Financial summary
Free cash flow pre-dividend of £785m
Generated £42m of cash post-dividend and pre-property disposals
Total turnover down 4.9% to £16.8bn (2013/14: £17.7bn)
Like-for-like (LFL) sales (ex-fuel/ex-VAT) down 5.9% (2013/14: down 2.8%)
Underlying profit before tax(1) down 52% to £345m (2013/14: £719m(2)), around the mid-point of the guidance range set in March 2014
Underlying earnings per share(1) down 53% to 10.9p (2013/14: 23.1p(2))
Property impairment £1,273m, primarily due to market conditions
Loss before tax £792m (2013/14: Loss of £176m)
Final dividend of 9.62p. Total dividend up 5% to 13.65p (2013/14: 13.0p), in line with commitment given in March 2014
Operating working capital improvement of £206m, in line with guidance
Property disposal proceeds of £448m as guided, profits of £131m achieved
Net debt reduced by £477m to £2,340m (2013/14: £2,817m)
Strategic and operating highlights
For 2014/15:
Initiated price re-set in March 2014, with a series of price cuts since
£315m invested in the customer proposition
Improving trend in LFL and volume KPIs through the year
£224m cost savings achieved, £1bn three-year target on track
Match & More card launched
From 2015/16:
New CEO, David Potts, starts in the business on 16 March
Focus on improving the customer offer and building trading momentum
Increased investment in customer proposition planned for 2015/16
Continue to prioritise capital discipline, with plans for further cost savings, improvement in working capital and lower capital expenditure
Ongoing development of IT platform, including first sales-based ordering trials
Further development of online model
M local roll-out slowed significantly, proposition and site selection criteria to be reviewed. Proposed closure of 23 M local stores during 2015/16
Dividend of not less than 5p per share for 2015/16
Andrew Higginson, Chairman, said:
"Last year's trading environment was tough, and we don't expect any change this year. However, Morrisons is a strong, distinctive business - we own most of our supermarkets, have strong cash flow, and are famous with customers for great quality fresh food at low prices. This gives us a good platform.
"David Potts joins as Chief Executive next week. Under his leadership, we will focus on building trading momentum and being more like the Morrisons our customers expect. We will invest more into the proposition and put customers at the heart of everything we do. We will listen and respond to our customers, and work hard every day to improve the shopping trip.
"Success measures will be simple - more customers buying more from us. More customers means more volume growth which, ultimately, will lead to better like-for-like, profitability and shareholder returns."
Trevor Strain, Chief Financial Officer, said:
"We are making good progress on the plan to generate £2bn of cash while making £1bn of cost savings to invest in the business, and are determined to keep lowering prices and keep them consistently low for our customers.
"Some of the changes at Morrisons are beginning to bite. Although some key measures showed progress, particularly in the final quarter, there is still much more to do.
"Today we are providing enhanced disclosure around commercial income and more detail on depreciation. We believe this new financial disclosure is appropriate for shareholders."
Outlook
In the year ahead, we will invest more for customers in order to build trading momentum.
We expect further cash flow progress, and target lower net debt in the £1.9-£2.1bn range.
The 2015/16 dividend will be not less than 5p per share, which the Board believes reflects the commitment to the capital allocation framework, and maintains flexibility around cash flow to enable the investment to build trading momentum.
A more detailed outlook will be provided once the new CEO has reviewed the components of the strategy.
