The fifth largest UK supermarket group, William Morrison, has today (21 September) revealed positive H1 results, proving that its mantra of no nonsense retailing is, in fact, making sense for shoppers and driving the best sales growth in the industry. The results showed that since last year, pre-tax profit has risen 9.1% before exceptional costs, reaching £86.4m.

The Yorkshire based retail chain claims to sell "the very best for less" in 105 stores nationwide, in areas including Liverpool, the Midlands, East Anglia, Kent and Essex. Despite fierce competition from Wal-Mart's Asda, it has continued to thrive, with £1.709bn in revenues up 15% from 1999. In store takings were shown to have increased by 11.9%. Margins have slipped from 23.9% to 23.3% but this was expected, chairman Kenneth Morrison commenting in a statement that, "current trading is strong but there is obvious pressure on the margins as the retail scene become more competitive."

Almost 40% of the chain is owned by Kenneth Morrison and his extended family, which also saw petrol sales in the 78 stations grow 45%, and like-for-like petrol sales increase 6%, although this reflects the cost increase in raw materials as well as significant volume gains.

The company has avoided Internet innovation, arguably a wise move in the light of Budgens' and Somerfield's recent announcements that their respective e-commerce sites were simply not proving profitable. Similarly, frozen food group Iceland has announced that it has abandoned plans to sell groceries through the television. Morrison has also disposed of several properties, which added £5.2m to the pre-tax profit; bringing it to a grand total of £91.6m, including exceptional items.

For the start of H2, the five weeks to 10 September, takings are already up 16% and like-for-like sales experienced a 9.5% increase. The company revealed that it was planning expansion with several new openings in areas with no previous Morrison presence, including Rhyl and Ipswich. The directors have announced an interim dividend of 30p per share, an increase of 3p.

Six months to August 6, 2000
(million pounds unless stated)
Shr (pence) 3.81 vs 3.23
Dividend (pence) 0.30 vs 0.27
Pre-tax pre-excepts 86.4 vs 79.2
Turnover 1,709.0 vs 1,486.0
6 Months Aug. 6:
2000 1999
Revenues GBP1.71 bln GBP1.49 bln
Operating profit 82.3 mln 76.3 mln
Pretax profit (a) 86.4 mln 79.2 mln
Pretax profit (b) 91.6 mln 79.2 mln
Earnings per share 3.81 p 3.23 p
(Ordinary)
Earnings per share 3.71 p 3.14 p
(Diluted)
Dividend 0.30 p 0.27 p

(a) Before items
(b) After items

CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR 27 WEEKS ENDED 6 AUGUST 2000

27 weeks 27 weeks 52 weeks
ended ended ended
6 August 8 August % 30 January
Note 2000 1999 change 2000
£m £m £m

Turnover 2 1,709.0 1,486.0 +15.0 2,970.1
------- ------- -------

Operating profit 3 82.3 76.3 + 7.9 183.1

Net interest receivable 4 4.1 2.9 6.1
------- ------- -------

Profit pre exceptional item 86.4 79.2 + 9.1 189.2

Exceptional item - profit
on sale of land and

buildings 5.2 - -
------- ------- -------

Profit before taxation 91.6 79.2 +15.6 189.2

Taxation (32.6) (29.4) (69.3)
------- ------- -------

Profit after taxation 59.0 49.8 +18.5 119.9

Minority interest - equity (0.5) (0.3) (0.7)
------- ------- -------
Profit for the financial

period 58.5 49.5 119.2

Non-equity dividends (0.4) (0.4) (0.8)
------- ------- -------
Profit attributable to

ordinary shareholders 58.1 49.1 118.4

Equity dividends 5 (4.6) (4.1) (22.8)
------- ------- -------

Profit retained 53.5 45.0 95.6
------- ------- -------

Earnings per share 6

Ordinary 3.81p 3.23p +18.0 7.78p
----- ----- -----

Diluted 3.71p 3.14p +18.2 7.57p
----- ----- -----
Dividend per ordinary

share 0.30p 0.27p +11.1 1.50p
----- ------ ------

CONSOLIDATED BALANCE SHEET

At At At
6 August 8 August 30 January
2000 1999 2000
Note £m £m £m

Tangible fixed assets
- at cost 1,734.9 1,502.6 1,597.2
- accumulated depreciation (400.6) (335.3) (368.2)
------- ------- -------
- at written down value 8 1,334.3 1,167.3 1,229.0
Current assets 9 325.5 304.3 253.5
Current liabilities 10 (679.8) (524.2) (556.7)
------- ------- -------
Total assets less current

liabilities 980.0 947.4 925.8
Creditors over one year - (75.0) -
Provisions for liabilities

and charges 11 (47.0) (44.1) (47.0)
Minority interest - equity (1.9) (1.5) (1.4)
------- ------- -------
931.1 826.8 877.4
- - -. Called up share capital

Equity 152.7 152.4 152.4
Non-equity 13.8 14.6 14.6
------- ------- -------
166.5 167.0 167.0
Share premium account 3.5 2.9 2.9
Profit and loss account 761.1 656.9 707.5
------- ------- -------
12 931.1 826.8 877.4
------- ------- -------

NB Net current liabilities (current assets less

current liabilities) (354.3) (219.9) (303.2)
------- ------- -------

CONSOLIDATED CASH FLOW STATEMENT

27 weeks 27 weeks 52 weeks
ended ended ended
6 August 8 August 30 January
2000 1999 2000
Note £m £m £m

Cash inflow from operating
activities 13 239.6 205.1 297.8

Net cash inflow for returns
on investments and

servicing of finance 1.3 1.7 2.9

Taxation paid (30.3) (0.1) (77.5)

Capital expenditure and
financial investment (145.0) (84.4) (166.4)
Dividends paid (19.1) (16.1) (21.1)
------- ------- -------
Cash inflow before use of

liquid resources and financing 46.5 106.2 35.7
Management of liquid resources (55.4) (48.8) (59.8)
Financing - issue of shares 0.2 - 0.1
Increase in debt 50.0 - -
------- ------- -------
Increase/(decrease) in cash

in the period 41.3 57.4 (24.0)
------- ------- -------

Reconciliation of net cash flow to movement in net debt in the
period

Increase/(decrease) in cash 41.3 57.4 (24.0)
Increase in debt (50.0) - -
Increase in liquid

resources 55.4 48.8 59.8
------- ------- -------
Change in net debt resulting

from cash flows 46.7 106.2 35.8
Opening net debt (3.4) (39.2) (39.2)
------- ------- -------
Closing net cash/(debt) 14 43.3 67.0 (3.4)
------- ------- -------