Interim report 2006/07. Wm Morrison Supermarkets PLC

Transcription

1 Interim report 2006/07 Wm Morrison Supermarkets PLC

2 Contents 01 Financial summary 02 Chairman s statement 06 Independent review report to Wm Morrison Supermarkets PLC 07 Accounting policies 08 Consolidated income statement 08 Consolidated statement of recognised income and expense 09 Consolidated balance sheet 10 Consolidated cash flow statement 10 Reconciliation of net cash flow to movement in net debt 11 Notes to the interim report 14 Seven year summary of results 16 Principal subsidiaries 17 Investor relations and financial calendar

3 Financial summary 25 weeks ended 23 July 2006 Commenting on the results, Sir Ken Morrison, Chairman, said We have more customers now than ever before in our history. Our business is growing again, and we are well on track with our targeted profit improvements. Marc Bolland joins a business moving firmly in the right direction, and I have every confidence that he will lead us to future success. 5,850.7m Group turnover (2005: 5,847.5m) 134.2m Profit before taxation (2005: loss of 82.1m) 881.2m Net debt (2005: 1,101.0m) 418.8m Operating cash flows (2005: 326.6m) 3.52p Earnings per share (2005: loss 2.54p) 0.625p Interim dividend (2005: 0.625p) Morrisons interim report 2006/07 1

4 Chairman s statement Over 9 million customers on average per week visiting 373 stores nationwide generating net sales growth of sales per square foot* Interim 2005/ Annual report 2005/ Interim 2006/07 served by 118,880 colleagues throughout the business at 23 July 2006 Overview This statement covers trading for the 25 weeks to 23 July 2006 and is presented in accordance with International Financial Reporting Standards. In March, having completed the process of converting Safeway stores to Morrisons, and divesting substantially all of those stores that would not fit the Morrisons trading model, we set out our plan for the next phase of our development, which we call the Optimisation Plan. Progress towards our optimisation targets has been pleasing in the first half, giving us confidence that they will be achieved ahead of our original timetable. The period saw little change in the size and shape of the stores estate, with a further 6 ex-safeway stores divested or closed and one new store opened in Leyland, to leave the Group with 373 trading stores at the half year. We expect to open 3 new build stores in the second half, at Swadlincote, Cardiff and Crowborough, and we announced in July that we are selling a further 6 small stores to Waitrose along with one of the ex-safeway distribution depots, at Aylesford, that was closed earlier this year. Turnover for the 25 weeks was 5.85bn, in line with the prior period. Given that 66 stores were sold in the intervening period this was a satisfactory performance. Strong growth was achieved in the stores converted from Safeway, whilst the original Morrisons stores, which started the period recording negative like for like sales, had, as anticipated, moved into positive territory by the end of the period. Fuel sales were very strong, and the fact that like for like volumes grew by 4.5% underscores Morrisons value credentials in this prolonged period of high fuel prices. Overall, like for like sales increased by 6.6% including fuel, and 4.6% excluding fuel, during a period which saw generally good growth across the sector. Stores Manufacturing Distribution Head Office Store portfolio at 23 July 2006 Net sales area Number Total 000 s sq ft of stores sq ft , , , ,551 *Like for like sales on a rolling 52 week average. 2 Morrisons interim report 2006/07

5 Profit before tax was 134.2m, compared with a loss in the prior period of 82.1m. Operating profit was 163.8m compared with 50.7m before exceptional costs in the prior period, reflecting progress in delivering the Optimisation Plan. There were no exceptional costs this time, compared with 118.8m in the prior period when the Group was in the midst of the stores conversion process. Cash flow was strong, with 418.8m generated from operations compared with 326.6m in the prior period, which was impacted by exceptional costs. This led to a substantial reduction in net debt, to 881m compared with 1.1bn a year previously and 1.6bn two years ago. Despite the reduction in debt, net financing costs were up slightly at 29.6m due to lower interest capitalised and the effect of marking-tomarket certain interest rate swaps that do not qualify for hedging treatment. Capital expenditure was significantly down after the intense activity of the previous two years, with investment in the period of 115.3m and an expectation that capital expenditure will approximately match depreciation this year. With the Group returning to profitability, the Board is pleased to confirm its intention to pay an interim dividend of pence per share, the same level as last year. This will be paid on 13 November 2006 to shareholders on the register on 13 October Optimisation Plan progress The last annual report set out the Board s plans for the next phase of development, having completed the task of converting and integrating the Safeway estate. It confirmed that this next optimisation phase would continue for three years, but that we were confident of delivering good improvements in like for like sales and profitability in 2006/07. At this interim stage of the year, it is pleasing to see the improvements coming through solidly and sustainably. The objectives behind the plan are simple to apply the Morrisons philosophy, which worked so well over many years, to the new, bigger business and adapt it where appropriate, to reflect things that have changed. Underpinning our actions is a vision once again to be the Best Grocer in Town, and progress is being made on all fronts. For the first time in two years, colleagues in the business have been able to concentrate, exclusively, on the day job, and this is bearing fruit. The quality of the existing team is amply demonstrated by the speedy way in which challenges have been addressed. Further improvements in standards are showing daily, in range selection, merchandising and supplier relationships. The lifeblood of the business is, of course, sales our ability to encourage more customers into our stores, and to buy more. In core Morrisons stores, we need to rebuild sales lost in the previous two years through cannibalisation, the distractions of the conversion programme and competitor openings. In the converted stores, we need to attract customers who are new to Morrisons. Good progress is being made in both areas. Customer numbers were up, on a like for like basis, by 5.3% overall and a particularly strong performance was seen in the converted stores as new customers tried us and liked what they found. Morrisons interim report 2006/07 3

6 Chairman s statement continued Marc Bolland (right) and Sir Kenneth Morrison CBE in the Holloway store Marc Bolland joined the Board of Wm Morrison Supermarkets PLC on 1 September He succeeds Bob Stott as Chief Executive of the Group. Aged 47, Marc was Chief Operating Officer and executive board member of Heineken N.V. as well as nonexecutive director of Manpower Inc. Marc also held a number of senior roles at Heineken over the last 20 years, amongst which has been responsibility for the Heineken brand strategy and the company s marketing strategy. Marc chairs the Morrisons Executive Board, taking responsibility for the Group s overall commercial and strategic development and delivering the Optimisation Plan. Sir Ken Morrison said: Marc has a wealth of experience operating in a highly competitive consumer products sector and also brings extensive commercial and leadership skills to the Group... With Marc we will have an excellent management team and I am confident that under his new leadership the Group will take up its rightful position as The Best Grocer in Town, and in so doing deliver sustainable profit growth for the benefit of all our stakeholders. With our store management teams able to focus, once again, on the basic disciplines of shopkeeping, we have been able to ensure that customer service is delivered well whilst also improving our efficiency. Our objective of saving 6m labour hours this year, without detriment to service or the need for any programme of redundancy, is well on course for achievement, with attendant savings of 50m. Our operational focus has also resulted in improvements in wastage levels, contributing to our three year gross margin uplift target of 0.9%, the majority of which we now expect to deliver this year. A strong contribution to this target has been through improved buying terms delivered by our trading team. They, too, are now able to concentrate fully on their normal tasks of product innovation and delivering the unique combination of everyday low prices and a comprehensive programme of promotions that have made us consistently first for value. Our suppliers are now seeing growth again with Morrisons, and they have responded in supportive fashion. Our abattoirs, fruit and vegetable pack-houses and meat and cheese processing facility were all operating at capacity in the period, to serve the new bigger business. This high level of operating efficiency has further helped the margin performance in the period. Our distribution network has coped well after the inevitable disruption associated with three large depot closures early in the year. Stores have received good service, despite the fact that our distribution infrastructure is still not optimally structured to serve our needs in the South. We are pleased to have proved that we can maintain our industry leading levels of in-store availability, albeit the cost of achieving this is currently too high. We are on track to deliver the 30m of distribution cost savings previously announced, this year, and some further rationalisation of the network is currently the subject of consultation with colleagues. Store location at 23 July 2006 Petrol Stores stations Scotland North Midlands East Midlands West South West South Central South East Total Morrisons interim report 2006/07

7 As previously announced, we opened our new head office in Bradford in April, and the relocation of 1,400 colleagues was achieved with minimal disruption. The elimination of duplicate facilities will save 30m in the current year, a previously announced target, but as important is the improvement in efficiency and morale being seen from having the vast majority of our central colleagues in one location for the first time since the Safeway acquisition. We are, naturally, cooperating fully with the inquiry into grocery retailing being undertaken by the Competition Commission, which we believe is exploring the correct issues. We have responded to their detailed and extensive requests for information, and have endeavoured to provide this in a timely and cost effective way through our in-house team. The Optimisation Plan is still in its early stages, but the Board is encouraged by progress to date and delighted that the efforts of colleagues throughout the business are bearing fruit both for customers and our shareholders. Morale is good, and we thank all our colleagues for their dedication and professionalism. We are delighted, on their behalf, to have been recognised as best for service by both the Grocer and Checkout magazine in their annual awards. Board Marc Bolland joined us as Chief Executive on 1 September, replacing Bob Stott who retires on 30 September. He has made an enthusiastic and energetic start, seeking to understand the heartbeat of the business and getting well acquainted with colleagues in all areas. In addition to taking over Bob s operational responsibilities Marc chairs the Executive Board, has responsibility for Group strategy and will be a member of the Nominations Committee. During the first half of the year we confirmed Paul Manduca as our Senior Independent Director. Paul is leading the process of selecting and appointing a new Deputy Chairman, in succession to David Jones, who retired on 30 June. Executive search firm Egon Zehnder has been engaged to assist with this. We are also seeking an additional independent Non Executive Director with recent and relevant financial experience to support the workings of the Audit Committee. Trading update and outlook In the 8 weeks since 23 July 2006 the Group has continued to see good trading momentum, with like for like sales up 6.5% including fuel and 5.9% excluding fuel. Converted store sales growth remains strong, despite 199 of the total 226 converted stores now being in their second year post conversion and therefore having annualised the initial conversion uplifts. The Group s sales levels are slightly stronger than we had anticipated at the time of preparing the Optimisation Plan, and give us confidence for the second half despite an expectation of a tougher trading environment. At this early stage in our optimisation programme, we are encouraged by the progress being made. We are very clear that there remains much to do in order to establish the levels of profitability expected by our shareholders, and in that regard will lay out our plans for the next phase of profit recovery when we present our full year results in March Sir Kenneth Morrison CBE Chairman Morrisons interim report 2006/07 5

8 Independent review report to Wm Morrison Supermarkets PLC Introduction We have been instructed by the Company to review the financial information for the 25 weeks ended 23 July 2006 which comprises the consolidated income statement, consolidated balance sheet, consolidated statement of recognised income and expense, consolidated cash flow statement and related notes to the interim report. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. Directors responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the UK. A review consists principally of making enquiries of management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with International Statements on Auditing (UK and Ireland) and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the 25 weeks ended 23 July KPMG Audit Plc Chartered Accountants Leeds 20 September Morrisons interim report 2006/07

9 Accounting policies 25 weeks ended 23 July 2006 Basis of preparation This interim report for the 25 weeks ended 23 July 2006 has been prepared on the basis of the accounting policies set out in Wm Morrison Supermarkets PLC s annual report and financial statements 2006 and in accordance with the Listing Rules of the Financial Services Authority. The interim report was approved by the Board of Directors on 20 September The interim report does not constitute financial statements as defined in section 240 of the Companies Act It does not include all of the information and disclosures required for full annual financial statements, and should be read in conjunction with the annual report and financial statements for the 52 weeks ended 29 January The financial information contained in this interim report in respect of the 52 weeks ended 29 January 2006 has been produced from the annual report and financial statements 2006 which have been filed with the Registrar of Companies. The auditors report on these financial statements was unqualified and did not contain any statement under Section 237 of the Companies Act The interim results for the current and comparative periods are unaudited. The auditors have carried out a review of the interim report and their report is set out on page 6. Significant accounting policies Except for the new accounting policy below, the accounting polices applied by the Group in this interim report are the same as those applied by the Group in the financial statements for the 52 weeks ended 29 January Financial instruments hedge accounting The Group has a number of cross currency swaps which are used for non-trading purposes. These derivative financial instruments are used to match or eliminate risk from potential movements in foreign exchange rates inherent in the cash flows of certain financial liabilities. Derivatives are reviewed regularly for effectiveness as hedges and corrective action taken, if appropriate. Derivatives are measured at fair value. Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. The gain or loss on any ineffective part of the hedge is immediately recognised in the income statement. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or liability, the associated cumulative gains or losses that were recognised directly in equity are re-classified into the income statement in the same periods during which the interest income/expense is recognised. Morrisons interim report 2006/07 7

10 Consolidated income statement 25 weeks ended 23 July weeks ended 23 July weeks ended 24 July 2005 Year ended 29 January 2006 Before Excep- Before Excepexceptional tional exceptional tional Total costs costs Total costs costs Total Note m m m m m m m Turnover 1 5, , , , ,114.8 Other operating income Raw materials and consumables (4,359.5) (4,426.7) (4,426.7) (9,155.5) (9,155.5) Gross profit 1, , , , ,977.8 Staff costs (746.1) (784.2) (15.3) (799.5) (1,630.8) (86.1) (1,716.9) Depreciation and other asset write offs (126.6) (139.3) (17.7) (157.0) (256.9) (21.0) (277.9) Intangible write offs (103.2) (103.2) Profit/(loss) on sale of property, plant and equipment 6.0 (1.3) (1.3) 7.5 (16.7) (9.2) Other operating expenses (469.4) (455.3) (85.8) (541.1) (986.1) (147.4) (1,133.5) Operating profit/(loss) (118.8) (68.1) (374.4) (262.9) Finance costs 3 (33.7) (26.7) (26.7) (73.2) (73.2) Finance income Share of post-tax profits from BP joint venture Profit/(loss) before taxation (118.8) (82.1) 61.5 (374.4) (312.9) Taxation (40.8) (9.9) (15.6) Profit/(loss) for financial period (94.0) (67.2) 45.9 (296.2) (250.3) Earnings/(loss) per share (pence): Basic (2.54) 1.73 (9.46) Diluted (2.54) 1.73 (9.46) Ordinary dividends (pence per share) Interim proposed paid Final paid Consolidated statement of recognised income and expense (SoRIE) 25 weeks ended 25 weeks ended Year ended 23 July July January 2006 m m m Profit/(loss) for the financial period 93.4 (67.2) (250.3) Actuarial profit/(loss) arising in the pension scheme (net of taxation) 49.3 (28.2) Total recognised income and expense for the financial period 93.4 (17.9) (278.5) Prior year impact on retained earnings of first time adoption of IAS Attributable to equity shareholders 93.4 (14.5) (275.1) 8 Morrisons interim report 2006/07

11 Consolidated balance sheet 23 July 2006 Note m m m Assets Non-current assets Goodwill and other intangibles Property, plant and equipment 5 6, , ,143.9 Lease prepayments Investment property Financial assets , , ,623.4 Current assets Stocks Debtors Cash and cash equivalents Non-current assets classified as held for sale , Liabilities Current liabilities Creditors (1,739.5) (1,705.3) (1,471.2) Other financial liabilities (2.5) (268.0) (296.6) Current tax liabilities (77.2) (39.0) (1,819.2) (1,973.3) (1,806.8) Non-current liabilities Other financial liabilities (1,016.9) (1,011.4) (1,022.7) Deferred tax liabilities (423.3) (508.9) (422.6) Pension liabilities (401.4) (324.4) (416.2) Provisions (89.0) (55.2) (127.2) (1,930.6) (1,899.9) (1,988.7) Net assets 3, , ,648.6 Shareholders equity Called up share capital Share premium Merger reserve 2, , ,578.3 Retained earnings , Total equity 7 3, , ,648.6 Morrisons Interim Report 2006/07 9

12 Consolidated cash flow statement 25 weeks ended 23 July weeks 25 weeks Year ended ended ended Note m m m Cash flows from operations Cash generated from operations Interest paid (14.6) (20.0) (74.9) Taxation (paid)/received (1.9) (4.3) 33.3 Net cash inflow from operating activities Cash flows from investing activities Interest received Proceeds from the sale of property, plant and equipment Purchase of property, plant and equipment (103.8) (338.2) (635.4) Acquisition of subsidiaries (net of cash acquired) (15.6) Proceeds on the sale of BP joint venture assets 87.0 Proceeds from the sale of subsidiaries Net cash outflow from investing activities (48.8) (170.6) (167.6) Cash flows from financing activities Net proceeds from the issue of ordinary shares Finance lease principal repayments (1.2) (1.5) (2.6) New borrowings Repayment of borrowings (250.0) (2.0) Dividends paid to shareholders 4 (81.7) (81.2) (97.8) Net cash (outflow)/inflow from financing activities (331.1) Net increase in cash and cash equivalents Cash and cash equivalents at start of the period 91.1 (28.6) (28.6) Cash and cash equivalents at end of the period Reconciliation of net cash flow to movement in net debt 25 weeks 25 weeks Year ended ended ended Note m m m Net increase in cash and cash equivalents Cash outflow from decrease in debt and lease financing Cash inflow from increase in loans (100.0) (100.0) Other non cash movements (7.2) 8.9 (9.0) Opening net debt (1,147.6) (1,160.9) (1,160.9) Closing net debt 9 (881.2) (1,101.0) (1,147.6) 10 Morrisons interim report 2006/07

13 Notes to the interim report 25 weeks ended 23 July weeks 25 weeks Year ended ended ended 1 Turnover m m m Sale of goods in stores 5, , ,540.5 Fuel 1, , ,515.7 Total sales including VAT 6, , ,056.2 VAT (501.2) (488.9) (1,026.6) Other turnover Total turnover 5, , , Exceptional costs The Group discloses separately within profit/(loss) for the financial period exceptional items which are material and unusual that derive from transactions or events that fall within the ordinary course of business. For the period year ended 24 July 2005 and year ended 29 January 2006 exceptional costs were incurred that related to the integration of Safeway and the conversion of the ex-safeway stores to the Morrisons format. An analysis of these exceptional costs can be found in the annual report and financial statements 2006 and the interim report 2005/06. These reports can be viewed in the Investor information section of the Morrisons website at 25 weeks 25 weeks Year ended ended ended 3 Finance costs and income m m m Interest payable on short term loans and bank overdrafts (5.6) (5.1) (11.1) Interest payable on bonds (27.6) (28.1) (58.1) Interest capitalised Total interest payable (30.4) (26.6) (57.4) Amortisation of derivative instruments (4.1) 5.6 (8.4) Pension liability interest cost (44.6) (41.3) (86.2) Expected return on pension assets Net pension liability interest 3.5 (2.2) (3.0) Other finance costs (2.7) (3.5) (4.4) Finance costs (33.7) (26.7) (73.2) Bank interest received Fair value income of derivative instruments Finance income Net finance cost (29.6) (16.2) (52.2) 25 weeks 25 weeks Year ended ended ended 4 Dividends m m m Dividends paid in the period The Directors are proposing an unchanged interim dividend of 0.625p per share, which will absorb an estimated 16.7m of shareholders funds. This amount will be charged to retained earnings when paid. Morrisons Interim Report 2006/07 11

14 Notes to the interim report continued 25 weeks ended 23 July Property, plant and equipment m m m Net book value At beginning of the period 6, , ,708.1 Additions at cost Interest capitalised Assets held for sale transfer Acquired from joint venture Disposals (0.2) (1.3) (52.1) Depreciation charge for the period and other asset write offs (124.4) (154.8) (273.5) At end of the period 6, , ,143.9 In addition to the depreciation charge above of 124.4m, 2.2m (24 July 2005: 2.2m; 29 January 2006: 4.4m) is charged on Investment properties. Contracts placed for future capital expenditure not provided in the financial statements amount to 61.3m. 6 Non-current assets classified as held for sale m m m Property Ex BP joint venture assets Non-current assets classified as held for sale represent stores and other administrative and distribution buildings marketed for sale. The amount that was reclassified from property, plant and equipment was all freehold and leasehold land and buildings including associated fixtures and fittings. The stock for those stores still trading is not reclassified as it will be immaterial at the time of sale. The results of any stores still trading continue to be included within the Group results. 7 Statement of changes in shareholders equity m m m At beginning of the period 3, , ,005.9 Total recognised income and expense 93.4 (17.9) (278.5) First time adoption of IAS Share issues Share option charge Deferred tax on options (3.3) Cash flow hedging reserve (3.3) Dividends (81.7) (81.2) (97.8) At end of the period 3, , , Morrisons interim report 2006/07

15 25 weeks 25 weeks Year ended ended ended 8 Cash flow from operating activities m m m Profit/(loss) for the period 93.4 (67.2) (250.3) Adjustments for: Taxation 40.8 (14.9) (62.6) Depreciation and other asset write offs Intangible write offs (Profit)/loss on disposal of property, plant and equipment (6.0) Net finance cost Other non-cash changes Share of results of joint ventures after taxation (2.2) (2.2) Excess of contributions over pension service cost (11.3) (15.9) (35.2) Decrease/(increase) in stocks 62.6 (15.4) 25.2 (Increase)/decrease in debtors (110.3) Increase in creditors (Decrease)/increase in provisions (38.8) (2.3) 67.2 Net movements in working capital Cash generated from operations Analysis of net debt m m m Cash and cash equivalents Bank overdrafts (15.7) (44.2) Cash and cash equivalents per cash flow Interest and cross-currency swaps Financial assets Loans (250.0) (250.0) Finance lease obligations (2.5) (2.3) (2.4) Current financial liabilities (2.5) (252.3) (252.4) Bonds (1,008.5) (1,000.3) (1,013.0) Other unsecured loans (4.0) (4.2) (4.0) Finance lease obligations (4.4) (6.9) (5.7) Non-current financial liabilities (1,016.9) (1,011.4) (1,022.7) Net debt (881.2) (1,101.0) (1,147.6) Morrisons Interim Report 2006/07 13

16 Seven year summary of results Half year IFRS IFRS UK UK UK UK UK UK GAAP GAAP GAAP GAAP GAAP GAAP GAAP GAAP Jul Jul Jul Jul Aug Aug Aug Aug , Income statement m m m m m m m m Group turnover 5, , , , , , , ,709.0 Group operating profit before exceptional costs Exceptional costs (118.8) (118.8) (21.8) (6.7) Group operating profit/(loss) (68.1) (57.3) Profit/(loss) before taxation (82.1) (73.7) Basic earnings per share (p) 3.52 (2.54) (2.26) Diluted earnings per share (p) 3.50 (2.54) (2.25) Dividend per ordinary share (p) IFRS IFRS UK UK UK UK UK UK GAAP GAAP GAAP GAAP GAAP GAAP GAAP GAAP Jul Jul Jul Jul Aug Aug Aug Aug Balance sheet m m m m m m m m Non-current assets 6, , , , , , , ,334.3 Other assets , Current liabilities (1,819.2) (1,973.3) (2,043.8) (2,737.5) (740.7) (686.1) (607.7) (684.4) Non-current liabilities (1,930.6) (1,899.9) (1,452.5) (1,470.9) (71.6) (56.7) (61.3) (62.7) Net assets 3, , , , , , , All the UK GAAP figures above have been restated for FRS 21 Events after the balance sheet date for dividends and FRS 25 Financial instruments: disclosure and measurement for preference shares and minority interests weeks weeks. 3 The results include the acquired results of Safeway Limited. 14 Morrisons interim report 2006/07

17 Full year IFRS IFRS UK UK UK UK UK UK GAAP GAAP GAAP GAAP GAAP GAAP GAAP GAAP Jan Jan Jan Feb Jan Feb Jan Jan , , Income statement m m m m m m m m Group turnover 12, , , , , , , ,968.9 Group operating profit before exceptional costs Exceptional costs (374.4) (139.2) (99.2) (10.9) (3.5) Group operating (loss)/profit (262.9) (Loss)/profit before taxation (312.9) Basic earnings per share (p) (9.46) Diluted earnings per share (p) (9.46) Dividend per ordinary share (p) IFRS IFRS UK UK UK UK UK UK GAAP GAAP GAAP GAAP GAAP GAAP GAAP GAAP Jan Jan Jan Feb Jan Feb Jan Jan , Balance sheet m m m m m m m m Non-current assets 6, , , , , , , ,229.0 Other assets Current liabilities (1,806.8) (1,712.4) (1,732.1) (742.7) (655.6) (586.3) (525.1) (538.0) Non-current liabilities (1,988.7) (1,982.2) (1,540.4) (100.4) (73.7) (61.4) (67.5) (62.9) Net assets 3, , , , , , , All the UK GAAP figures above have been restated for FRS 21 Events after the balance sheet date for dividends and FRS 25 Financial instruments: disclosure and measurement for preference shares and minority interests weeks. 2 The results include the acquired results of Safeway Limited. 3 Reclassification under UK GAAP to reallocate distribution costs. 4 Restated for FRS 20 Share-based payment for share options. Morrisons Interim Report 2006/07 15

18 Principal subsidiaries 25 weeks ended 23 July 2006 % equity Subsidiaries of Wm Morrison Supermarkets PLC Principal activity holding Bos Brothers Fruit and Vegetables BV produce wholesaler 100 Farmers Boy Limited manufacture and distribution of fresh food products 100 Farock Insurance Company Limited captive insurance 100 Holsa Limited packaging manufacturer 100 Neerock Limited fresh meat processor 100 Wm Morrison Produce Limited produce packer 100 Safeway Limited holding company 100 Rathbone Kear Limited baker 80 Subsidiaries of Safeway Limited Safeway Overseas Limited grocery retailing 100 Safeway Stores Limited grocery retailing 100 All of the above companies are registered in England and Wales except Bos Brothers Fruit and Vegetables BV which is incorporated in the Netherlands and Farock Insurance Company Limited which is incorporated in the Isle of Man. The principal area of trading for all of the above companies is the United Kingdom apart from Bos Brothers Fruit and Vegetables BV and Safeway Overseas Limited who also trade in the rest of Europe. In addition to the above, the Company has a number of other subsidiary companies, particulars of which will be annexed to the next annual return. 16 Morrisons interim report 2006/07

19 Investor relations and financial calendar 25 weeks ended 23 July 2006 Financial Calendar 2007 Financial year end 4/2/07 Prelim results announcement 15/3/07 Annual review posted 19/4/07 Annual general meeting 24/5/07 Half year end 29/7/07 Interim results announcement 20/9/07 Dividends Interim dividend record date 13/10/06 Interim dividend payment date 13/11/06 Final dividend record date 27/4/07 Final dividend payment date 29/5/07 Corporate website The Morrison website is available on the internet at In addition to this interim report 2006/07 and our latest annual report and financial statements for 2006, our website also contains information on corporate social responsibility, company history, stores and services, latest offers, press information, as well as a local store finder. Share price information is available on the corporate website, in the financial press and the Cityline service operated by the Financial Times (telephone ). Shareholder information online The annual report, annual review and the interim report are available through the internet. The information is exactly the same as in the printed version but is more easily accessed. In addition, because the larger annual report is not posted to shareholders as a matter of course, costs are lowered and the environmental impact reduced. Shareholders wishing to obtain a paper copy of the annual report may request it. Dividend Reinvestment Plan The Company has a Dividend Reinvestment Plan which allows shareholders to reinvest their cash dividends in the Company s shares bought in the market through a specifically arranged share dealing service. Full details of the plan and its charges, together with mandate forms, are available from the Registrars. Registrar and Shareholding enquiries Administrative enquiries about the holding of Morrisons shares and enquiries in relation to the dividend reinvestment plan should be directed to: Capita Registrars Northern House Woodsome Park Fenay Bridge Huddersfield HD8 0LA Telephone Registered office Wm Morrison Supermarkets PLC Hilmore House Gain Lane Bradford BD3 7DL Telephone Investor Relations Telephone This document is printed on Revive Silk, manufactured in the UK at mills with ISO accreditation and comprising 75% de-inked post consumer waste and 25% mill broke and virgin fibres.

20 Wm Morrison Supermarkets PLC