PRELIMINARY ANNOUNCEMENT 52 weeks ended 26th April 2003
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PRELIMINARY ANNOUNCEMENT 52 weeks ended 26th April 2003 Presentation Transcript

  • 1. PRELIMINARY ANNOUNCEMENT 52 weeks ended 26th April 2003
  • 2. Agenda - Good Morning and Welcome
    • 1. Overview - John von Spreckelsen
    • 2. Strategy - Renewal and New Business - John von Spreckelsen
    • 3. Strategy - Commercial - Steve Back
    • 4. Financial Review - Steve Back
    • 5. Summary and Close - John von Spreckelsen
  • 3. Financial Summary
  • 4. Like-for-Like Food Retail Sales * Electronic top up of mobile phones has largely replaced phone card sales. If the full sales value of the top up was recorded within sales rather than the commission element, like-for-like sales would have shown an uplift to 1.7%.
  • 5. Agenda
    • 1. Overview - John von Spreckelsen
    • 2. Strategy - Renewal and New Business - John von Spreckelsen
    • 3. Strategy - Commercial - Steve Back
    • 4. Financial Review - Steve Back
    • 5. Summary and Close - John von Spreckelsen
  • 6. Vision
    • plc: “Be the leading small-format food retailer in the UK”
    • Somerfield: “Be the leading local fresh and convenience food retailer”
    • Kwik Save: “Be the dominant low price neighbourhood food retailer”
  • 7. Strategy Capitalise on Key Assets
    • Large estate - the Group has more stores in the UK than any other quoted grocery food retailer
    • Fresh - the Group has the capability and expertise for daily delivery
    • UK national supply chain - covers all of England, Scotland and Wales
    • Strong balance sheet and no debt
    • Experienced retail management team
  • 8. Strategy Background
    • Market
      • Convenience is a fast growing market and remains fragmented
      • Main shop segment of the market - no growth
      • Convenience and top up shopping - some consolidation taking place - attractive growth opportunities
    • Company
      • Shareholder returns and profits are not yet adequate
      • Historically weak and confused business model for Kwik Save
      • Valuable estate but under-performing and under-invested retail portfolio
  • 9. Strategy Offer - Exploit Complementary Market Positioning
  • 10. Strategy Portfolio - Focus on Core Offer
  • 11. Strategy - New Business Opportunity to Expand into the Convenience Market
    • Forecourts - Key differentiator is that these are food sites selling fuel
    • TFE 18 stores achieving growth of 9% in Q4
    • Food only agreements
    • Margram 8* stores of the 12 now trading as Somerfield
    • Food and fuel sites
    • Weekly sales range from £112k to £242k
    • Franchise - Quality fresh food based “franchise” offer
    • TM Retail 3* stores - co-branded trial
    • * As at the year end only 2 Margram stores and one TM store were open and included in turnover
  • 12. Strategy Growth Through Investment - Somerfield 100th store launched this week - Worlds End, Chelsea
  • 13. Strategy Kwik Save - Formats Investment
    • First Trial - 6 stores
    Second Trial - 8 Stores Productivity and Growth
  • 14. Strategy Range - For Everyday Needs
  • 15. Agenda
    • 1. Overview - John von Spreckelsen
    • 2. Strategy - Renewal and New Business - John von Spreckelsen
    • 3. Strategy - Commercial - Steve Back
    • 4. Financial Review - Steve Back
    • 5. Summary and Close - John von Spreckelsen
  • 16. Strategy Growth is paramount - what about cost?
    • Created centralised procurement PACE - a process to reduce cost of goods for resale STEPS - centralised savings on support goods, services and all contracts and co-operations for supply e.g. NISA
    • Cost of supply chain operation
    • Head Office and Support functions
    • Cost of finance - interest at lowest rates
    • Tax and Dunbar
    • Property and under-utilised assets - release of profits and cash for next 2 years
    • Closed stores - quick and effective turnaround
  • 17. Strategy Supply Chain/IT
    • Largely unchanged - target 15 Depots by 2005/06 Financial Year Production of a single, integrated, fully composite supply chain (current capacity £6 billion) Development of new composite RDCs Single RDC for all slow moving goods Closure of outdated/surplus depots
    • Operational Effectiveness Composite deliveries - covering Chill, Frozen and Ambient Shorter lead times for fresh deliveries One system - “Exceed” to manage all depots on line Interactive voice picking - improves accuracy and picking efficiency
    • IT - continuation of improvement strategy
  • 18. Strategy Availability and Stock
  • 19. Agenda
    • 1. Overview - John von Spreckelsen
    • 2. Strategy - Renewal and New Business - John von Spreckelsen
    • 3. Strategy - Commercial - Steve Back
    • 4. Financial Review - Steve Back
    • 5. Summary and Close - John von Spreckelsen
  • 20. Net Profit
  • 21. Exceptional Items Last year within interest there were refinancing costs of £6.0m
  • 22. Taxation
    • £5.0m tax credit for the year (buffer carried forward) £8.5m
    • Taxable losses carried forward £49.6m
    • Capital losses carried forward £219 m
    • Tax plan completed
  • 23. Operating Cash Flow
  • 24. Reconciliation of Net Debt
  • 25. Reinvestment
  • 26. Strategy - FRS17 Pension Risk
    • FRS17 pension deficit from £55.1m to £99.5m
    • £6.8m higher P & L charge under FRS17 than under SSAP24
    • The defined benefit scheme is closed to new members and the Group has increased company pension contributions from 13.9% to 20%
  • 27. Agenda
    • 1. Overview - John von Spreckelsen
    • 2. Strategy - Renewal and New Business - John von Spreckelsen
    • 3. Strategy - Commercial - Steve Back
    • 4. Financial Review - Steve Back
    • 5. Summary and Close - John von Spreckelsen
  • 28. Summary
    • Clear focused business strategy
    • Experienced Board to deliver and add pace to the strategy
    • Sound financial base on which to grow
    • Somerfield on track and remains focused
    • Kwik Save format of the future to be rolled out
    • Operating in growing market segments
  • 29. Strategy Financial Targets - EBIT Margins
    • Somerfield 4%
    • Kwik Save 2%
    • Forecourts and Franchising 3%
    • Capital - all investments must meet a demanding cash payback model
    • - exceptions: health and safety and infrastructure works
  • 30. Question and Answer Session Thank you
  • 31. APPENDICES
  • 32. HR Strategy for our Stakeholders
    • People
    • Energise 54,000 colleagues
    • Simplify and create an effective, focused and lean organisational structure
    • Train and develop our own people and promote from within
    • Motivate and reward our people
    • Establish a strong culture and values set - a way of working for our organisation
    • Create a totally focused retail team
  • 33. Interest
  • 34. Trading Portfolio Movements No. of Stores
  • 35. Trading Portfolio Movements Sq. Ft. (‘000s)