Preliminary Results 18 March 2020 52 weeks to 2 February 2020 1 - - PowerPoint PPT Presentation

▶
preliminary results
SMART_READER_LITE
LIVE PREVIEW

Preliminary Results 18 March 2020 52 weeks to 2 February 2020 1 - - PowerPoint PPT Presentation

Jun 01, 2023 337 likes •717 views

Preliminary Results 18 March 2020 52 weeks to 2 February 2020 1 David Potts CEO Fix, Rebuild, Grow, Sustain , S Sust ustain GROW A broader business creating value REBUILD Six priorities to improve the shopping trip Gain consistency

slide-1
SLIDE 1

1

Preliminary Results

18 March 2020

52 weeks to 2 February 2020

slide-2
SLIDE 2

David Potts CEO

slide-3
SLIDE 3

3

GROW A broader business creating value REBUILD Six priorities to improve the shopping trip Gain consistency and confidence FIX Stable LFL Improve capability Operate at lower cost

, S Sust ustain

Fix, Rebuild, Grow, Sustain

SUSTAIN Shopping trip improvements Carbon and plastic Local integration

slide-4
SLIDE 4

4

Own Brand

slide-5
SLIDE 5

5

  • Executive Committee appointments
  • New generation coming through
  • Bench strength

Colleagues

slide-6
SLIDE 6

6

Consumer confidence weaker

Source: GfK Consumer Confidence monthly year-on-year change

  • 15
  • 14
  • 13
  • 12
  • 11
  • 10
  • 9
  • 8
  • 7
  • 6
slide-7
SLIDE 7

7

Be more competitive – own brand customer favourites

slide-8
SLIDE 8

8

Be more competitive

slide-9
SLIDE 9

9

Serve customers better

slide-10
SLIDE 10

10

Find local solutions

Over 1,000 local items Over 200 local suppliers 37 local foodmaker events Local sales up

  • ver 30%
slide-11
SLIDE 11

11

Make core supermarkets strong again

slide-12
SLIDE 12

12

Naturally digital

Evolution not revolution Organise people and processes Work at pace to create value Small team to identify opportunities

slide-13
SLIDE 13

13

Wholesale

slide-14
SLIDE 14

14

Wholesale & online

Rontec, Gateway Leeds Interior - Rontec, Gateway Leeds Online Home Delivery Morrisons Daily Conversion

slide-15
SLIDE 15

15

slide-16
SLIDE 16

Michael Gleeson CFO

slide-17
SLIDE 17

17

2019/20 2018/191 Ex-fuel like-for-like sales growth (0.8)% 4.8% Profit before tax and exceptionals2

  • £m

408 396 Return on capital employed 7.0% 6.9% Net debt : EBITDA3 2.4x 2.4x Ordinary dividend

  • pence

6.77p 6.60p Special dividend

  • pence

2.00p 6.00p Total dividend

  • pence

8.77p 12.60p

Overview

1 Restated for IFRS 16 - lease accounting 2 Profit before tax, exceptional items and net retirement benefit interest 3 EBITDA before exceptional items

3.0%

slide-18
SLIDE 18

18

2018/19 2019/20 Like-for-like (ex-VAT) H1 H2 FY H1 H2 FY Group Sales ex-fuel % 4.9 4.6 4.8 0.2 (1.7) (0.8) Sales inc-fuel % 4.2 4.5 4.3 0.2 (2.5) (1.1)

Sales

17,735 17,536 (105) (94)

2018/19 Net new space Like-for-like Fuel 2019/20

Sales £m

slide-19
SLIDE 19

19

£m 2019/20 2018/191 Impairment and provision for onerous contracts 2 (10) Profit/(loss) on disposal and exit of properties 66

  • Store restructuring and closure costs

(51)

  • Costs associated with the repayment of borrowings
  • (33)

Retirement benefit exceptional items

  • (26)

Other exceptional items (9) (42) Net retirement benefit interest 19 18 Total exceptional credit/(charge) 27 (93)

Exceptional items

1 Restated for IFRS 16 – lease accounting
slide-20
SLIDE 20

20

£m 2019/20 2018/191 Reported operating profit 521 432 Reported profit before tax 435 303 £m 2019/20 2018/191 Operating profit before exceptionals 513 510 EBITDA margin before exceptionals 5.9% 5.7% Profit before tax and exceptionals2 408 396

Profit

1 Restated for IFRS 16 – lease accounting 2 Profit before tax, exceptional items and net retirement benefit interest

3.0% 22 bps

slide-21
SLIDE 21

21

–

Productivity

–

Shrink / availability

–

COGS

–

Naturally digital

Cost saving opportunities

slide-22
SLIDE 22

22

A broader, stronger business

£75m - £125m incremental profit target:

–

Lower interest

–

Morrisons.com

–

Wholesale

–

Popular and useful services Cumulative £68m

slide-23
SLIDE 23

23

£m 2019/20 2018/191 Cash flow from operations 1,017 977 Capital expenditure (511) (461) Tax and interest (190) (195) Proceeds from disposals 34 22 Other 11 (19) Non cash movements on lease liabilities (66) (53) 295 271 Other non cash movements (57) 10 238 281 Dividends paid (302) (289) Movement in net debt (64) (8) Opening net debt (2,394) (2,386) Closing net debt (2,458) (2,394)

Statement of cash flow

1 Restated for IFRS 16 – lease accounting
slide-24
SLIDE 24

24

Balance sheet

  • 11
  • 39

186 272 594 688 944

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Net Pension Surplus £m

1,020 520 365 419 500 461 511

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Cash Capex £m

2,817 2,340 1,746 1,194 973 997 1,082

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

Net Debt (pre-IFRS 16) £m

8.2% 5.6% 5.3% 6.3% 6.7% 6.9% 7.0%

2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20

ROCE

Post-IFRS 16 Basis Lease adjusted on a 14x multiplier

slide-25
SLIDE 25

25

2020/21 Financial calendar

2020/21 Date Q1 trading statement 12 May 2020 AGM 11 June 2020 Half year end 2 August 2020 Interim results announcement 10 September 2020 Financial year end 31 January 2021

slide-26
SLIDE 26

26

Net new space sales 0.3% Depreciation c.£550m Net finance costs before exceptionals c.£105m Capital expenditure c.£525m Normalised tax rate 23% - 23.5% Cash tax paid To include c.£50m cash impact Onerous capital payments Less than £10m Wholesale supply sales £1bn in due course

2020/21 guidance

slide-27
SLIDE 27

27

Capital allocation framework

Invest in maintaining estate and reducing cost Maintain debt ratios to support investment grade rating Invest for profitable growth Pay dividends in line with stated policy Return surplus capital to shareholders

slide-28
SLIDE 28

28

Appendices

slide-29
SLIDE 29

29

£m 2019/20 2018/191 Revenue 17,536 17,735 Statutory operating profit 521 432 Net finance costs (87) (130) Share of profit from joint venture 1 1 Statutory profit before tax 435 303 Profit before tax and exceptionals2 408 396 Basic earnings per share before exceptionals3 13.18p 12.85p Net debt 2,458 2,394 Total dividend4 8.77p 12.60p

Financial summary

1 Restated for IFRS 16 – lease accounting 2 Profit before tax, exceptional items and net retirement benefit interest 3 Profit before exceptional items and net retirement benefit interest, adjusted for a normalised tax charge divided by weighted average number of shares 4 Includes special dividends of 2.00p in 2019/20 and 6.00p in 2018/19

3.0% 20.6 %

slide-30
SLIDE 30

30

Earnings per share (EPS) before exceptionals

£m 2019/20 2018/191 Profit before tax and exceptionals2 408 396 Normalised tax charge at 23.1% (2018/19: 23.5%) (94) (93) Profit before exceptionals and after tax3 314 303 Weighted average number of shares (m) 2,383 2,357 Basic EPS before exceptionals4 13.18p 12.85p Total dividend5 8.77p 12.60p

1 Restated for IFRS 16 – lease accounting 2 Profit before tax, exceptional items and net retirement benefit interest 3 Profit before exceptional items and net retirement benefit interest, adjusted for a normalised tax charge 4 Profit before exceptional items and net retirement benefit interest, adjusted for a normalised tax charge divided by weighted average number of shares 5 Includes special dividends of 2.00p in 2019/20 and 6.00p in 2018/19
slide-31
SLIDE 31

31

Finance costs

£m 2019/20 2018/191 Interest payable (47) (51) Interest capitalised 2 1 Provisions: unwinding of discount (2) (3) Interest on lease liabilities (63) (66) Other finance costs (1) (1) Finance costs before exceptionals (111) (120) Other finance income 4 4 Finance lease income 1 1 Net finance costs before exceptionals (106) (115) Costs associated with repayment of borrowings

  • (33)

Net retirement benefit interest 19 18 Net finance costs (87) (130)

1 Restated for IFRS 16 – lease accounting
slide-32
SLIDE 32

32

Statement of financial position

£m 2019/20 2018/191 Property, plant and equipment and investments2 8,641 8,581 Working capital3 (2,038) (2,013) Provisions and tax (548) (537) Net retirement benefit surplus 944 688 Net debt (2,458) (2,394) Net assets 4,541 4,325 Key metrics: Interest cover 4.8x 4.4x Net debt : EBITDA 2.4x 2.4x Gearing 54% 55% ROCE 7.0% 6.9%

1 Restated for IFRS 16 – lease accounting 2 Including goodwill and intangibles, property, plant and equipment, right-of-use assets, investment property, assets held-for-sale, investments in joint venture, and

non-current trade and other receivables

3 Inventories, receivables and payables < 1 year
slide-33
SLIDE 33

33

Our priorities

To be more competitive To serve customers better Find local solutions Develop popular and useful services To simplify and speed up the organisation To make the core supermarkets strong again Naturally digital

slide-34
SLIDE 34

34

The plan

Dividend yield Operational levers to enhance returns Capital structure levers to enhance returns Profit growth Optimise total shareholder return on basis of robust balance sheet Asset intensity Optimise assets Capital return Volume growth Margin

slide-35
SLIDE 35

35

2 February 2020 3 February 2019 Number of shareholders 36,349 39,090 Number of shares in issue (m) 2,405 2,368 Dividend (p) 2019/20 2018/19 2017/18 Interim ordinary 1.93 1.85 1.66 Interim special 2.00 2.00

  • Final ordinary

4.84 4.75 4.43 Final special

  • 4.00

4.00 Total 8.77 12.60 10.09 Dividend dates Ex dividend 21 May 2020 Record 22 May 2020 Payment 29 June 2020

Shareholder information

slide-36
SLIDE 36

36