24th May 2007 07:03
Morrison(Wm.)Supermarkets PLC24 May 2007 Wm Morrison Supermarkets plc 2007 AGM and Interim Management Statement In his opening remarks at today's AGM, the Chairman Sir Ken Morrison willprovide the following statement; The past year 2006/7 saw a good demonstration of the sound progress we have made towards ourformer operating standards. The absorption of the Safeway business wascompleted and we saw solid growth in sales, profit and cash generation. Profit before tax, property profits and exceptional items was £331m comparedwith £54m in 2005/6. There were no exceptional items, compared with costs of£374m in the previous year. It was important during this period to show recovery in profit terms whilstmaximising cash generation. Our net debt fell from £1.15bn to £0.8bn in theyear due in so small part to tightening control in all aspects of the business. Trading update In the 15 weeks ended 20th May 2007 like for like sales excluding fuel increasedby 4.0% (3.2% including fuel) confirming the steady progress we have made sincewe last provided a sales update at our Preliminary Results announcement on 15thMarch. In this period total Group sales excluding fuel increased by 3.7% (3.1%including fuel) reflecting the impact of disposals in 2006/7. As expected our cash flow has been strong so far this year. In part this hasbeen due to seasonal working capital benefits and also to corporation taxrefunds from earlier years. As previously indicated we expect net debt to riselater in the year, reflecting the impact of our increased investment programmeand the measures that we are taking to deal with the remaining pensions deficit. During the period we have signed a new lease for an additional distributionfacility in Swindon, which will allow us to reduce our distribution milestravelled considerably. Whilst only a partial solution to our overallrequirements for the South, this represents a good first step and will becommissioned in late summer. The associated costs of commissioning andredundancies elsewhere in our network, were incorporated in our plans for theyear. During the period we sold ancillary property, not required by the business, fora profit of £14m. This will be reported separately on the Group's incomestatement, and with this exception our expectations for full year profitabilityremain unchanged. Board Changes This year has seen a number of board changes. I announced Bob Stott'sforthcoming retirement at this meeting last year. He was replaced as CEO byMarc Bolland who joined us from Heineken in September 2006. On 8th March thisyear Martyn Jones, who has been with Morrisons for 17 years, joined the Board asTrading Director. I would like to wish them great success in their new roles. The new team is being formed and is one I feel will carry us forward into thefuture to capitalise on the sound foundations which are now firmly in place. Iam confident we can look forward with optimism. Two long-serving directors who have been major contributors to the company'ssuccess in the past important years will be no longer with us. Marie Melnykleft the company on health grounds in December last after 30 years with thecompany, and David Hutchinson, who has been with us for 21 years, departs nextmonth. Marie has contributed so much in a multitude of areas throughout ourbusiness over her long and progressive career, which culminated in her role asManaging Director. Meanwhile David was responsible for our distribution activities as well asmanaging and developing all our vertical integration through our abattoirs, meatfactory and pack houses. Their contribution over the hard miles involved in the completion of theconversion of Safeway was enormous and they demonstrated great skill,determination and dedication through this period to hand over a very soundbusiness to our new team. It has been my privilege to work with two exceptionally talented people whocared so much about their responsibilities and your company. On behalf of allthe shareholders I offer them sincere thanks and wish them well. We are in the process of recruiting a new Deputy Chairman who will replace mewhen I retire in 2008 and the Nominations Committee is expecting to make anannouncement on this appointment in the near future. Our business progress It is now some eighteen months since we completed the Safeway integration andconversion process and have been able to focus once again on developing thebusiness and delivering growth and profits. Good progress has been made; ourmarket share is now stable and we look forward to a period of steady growth.There is clearly more to strive for. We have implemented a three year plan which will increase our selling space andimprove our supply chain infrastructure and capacity, so that we can moreeffectively meet the needs of our customers. Market Street is being refreshed,product ranges are being overhauled and new lines are being added so that ourselling space meets changing demands and works even harder. Customers continue to benefit from 1,000 weekly offers, including 150 buy one,get one frees and continuing low prices. We are committed to providing our customers with the best and freshest productsavailable throughout the year. Our vertically integrated business model,whereby we process 80% of our fresh produce and 90% of our fresh meat throughour own facilities, enables us to assure the quality and provenance of ouroffering. We consistently seek to work with British farmers first and foremost, and sourceas much of our produce as possible from our domestic farmers and growers. Localproducers are important to us and we continue to give them good support. Store development We see increasing store space as a key element of our future growth strategy,both through new stores and extensions and we expect to open a further 1 millionsquare feet of new selling space over the next three years. Eight new stores will open during the current financial year. The first ofthese, at Speke, is scheduled to open on 9th July. This will be followed byJohnstone, Erskine, Dundee, York, Llanelli, Bristol Hartcliffe and Wednesbury. The Erskine store, which is 24,000 square feet, will be the smallest store wehave opened for over 20 years and marks a significant change in our recentproperty development strategy. We are sure we can successfully operate ourbusiness in a store of this size as has been confirmed by the significantimprovements we were able to make during 2006/7 in the performance of similarsize stores we acquired from Safeway. We continue to improve and extend our existing estate, and a number of projectshave already been completed this year. We are currently carrying out extensionsat Aberystwyth, Brecon, Canterbury, Chippenham, Hawick, Meltham, Newquay andPenzance and a major extension and refurbishment is also underway at ourGilbraltar store. Further extensions are due to be completed at Redditch,Northampton, Weston and Bridport by the end of the year. The Board is very conscious of the value of your company's past investment inand retention of freehold property and intends to continue with this policy.Currently the majority of our estate is freehold which provides us with aconsiderable degree of operational flexibility and we believe that owning ourown properties is essential, if we are to remain competitive and deliversustainable growth in the business. Consumer trends The Board is very aware of the spotlight that is on food retailers with regardto promoting healthy eating and being environmentally responsible. We believethat exercising social responsibility is entirely compatible with deliveringcontinued profit recovery and we are pleased, this year, to have published acorporate responsibility report for the first time. We also published the results of Marc Bolland's business review in March. Overthe coming years we will build on Morrisons credentials as the "food specialistfor everyone", concentrating on our four unique attributes: • More people preparing more food in-store than any other retailer • The market rediscovered • Closer to source than any other food retailer • Competitive prices and 100s of offers that save our customers money which amount to quality and value. These credentials, which have been at the heart of Morrisons for many years,have never been more relevant to the consumer. Competition Commission The Competition Commission inquiry into the grocery industry continues and webelieve will now not be concluded until the first quarter of next year. Weshare some of the Commission's concerns about the competitive landscape and areco-operating fully with their inquiry. We cannot predict the outcome of theinvestigation but if local competition turns out to be the main issue, as thesmallest of the big four food retailers we may have the opportunity to exploitlocations where we are not currently represented. Charity of the year Notwithstanding that there has been an enormous amount of work going onthroughout the company during the year, our staff have found time to raise £1.6mfor our charity of the year, the Breast Cancer Campaign. This is a terrificachievement and I hope we can keep up the good work with this year's charity,Asthma UK. Our staff At this point I'd like to pay tribute to all our staff for their skill,dedication and energy which have supported the numerous changes we have made tothe business. It has also given me particular personal pleasure in presenting128 members of staff with awards to recognise their 25 years service with theGroup. The progress made so far in profit recovery resulted in payments of £43m forprofit share being distributed amongst our eligible staff. That concludes my report, and concludes today's proceedings. I hope we will seeyou in our stores, and that you like what you see. Enquiries Wm Morrison Supermarkets: Investor RelationsNiall Addison 07764 624701 Media RelationsGillian Hall 0845 611 5359 Citigate Dewe Rogerson: Media RelationsJonathan Clare 020 7638 9571Simon RigbySarah Gestetner This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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