Introduction from the Chairman
At the start of the year, we outlined a range of initiatives to grow our sales profitability, make our business more efficient
and develop further growth opportunities that would deliver
enhanced value to shareholders. The management team has
made good progress in all these areas and we are on track
to deliver our vision to make Morrisons 'Different and Better
Profit before tax was £947m, an increase of £73m (8%) when
compared with £874m last year. Underlying profit before tax,
which we regard as the true measure of business performance,
was up 8% to £935m. Statutory basic earnings per share
increased by 11% over the previous year to 26.7p, with
underlying basic earnings per share up by 11% to 25.6p.
Our policy is to increase the dividend in line with underlying
earnings growth subject to a minimum increase of 10% in each
of the three years to 2013/14. In line with this policy, the Board
is therefore recommending a final dividend of 7.53p per share,
to bring the total dividend for the year to 10.7p, an increase
of 11% on 2010/11. The dividend is covered 2.4 times by
Cash flow from operations of £1,264m was up by £123m (11%),
when compared to the previous year. Capital expenditure and
investments of £901m was £306m higher than the previous
year. This was the result of a planned acceleration in our store
opening programme, the addition of a new regional distribution
centre at Willow Green, Bridgwater, and investments to support
our expansion ambitions for online shopping and vertical
integration. We expect capital expenditure to be higher in
2012/13 as we continue to invest for future growth. £368m
was invested into our equity retirement programme, and
we are on track to meet our objective of returning £1bn to
shareholders over the two years to March 2013, in addition
to normal dividends.
These investments, together with an increased dividend
payment, resulted in a rise in net debt to £1,471m (2010/11:
£817m), to leave gearing at 27%. At this level it remains
low for the sector. At the year end the Group had undrawn,
committed facilities of £725m and a credit rating of A3 from
Moody's. This is a strong investment grade which is only held
by two other European retailers.
Community and the environment
Our customers expect us to trade responsibly, and we are
committed to managing resources carefully, maintaining
ethical standards and working with the communities in which
we operate. During the year, we have continued to undertake
research projects through the Morrisons Farming Programme,
have been enthusiastic supporters of the Government's Public
Health Responsibility Deal and have made good progress
towards our long term energy reduction targets. Our Let's
Grow programme, now in its fifth year, continues to help
school children throughout the UK to get out of the classroom
and learn about the food cycle first hand.
It is a source of pride that our colleagues and customers
always go out of their way to support our charitable activities,
and I am delighted that Save the Children was selected by
our colleagues, for the second successive year, as our charity
partner. Specifically, we have helped fund its award-winning
Families and Schools Together (FAST) programme across the
UK, which is designed to give the most disadvantaged children
a chance of a better future. With an array of fundraising
activities, we have raised £2.3m for FAST this year, successfully
funding 24 programmes, as well as Save the Children's
emergency appeals in Japan and East Africa.
Morrisons commitment to providing customers with an
outstanding shopping experience and making it a great place
to work for colleagues has again been recognised with numerous
industry awards. These included nine The Grocer Own Label
Food and Drink Awards, Fresh Produce Retailer of The Year
(multiple category) at the Retail Industry Awards and Employer
of the Year from both Retail Week and The Grocer Gold Awards.
These awards are testimony to the passion and hard work
of our 131,000 colleagues, who are making Morrisons
'Different and Better than Ever' for our customers every day.
I am delighted that our growth during the year will provide
a profit share pool for them of £49m, an increase of 8%
over last year.
We continue to invest in training and skills. Our award-winning
Morrisons Academy provides specialist training to help
colleagues develop new skills or work towards a nationally
recognised qualification such as QCF. Over 100,000 colleagues
were successfully accredited during the year and, at the time
of rising youth unemployment, I am pleased that 40,000 of
our colleagues are aged 16 to 24.
On behalf of the Board, I want to express our thanks to every
one of our colleagues for their dedication, professionalism
and service throughout the year.
We are committed to making
food shopping fresh,
friendly and affordable
It underpins our unique promise to every single household
in the UK - the best service and the freshest food for less.