smile – Awardedwhen consistently giving good service.

• “I excel”: a blue badge with red smile – Awarded forexceptional service.

Service into Sales was enhanced during 2004 by thelaunch of Making Families Smile, which is relevant toevery employee. A series of roadshows was run acrossthe company and all 30,000 colleagues in retail wereinvited to attend. The objective was to deliver the MakingFamilies Smile mission in an informal and fun way.

Woolworths also aims to discuss objectives withcolleagues regularly and has launched daily briefingsacross all stores. The briefings are designed to bringcolleagues up to speed with the current state of thebusiness, our plans for the future and their roles inmaking families smile.

‘What Makes A Good Buyer?’The Good Buyer work was commissioned to appraiseand benchmark the Woolworths Buying population. This was done through a series of in-depth 1:1 interviewsacross the buying group to establish internal competencewhich was then tested against competence in the market.From this breakthrough, capabilities were identifiedresulting in a skills framework which complementstechnical buyer skills and leadership skills describedwithin the Woolworths Leadership model. Individuals who participated in the research received personalfeedback to support future development and careerprogression. Following the introduction of thebreakthrough capabilities we have rescoped ourrequirement when recruiting both internally and externallyand shifted the development focus for the buyingpopulation to ensure we recruit, retain and develop thebest buyers in the market.

Our Performance 2005Woolworths Group plcIn April 2004 Woolworths Group launched its newpension scheme. During an extensive review, thefollowing variables were used to flex the schemesavailable, thus enabling the retention of the final salary scheme:

• retirement age

• accrual level

• contribution level

• early retirement terms

• provision for spouses on death after retirement

• administration costs as a result of members joiningthe scheme and then leaving the company within ashort space of time

• whether the scheme is contracted into the StateSecond Pension.

For full details of the scheme structure, how it wascommunicated and the participation level, please see the attached case study.

Woolworths plc‘Service into Sales’We received feedback from our customers regardingservice they received in stores. From their feedback, we acknowledged that service was inconsistent acrossthe salesfloor and was on occasion compounded by poor queue management at the till point. We wanted to get it right so that it would make a real difference toour customers.

‘Service into Sales’ was developed and rolled out tostores in September 2003. Service into Sales is not hardsell; it is about increasing our sales through the serviceand products we offer. We have sought to build on whatour best colleagues have already been doing, and doingit because it is what they want to do rather than havingbeen artificially scripted.

continued

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Health and SafetyLast year we introduced the new Health & SafetyStandards in Practice (SIP) document which contains allof our generic risk assessments for store-based activitiesas well as being a comprehensive reference document.Within the H&S SIP there is also the facility for the storemanager to carry out a store specific risk assessmentshould the need arise. We also started to use an externalcompany to carry out a store specific fire risk assessmentas required by the Fire Precautions (Workplace)Regulations. They also carry out a full fire safetyinspection using Woolworths internal ‘Critical FireHazards Document’. In addition we introduced a new fire safety SIP last year. We also reviewed and reworkedthe responsible persons health & safety training course,which is a one-day course covering health & safety withinstores and also equips the store management team tocarry out basic risk assessments.

Entertainment UK Limited (EUK)WorkplaceEUK continues to make sure that its policies andemployment practices keep abreast of and in some cases exceed legal requirements.

The annual management development review was held to discuss potential career development opportunities formanagers within the company.

An annual results briefing was held in April 2004 for allstaff to update them on progress in the previous financialyear and also to communicate the strategy for 2004/5.This was part of a package of communications, alongwith senior management meetings and Fast Forward –the EUK company magazine, in order to keep peopleupdated on company news and progress.

Head Office refurbishmentThe Head Office refurbishment programme commencedin April 2003.

In November 2003 floors 4 to 7 were opened. The officesare now light and airy as new windows have been fitted. The offices have new desks, chairs and plenty of cupboard space.

The new restaurant facility opened in November under anew catering contract with Eurest that offers a vast menuof options for breakfast and lunch. In addition, there willalso be access to the balcony during the warmer weather.On each floor there is access to fresh bean coffee andspeciality teas via high-quality vending machines.

On the 6th floor there is a Learning Resource Centrewhich offers access to a range of learning aids. The LRCis also large enough to accommodate briefing sessionsfor events such as team build days and performancemanagement workshops.

The remaining floors, 1 to 3, opened in April 2004, withthe ground floor and basement opening in December2004. On the ground floor there is a fully resourceddocument centre, a fully equipped presentation suite andaccess to showers.

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How We Do BusinessIn Our Environment

Based on the Group’s guiding principles the Group seeks tounderstand and minimise its environmental impact.

A copy of the Group’s guiding principles can be found on our website atwww.woolworthsgroupplc.com/csr

The Group’s major environmental issues are those commonly associated with most large-scale retail operations:

• Energy use within buildings – e.g. stores, distribution centres and offices

• Energy use through logistics – e.g. transport from producer to warehouse, distribution fleet and company cars

• Products – product design, manufacturing, distribution, use and end of life

Environmental data is collected individually by each operating company, which sets its own targets.

Energy Statistics: Electricity Consumption

All Woolworths stores:To Feb 03 167,903,593 kWhTo Feb 04 173,847,596 kWhTo Feb 05 178,730,090 kWh

Logistics and Distribution Update Reverse LogisticsIn August 2004 Woolworths introduced a new faulty returns process aimed at reducing landfillimpact and increasing the element of re-use of merchandise returned to store. A new, outsourcedreturns facility is operated by Return Logistics based in Swindon.

The new process means that all of the faulty items returned by customers annually can be sent to Return Logistics for central processing and re-use. Previously, a significant proportion of items were destroyed (with attendant safety implications for colleagues) and sent to landfill. This initiative has led to reductions in store waste volumes and helps prepare the company for the implementation of the WEEE directive later in 2005.

Larger stores are now able to return items as often as daily. Previously, items scheduled for return to supplier were held in store until a major recall was organised (usually bi-annually). As a consequence of this new approach there are demonstrable space savings in storestockrooms and a greater ability for store colleagues to focus on the display of good stock. The location of the returns centre has also meant that shared transportation of goods via the main Woolworths Distribution Centre in Swindon has minimised road mileage associated with the return of faulty items.

Out-of-town stores:To Feb 03 33,210,428 kWhTo Feb 04 34,569,852 kWhTo Feb 05 31,951,001 kWh

Mainchain:To Feb 03 134,693,165 kWhTo Feb 04 139,277,744 kWhTo Feb 05 146,779,089 kWh

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Operational Performance – UKDuring the course of the year, the DistributionEnvironmental Policy has been comprehensively re-written. In support of this a new quarterly auditprocess has been implemented.

Transport operations have seen improved environmentalperformance over the course of the last financial year:

• Fuel efficiency has increased by 0.1% during the year

• Total road mileage travelled has reduced by 4.4%

• 12% of all store deliveries are now completed outside of normal trading hours

• Road mileage saved by collecting goods fromsuppliers has increased by 8%

• We have undertaken major improvement works on one of our key distribution sites to improve drainage,reduce spillage contamination risk and to ensure theprotection of local fresh water systems

Operational Performance – Offshore SourcingWe have, over the past three years progressivelyincreased efficiencies in our international logisticsactivities which, whilst having positive cost controlimpacts also have significant positive environmentalimpact.

Over the course of the past year we have seen:

• Offshore merchandise consolidation improvement of4.4% (building on the previous year’s improvement of5.2%). This improves the efficiency of fill of containerscoming into the UK, thereby reducing the number ofvessels and port-side vehicles in use.

• We have progressively increased the use of the largestcontainers with the largest 45’ unit utilisation up by one third, whilst small container usage has fallen byover 40%

• Total container fill has increased by almost 4%

• Implementation of a ‘drop and swap’ process in the UK for international freight which reduces wastedUK journeys.

• International shipping continues to get larger and thecapacity on the vessels utilised by Woolworths freight is now up to 8,000 containers. Increased computingcontrol on these vessels is also significantly improvingcargo capacity usage, permitting optimum routesailing and optimum speed management. Our largestsea carrier is currently exceeding the InternationalMaritime Organisation heavy fuel sulphur contentguidelines by some 40%.

Distribution Centre DevelopmentDuring 2004/5 we have concluded the design work onour new distribution network arrangement, which willsignificantly reduce total vehicle mileage over the courseof the next three years.

The first phase of these developments will see theintroduction of a new Distribution Centre at Bedfordwhich will come on-stream during the summer of 2005.

This site has been designed along an ‘EcoTemplateWarehouse Model’ by Gazeley properties. The 445,000 sq ft facility incorporates 11 environmentally beneficialinitiatives and is the first of its kind in the UK.The 11 key initiatives at Bedford include solar thermal hot water heating; a wind turbine to generate power for the offices; rooflights reducing the need for electriclighting; and pervious paving, minimising the need forman-made underground drainage systems. Overall, the facility will cut water usage by 45%, harvest 400,000litres of rainwater per annum (equivalent to 25 millioncups of tea), reduce CO2 emissions; and derive 6% of its energy requirement from natural resources.

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Waste – Recycling Product packaging is used in large quantities within the Woolworths Group. Its use ranges from productprotection and transportation to in-store display andmerchandising, through point of sale and productdescription. Woolworths’ stores work together with two of our other businesses, EUK and MVC, to promote therecycling of waste cardboard and other packaging withinits operations.

Wherever possible, card and plastic materials, the twomajor packaging constituents in our business, are takenback from our stores to our Distribution Centres. Thematerials are then baled and passed to recyclingbusinesses for reprocessing.

Statistics for Recycling Packaging:Plastic Tonnage: Year end 2003 300 Tonnes Year end 2004 397 TonnesYear end 2005 311 Tonnes

Card Tonnage:Year end 2003 18,300 Tonnes Year end 2004 17,346 TonnesYear end 2005 17,253 Tonnes

Entertainment UK (EUK) UpdateEUK entered into a waste partnership with Onyx andPearce Recycling. All EUK sites have cardboard balersinstalled and this is generating revenue back into thebusiness.

Onyx & Pearce Recycling attend the regular EUKenvironment forum meetings to keep us abreast ofchanges and initiatives within the waste industry that may benefit EUK.

EUK recycled 1,653.15 tonnes of cardboard during 2004.

Supplier return books at the Perivale site are now pulpedand converted into paper for tissues and newspaper.

After Christmas an initiative was launched to encourageemployees to recycle their Christmas cards. Staff brought their cards from the office or home and they were collected at each site and then taken to Tesco to be put into their recycle container.

845 tonnes of plastic CD cases were sent to be grounddown and recycled.

1,020 toner cartridges were recycled.

260 tonnes of plastic video cases were ground down and recycled.

1,410 fluorescent tubes were recycled.

The packaging data submission to Valpak in February2004 increased due to improved recording of data withinthe business.

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How We Do BusinessIn Our Community

The Group strives to be a good neighbour and to make acontribution to the wider society. In keeping with our GuidingPrinciples we believe best practice combines charitable giving and using our resources to contribute to society.

Woolworths Kids FirstOnce more, community activity in 2005 is centred on Woolworths Kids First (Charity No. 1073947).

It was our customers and employees who told us what they wanted when we asked what charityinvolvement meant to them. As a result, Woolworths Kids First was founded to enable employeesthroughout the Woolworths retail business to support community-based projects of their choice to benefit children. Involvement in the scheme is voluntary with responsibility taken at a local level for each initiative.

Other funding streams continue to evolve as the charity develops. Selected product continues to be sold through Woolworths’ stores, part of the profits of which are donated to the charity.In addition, our suppliers have continued to identify with the principles that we espouse forcommunity involvement by supporting high-profile charity events. Our flagship fundraiser was the Red Carpet Bash, held at the Grosvenor House in September 2004. This event alone raised£300,000 for the cause, enabling the development of grant-making initiatives such as the award-winning Playground Partnerships (see below).

Thanks to the efforts of employees, suppliers and customers, over £750,000 was raised forWoolworths Kids First in 2004.

Playground PartnershipsIn 2004, Woolworths Kids First launched Playground Partnerships, a grant-giving scheme set up to address the issue of play provision which had been identified as a real concern for manyschools. The primary objectives of the programme were to create a fun, curriculum-based andchild-led project that allowed UK primary school children to develop creative proposals for theimprovement of their school playground.

Following a successful pilot across 50 schools in Essex and Kent, Playground Partnerships waslaunched nationally in 2004. Whilst the scheme is designed to constitute an educational project in its own right, schools are encouraged to submit the resulting work to Woolworths Kids First for consideration for an award, enabling them to turn their ideas into reality. In its first year 7,000schools requested a project pack and £250,000 was awarded to 80 successful applicants, ingrants ranging from £1,000 to £10,000.

Following its recent success in winning the Retail Week Corporate Responsibility Award 2005, the programme has been launched again this year with an increased grant fund of £500,000 andan additional category for special schools. Please refer to our case study for further details.

The Big Tick Woolworths was once again accredited in 2004 with the Cause Related Marketing Awards forExcellence Kite Mark. The Big Tick acknowledges andcelebrates the impact resulting from the continuedpartnership between Woolworths and Woolworths KidsFirst.

British Retail ConsortiumWoolworths is also a member of the British RetailConsortium (BRC), with a seat on the CSR Committee.The BRC exists to speak for the retail industry bycampaigning, networking, and disseminating information.The BRC has developed a range of ways for the industryto improve its performance by standards/benchmarking,research, tools, information and publications.

The London Benchmarking GroupThe London Benchmarking Group and its model for the management and measurement of corporatecommunity involvement has been helping membercompanies effectively assess and target their communityprogrammes since 1994. Woolworths has benefited fromthe use of the LBG model since 2001.

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Our Business in the CommunityThe group strives to be a good neighbour and to make a contribution to the wider society. In keeping with our Guiding Principles, we believe that best practicecombines charitable giving and using the resources of the organisation to contribute to society.

The group has been involved in a number of initiativesincluding a cash donation to victims of the Beslan Siegeand a donation through UNICEF of clothing for childrenaffected by the tsunami. In addition, employees in manylocations throughout stores and offices raised thousandsof pounds that was donated to the DEC (DisastersEmergency Committee) Tsunami Fund locally.

BiTCThe Woolworths Group is a member of Business in the Community and for the third time has completed theCorporate Responsibility Index to enable the business to benchmark its CSR achievements.

The Corporate Responsibility GroupThe Corporate Responsibility Group (CRG) is made up of over 70 of the UK’s leading companies – all ofwhom are committed to adopting a social, ethical and environmentally responsible approach to businesspractice and have a strong track record in developingcorporate responsibility initiatives.

Formed in 1987, the group acts as a forum for corporateprofessionals working in the field of corporateresponsibility and community involvement to debaterelevant issues and enhance business practice.

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Nordoff-RobbinsThe Group is also an active supporter of Nordoff-Robbins, the music industry’s adopted charity. TheNordoff-Robbins approach to music therapy developedfrom the pioneering work of Paul Nordoff and CliveRobbins in the 1950s-60s.

It is grounded in the belief that everyone can respond tomusic, no matter how ill or disabled. The unique qualitiesof music as therapy can enhance communication,support change, and enable people to live moreresourcefully and creatively.

In 2004, EUK again sponsored the annual Six Nationsrugby dinner with Nordoff-Robbins.

Entertainment UK Limited (EUK)Job Hunting and Interview TechniquesOnce again this year, assistance and advice was providedto local school children on selection and applications forjobs. This involved setting up mock interviews along withcoaching and feedback on performance.

Six Nations Rugby DinnerEUK sponsored the 2005 annual Six Nations rugby dinnerin conjunction with Nordoff-Robbins. This yearapproximately £90,000 was raised.

Charity Donations This year £2,000 was donated to Harlington HospiceAssociation and a further £2,000 was donated to AgeConcern. £1,000 was donated to Hayes Town Christmaslights fund.

The Royal Hospital for Neuro Disability also received£1,000 for audio equipment for a music lending librarybeing set up by a former employee.

continued

Sponsorship was given to the following projects:

• Climbing Mount Kilimanjaro for Downs Syndrome

• Skydiving for Starlight

• Race for Life – Cancer Research £1,300

• 2CV 24-Hour Race – Harlington Hospital

• Various sports kits for local sports teams.

Support through advertising was given to:

• NSPCC

• Great Ormond Street Hospital

• Dream flight

• Multiple Sclerosis Funbook

• Hillingdon Crime Prevention for local schools

• Child Safety Year Book

• Project Safe Child.

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Case studiesIn Our Marketplace – Customer Support

“The department ranked top in all categories over the six-month period. Needless to say we were very proud of our achievement!”

The Woolworths Customer Support Department handles all customer enquiries and complaints forall our 823 stores and also our Websites.

Working within our legal obligations and our own policies, the department handles over 200,000contacts per year by telephone, email and letter. All contacts received are dealt with withinIndustry recognised KPIs (key performance indicators), such as length of time taken to answer a call and the number of calls abandoned before the team can answer them. The team’sperformance is consistently better than industry average.

Contacts into the department vary from basic enquiries such as “Do you have a store in Reading,”to far more serious and complicated issues such as customer accidents, property damage andpossible legal or trading standards involvement.

Our designated ‘Consumer Issues Team’ within the Customer Support structure, deals with thesemore in-depth contacts, obtaining further information for our customers from other departmentssuch as Quality Assurance, Buying, Quality Control and our Insurance Department.

From 2005 the mystery-shopping programme will also sit within the Customer Supportdepartment. This allows us to monitor store performance in relation to complying with bestpractice. For 2005 there has been a change to the programme which now incorporates a large section on the customer experience within our stores rather than the check-list approachwhich is prevalent in many of our competitors who also use mystery shopping programmes. This programme will seriously challenge our colleagues to improve the service they give to our customers.

Customer SurveysDuring 2004, Customer Support has received regular customer feedback as a result of theCustomer Service Survey Programme introduced.

This programme has included:

• Surveys to customers who have contacted the department via telephone or letter with variousissues asking them to rate their customer service experience. 84% of customers were eitherTotally/Very Satisfied with the service that they had received from the adviser.

• Outbound telephone surveys to Home Shopping customers e.g. Spring summer/Xmas to ratethe service offered, range of products, delivery etc.

• Measurement of the service we are giving to our Web driven customers.

These surveys enable the department to measure the quality of service that is being offered, takeonboard customer feedback and make improvements where necessary. The surveys prove to bereal motivators for the customer support and Multi-Channel Retail team as the feedback is sharedwith every member of the team.

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Multi Channel RetailThe Contact Centre has expanded over the last year, with the addition of the Multi Channel Retail function.Multi Channel Retail is seen as one of the key prioritieswithin the business, and is a very exciting development.

Together with Customer Support, MCR is a customer-facing department, which deals with customers throughvarious channels, including phone, email and letter.However, the role of MCR differs, as Woolworths’customers are able to place orders for home delivery via phone and web.

MCR initially started as a small project for theSpring/Summer catalogue in April 2004, with a core teamof seven. During the Christmas period this expanded tocover a 7-day operation with a core team of 60. BetweenOctober ‘04 and January ‘05 the MCR team managedover 76,000 calls.

The MCR Contact Centre operates to the same highstandards as Customer Support and the team ismeasured against the same Contact Centre IndustryKPIs.

We believe that Woolworths colleagues can deliver thebest service to our customers, so the decision was takento keep the contacts ‘in-house’ rather than out-sourcingor using an ‘off-shore’ company.

The Contact Centre has also supported a successful trialthat will allow our customers to order on-line in stores.This potentially gives every store the ability to sell over400,000 items to its local customers. Given the successof this trial, this programme is being aggressively rolledout during 2005.

As the Contact Centre is in our Castleton offices in theNorth West of England, we have the potential to expandand grow as more new and exciting initiatives arelaunched by the business.

Industry Benchmarking ResultsThe Customer Support department this year participatedin a Benchmarking exercise carried out by Call CentreFocus (a publication specialising in the Call CentreIndustry, to which many contact centres and retailerssubscribe). The benchmarking exercise was carried outacross 25 national contact centres, marking them on setcriteria and ranking them within the group of 25.

There were four main areas measured (each with furthercriteria) which followed the “customer journey”. Thesewere:

• Quality of welcome – This measures warmth of the opening welcome, rapport, pace, enthusiasm,personalisation with the adviser’s name and genuineinterest and is classed as the most important phase of a call.

• Handling of the enquiry – This measures the adviser’sability to identify the customer’s needs throughquestioning, listening skills and active responses and the overall control of the call.

• Response to the enquiry – The assessment here isaround the strength of company knowledge, thequality of the information supplied versus thecustomer’s needs and any “added value ingredients”i.e. did the caller offer over and above what thecustomer originally enquired about and expressinterest in the future progress of the query.

• Relationship and close of the call – Areas taken intoaccount here are those that leave a lasting impressioni.e. empathy, degree of trust or confidence built, thequality of the attention received and the overallimpression left by the adviser.

The department ranked top in all categories over thesix-month period. Needless to say we were very proudof our achievement!

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Success Stories1; Customer Support received a distressing letter from acustomer whose son had lost his cuddly toy. This toy waspurchased from Woolworths when he was born and wasthe only toy that the little boy would fall asleep with.

After investigation, it was found that we no longerstocked the item and that we did not have a sample held at our Head Office. Customer Support raised thecustomer’s distress to our Buying Department, who in turn contacted the original supplier in the Far East. Thesupplier produced a one-off replacement, shipping it back to England for our customer.

The customer was delighted with what Woolworths haddone for her son and more importantly that she wouldfinally get a good night’s sleep.

2; Mrs Smith made a long-distance telephone call fromHong Kong to the call centre. She was extremelyconcerned and upset as her daughter had swallowedsome Chad Valley Play Doh. Her daughter was feelingunwell so Mrs Smith had taken her to the local hospitalwhere they had requested the composition of the Doh.Working with Quality Assurance, we were able to obtainthe full information and due to the time difference, emailthis to Mrs Smith. Mrs Smith received this informationfirst thing in the morning and was able to pass all theinformation on to the doctors in the Far East.

We received a further email from Mrs Smith, telling us that her daughter was fine, and thanking us for the speedwith which we obtained the correct information and theempathy we had shown her whilst she was concernedabout her daughter.

Quality MonitoringIn addition to the feedback we receive from customersurveys the department uses other methods tocontinually monitor service levels.

Team Leaders within the department continually monitortheir advisers’ phone calls, letters and emails to ensureour customers receive a consistent quality service. Fortelephone calls this involves “live” recording of a call,scoring against defined call standards and providing anoverall scoring of the call to the adviser. They thenreceive feedback on the call that includes listening to therecording and together the adviser and their team leaderdiscuss the call and agree development areas wherethese are applicable. Team Leaders have targets of howmany calls to listen to each month and the advisers arecontinually coached to deliver “The Perfect call”.

As with phone calls, the quality of letters and emails thatare sent to our customers are also monitored for qualityand to maintain continuous improvement. Team Leaderscheck a number of letters/emails against agreedstandards and score them for an overall rating. Theadviser will always receive feedback on the monitoredcorrespondence at their regular review sessions, wheredevelopment areas are highlighted and coaching givenwhere applicable.

All telephone, letter and email standards have beenbenchmarked externally with other companies to ensurethat we are setting a standard that is realistic butcontinually striving to deliver excellent customer service.

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Case studiesIn Our Workplace – Pension SchemeReproduced with kind permission of the employer task force on pensions (http://www.employertaskforce.org.uk)

“The company believes that for these people joining the scheme may make little sense, and is instead working to highlight other saving options”

BackgroundWoolworths Group was formed out of the Kingfisher Group demerger in August 2001, and is oneof the UK’s largest general retailers and entertainment wholesalers. It employs 32,000 permanentstaff, with a turnover of around 10,000 each year. Approximately 10,000 of its staff are aged 16-20. However, beyond the high turnover rate and young staff it has a high degree of loyaltywithin the organisation.

The company inherited control of the Kingfisher scheme in April 2002, and committed tomaintaining it without making any changes for two years. During this time it undertook a majorreview exercise of its pension scheme. A redesigned scheme was introduced for new staff in June 2003, with changes to the scheme for existing members coming into place in April 2004.

Scheme DesignWhen the Kingfisher Group demerged, Woolworths carried over around 8,500 members from theexisting 1/60th Defined Benefit (DB) scheme. Contributions to the scheme, as at Kingfisher, wereset at 5% with a commitment not to change the scheme for two years. At the time of demerger, all existing pensioners remained in the Kingfisher scheme, so that at the outset there were nodeferred members and no members actually drawing a pension from the Woolworths scheme.

Woolworths believed that it could not sustain the scheme in the form it had been inherited fromKingfisher, as the costs and risks to the employer were simply too high. However, it also felt that if a way could be found to manage these risks, maintaining some form of DB scheme even fornew entrants, it would mark them out as an ‘employer of choice’ and result in significantrecruitment and retention benefits within the current pensions climate. It was therefore reluctant to move to a Defined Contribution (DC) scheme.

The company carried out a six-month research and review exercise, during which time it didextensive research into the demographic make-up of its workforce and the implications of thevarious pension options available to them. It was particularly keen to strike a balance betweenissues of loyalty and turnover on the one hand, with those of profitability and responsibility toshareholders on the other.

The approach it took was to strip down its pensionscheme and to view it in pieces, looking for opportunitiesto reduce the risks to the company while retaining a DB scheme.

These pieces were:

• retirement age;

• accrual rate;

• contribution level;

• early retirement terms;

• provision for spouses on the death after retirement;

• administration costs as a result of members joiningthe scheme and then leaving the company within a short space of time; and

• whether the scheme is contracted into the StateSecond Pension.

Woolworths believed it could produce a sustainable finalsalary scheme by adjusting these variables. So for newentrants, it raised the retirement age to 65 and changedemployee contributions to 6%. It also contracted backinto the State Second Pension, used cost-neutral earlyretirement terms, removed the automatic provision for aspouse on death after retirement and imposed a one-yearminimum service requirement for new staff wishing to jointhe scheme.

At the same time, existing scheme members were giventhe option to raise their contributions to 7% and maintaintheir 1/60th accrual rate, or to maintain their contributionsat 5% but to reduce to a 1/80th accrual rate. These newterms came into place once the two-year commitmentnot to change the scheme for existing members hadexpired in April 2004.

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Case studiesIn Our Workplace – Pension Scheme

The scheme for new entrants has been contracted backinto the State Second Pension. This is in light of the viewthat it is important for state pensions provision andoccupational schemes to interact. Contracting-inrecognises the greater generosity of the State SecondPension for people on lower incomes. Similar logic drove the decision to raise the company’s pension ageto 65 – lower-income employees struggle to afford to

retire without the state portion of their benefits, so itmade sense to bring the company retirement age into line with the State Pension age.

Woolworths did not seriously consider either a hybrid or a career average scheme for new entrants. It believesthat such schemes are over-complicated, making themdifficult to communicate to colleagues and thereforereducing any recruitment and retention benefits of apension scheme. It was also concerned that over-complicated scheme designs could impact on trust in pensions, which is already at a low level.

CommunicationWoolworths was keen to provide its workforce with asmuch information as possible about the changes to thescheme. When colleagues became aware that a review of the pension scheme was being undertaken, they were understandably nervous about the likely outcome.To counter this, a steering group was formed to ensure that all areas of the group would receive a consistentmessage. Woolworths undertook a two-week cascadeexercise, explaining the changes to all levels ofmanagement before any general announcement wasmade.

When the announcement did come, management werecareful to explain the problems facing pension schemesin general, to draw comparisons with other companies’(generally DC) schemes, and to highlight that thecompany was increasing its financial commitment to the scheme too. Against this background, the eventualannouncement that the final salary scheme was beingretained, and that the negative impact on colleagues waseffectively restricted to a 2% increase in contributions,was well received.

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Case studiesIn Our Workplace – Pension Scheme

All scheme members received a letter at home outliningthe choices available to them. The letters came with agrid outlining how the changes would affect members,non-members and new joiners.

This followed up with an annual benefit statementincluding a personalised analysis of what the impactwould be on each employee if they chose to raise their contributions or to accept the reduced accrual rate. A tear-off form was attached and a pre-paidenvelope provided for members to return their decision. 92% responded (of which 90% opted to raise theircontributions) with the remainder defaulting onto thelower accrual rate.

ParticipationThe Woolworths pension scheme has around 8,500members (of which about 3,000 are based in offices andlarge distribution centres, with the rest based on the shopfloor). This is out of a total of 32,000 employees.

The company is still considering how best to market the scheme to new colleagues. Because the scheme isbarely a year old and there is a one-year restriction onnew staff joining, it is not clear how effective currentcommunications are. The company provides brandedpensions literature to all new joiners, and then a reminderabout their right to join is automatically triggered after 10 months. There are also posters advertising a helplinenumber at its various sites.

However, although conscious of the need tocommunicate the company pension provision to allcolleagues, Woolworths is of the view that membership is not always the most appropriate option. The scheme is open to all colleagues, but many of those on the shopfloor are aged between 16 and 20 and work only a fewhours a week. The company believes that for thesepeople joining the scheme may make little sense, andis instead working to highlight other saving options, forexample paying into a savings account directly from thewage packet. This approach is based on research intowhich groups of colleagues consider a pension to beimportant. With this in mind, it is continuing to monitorwho is joining the scheme and is carrying out furtherdemographic research to consider which colleagues the scheme makes sense for and what alternatives may be available.

Woolworths operated automatic enrolment in the past, but has since moved away from this mechanism. This was based on a awareness that membership of the scheme wasn’t going to be appropriate for allcolleagues, as well as on the fact that automaticallyenrolling colleagues in a sector with such high turnovergenerated a substantial additional administrative burdenon the company.

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Case studiesIn Our Community – Playground PartnershipsWoolworths Group Company policy and commitment towards Corporate Social Responsibility

“One of the ways in which the company brings to life its CSR strategy is through local community involvement.”

Established in the UK in 1909, Woolworths is one of the UK’s leading and best-loved high streetretailers. The company’s brand proposition is “Let’s have some fun” and its core values revolvearound making life easier for its customers and their families.

Woolworths Group has a commitment to good corporate governance, open dialogue with itsstakeholders and sound risk management. This is based on the belief, shared by many keyshareholders, that prudent management of environmental and social issues is a good indicator of sound corporate management.

Proper CSR management can influence reputational standing, the attraction of stores andproducts, the ability to secure and retain staff, supplier relationships and good standing in the financial arena.

Woolworths Kids FirstOne of the ways in which the company brings to life its CSR strategy is through local communityinvolvement. To facilitate this, the registered charity “Woolworths Kids First” was established fiveyears ago with a mission to “change children’s lives for good” and to enable employees to raisefunds for local causes and charities of their choice.

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Case studiesIn Our Community – Playground Partnerships

Playground PartnershipsIn 2003 Woolworths Kids First was also tasked with developing and administering a flagshipnational project which could be implemented locally and would launch in 2004.

When choosing the format of the national project, it was key that the initiative fitted theWoolworths brand proposition and was in keeping with the charity’s raison d’être. It had to be fun, meet a real need at a local level and deliver genuine learning opportunities forparticipating children. Our researchers identified that the condition of school play spaces was an area of concern for teachers and parents, as they were often overlooked.

As a result, the project Playground Partnerships was developed to award grants to primaryschools to improve their playgrounds and the quality of the pupils’ playtime. Following a pilot with 50 schools in 2003, the project was rolled out nationally in 2004.

Objectives

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Resource Pack

Participating schools receive a resource booklet withguidance on how curriculum requirements acrossdifferent subjects can be met through the project. Thebooklet also features suggestions for team roles withexplanations of what they involve and why they areimportant, such as log keepers, budget managers,designers and surveyors.

Project Work

These materials are designed to constitute an educationalproject in their own right. However, schools areencouraged to submit the resulting work to WoolworthsKids First for consideration for award, enabling them toturn their ideas into reality.

Applications

Applications and portfolios included:• Surveys• Creative writing• Multi-media work• Design work• Budgets• Models.

How The Project WorkedPlayground Partnerships encourages primary school children to develop creative proposals forsubmission to Woolworths Kids First by explaining why their playgrounds need improving and the changes they would make if they had sufficient funds. The proposals are developed by thechildren under the supervision of their teachers.

Judging

Entries are independently reviewed by four regionaljudging panels of educationalists, landscape architectsand play experts. Judging criteria focusses on whetherthe project is pupil-led, who the children involved to bringtheir proposal to fruition, learning achieved and evidenceof how much difference a grant would make to theplayground.

Awards Ceremony

Where? The Natural History MuseumWhen? 11 November 2004Who? Pupils and teachers from the twelve

£10,000 winning schoolsWhy? To celebrate the achievements of the

winners

Awards

Schools could apply for one of four categories of grant:• £10,000• £5,000• £2,000• £1,000.

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Future PlansWoolworths Kids First considers Playground Partnerships to be a long-term commitment.Future plans include:

• Increase the grant fund to £500,000 for 2005• Extend to pupils with special educational needs• Involve Woolworths suppliers• Develop a web resource.

Timescale

Evaluation of the project took place throughout December 2004

Budget

continued

Total Budget: £327,000

1. Grant fund £250,0002. Judging £8,0003. Booklet & poster £47,0004. Awards ceremony £12,0005. Evalution £10,000

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Outcomes and Benefits of the ProjectParticipants – Over 7,000 primary schools requested the resource pack (over 30% of all UK primary schools).

Entries337 schools applied for a grant.

Involvement – whole school communities (pupils,teachers, caretakers, parents, etc).

Curriculum Links – Maths, English, PSHE (Personal,Social & Health Education), Citizenship, Science, Art,Music, Design & Technology.

Feedback – Those who took part but did not receive anaward are keen to continue their projects.

Grants – 80 grants in 2004 totalling £250,000.

PR – the scheme received massive coverage in TheTimes, The Guardian and The Mirror.

CSR Agenda – Woolworths is positioned as a nationalretailer that cares about its children and communities inan innovative and surprising way that is at one with itscore customers.

Feedback“Everyone has a local Woolworths. I think it’s great that they’re giving back to the community like this.”(Teacher)

“We used the prompt sheets in the pack for the project to give us some ideas. The prompt sheets gave us lots of information which was very useful.” (Teacher)

“It should have been an adults’ activity and it made me feel really grown up to be a log keeper and see what everyone else was doing.” (Pupil, Year 4)

“It gave the children a real boost.” (Teacher)

“We feel really proud that we won £2,000” (Pupil, Year 6)

EvaluationFull evaluation of the project was completed in December2004, with both winning and non-winning participantsassisting through discussion, interview and questionnaire-based research. The findings from this evaluation arebeing used to determine how best to take the schemeforward, to provide more opportunities for primary schoolchildren in the UK in 2005 and 2006.

continued

Woolworthswww.woolworths.co.uk

The Mainchain stores comprise traditional Woolworthsoutlets located in small towns and city suburbs, targetedat meeting basic everyday shopping requirements, aswell as larger stores located on prime shopping streets in major regional shopping centres. The product offercovers Toys, Children’s Clothing, Events, Confectionery,Home and Entertainment; larger stores includea more comprehensive range of Home and Children’sClothing.

OverviewNumber of stores: 802Average size sq ft: 8,480

Woolworths out-of-town stores offer a wider selection of toys, a babyshop, kids’ bedroom ranges andentertainment products, all from a superstore formatdesigned to meet demand for out-of-town shopping.


MVCwww.mvc.co.uk

MVC is a specialist retailer of Home Entertainmentproducts (DVDs, CDs, videos and games software). The MVC ‘More’ membership card has in excessof 1.5 million cardholders. MVC targets the frequent high-spending buyer of Entertainment products and aims to distinguish itself from other specialisthigh street Entertainment retailers by offering acomprehensive product range including an extensiveback catalogue at competitive prices.


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Appendix 1Woolworths Group at a GlanceRetail

Entertainment UK Limitedwww.entuk.co.uk

EUK is the country’s largest wholesale distributor ofHome Entertainment products (DVDs, CDs, videos, books and games software), supplying Britain’sretailers with their entertainment ranges. EUK offers a value added wholesale service which includesmanaging retailers’ inventory, merchandising,staff training and product labelling. EUK has alsoestablished EUK Direct, offering a wholesale distributionservice and a ‘direct to home’ solution forEntertainment retailers on the internet.

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Appendix 1Woolworths Group at a GlanceEntertainment Wholesale & Publishing

2 | Entertainwww.2entertain.co.uk

The Group holds a 40 per cent share in this joint venture,combining the former VCI audio and video business with BBC Worldwide’s video publishing arm. Recentvideo titles include ‘Little Britain’ and ‘Jeremy Clarkson:Hot Metal’ and on audio, ‘Daniel O’Donnell: The JukeboxYears’.

2 |Entertain

continued

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Appendix 2Background on BiTC

Business in the Community is a unique movement in the UK of 700 member companies. Their purpose is to inspire, challenge, engage and support business in continually improving their positive impact on society.

Together their member companies employ over 15.7 million people across 200 countries. In the UK, their members employ over 1 in 5 of the private sector workforce.

Membership of Business in the Community is a commitment to action and to the continualimprovement of the company’s impact on society.

Their members commit to:

• Integrate responsible business practice throughout their business

• Impact through collaborative action to tackle disadvantage

• Inspire, innovate and lead by sharing learning and experience

Further information about Business in the Community can be found at their websitewww.bitc.org.uk. CSR Report 2004

PrinciplesWoolworths has a range of policies and procedures which deal with standards of behaviour at work.These include our Code of Conduct for Managers, as well as those dealing with Discipline, Grievances,Information Technology, Supplier Relationships,Harassment, Diversity and so on. Colleagues areencouraged to use the provisions of these procedureswhen appropriate. However, there may be timeswhen a colleague may genuinely and in good faith wish to raise a matter about the conduct of someone,especially their immediate manager, (or someone moresenior), which is of a sensitive and serious nature.

Certain types of disclosure qualify in law for protection;these relate to information which the colleaguereasonably believes is either happening now, took place in the past, or is likely to happen in the futurein the following areas:

• A criminal offence

• The breach of a legal obligation

• A miscarriage of justice

• A danger to the health and safety of any individual

• Damage to the environment

• Deliberate covering up of information of any of theabove five matters.

Due to the nature of this type of concern, using theGrievance Procedure is not generally appropriate, andtherefore a special ‘whistleblowing’ procedure exists to ensure that such issues are dealt with fairly andwithout victimisation.

Woolworths will not tolerate any harassment orvictimisation of a whistleblower, including informalpressure, and will treat any instances as a seriousdisciplinary offence.

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Appendix 3Samples of Our Policies – WorkplaceWoolworths Business Behaviour policy – Voicing concerns

Company policyYou will find full details of Woolworths Code of Conduct in Outlook/public folders/all public folders/company policies.

If you are concerned about possible breaches of thisCode or other areas of business practice, then youshould report any malpractice or illegal acts or omissions immediately. These breaches could be by your peers, ex-colleagues or those in more seniorpositions in the company.

Our policy is designed to ensure that:

• Woolworths is committed to ensure that its affairs arecarried out ethically, honestly and to a high standard

• We encourage a culture of openness, accountabilityand integrity

• Any malpractice occurring at Woolworths is takenextremely seriously

• The confidentiality of colleagues raising concerns isrespected, if they wish

• There is an opportunity to raise concerns withinWoolworths outside our line management structureand there is clarity about the proper way in whichconcerns may be raised outside the company,if necessary

• Any false allegations made maliciously are rigorouslydealt with through our Disciplinary Procedures.

ScopeThe policy applies to all Directors and colleaguesirrespective of grade, job, or length of service.

Woolworths reputation and integrity are of paramount importance. All colleagues are expected and required to conform to the higheststandards of conduct and behave in such a way that any suggestionof impropriety or unprofessional behaviour is avoided.

• Risk Management Department: by phoning 0800 366 366 and speaking with a Risk Manager or inwriting, addressed to the Head of Risk Management at Woolworths House, Royle Barn Road, Castelton,Rochdale, Lancs. OL11 3DU, and marked ‘Strictly Private and Confidential’ – addressee only’

• Group Audit Committee Chairman: by writing to the Chairman , Group Audit Committee, WoolworthsGroup plc, c/o Head of Group Audit, Woolworth House, 242, Marylebone Road, London NW1 6LJmarked ‘Strictly Private and Confidential – addresseeonly’.

3. The matter raised will be treated with completeconfidence.

4. It will automatically be logged and progress monitoredby the Employee Relations Manager in conjunctionwith the Head of Risk Management or the Group Audit Committee Chairman for investigation andaction.

5. Depending on the gravity of the allegation, theappropriate Director will be notified.

6. Allegations against a Director will be referred to theChief Executive.

7. The HR Director (and the Chief Executive if theallegation is against a Director or a Controller) will also be notified and kept informed of the investigationand its outcome.

8. A summary of all allegations made and the outcomeof investigations will be given to the Audit and RiskManagement Committee each quarter by theEmployee Relations Manager.

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Legal Protection• The Public Interest Disclosure Act 1998 protects from

victimisation those who want to raise concerns aboutmalpractice, in good faith, and with reasonablesuspicion.

• Protection is provided irrespective of whether or notthe information is confidential or the malpracticeoccurs in the UK or overseas.

• Colleagues should raise the matter internally in thefirst place, using the Whistleblowing Proceduredetailed here.

• The Act also protects people at work where they make an external disclosure in a range ofcircumstances to ‘prescribed bodies’, such as theHealth and Safety Executive, the Inland Revenue, and the Financial Services Authority.

• Wider disclosures (e.g. to the media, and MP’s) areprotected if, in addition to the requirements givenabove, they are reasonable in all the circumstancesand they are not made for personal gain. There mustalso be a reasonable belief that victimisation wouldoccur if the matter was raised internally or with aprescribed body.

ProcedureRaising a concern1. Colleagues should contact one of the following -

the Employee Relations Support Centre in London Office (for general and criminal matters) or the RiskManagement Department (for criminal matters only)or the Group Audit Committee Chairman (for general and criminal matters).

2. The concern can be raised by telephone or in writing.

• Employee Relations Department: by phoning 0800328 7146 (Confidential Colleague Helpline) andspeaking with a Employee Relations Advisor, or in writing, addressed to the Employee RelationsManager at Woolworth House, 242, Marylebone Road,London NW1 6LJ and marked ‘Strictly Private andConfidential – addressee only

continued

17. Where there is no case to answer, but the colleaguewho raised the matter held a genuine belief andwas not acting maliciously, the senior managerinvestigating the allegation will ensure that thecolleague suffers no repercussions.

18. If the whistleblower is not satisfied with the outcomeof the investigation, Woolworths recognises theirlawful right to make disclosures to outside bodiessuch as the Health and Safety executive, the InlandRevenue etc (see appendix for list of bodies).

19. Only where false allegations are made maliciously will it be considered appropriate to act against thewhistleblower under the Disciplinary Procedure. Thismay constitute gross misconduct resulting insummary dismissal.

Appendix 1

Prescribed bodiesDisclosure of information may be made to the following‘prescribed’ bodies as defined by the Public DisclosureAct.

1. Health & Safety risks: HSE and Local Authority

2. Environmental issues; The Environment Agency

3. Utilities: OFTEL, OFFER, OFWAT, OFGAS and the RailRegulator

4. Financial Services and the City: Financial ServicesAuthority, HM Treasury

5. Fraud & fiscal irregularities: Serious Fraud Squad,Inland Revenue and Customs and Excise

6. Company Law: Department of Industry

7. Competition and consumer law: Office of Fair Tradingand Local Authority

8. Others: Charity Commission, Data ProtectionRegistrar, Occupational Pensions RegulatoryAuthority.

Please note that this is not a comprehensive list and is forgeneral guidance only.

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Investigating the concern9. A senior manager, independent of the person to

whom the allegation of malpractice refers, will beappointed to carry out an initial investigation into the allegation.

10. If requested by the colleague who has raised theconcern, this investigation will be confidential. The colleague will be asked if they wish their identityto be disclosed and will be informed of their protectionagainst victimisation.

11. This colleague will be asked whether they wish tomake a verbal or written statement. In either case,the investigating senior manager, will write a briefsummary of the interview, which will be agreed byboth parties.

12. The senior manager will then decide whether thematter should be investigated further, and if so,in what way.

13. The investigation may need to proceed under terms of strict confidentiality i.e. by not informing thesubject of the complaint until (or if) it becomesnecessary to do so – as in the case of suspectedfraud for example.

14. In other instances, immediate suspension may beappropriate when the subject of the allegation hasbeen informed and an investigation initiated.

Determining the outcome15. The colleague who has raised the allegation will

be kept informed about the investigation outcome.(NB Details of disciplinary action taken will remainconfidential to the individual concerned).

16. If the result of the investigation is that there is a caseto be answered by the individual who is thesubject of the allegation, – the DisciplinaryProcedures will be used.

continued

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Appendix 4Samples of Our Policies – WorkplaceEqual Opportunities Policy – Entertainment UK

The Company is an equal opportunities employer and is committed to ensuring equal opportunityin all aspects of employment, including policies, practices and procedures. Everyone who appliesto or works for the Company will be treated equally, regardless of race (which means colour, race,nationality, ethnic or national origin), gender, disability, marital status, sexual orientation, religion or age.

The equal opportunities policy applies to all established and temporary employees, contractors,visitors, job applicants and agency staff. The requirement not to discriminate, either directly orindirectly, applies to all those who work for the Company, including those who make decisionsaffecting job applicants and staff development. The policy is relevant to every aspect of work from recruitment, throughout employment (e.g. appraisal, promotion, compensation, training andpersonal development) to issues of termination of employment.

Where contractors, visitors, job applicants and agency staff are deemed to be in breach of ourEqual Opportunities Policy, they may be requested to leave the premises.

Any breach of the Equal Opportunities Policy by an established or temporary employee may resultin disciplinary action, which may include dismissal.

The Company will take all possible steps to ensure that equal opportunity is maintained. This willinclude:

• Ensuring that job specifications relate to the requirements for the performance of the job;

• Providing equal opportunity training as the Company considers appropriate to enable staff toimplement equal opportunities. Where a member of staff considers that it is appropriate toreceive additional equal opportunities training, in addition to the information provided in theCompany Induction Day, they should discuss this with their line manager;

• Monitoring the ethnic and gender composition of the workforce. This will be done inaccordance with accepted practice as recommended by equal opportunities bodies and in accordance with good human resources practice. All monitoring will only be used for thepurpose of equal opportunity monitoring and in accordance with the recommendations of the Data Protection Action 1998;

• In the case of disability, considering what steps may be taken to ensure that disabledindividuals are not disadvantaged in the Company’s workplace. The Company observes theEmployers’ Agenda on Disability, a copy of which may be obtained from the Disability RightsCommission.

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Appendix 4Samples of Our Policies – WorkplaceEqual Opportunities Policy – Entertainment UK

Breach of the Equal Opportunities PolicyThe aim of this policy is to ensure that all members of staff know that they are able to work in anenvironment that is free from discrimination and that they are able to achieve full potential in theirjobs. All members of staff must be aware of this equal opportunities policy and abide by its termsat all times. Staff are expected to treat each other fairly and with respect. A breach of the equalopportunities policy may be treated as part of the disciplinary procedure, grievance procedure orharassment procedure, depending upon its nature.

More InformationIf anyone wants clarification of the Equal Opportunities Policy, they should speak to their Manageror the HR Department.

HIV/AIDSIn line with the Company’s Equal Opportunities Policy, the Company has developed a procedurefor dealing with staff who are or may be affected by HIV or AIDS as follows:

• No employee will be discriminated against by the Company or by their colleagues if they havecontracted HIV or AIDS or if they know someone who has.

• Anyone who has HIV or AIDS will be treated in exactly the same way as any employee with a serious illness, e.g. allowed paid time off to attend medical appointments and given sick pay (if entitled under the Company’s sick pay policy).

• If any employee confides in another that he/she is HIV positive or has AIDS, this must remain a confidential matter unless the employee with HIV/AIDS gives express permission otherwise.

continued

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Appendix 5Samples of Our Policies – WorkplaceCode of Conduct

We have adopted a Code of Conduct that defines WoolworthsGroup’s minimum standards for ethical business practice. It appliesto all employees of companies within Woolworths Group plc,whether established or on temporary contracts. Consultants oragents who are retained to represent the Woolworths Group arealso required to conform to the relevant sections of this Code.

ScopeThis policy applies to all colleagues.

PolicyThere are a number of basic principles that should guide everything that we do. These are:-

• be truthful and fair in all aspects of our business;

• abide by the law;

• uphold our good reputation with customers and business partners;

• encourage mutual respect, openness and integrity in the workplace.

These are the ethical principles on which this Code has been based.

Where you are faced with an ethical decision that is not specifically covered by this Code or by these basic principles, you must seek the advice of your line manager.

Each Group Operating Company will have its own policies which relate to some of the subjectmatter of this code. Whilst these will not conflict with the spirit of this Code, colleagues shouldalso make themselves aware of these policies and be sure to abide by them.

Any breach of this Code could have serious consequences for the Group and may result indisciplinary action.

1. Ethical Conduct

1.1 Conflicts of Interest• All employees should avoid any real or apparent conflict between their personal interests and

those of the Group. A conflict of interest would arise, for instance, if any employee:

• placed a contract on behalf of a Group company with a supplier who was managed by a closefriend or family member;

• worked as a consultant in a private capacity for a supplier or material trade customer of aGroup company; or

1.2 ConfidentialityInformation about the Group, which is not publiclyavailable, must be handled with discretion and must notbe given to others unless they are employees who needto know it in order to do their job or are third parties whothe Group has authorised to receive it. Except for ourprofessional advisers, confidential information shouldnormally only be disclosed where an agreement is inplace under which the recipient agrees to preserve theconfidentiality of the information. Confidential informationmay only ever be disclosed or used where this is believedto be for the benefit of the Group. Among other things,any unauthorised disclosure could place the Group at anactual or potential commercial disadvantage, may resultin the summary dismissal or other disciplining of theindividual concerned and could constitute a seriousbreach of the criminal law.

In order to safeguard the Group from legal risk, noconfidential information should be obtained from a thirdparty without an appropriate written agreement with theinformation provider. Information concerning competitorswill be accepted only where there is reasonable beliefthat both receipt and use of the information is lawful.

No offer of employment shall be made to any person in the expectation of obtaining that person’s specificknowledge of a former employer’s confidentialinformation, nor shall any new employee be placed in a position that would lead them to disclose or makeimproper use of a former employer’s confidentialinformation.

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• carried on a business in their own time of a similarnature to their own work in the Group;

• offered a job to a member of their family;

• sought personal gain to the detriment or prejudice of a Group company in business or private dealings.

The above provides some examples of conflicts ofinterest but is not intended to be an exhaustive list. Otherconduct of a similar nature would also be construed asbeing in conflict with the interests of the Group.

If a genuinely unavoidable conflict of interest shouldarise, the colleague must declare this in writing to theirManaging Director.

All Directors and senior employees need the writtenconsent of their Managing Director before they engage in any other business activity, whether or not they benefitfinancially from them. The same approval is necessarywhere such a person wishes to have a financial interest in any business activity other than in a quoted or listedcompany. If you are already involved in such an activity or if you already have such a financial interest when you join the Group, you will still need the same approval.Where such written approval has been given thecolleague is responsible for ensuring that one copy isplaced on their personnel file and that a second copy isdeposited centrally with the designated company officer(normally the Company Secretary or Internal Auditor).

All Managers, but particularly Senior Managers, shouldconsider before making any investment whether theyhave a conflict of interest if they are to invest in a quoted or listed company which is a major supplier orsubstantially dependant supplier to, or competes with,any business of a Group company. In any event theymust disclose any such investment to their Manager atthe time it is made and, if they have already invested insuch a company, on joining the Group.

Conflicts of interest may also arise through spouses,partners, children and family trusts. You should takereasonable measures to ensure that they are made aware of and comply with these requirements.

continued

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2 Market Abuse

The use of inside or unpublished information about theWoolworths Group (or any of its companies) in buying orselling Woolworths Group plc shares is strictly forbidden.Insider information also applies to information obtained inrespect of any other company with whom the Group doesbusiness.

It is a criminal offence to deal in those shares in suchcircumstances. Explicit rules are contained in FinancialServices and Markets Act 2000, which supplements otherexisting insider dealing laws, and take the form of a newcode: The Code of Market Conduct. Woolworths Groupplc fully endorses and adopts the code and expects youto comply with it. You can access it in full at the followingwebsite: www.fsa.gov.uk/marketconduct.

2.1 What is the relevance for Woolworths Group plc?Effectively, everyone should be aware that:

1. New penalties exist for misuse of information in thefinancial markets or for causing false or misleadingimpressions in those markets or for distorting themarkets. Importantly it is your behaviour alone thatwill be judged. There will be no need to prove that youintended abuse. The new regime also applies if you encourage another to behave in a wayconstituting abuse.

2. The penalties for market abuse include the ability tolevy unlimited fines against you personally as well asagainst the company.

2.2 Examples of abuseMisuse of InformationA person learns from his friend that the friend’s wife’scompany is about to be the subject of a takeover offerfrom another company. Accordingly, the person buysshares in the wife’s company in anticipation of making aprofit on the rise in the share price once the takeover isannounced.

Creating a false or misleading impressionMany people post messages on Internet bulletin boardsoutlining the benefits of investing in a number ofcompanies. If these contain untrue statements about thecompanies’ activities or profitability, they may create afalse or misleading impression. The most obviousexample is where an individual buys shares in thecompanies, posts untrue messages and then, whenunwary investors buy the shares (driving the price higher),the person who posted the messages sells at profit,prompting the price to collapse. Innocent investors whoact on the basis that the messages are accurate oftenlose money on their investment.

2.3 How do we comply with the Code?1. No person (other than an authorised person, like abanker or our brokers) may in the course of businesscommunicate an invitation or inducement to engage ininvestment activity. You should therefore be vigilant toensure that neither you nor your reports publish orotherwise communicate matters, which could be seen asan inducement to deal in Woolworths Group plc shares.

Please also note that:1. Authorised persons (like a banker or our brokers)

cannot approve real-time communications and,although certain exemptions apply, even greater careshould be taken when talking to individual analysts orother investment professionals.

2. Dealing with analysts and the Financial Press shouldbe restricted to the Chairman, the Group ChiefExecutive and the Group Finance Director.

3. When preparing Trading Statements or ResultsAnnouncements, detailed back-up, in the form ofworking papers or third party supporting materialshould be retained and clearly cross referenced tosupport each element of the statement orannouncement.

As with any new legislation there are grey areas andquestion marks as to how the law will be enforced inpractice. Please always err on the side of caution and if indoubt refer to the Group Company Secretariat.

continued

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3 Buying/selling Woolworths Group plc shares

Any dealings in Woolworths Group plc shares by anyrelevant employee (see definition below) requires thepermission of the Company Secretary, who will then passthe request to the Group Company Secretary for finalclearance. Approval may be withheld to protect theGroup or its employees.

A relevant employee for this purpose is someone whohas access to financial results or other confidentialinformation about Woolworths Group plc or its subsidiarycompanies. This will include a Director, a ‘Director Of’and a Controller, including similar bands/grades acrossthe operating companies and any other employee so designated from time to time. Corporate Centrecolleagues are regarded as relevant employees. If indoubt, you should consult your Manager or the GroupCompany Secretary.

The “Model Code” issued by the UK Listing Authority as part of The Listing Rules contains restrictions ondealing in shares by certain third parties (for examplespouses and family trusts) who are connected withrelevant employees. The provisions of the Model Codesupplement our own Code of Conduct and any breachof the Model Code will be regarded as a breach of this Code.

The use of inside or unpublished information aboutWoolworths Group plc or any other Group company inbuying or selling Woolworths Group’s shares is strictlyforbidden. Insider information also applies to informationobtained in respect of any other listed company withwhom the Group does business.

It is a criminal offence in the UK and in a number of othercountries to deal in those shares when in possession ofinsider information. It is also an offence to communicateinsider information to others with the expectation thatthey would deal in the shares of the company concerned. Any dealings in Woolworths Group shares or in any otherpublicly quoted company in which Woolworths Groupholds an investment (other than through any of itspension schemes) by any relevant employee requires thepermission of your Company Secretary or equivalentdesignated legal officer, who will clear the request withWoolworths Group plc. Approval may be withheld toprotect the Group or its employees.

3.1 Dealings by Directors and Relevant Employees1. A director or relevant employee must not deal in any

securities of the listed company on consideration of a short term nature.

2. A director or relevant employee must not deal in anysecurities of the listed company during a “closed period”. These are usually periods preceding atrading/results announcement by Woolworths Groupplc. A list of closed periods is available from theGroup Company Secretary.

3. A director or relevant employee must not deal in anysecurities of the listed company at any time when he is in possession of unpublished price sensitiveinformation in relation to those securities, or otherwisewhere clearance to deal has not been given.

4. A director or relevant employee must not deal in any securities of the listed company during an openperiod (i.e. not closed) without advising the GroupCompany Secretary in advance and receivingclearance.

5. A written record will be maintained by the Companyof any clearance given. Written confirmation from theGroup Company Secretary that clearance (if any) hasbeen recorded will be given to the director or relevantemployee concerned.

continued

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4. Relationships

4.1 Customer RelationsWe are committed to providing customers with accurateinformation on which they can make an informeddecision.

Repeat purchases by our customers depends upon them receiving a high level of service. You should beresponsive to their enquiries and ensure that they are not misled when you are providing information.

Making deceptive or misleading statements is prohibited.

4.2 Supplier RelationshipsWe will comply with the laws of all the countries wherewe do business. Group companies deal with a widerange of suppliers of goods and services. They includeprofessional advisers and consultants. All suppliers are animportant resource and should be treated with fairness atall times. Procurement decisions should be made on thebasis of quality, service, price, delivery, best value andother similar factors. You should observe legal and ethicalstandards in all your dealings with suppliers. Any corruptor improper behaviour in dealings with suppliers isprohibited.

It is our intention only to source from suppliers who cansatisfy our standards with regards to labour and welfareconditions, health and safety and environmentalmanagement or who have given a commitment toachieve these standards within an agreed time-frame.

4.3 Special Payments, Gifts and Business HospitalityWe will never engage in bribery. We will abide by theForeign Corrupt Practices Act (“FCPA”) and the OECDConvention on Combating Bribery of Foreign PublicOfficials in International Business Transactions (“OECDConvention”). Any consultants or agents who are retainedto act on behalf of a Group company must also agree toabide by the FCPA/OECD Convention and should not beengaged without a formal written agreement that hasbeen approved by the Company Secretary or equivalentlegal officer.

Only legitimate payments may be made by Groupcompanies and these must be properly recorded in theaccounts.

The Group does not encourage the practice of giving orreceiving gifts, even if they are only of a nominal value.However, the acceptance or giving of gifts may beapproved in writing by your Director only if it iscustomary, reasonable and ethical to do so, is notintended to gain unfair business advantage, does notviolate any law, and is properly accounted for.

Gifts should never be capable of being seen as animproper inducement. They should not be solicited andemployees should avoid a pattern of accepting frequentgifts or hospitality from the same persons or companies.

Before accepting any level of hospitality beyond lunch ordinner, the express approval of a Director should beobtained in writing. He or she will need to be satisfiedthat the hospitality is for the benefit of the Group’sbusiness.

4.4 Competitor RelationshipsThe aim of all Group companies is to compete vigorouslyin the marketplace. Collusion with competitors isprohibited. Such behaviour may contravene competitionlaws and have serious consequences for the Group. AllGroup companies will comply with the laws governingfree and fair competition.

It is prohibited to attempt to restrict competition by:

• inducing a customer or competitor to breach acontract with a third party;

• obtaining unauthorised access to confidentialinformation;

• securing an unfair competitive advantage;

• operating illegal price fixing agreements; or

• undertaking activities which could damage theGroup’s reputation.

continued

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Appendix 5Code of Conduct

You should be scrupulous in observing legal and ethicalstandards in seeking information about our competitors.There are accepted means for obtaining such information.If in doubt you should consult your Manager.

4.5 Media ContactAll enquiries from the national and financial press, orpersonal interviews and all requests for information ontrading, profit targets and legal issues should be clearedwith the Corporate Centre or in accordance with theGroup’s procedures as operated from time to time.Approval will only be given where this is in keeping with the communications’ objectives of the Group. Employees must not make public statements regardingissues or matters about which they are not an authorisedspokesperson or which could adversely reflect upon theGroup. Any unauthorised disclosure of confidentialinformation regarding the Group to the media is a seriousdisciplinary offence and could result in summarydismissal.

5 Control and Finance

5.1 Proper Use of FundsWe rely on our employees to maintain accurate booksand records, adhering to the highest standards ofhonesty. The funds and assets of all Group companieswill be utilised solely for lawful and proper businesspurpose and all transactions involving such funds orassets shall be correctly described and properlyauthorised.

5.2 Use of Group ResourcesIn general, employees are not authorised to use Groupresources for personal purposes. A concession may bemade for the occasional use of equipment such astelephones, photocopiers and computers if there is norealistic alternative at that time and provided that:

• it results in no more than minimal additional cost tothe Group;

• is not illegal or in breach of other policies;

• is not of an unreasonable duration or frequency;

continued

• does not interfere with the performance of Groupbusiness; and

• does not cause embarrassment to the Group.

Any abuse of this concession may result in its withdrawaland disciplinary action being taken against thoseconcerned.

5.3 Use of Computer FacilitiesWe will respect the copyright of all computer softwarethat we use and will strictly adhere to all relevant lawsand regulations regarding the use and copying of suchsoftware.

Within Woolworths plc only the MIS Department isauthorised to purchase and install software (of any kind).Employees must exercise the same care, caution andetiquette in sending e-mail messages as they would innormal written business communications. We will nottolerate abusive or unprofessional e-mail.

Employees must not abuse access to the Internet forpersonal or improper purposes.

Monitoring of Group communications facilitiesEmployees’ usage of Group telephony, e-mail andInternet facilities will be subject to monitoring inconformance with lawful best practice and evidence ofabuse will result in disciplinary action.

Materials• Terms and Conditions of Employment

Contacts• Company Secretary

50Corporate Social Responsibility Report 2005

Contacts and Feedback

The online version of this report can be found atwww.woolworthsgroupplc.com/csr05

FeedbackWoolworths Group welcomes your feedback to thisreport. If you have any comments regarding this report or the CSR section on the website please e-mail us at:[email protected]

or write to us at:Woolworths Group plcWoolworth House242-246 Marylebone RoadLondon NW1 6JL

Copyright detailsFurther information on Woolworths Group plc can befound at: www.woolworthsgroupplc.com

Documents

Corporate Social Responsibility Report 2005 CSR report.pdf · Corporate Social Responsibility Report 2005 Corporate Governance – Combined Code Statement The Company recognises the