More of What Matters What of More
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WorldReginfo - 07349d63-9e88-4d10-9a41-36cf478c6825 - WorldReginfo 2012/13 Annual report and financial statements statements financial report and Annual PLC Supermarkets Morrison Wm More of what matters what of More Annual report and financial statements 2012/13 Wm Morrison Supermarkets PLC Performance and strategy review Annual report and financial statements 2012/13 Morrisons at a glance Who we are We provide great service to We are the UK’s fourth largest our customers by offering food retailer by sales, with annual turnover in excess of £18bn. We the best value fresh food, have c500 stores across the UK, prepared in-store by which includes 12 convenience our experts. formats. Over 11 million customers visit We are unique because of our stores each week, served by the transparency of our 129,000 friendly colleagues. supply chain and our focus Financial performance 2012/13 on traditional crafts – we do more of what matters. Turnover £18.1bn Like-for-like sales % 53 week v 53 week basis (2.1) Profit before tax £879m Basic earnings p per share 26.7 Net debt £2.2bn Total dividend p per share 11.8 Note: Throughout the Directors’ report and business review (1) Unless otherwise stated, 2012/13 refers to the 53 week period ended 3 February 2013 and 2011/12 refers to the 52 week period ended 29 January 2012. 2012 and 2013 refer to calendar years. (2) Underlying profit is defined as profit before one off costs and credits, property transactions and IAS 19 pension interest, at a normalised tax rate, as reconciled in note 1 of the Group financial statements. Underlying operating profit is operating profit before property disposals. (3) Like-for-like sales reflects the percentage change in year-on-year store sales (excluding VAT and fuel), stripping out the impact of new store openings and closures in the current or previous financial year. WorldReginfo - 07349d63-9e88-4d10-9a41-36cf478c6825 Performance and strategy review Governance Financial statements How we’ve performed against Directors’ report and business our strategic objectives review Performance and strategy review WHAT WE SAID WE WOULD DO 2 Our business model – doing more of what matters 4 Understanding our customers and the challenges of our marketplace • Deliver even better value for 6 Chairman’s review our customers 8 Chief Executive’s review 12 Focused on our strategic objectives • Develop our core business through 14 Measuring performance against our strategic objectives opening more supermarkets and 16 Driving the topline 19 Increasing efficiency convenience stores 21 Capturing growth 24 Financial review • Continue to explore 28 Managing risks and uncertainties multi-channel capabilities 30 More of what matters for our people 33 Corporate responsibility Governance WHAT WE DID 36 Board of Directors and Management Board 40 Corporate governance report • Continued to offer customers great 45 Directors’ remuneration report value on fresh food prepared in store 55 General information 58 Statement of Directors’ responsibilities • Opened 17 new stores and nine convenience stores Financial statements • Launched Morrisons Cellar, developed 59 Group financial statements our Kiddicare online offer and 59 Independent auditor’s report 60 Consolidated statement of comprehensive income continued to explore food online 61 Consolidated balance sheet 62 Consolidated cash flow statement 63 Consolidated statement of changes in equity WHAT WE WILL DO NEXT 64 Group accounting policies 70 Notes to the Group financial statements 96 Company financial statements • Increase our accessibility to customers 96 Company balance sheet by building our convenience portfolio 97 Company accounting policies to 100 stores 100 Notes to the Company financial statements • Continue to offer great value on Investor information Market Street with our ‘pick of the 109 Five year summary of results 110 Supplementary information street’ deals 111 Investor relations and financial calendar • Launch Morrisons online food offer in 2014 1 1 WorldReginfo - 07349d63-9e88-4d10-9a41-36cf478c6825 Performance and strategy review Annual report and financial statements 2012/13 Our business model – doing more of what matters What we do Where we do it Our business model is underpinned by We operate throughout the UK so we’re the manufacturing and sourcing of great closer to our suppliers and customers – food, sold across our stores by our friendly the people who matter. people – put simply we make, we buy, we move and we sell. Morrisons has grown from a market stall in Bradford to Key the UK’s fourth largest supermarket group with c500 Head office stores including 12 Morrisons M local convenience stores. Online head office We employ 129,000 people across our business, including Distribution centres over 5,000 trained butchers, bakers and fishmongers. We have over 600 lorries and 150,000 trolleys! Manufacturing M local Each of our stores (including convenience) has its own Supermarkets Market Street, complete with trained colleagues using their craft skills to bring fresh products to our customers, 58 prepared just the way they like it. Every day in-store we Scotland bake 128,000 loaves, filet 5,000 fish and make 11,500 sandwiches. We make more fresh food in-store than any other supermarket. 90 We have always cared about the origin of our food. In the 1960s we began sourcing our meat from Woodhead North Brothers, a company which became part of the Morrisons family in 1991. We are now the UK’s second largest fresh food manufacturer and our vertical integration gives us both transparency over our supply chain and the flexibility to run industry leading promotions to support our profitability. 99 Our business model has evolved to reflect the changing Midlands demands of today’s consumer, in particular ‘when, where and how’ they shop. We continue to invest in the convenience market, recently buying 62 stores from other 85 retailers. We have made progress with our multi-channel offer, with Kiddicare and Morrisons Cellar, and the development of our online food proposition. 84 South East 70 Our head office, logistics and distribution teams support our South Central stores and we continuously invest in technology. Our Evolve South West programme has helped us increase efficiency by making sure we have the right systems in place to deliver continuous improvement across our operations. We recognise the importance of developing our people and the Morrisons Academy gives colleagues the opportunity to learn skills to take them from ‘shop floor to top floor’. We are proud to be a British Group and close to both our customers and suppliers. We are committed to behaving responsibly (page 33) in everything we do, for example reducing waste through We are continuing to grow so that we can reach even more our Great Taste, Less Waste scheme. customers. In 2013/14 we plan to open 20 stores and increase our convenience store portfolio to 100. Our continued store We understand the need to protect our business from roll out means we’re creating local jobs across the UK. operational and reputational risk. Details of our risk management and mitigating factors are set out on page 28. We work closely with our communities to support local initiatives, such as Let’s Grow (our fun educational scheme for schools) and Raise a Smile (our charity partnership scheme). 2 WorldReginfo - 07349d63-9e88-4d10-9a41-36cf478c6825 Performance and strategy review Governance Financial statements H ow we do it differently We provide great service to our customers by How we’re building on offering the best value fresh food, prepared in-store Fresh by our experts. We are unique because of the Value transparency of our supply chain and our focus on Service traditional crafts. Fresh Value more of what matters more of what matters • fresh food – from field to fork, • honest prices – affordable for everyone catch to kitchen in hours • transparent promotions • made from scratch in-store every day • great availability • vertical integration – we own the supply We price our food honestly to offer the best value to chain and we source locally our customers. Our vertical integration allows us to drive • we guarantee our fresh credentials out efficiencies and quickly pass savings on to customers. In Market Street our customers can see their food being prepared. Even our Morrisons M local stores have Market Street made products giving customers the same great fresh food. lue for o Owning our supply chain means we va ur s V h ng ha a know where our food comes from. s si re l e i h u We can also react more quickly to r im o e l F x d customer demands throughout the a e day, resulting in less waste. M r s Service Service more of what matters • craft skills in-store – see and We pride ourselves on our in-store craft skills. We have over 5,000 trained butchers, bakers taste the food on Market Street and fishmongers preparing food and delivering • friendly people, offering the exactly what our customers want, tailored to best advice and service suit local markets. • knowledgeable HOT (Hello, Offer, Thank) service 3 WorldReginfo - 07349d63-9e88-4d10-9a41-36cf478c6825 Performance and strategy review Annual report and financial statements 2012/13 Understanding our customers and the challenges of our marketplace Total shareholder return AsConsumer a result of Confidencethese external pressures, customers are becoming increasingly savvy about when, where and how they shop, trading 140 Challenging economic conditions -15 down and using coupons, only buying what’s needed and using 130 The economy continues to be extremely challenging and the the internet to check prices and shop around for the best deals. -20 120 tough trading conditions look set to remain as the UK faces 110 slow economic growth. -25 3 100 Inflation averaged 2.8%1 through the year, with CPI food inflation 74% 90 averaging 4.1%1.