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View Annual Report Wm Morrison Supermarkets PLC Supermarkets Morrison Wm Annual Report and Financial Statements 2018/19 Broader, stronger Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2018/19 Overview p6 p8 Morrisons unique team of food makers The progress we and shopkeepers are working together to have made on our achieve meaningful, sustainable growth six priorities Chief Executive’s statement READ MORE AT www.morrisons- corporate.com FINANCIAL HIGHLIGHTS Group like-for-like Profit before tax, exceptional Group revenue # (LFL) sales (exc. fuel)* # items and net pension interest1 # £17.7bn +4.8% £406m +2.7% +8.6% 17.7 17.3 406 4.8% 337 374 2.8% 242 16.1 16.3 1.9% (2.0)% 2015/162 2016/17 2017/183 2018/19 2015/16 2016/171 2017/181 2018/191 2015/16 2016/17 2017/181 2018/19 1 Referred to as ‘profit before tax and exceptionals’. 1 2016/17, 2017/18 and 2018/19 include wholesale 2 2015/16 profit before tax and exceptionals excluding 1 2017/18 Group revenue on a 53 week basis. contribution to LFL sales. £60m one-offs was £302m. 3 £369m 52 week equivalent. Free cash flow* SH Net debt* SH Total dividend SH £265m £997m 12.60p generation +24.9% 854 12.60p 10.09p 670 1,746 1,194 350 973 997 5.43p 265 5.00p 1 2 2015/16 2016/17 2017/18 2018/19 2015/16 2016/17 2017/18 2018/19 2015/16 2016/17 2017/18 2018/19 1 Including 4.00p special dividend. 2 Including 6.00p special dividend. Throughout the Directors’ report and Strategic report: Unless otherwise stated, 2018/19 refers to the 52 week period ended 3 February 2019 and 2017/18 refers to the 53 week period ended 4 February 2018. 2018 and 2019 refer to calendar years. Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2018/19 Strategic report Strategic STRATEGIC REPORT Governance The core purpose 2 Chairman’s statement 4 Chief Executive’s statement 6 Six priorities 8 Six priorities in action 10 statements Financial Our sites and our brands 12 Our customers 13 Our colleagues 15 Our suppliers 17 Our shareholders – Chief Finance 18 and Commercial Officer’s report Corporate responsibility 21 information Investor Risk 23 GOVERNANCE Corporate governance report 27 p13 Directors’ remuneration report 39 Our four stakeholder Directors’ report 55 FINANCIAL STATEMENTS ambitions Independent auditors’ report 58 Consolidated income statement 66 Consolidated statement of comprehensive income 66 Consolidated balance sheet 67 Consolidated cash flow statement 68 Consolidated statement of changes in equity 69 General information 70 Notes to the Group financial statements 74 Company balance sheet 111 Company statement of changes in equity 112 Company accounting policies 113 Notes to the Company financial statements 116 Related undertakings 127 p21 INVESTOR INFORMATION Five year summary 129 Corporate Supplementary information 131 Glossary 132 responsibility Investor relations and financial calendar 134 Information at your fingertips 136 NON-FINANCIAL HIGHLIGHTS BUSINESS HIGHLIGHTS Like-for-like (LFL) • Customer satisfaction scores now up 20% pts in customer transaction numbers # Customer satisfaction C the last four years • Revenue growth of 4.7% on a 52-week basis, the +0.7% +8% pts best since 2009/10 year-on-year • Total 2018/19 dividend paid to shareholders +8% of £289m 4.0% +7% 2.9% 0.7% +2% • £700m annualised wholesale supply sales achieved +3% ahead of end-2018 target (1.6%) 2015/16 2016/17 2017/18 2018/19 • Morrisons Daily convenience stores now in LFL customer transaction numbers, year-on-year change. Jan 16 Jan 17 Jan 18 Jan 19 115 locations Excludes online. Customer satisfaction measured at January each year, year-on-year change. • Sales of local suppliers’ products were up another 27% during the year and have now almost doubled Colleague engagement index CO over the last three years 76% Alignment of highlights to our 78% stakeholder ambitions: 76% 76% 76% C Customers SH Shareholders S Suppliers # All 2015/16 2016/17 2017/18 2018/19 Colleague engagement index as measured in the CO Colleagues annual ‘Your Say’ survey. * Alternative Performance Measures as defined in the Glossary on pages 132 – 133. 1 Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2018/19 The core purpose To make and provide food we’re all proud of, where everyone’s effort is worthwhile, so more and more people can afford to enjoy eating well. Resources and relationships Our business … Customers Around 12 million customer transactions every week Colleagues Food maker Distributor Over 100,000 We are a diverse team, but united by We have a national distribution network friendly and skilled our ways of working and our food maker that moves the food we make and buy colleagues, supported and shopkeeper credentials • Our stores are serviced by eight regional by a high quality • Over half of the fresh food we sell distribution centres and one national management team we make ourselves distribution centre • Every day our skilled food makers on Market • This network supports our growth through Street make fresh food for our customers other channels • We make fresh food in our manufacturing • Technology simplifies the links between sites Sites sites across the UK and stores 494 conveniently located supermarkets • Our digital production lines increase productivity and efficiency, and reduce waste 18 manufacturing sites • We work with our suppliers to carefully source 9 distribution centres the products we do not make ourselves Increasing digital presence … is different in many ways … Our food making skills provide products that are By controlling the whole supply chain, we know Understanding our customers powers the Through stores, manufacturing, online and fresh, good quality, great value and unique to us where our food comes from and can provide our decisions we make. Customers love our brand our wholesale partners, we can leverage our customers with what they want, when they want it and see us as competitive and locally relevant brand to achieve meaningful and sustainable capital light growth Brand A well-loved brand becoming more relevant and accessible to more customers … delivering through our six priorities … 1 To be more 2 To serve 3 Find local 4 Develop 5 To simplify and 6 To make the core competitive customers solutions popular and speed up the supermarkets better useful services organisation strong again Financial strength A strong balance sheet, with a largely … and supported by our five ways of working freehold estate, low debt and a net pension surplus 1 Customers 2 Teamwork 3 Freedom in 4 Listening and 5 Selling, controlling costs, growing first the framework responding profits, and removing waste Continued generation of significant and sustainable levels of free cash flow 2 Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2018/19 Strategic report Strategic Governance Financial statements Financial Outcomes information Investor Customers • An improving shopping trip informed by listening • More customers, buying more from us, more often • Customers can get what they want, when they want it See pages 13 and 14 for more detail Retailer Wholesaler Colleagues We sell the products we make and buy, We are a wholesaler, providing products • Engaged and motivated colleagues in our stores and online to retail partners and wholesale customers • Colleagues sharing in the success • Listening informs the improvements we make • We aim to make our brands more popular, of the business • We have a Morrisons price list, providing good accessible, and increase volume through our • A fair day’s pay for the work they do existing assets quality fresh food and great value See pages 15 and 16 for more detail • Our shopkeepers care deeply about service • We leverage the strength of our brands and manufacturing capability to deliver good quality • Our More Card helps us to understand and products at great value serve our customers better, by tailoring offers • The Safeway brand has been revived for • Over 75% of British households now have access Suppliers wholesale partners to our online offer, and we continue to expand • Establishing lasting relationships our ‘reach’ • Working together with simplified terms • Ways of working that comply with the Groceries Supply Code of Practice See page 17 for more detail … is different in many ways … Our food making skills provide products that are By controlling the whole supply chain, we know Understanding our customers powers the Through stores, manufacturing, online and fresh, good quality, great value and unique to us where our food comes from and can provide our decisions we make. Customers love our brand our wholesale partners, we can leverage our Shareholders customers with what they want, when they want it and see us as competitive and locally relevant brand to achieve meaningful and sustainable • A strong balance sheet capital light growth • A cash generative business with low levels of debt • Sales, profit and dividend growth … delivering through our six priorities … See page 8 for more detail See pages 18 to 20 for more detail 1 To be more 2 To serve 3 Find local 4 Develop 5 To simplify and 6 To make the core competitive customers solutions popular and speed up the supermarkets better useful services organisation strong again Environmental and social value • Making a positive contribution to society … and supported by our five ways of working See page 15 for more detail • Reducing plastic, minimising food waste, and taking care of the environment 1 Customers 2 Teamwork 3 Freedom in 4 Listening and 5 Selling, controlling costs, growing • Respecting human rights and ethical first the framework responding profits, and removing waste trading practices See pages 21 and 22 for more detail 3 Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2018/19 Chairman’s statement Sustainable growth for all stakeholders The last year had many highs, notably during the glorious summer, and also some more challenging periods both for the economy and the consumer.
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