Wm Morrison Supermarkets PLC Supermarkets Morrison Wm Wm Morrison Supermarkets PLC Hilmore House, Gain Lane We are responding Bradford BD3 7DL Telephone: 0345 611 5000 Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2020/21 Visit our website: www.morrisons.com An nual Report and Financial Statements 2020/21 Statements Report Financial and nual 650,000+ doorstep deliveries to the vulnerable NHS hour WE ARE DONATING LUNCHBOXES DAILY OVER TH E SCH OO L HOLIDAYS 24629_Morrisons AR_Covers_2021_29-04-21.indd 1-3 29/04/2021 18:09 Feeding the nation We are responding to the global crisis by playing our full part in feeding the nation. Our core purpose remains: 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. Financial highlights Profit before tax, exceptional items* Group revenue Group like-for-like (LFL) sales (exc. fuel)* and net retirement benefit interest1 £17.6bn 8.6% £201m (50.7)% 4 17.3 17.7 17.5 17.6 8.6% 408 431 16.3 374 396 337 4.8% 201 2.8% 1.9% (0.8)% 2016/17 2017/181 2018/19 2019/20 2020/21 2016/17 2017/18 2018/19 2019/20 2020/21 2016/17 2017/182 2018/193 2019/20 2020/21 1 2017/2018 Group revenue on a 53 week basis. Profit before tax, exceptional and net retirement benefit interest Waived business rates relief 1 Referred to as ‘profit before tax and exceptionals*’. 2 £369m 52 week equivalent. 3 Restated following the application of IFRS 16. 4 Profit before tax, exceptional item and net retirement benefit interest adjusted for the waiver of rates relief. Free cash flow* Net debt* Total dividend £(450)m £3,169m 11.15p 670 3,169 12.60p 11.15p 10.09p 350 2,458 281 238 2,386 2,394 8.77p Designed & Produced by Printing by (450) 6.60p 6.77p 7.15p Radley Yeldar Geoff Neal Group 5.43p 6.09p 1,798 ry.com Paper stock: This report is printed 1,194 973 997 1,082 on Revive 100 Offset uncoated, 2016/171 2017/181 2018/19 2019/20 2020/21 2016/171 2017/18 2018/19 2019/20 2020/21 2016/17 2017/181 2018/192 2019/203 2020/214 Photography a 100% recycled paper. 1 Calculated on a pre-IFRS 16 basis. Net debt excluding lease liabilities Ordinary Lease liabilities Special Board and Executive Revive 100 Offset is manufactured 1 Calculated on a pre-IFRS 16 basis. 1 Including 4.00p special dividend. 2 Including 6.00p special interim dividend. Committee portraits by to the certified environmental 3 Including 2.00p special interim dividend. Chris Leah Photography management system ISO 14001. 4 Including 4.00p special dividend paid and declared in 2021. * Alternative Performance Measures as defined in the Glossary on pages 157 to 159. Throughout the Directors’ report and Strategic report: Unless otherwise stated, 2020/21 refers to the 52 week period ended 31 January 2021 and 2019/20 refers to the 52 week period ended 2 February 2020. 2021 and 2020 refer to calendar years. 24629_Morrisons AR_Covers_2021_29-04-21.indd 4-6 29/04/2021 18:09 Delivering against our ambitions Our suppliers Contents page 20 Strategic report How we are responding to COVID-19 2 Our business model 4 Chair’s statement 6 FARMERS’ Chief Executive’s statement 8 Our customers DISCOUNT page 14 Seven priorities in action 10 Responding to our customers 14 Rewarding our colleagues 18 Working with suppliers 20 Delivering returns to our shareholders 22 NHS hour Protecting the environment 26 and supporting communities Risk 33 Governance Thank Corporate governance report 39 you Directors’ remuneration report 54 Directors’ report 73 Financial statements Independent auditors’ report 77 Consolidated income statement 86 Consolidated statement 86 of comprehensive income Consolidated statement of financial position 87 Consolidated statement of cash flows 88 Our colleagues Consolidated statement of changes in equity 89 Our environment page 18 Our shareholders General information 90 and community page 22 Notes to the Group financial statements 94 page 26 Company statement of financial position 134 Company statement of changes in equity 135 Company accounting policies 136 Non-financial highlights Notes to the Company financial statements 139 Related undertakings 152 Underlying energy use (MWh) down to Investment in colleague pay increased to Investor information Five year summary 154 2,455,235 £10.00 per hour Supplementary information 156 Glossary 157 2,717,487 £10.00 2,592,286 2,454,972 2,455,235 £8.50 £8.70 £9.00 £9.20 Investor relations and financial calendar 160 Information at your fingertips 162 2017/18 2018/192019/20 2020/21 Apr 2017 Apr 2018 Apr 2019Apr 2020 Apr 2021 Brand warmth Business highlights • Proud to be there for stakeholders during the pandemic and to play our full part to help feed the nation • Recognised by customers as best for brand Mean Score Mean warmth and net promoter score Sustainability • Improved the offer for customers, enabling our strong absolute and relative momentum spotlight Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 to be sustained Our commitment to Morrisons Competitor 1 Competitor 2 Competitor 3 • Online sales tripled during the year including corporate responsibility with Amazon, now available in around 50 towns and cities ‘Sustain’ is a key part of our strategy and underpins everything we do. Throughout the report, look out for this icon to read examples of Alignment of highlights to our stakeholder ambitions how we are meeting our corporate Customers Colleagues Suppliers Shareholders Environment and communities All responsibility objectives. Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2020/21 1 01_FC_Feeding_the_nation_FC_p3_v127.indd 1 26/04/2021 13:57 How we are responding to COVID-19 External National lockdown Restrictions on freedom Lockdown restrictions one begins of movement continue easing begins • Wide ranging restrictions • Go to work on freedom of movement if required • Easing of outdoor restrictions Impacts Customers stocking Trading hours are up on essentials restricted to allow for restocking Colleagues are ‘New normal’ recognised as Significant starts to emerge key workers growth in online Counters fully channels All food-to-go reopen counters and 70% decline cafés close in fuel sales Mar Apr May Group Quarterly Q1 +5.7% Q2 +12.3% LFLs (exc. fuel) Initiatives and actions throughout £500k the year Morrisons Foundation + fund set up to support NHS food boxes the homeless website live with Guaranteed pa y for free delivery and sick, shielding and click and collect in affected colleagues and Speed y shopping and greater flexibility hospital car parks around shifts and basket-only queuing Immediate payment launched annual leave to around 3,000 small suppliers Free doorstep delivery telephone grocery service launched for the elderly Social and vulnerable Partnership with distancing Deliveroo from over measures introduced at all sites 180 stores including marshal-controlled entry in store and reconfigured customer flows FARMERS’ DISCOUNT Contactless New wholesale pa yment increased to NHS Gingerbread and bulk delivery £45 hero launched service for local councils, care homes and £10m charities of food to ...by selling Support for restock Britain’s MAXIMUM CAPS restaurant quality farmers and food banks introduced to steak and seafood fishermen... maintain availability in store SELL BAGS OF All food-to-go, counters and cafés closed Colleague discount increased to 15% FLOUR Food boxes launched to provide essentials Guaranteed colleague bonus, FROM OUR for the vulnerable and self-isolating triple that of last year’s average and BAKERIES paid each quarter to meet Protective screens introduced at rising demand 6,500 checkouts in 14 days Hardship fund to support colleagues in financial difficulty 2 Wm Morrison Supermarkets PLC Annual Report and Financial Statements 2020/21 01_FC_Feeding_the_nation_FC_p3_v127.indd 2 26/04/2021 13:57 Our core purpose Our purpose during Our purpose Strategic report the COVID-19 pandemic during recession To make and provide food we’re all proud of, To play our full part in feeding Making good food available where everyone’s effort is worthwhile, so more the nation. It’s more than our job. for everyone. It’s all of our jobs. and more people can afford to enjoy eating well. Governance Further easing of restrictions Re-tightening National Tier National • Reduction in social distancing of local lockdown two system lockdown three to ‘one metre plus’ restrictions begins introduced begins • Restaurants, pubs and cafés statements Financial • 4 weeks • Business rates • Similar to allowed to reopen • Non-essential relief waived lockdown one • Two households able to meet retailers closed • Schools closed in or outside • Schools stay open Less impact Value continues than lockdown We work hard Some level to be important one as customers to help families of stocking up information Investor Increased to those feeling and colleagues enjoy the best but not as severe footfall in store the economic understand the Christmas possible as lockdown one squeeze Cafés reopen well established Cafés reopen Cafés close Cafés close routines and in tiers one processes 43% decline in some areas and two in fuel sales Cafés close Jun–Sep Oct Nov Dec Jan Q3 +7.8% Q4 +9.0% Quieter hour 100,000 introduced into all 1.2m stores on a Sunday meals provided to doorstep deliveries families in need working milestone reached 10% with the charity 'The Bread and SS 10% B u t t e r Th i n g' SERVE OUR Teachers’ discount STUDENTS 10% discount for introduced 10% NHS, Blue Light 650,000 BLUE LIGHT workers and teachers food delivery service WORKERS’