Dear Shareholder,

On behalf of the Board, I am delighted to present the Wesfarmers 2007 Annual Report.

It has been a very busy year for the company with a number of significant acquisitions. These included leading insurance brokers OAMPS and Crombie Lockwood; the medical and industrial gases producer and distributor Coregas (formerly Linde Gas); and Bullivants, Australia’s leading supplier of lifting and rigging equipment.

In April 2007, Wesfarmers acquired a major stake in Coles Group Limited and in September 2007 the Coles Board unanimously recommended Wesfarmers’ enhanced proposal to acquire Coles Group Limited by way of a scheme of arrangement.

In addition, a number of major investment projects were completed or were well progressed at year end.

These included the completion of the 20 kilometre conveyor and coal handling system at the Curragh coal mine in Queensland and substantial progress on construction of CSBP’s ammonium nitrate expansion and Wesfarmers Energy’s new liquefied natural gas (LNG) plant, both at Kwinana in Western Australia.

The increased level of activity during the year resulted in a significantly heavier workload for the company’s dedicated team of employees. I would like to take this opportunity to thank them sincerely for their loyalty and tremendous efforts over the past 12 months.

I would also like to extend a personal vote of thanks to my fellow directors for their hard work and tireless contribution. I have greatly valued their support and commitment to our objective of delivering a satisfactory return to our shareholders.

For more details on the company’s activities during the year, including the proposal to acquire Coles, I encourage you to read the review by our Managing Director, Richard Goyder, and the operational reports that follow.

The Board declared a fully-franked final dividend of $1.40 per share (last year $1.50) for the year ended 30 June 2007, taking the full-year fully-franked dividend to $2.25 per share compared to last year’s $2.15. The total dividend for the year represents 110 per cent of net profit after tax. The company also reinstated the dividend investment plan during the year, providing shareholders with the ability to invest all or a portion of their dividend entitlements in additional Wesfarmers shares.

Lou Giglia retired as a director in November 2006 after 35 years distinguished service. We thank him for his outstanding contribution. In July 2007, the Board announced the appointment of Tony Howarth as a non-executive director. Tony has more than 30 years experience in the banking and finance industry and his appointment will further strengthen the Board’s level of commercial expertise. I would like to take this opportunity to welcome Tony to the Board.

The Board continues to review its corporate governance policies and procedures to ensure it fulfils its obligations and meets the expectations of stakeholders. Further details are set out in the Corporate governance statement.

The pursuit of sustainable outcomes is a major driver of a number of initiatives to improve the performance of the group’s businesses and these are summarised in the Sustainability section of this report. The company’s Sustainability Report, which will be released in November 2007, will provide a detailed description of the company’s performance during the year in the areas of workplace safety, environmental impacts and community engagement.

Your Board is confident that we are ready to take advantage of the many opportunities ahead of us. In every sense, we are excited about the future.

Yours sincerely,

Trevor Eastwood AM
Chairman