Profitability Analysis of Tesco and Its Competitors - Case Study Example

April 15, 2016

Profitability analysis of Tesco and its competitors

Introduction

Financial statements convey accounting information to relevant stakeholders. However, further analysis is important to help these stakeholders make informed decisions on a target company. Comparing performance of a company with those of its competitors helps management of the subject company towards competitiveness in the industry. Similarly, investors need to compare profitability to optimize returns and to compare liquidity ratios to know entities that can guarantee safety of investments over a short period. A comparative analysis of profitability of Tesco and its main competitor, Morrison, over the past four years is presented. Two other competitors, OCADO group PLC and Sainsbury (J) PLC, are then included in the analysis to present the profitability scope of the industry in which the two companies operate, the grocery and general merchandise industry in Britain.

The next section discusses background information and analysis results for profitability of Tesco and Morrison and is divided into two components of profitability, profit margin and activity. The third section offers background information on the entire industry and conducts the rations of four players in the industry from an industry perspective and the last section discusses the results.

Tesco and Morrison

Background Information

Tesco is a multinational company that operates in the Britain’s grocery and general merchandise industry. It has its headquarter is in Welwyn Garden City. It has a wide range of products that include fresh food, frozen food, baby products, health and beauty products, and detergents, among others. The company also offers financial services, sells its products over the internet, and offer doorstep deliveries at an affordable cost free (Tesco, N.d.). Factors such as customer satisfaction, a good working environment, and positive relationships with partners are the company’s focus. Customer loyalty, according to the company, which the company measures using rate at which a customer shops and cost of the purchases on a weekly basis decreased in the year ended 2015, but employee satisfaction remained high in the period. Employees, based on an internal survey, also indicated that they would recommend people to work with Tesco and to shop at Tesco. The company’s performance in the financial year, however, declined from the level in the previous financial year. Revenues reduced by about 1.3 percent and trading profit reduced by 57.5 percent. Similarly, the company’s operating cash flow reduced by about 60 percent. Trading profit margin from sales in Britain was barely one percent, while Europe reported a trading profit margin of 1.93 percent, and Asia reported a trading profit margin of 5.72 percent. The estimated profit margin from Tesco Bank, however, was 18.9 percent. Competition, weak brand image, weak financial performance are some of the threats that the company reported in its annual report for the financial year that ended in 2015 (Tesco, 2015).

Most of the products that Morrison offers are similar to products that Tesco offers and this establishes direct competition between the two companies. Fresh products, different types of food, household commodities, and baby products are examples of the common commodities in which the two companies trade. Like Tesco, Morrison offers discounts on some of its products and sells its commodities online (Morrison, 2016). One of the profitability indicators for Morrison, over the financial year ended 2015 is its cost-saving approach. It realized £ 224 million in cost saving in the financial year. Similarly, the company made efforts to expand its market base through opening more stores with focus on convenience stores. The company’s focus is on fresh supply, value, and service. It ensures that its food products are fresh and it controls the supply chain of these products for safety and quality. The company also controls most processes in making its food products and applies ethical codes in ensuring acceptable quality standards of its fresh products. One of the benefits of the company’s cost saving initiatives is price reduction that could allow it to offer products at a lower price and gain a competitive advantage. The company focuses on customer satisfaction and refunds unsatisfied customers on products that it prepares. An experienced customer care team also exists in the company that also boasts of a competent employee base that is trained to meet needs of customers. The company’s percentage sales volume and percentage sales revenues in the industry increased in the financial year but were less than ten percent respectively. This, however, occurred when the company realized a 3.2 percent decline in its annual sales. Morrison’s control over the grocery market in the United Kingdom also declined in the year ended 2015, and this followed a systematic decrease that has existed over the past five financial years. The company reported an operating loss of about four percent. Its turnover also reduced from its value in the previous year and underlying pre-tax profit, though positive, reduced from the value in the previous year (Morrison, 2015).

Profitability ratios offer insight into a company’s level of profit in a financial period (Vasigh, Fleming, & Mackay, 2010). Gross profit margin, operating profit margin, net profit margin, and return on investments are some of the ratios (Chandra, 2008). This section presents a comparative analysis results for profitability indicators of Tesco Plc and Morrison Plc for the financial years ended 2012, 2013, 2014, and 2015. Two classes of profitability ratios, profit margins and activity aspects, are analyzed.

Profit Margins

Gross profit margin

Figure 1: Gross profit margins for Tesco and Morrison

One of the observable features of the graph is the declining trend in gross profit margins of the two companies. The trend, however, is more significant for Tesco than it is for Morrison. The gross profit margin for Tesco (8.15 %) was higher than that for Morrison (6.89 %) in the year 2012. Both of the companies reported a decline in margins in the year ended 2013 but that of Tesco was greater and led to a lower margin for the company than did that for Morrison. In the year ended 2014, Tesco maintained its gross profit margin at 6.31 percent while that of Morrison declined to 6.07 percent. In the year ended 2015, however, Tesco realized a significant decline to -3.39 percent while Morrison’s margins only declined to 4.53. According to theses observed values, Morrison (average gross profit margin= 6.0375 percent) has performed better than has Tesco (average gross profit margin= 4.345). The observed difference in gross profit margin over the period, however, was not significant (t= -0.8051, p= 0.4797).

Operating margin. Operating profit margin is another profitability indicator, and the following graph shows the trend for the two companies over the four-year period.

Figure 2: Operating profit margin

An overall decline in operating profit margin is evident for the companies, except for an increase that Tesco reported in the year ended 2014. The margin was better for Tesco than it was for Morrison in the year ended 2012 but this decrease to become worse in the year ended 2015. Tesco realized a more significant reduction in the ratio in the year ended 2013 in which Morrison even performed better. In the year ended 2014, however, Tesco improved its operating profit margin and outshined Morrison. The two companies had negative margins in the year ended 2015, but the margin was worse for Tesco (-9.3 percent) than it was for Morrison (4.14 percent). A test of hypothesis on difference in gross profit margins of the two companies identifies an average better performance for Morrison (1.5175 percent per year) than for Tesco (1.0975 percent per year). The difference, however, is not significant (t= -0.21231, p= 0.8526).

Net profit margin. Figure 3 shows the trend in net profit margin over the four-year period.

Figure 3: Net profit margin

The graph shows a slightly better performance for Tesco in the year ended 2012. Morrison realized a slight decrease in its net profit margin in the following year, but the decrease was greater for Tesco that almost made a net profit loss. While the margin continued to decrease for Morrison, Tesco improved on its margin to perform better in the year ended 2014. A sharp decline, however, led to a worse performance for Tesco in the year ended 2015 (-9.22 percent) than that of for Morrison (-4.53 percent). Analysis of average performance over the period identifies low level of profitability for the two companies, but with a better performance for Morrison than for Tesco. Morrison realized an average net profit margin of 0.4 percent while Tesco has realized an average net profit margin of –0.7875 over the period. The difference, however, was not significant (t= -0.683, p= 0.5436).

Activity

Return on assets. Figure 4 shows the return on assets ratios for the two companies.

Figure 4: Return on assets

A general trend in decrease in profitability is evident in the ratio. Morrison reported better returns on assets in the years ended 2012, 2013, and 2015 while Tesco reported a better ratio in the year ended 2014. The difference in return on assets ratio between the two companies increased from the year ended 2012 to the year ended 2013 because of a greater decline in Tesco’s performance than the decline in Morrison’s performance. Morrison experienced a decline in the year ended 2014 while Tesco reported an increment and better performance. A sharp decline for Tesco in the year ended 2015 then led to a worse performance (-12.17 percent) for Tesco than the -7.65 ratio that Morrison reported. The average return on assets ratio was better for Morrison (0.93 percent) than for Tesco (-1.0625 percent), though this difference was not significant (t= -0.8796, p= 0.4438).

Assets turnover. The companies experienced less volatile ratios in asset turnover as figure four shows.

Figure 5: Assets turnover ratio

Morrison had higher ratios than Tesco did for the entire period. The ratio, for example, was 1.32 for Tesco in the year ended 2012 but 1.86 for Morrison. Both of the companies reported a decline in the two subsequent financial years and an improvement in the year ended 2015 in which Morrison had a ratio of 1.69 compared to Tesco’s 1.32. Analysis of average performance over the period identifies a performance for Morrison (assets turnover ratio= 1.745) than for Tesco (1.298) and the difference is significant (t= -10.861, p= 0.00).

The following figures show inventory turnover, return on equity, return on invested capital, and earnings per share for Tesco and Morrison.

Figure 6: Inventory turnover

Figure 7: Return on equity

Figure 8: Return on invested capital

Figure 9: Earnings per share

The percentage of assets, by inventory, was larger for Morrison than for Tesco except in the year ended 2013 when the percentage was slightly higher for Tesco. A higher level of volatility existed in the ratio for Morrison compared to Tesco. Comparison of means shows that the ratio was higher for Morrison (7.5575 percent) than it was for Tesco and the difference was not significant (t= -2.5161, p= 0.0865). Return on equity, return on invested capital, and earnings per share ratios followed a similar trend, which shows higher volatility of profitability of Tesco. Tesco reported better return on equity ratio in the years ended 2012 and 2014. While the ratio decreased, monotonically, for Morrison, it increased for Tesco in the year ended 2014. The ratio then declined for Tesco, from 6.21 percent to 5.27 percent while the change for Morrison was from -4.8 percent to -18.37 percent. Morrison again performed better, over the four-year period, but the difference was not significant (t= -0.7792, p= 0.4926). An almost similar trend was observed for return on invested capital but the two companies report almost the same ratio for the year ended 2012 (Tesco= 10.64 percent and Morrison= 10.44 percent). The ratio then decreased, monotonically, for Morrison but increased in the year ended 2014 for Tesco before falling drastically. Overall, the ratio was lower for Tesco (-1.755 percent) than for Morrison (1.9075 percent) but the difference was not significant (t= 0.7972, p= 0.4836). Earnings per share for Tesco also reduced in the year ended 2013 but increase and outperformed that of Morrison in the year 2014 before a drastic decline in the year ended 2015. The performance was also better for Morrison, but the difference was not significant.

Industry

Background information

History of the grocery and merchandise retail industry suggest a stiff competition that has restricted the industry to the hands of a few players. Analysis of market share from 1998 to 2003 identifies significance of Tesco as the then market leader that was expanding its market share. Sainsbury was the second largest player, by market control, but it realized a decline in market share while Morrison was gradually gaining position in the market. The three, by 2003, controlled more than 60 percent of the market (Chakraborty, et al., 2014). Tesco, however, has maintained its position as the market leader (Lipsey & Chrystal, 2011) with a market share of 31 percent in the year 2009. Stiff competition existed among Tesco, Morrison, Wal-Mart, and ASDA that controlled more than 75 percent of the market (Henry, 2011). Some of the market players offer discounts on their products as a competitive strategy (MarketLine, 2015) and Morrison is an example (Morrison, 2016). Market share determines revenues into profitability and this section analyzes profitability of the industry.

Gross profit margin. Two companies, OCADO plc and Sainsbury plc, were then added and data analyzed for an estimate of the industry’s outlook. Profitability ratios of OCAD plc were only available for up to the year ended 2014 and average ratios for the year ended 2015 were computed from the three other companies. The following graph shows the trends in gross profit margins for the companies and the industry’s estimated average.

Figure 10: Gross profit margins for Tesco and Morrison

The industry experienced a gross profit margin of about 12 percent from the year ended 2012 to the year ended 2015 after which the rate fell to almost two percent. A majority of the industry’s players, however, reported margins of below 8.5 percent and the particularly high margin of OCADO explains the high industry margin. The average margin dropped, significantly, in the year ended 2015 when values for OCADO were not included. Tesco reported the highest ratio in the industry. With OCADO controlling just a small percentage of the industry compared to the other players, volatility due to its inclusion can be ignored.

Operating margin. The following graph shows the trend for the two companies over the four-year period.

Figure 11: Industry operating profit margin

OCADO, in spite of realizing very high gross profit margins, reported the lowest operating profit margin. Changes in operating profit margin were also volatile, with different degree of volatility for each company. However, there was a systematic decline in operating profit ratios in the year ended 2015 for all of the company. This identified a decline in the industry’s gross profit margin to a negative value (-4.6667 percent). The industry’s average operating profit margin declined throughout the period with a more significant decline in the year ended 2015. Tesco was the highest performer in the industry, though with a very small level of operating profit margin.

Net profit margin. The industry reported a net profit loss in the year ended 2015 as figure 12 shows.

Figure 12: Industry’s net profit margin

The industry’s net profit margin has been low and has been declining consistently. The ratio was 2.6475 percent in the year ended 2012. It then declined in the subsequent two years but remained positive. However, the industry realized net loss in the year ended 2015. Even though data for Ocado’s net profit margin was not included, the positive trend in the year ended 2014 cannot be forecasted. This is because of the observed volatility of the company’s net profit margin over the period and volatility of net profit ratios of the other company such that an increment in a year does not guarantee an increment in a subsequent year.

Activity

Return on assets. A general decline in return on assets was noted for the industry as figure 13 shows.

Figure 13: Return on assets

The greatest level of decline in the activity ratio occurred in the year ended 2015. The rate was further negative for the year and a systematic decline from the year ended 2012 suggest a future declining trend. Sainsbury, however, reported the best return on assets ratio for the last two financial periods.

Assets turnover. The industry experienced less volatile asset turnover ratios over the period and the following figure shows.

Figure 14: Assets turnover ratio

The industry reported a decreasing asset turnover ratio over the period, but this worsened in the year ended 2015. The ratio remained between 1.4 and 1.7 over the period. Despite the average decline, Morrison reported an increase in asset turnover ratio over the year ended 2015.

The following figures show return on equity, return on invested capital, and earnings per share for the industry .

Figure 15: Return on equity

Figure 16: Return on invested capital

Figure 17: Earnings per share

Return on equity reduced, significantly, from the year ended 2012 to the year ended 2013. A slight decrease followed this before a more significant decrease in the year ended 2015. Morrison and Sainsbury reported fair ratios among the industry’s participants with more stable ratios. Tesco had the most volatile ratios and the lowest in the year ended 2015. The industry average ratio was negative in the year ended 2015. Return on invested capital followed an almost similar trend in which a significant decrease occurred from the year ended 2012 to the year ended 2013. A moderate decline then followed before a sharp decline to a negative ratio in the year 2015. Like in return on equity, Sainsbury was the most stable because of its higher values over the period while Tesco was the least stable because of volatility of its ratio and its value in the year ended 2015 that was the lowest. The same trend is observable from earnings per share in which Sainsbury was the most stable over the period while the ratio declined and became negative during the year ended 2015.

Discussion

The results show a better profitability performance for Morrison than for Tesco. Tesco performed better in the years ended 2012 and 2014, but the rate at which its profitability indictors declined was higher. The declining trend in profitability for the two companies suggests that the decline is affecting more firms in the industry or the entire industry and the lack of significance in differences within each profitability indicator supports this. Morrison’s cost savings initiative and expansion through opening new convenience stores could explain its ability to minimize losses than does Tesco. Morrison also offers services that are more direct to customers through processing a majority of its products, a possible factor to higher quality and customer satisfaction. In addition, Morrison refunds customers who are not satisfied with products that the store processes and these could explain the company’s profitability advantages over Tesco. This is because customer satisfaction that is one of the focus points of Morrison promotes competitiveness (Chan, Chiou, & Lettice, 2012). In addition, accessibility that additional convenience stores could have created could account for increased market control into greater revenues that translate to profitability (Irene, 2014). Even though offered discount is associated with losses while received discount is associated with gain (Scott, 2016), offering discounts is a customer attraction and retention strategy (Hoffman & Bateson, 2016) and relief from additional sales and marketing efforts and costs. A higher profitability ratio indicates better profitability (Godwin & Aldeman, 2012; Tracy, 2012). In addition, the ratios measure earnings and should be positive (Robinson, et al., 2015). Consequently, Morrison’s higher ratios make it a better choice for investing than Tesco because of lower loss. However, the decreasing trend, with negative values in the latest financial year, shows the loss in the companies and identifies them as risky investment options.

Industry’s average profitability ratios show that the low profitability that became negative in the year ended 2015 is common problem in the industry. Factors such as stiff competition that emerge from concentration of industry players (Hendriks, 2012) explain the trend. Business cycle (Harvard Business Review, 2013) in which the industry could be in its declining phase, (Keilly & Brown, 2011), could also explain the trend. If this is the case then the loss that these companies faced in the financial year ended 2015 is likely to last. Consequently, the industry is not good for investors because of its negative prospects.

Conclusion

The analysis identifies poor profitability rations over the period. The performance reduced in the year ended 2015. Even though difference exists in ratios of the individual companies, these are not significant and show homogeneity in performance. The poor estimated industry outlook implies high risk in investing in the industry. Investors, therefore, are advised not invest in the industry.

Reference list

Chakraborty, R. et al. (2014). ‘Market consolidation and pricing developments in grocery retaining: A case study’ In Peitz, M. & Spiegel, Y. The analysis of competition policy and sectorial regulation. Hanover, MA: World Scientific.

Chan, H., Chiou, T., & Lettice, F. (2012). ‘A conceptual model for greening supply chain though greening suppliers and green innovation.’ In Management Association. Supply chain management: Concepts, methodologies, tools, and applications. Hershey, PA: IGI Global.

Chandra, P. (2008). Financial management. New Delhi: Tata McGraw-Hill Education.

Godwin, K. & Aldeman, J. (2012). Services marketing: Concepts, strategies, & cases. Mason, OH: Cengage Learning.

Harvard Business Review. (2013). HRB’s must read digital set. Boston, MA: Harvard Business Press.

Hendriks, P. (2012). Newspapers: A lost cause? Strategic management of newspaper firms in the United States and the Netherlands. Amsterdam: Springer Science & Business Media.

Henry, A. (2011). Understanding strategic management. New York, NY: OUP Oxford.

Hoffman, N. & Bateson, C. (2016). Financial ACCT2. Mason, OH: Cengage Learning.

Irene, S. (2014). Strategic marketing in fragile economic conditions. Hershey, PA: IGI Global.

Keilly, F. & Brown, K. (2011). Investment analysis and portfolio management. Mason, OH: Cengage Learning.

Lipsey, R. & Chrystal, A. (2011). Economics. New York, NY: OUP Oxford.

MarketLine. (2015). Tesco, plc SWOT analysis. MarketLine.

Morrison. (2015). Building momentum: Annual report and financial statements 2014/15. Morrison. Retrieved from: http://www.morrisons-corporate.com/ar2015/pdf/Morrisons_AR_2014_Full.pdf.

Morrison. (2016). Morrison. Morrison. Retrieved from: https://groceries.morrisons.com/webshop/getCategories.do?tags=.

Robinson, et al. (2015). International financial statement analysis. Hoboken, NJ: John Wiley & Sons.

Scott, P. (2016). Accounting for business. Oxford, UK: Oxford University Press.

Tesco. (2015). Tesco: Annual report and financial statements 2015. Tesco. Retrieved from: http://www.tescoplc.com/files/pdf/reports/ar15/download_annual_report.pdf.

Tesco. (N.d.). Tesco. Retrieved from: Tesco. http://www.tesco.com/homepages/default/variants/a/.

Tracy, A. (2012). Ratio analysis fundamentals: How 17 financial ratios can allow you to analyse any business on the planet. RatioAnalysis.net.

Vasigh, B., Fleming, K., & Mackay, L. (2010). Foundations of airline finance: Methodology and practice. Burlington, VT: Ashgate Publishing.

Appendices

Appendix A: Tesco financial statement

TESCO PLC ADR (TSCDY) INCOME STATEMENT

Fiscal year ends in February. GBP in millions except per share data.

2011-02

2012-02

2013-02

2014-02

2015-02

TTM

Revenue

60455

64539

64826

63557

62284

61645

Cost of revenue

55330

59278

60737

59547

64396

63560

Gross profit

5125

5261

4089

4010

-2112

-1915

Operating expenses

Sales, General and administrative

1657

2695

2750

Other operating expenses

2290

2486

1901

-278

985

985

Total operating expenses

2290

2486

1901

1379

3680

3735

Operating income

2835

2775

2188

2631

-5792

-5650

Interest Expense

465

417

445

447

499

538

Other income (expense)

1271

1477

217

75

-85

-95

Income before income taxes

3641

3835

1960

2259

-6376

-6283

Provision for income taxes

864

879

574

347

-657

-611

Minority interest

16

8

-4

-4

-25

-28

Other income

16

8

-4

-4

-25

-28

Net income from continuing operations

2777

2956

1386

1912

-5719

-5672

Net income from discontinuing ops

-106

-142

-1266

-942

-47

-468

Other

-16

-8

4

4

25

28

Net income

2655

2806

124

974

-5741

-6112

Net income available to common shareholders

2655

2806

124

974

-5741

-6112

Earnings per share

Basic

0.99

1.05

0.05

0.36

-2.12

-2.26

Diluted

0.99

1.04

0.05

0.36

-2.12

-2.26

Weighted average shares outstanding

Basic

2673

2674

2678

2689

2702

2706

Diluted

2687

2682

2679

2693

2702

2713

EBITDA

5526

5750

4769

4971

-4325

-4208

Appendix B: Tesco balance sheet

TESCO PLC ADR (TSCDY) BALANCE SHEET

Fiscal year ends in February. GBP in millions except per share data.

2011-02

2012-02

2013-02

2014-02

2015-02

Assets

Current assets

Cash

Cash and cash equivalents

2428

2305

2512

2506

2165

Short-term investments

1170

1284

580

1096

746

Total cash

3598

3589

3092

3602

2911

Inventories

3162

3598

3744

3576

2957

Prepaid expenses

387

420

417

388

516

Other current assets

4892

5256

5843

8006

5574

Total current assets

12039

12863

13096

15572

11958

Non-current assets

Property, plant and equipment

Land

24817

25734

25298

Fixtures and equipment

8895

9967

Other properties

25767

27058

10826

10851

11493

Property and equipment, at cost

34662

37025

35643

36585

36791

Accumulated Depreciation

-8401

-9324

-10773

-12095

-16351

Property, plant and equipment, net

26261

27701

24870

24490

20440

Goodwill

2954

2286

2288

Intangible assets

4338

4618

1408

1509

1483

Deferred income taxes

48

23

58

73

514

Other long-term assets

4520

5576

7743

6234

7531

Total non-current assets

35167

37918

37033

34592

32256

Total assets

47206

50781

50129

50164

44214

Liabilities and stockholders' equity

Liabilities

Current liabilities

Short-term debt

1386

1838

760

1904

1998

Capital leases

6

6

10

Accounts payable

5782

5971

6036

5831

5076

Taxes payable

432

416

959

893

461

Other current liabilities

10131

11024

11224

12765

12265

Total current liabilities

17731

19249

18985

21399

19810

Non-current liabilities

Long-term debt

9689

9911

529

9188

10520

Capital leases

9539

115

131

Deferred taxes liabilities

1094

1160

1006

594

199

Pensions and other benefits

2378

3193

4842

Minority interest

88

26

18

7

Other long-term liabilities

2069

2660

1031

953

1641

Total non-current liabilities

12940

13757

14501

14050

17333

Total liabilities

30671

33006

33486

35449

37143

Stockholders' equity

Additional paid-in capital

4896

4964

5020

5080

5094

Retained earnings

11197

12369

10535

9728

1985

Accumulated other comprehensive income

442

442

1088

-93

-8

Total stockholders' equity

16535

17775

16643

14715

7071

Total liabilities and stockholders' equity

47206

50781

50129

50164

44214

Appendix C: Morrison financial statement

MORRISON (WM) SUPERMARKETS PLC (MRWSF) INCOME STATEMENT

Fiscal year ends in January. GBP in millions except per share data.

2011-01

2012-01

2013-01

2014-01

2015-01

TTM

Revenue

16479

17663

18116

17680

16816

16384

Cost of revenue

15331

16446

16910

16606

16055

15708

Gross profit

1148

1217

1206

1074

761

676

Operating expenses

Sales, General and administrative

336

1250

1670

1733

Other operating expenses

336

340

1

Total operating expenses

336

340

337

1250

1670

1733

Operating income

812

877

869

-176

-909

-1057

Interest Expense

35

39

65

81

95

95

Other income (expense)

97

109

75

81

212

247

Income before income taxes

874

947

879

-176

-792

-905

Provision for income taxes

242

257

232

62

-31

-68

Net income from continuing operations

632

690

647

-238

-761

-837

Net income

632

690

647

-238

-761

-837

Net income available to common shareholders

632

690

647

-238

-761

-837

Earnings per share

Basic

0.24

0.27

0.27

-0.1

-0.33

-0.36

Diluted

0.23

0.26

0.27

-0.1

-0.33

-0.36

Weighted average shares outstanding

Basic

2640

2587

2428

2327

2332

2332

Diluted

2697

2651

2435

2336

2332

2332

EBITDA

1228

1326

1312

845

-310

-425

Appendix D: Morrison balance sheet

MORRISON (WM) SUPERMARKETS PLC (MRWSF) BALANCE SHEET

Fiscal year ends in January. GBP in millions except per share data.

2011-01

2012-01

2013-01

2014-01

2015-01

Assets

Current assets

Cash

Cash and cash equivalents

228

241

265

261

241

Short-term investments

4

2

5

1

6

Total cash

232

243

270

262

247

Inventories

638

759

781

852

658

Prepaid expenses

53

83

86

116

88

Other current assets

215

237

205

200

151

Total current assets

1138

1322

1342

1430

1144

Non-current assets

Property, plant and equipment

Land

8205

8565

3989

Fixtures and equipment

1820

2011

2340

2673

1301

Other properties

8346

8816

1009

1112

5385

Property and equipment, at cost

10166

10827

11554

12350

10675

Accumulated Depreciation

-2380

-2625

-2938

-3725

-3423

Property, plant and equipment, net

7786

8202

8616

8625

7252

Goodwill

7

61

34

10

10

Intangible assets

177

242

381

448

510

Deferred income taxes

38

241

Prepaid pension costs

4

Other long-term assets

3

-209

154

216

251

Total non-current assets

8011

8537

9185

9299

8027

Total assets

9149

9859

10527

10729

9171

Liabilities and stockholders' equity

Liabilities

Current liabilities

Short-term debt

115

52

553

11

Accounts payable

1400

1409

1501

1436

1397

Taxes payable

172

163

180

96

119

Other current liabilities

514

616

601

788

746

Total current liabilities

2086

2303

2334

2873

2273

Non-current liabilities

Long-term debt

1052

1600

2373

2480

2508

Capital leases

7

Deferred taxes liabilities

499

464

471

430

415

Pensions and other benefits

11

43

Other long-term liabilities

92

95

112

243

338

Total non-current liabilities

1643

2159

2963

3164

3304

Total liabilities

3729

4462

5297

6037

5577

Stockholders' equity

Additional paid-in capital

107

107

107

127

127

Retained earnings

2463

2440

2273

1714

616

Accumulated other comprehensive income

2850

2850

2850

2851

2851

Total stockholders' equity

5420

5397

5230

4692

3594

Total liabilities and stockholders' equity

9149

9859

10527

10729

9171

Appendix E: OCADO financial statement

???OCADO GROUP PLC (OCDO) INCOME STATEMENT

Fiscal year ends in November. GBP in millions except per share data.

2010-11

2011-11

2012-11

2013-11

2014-11

TTM

Revenue

516

598

679

792

949

1027

Cost of revenue

354

414

471

545

636

684

Gross profit

162

185

207

248

313

343

Operating expenses

Sales, General and administrative

133

219

270

338

371

Other operating expenses

40

2

4

-2

-2

Total operating expenses

173

221

273

336

369

Operating income

-11

185

-14

-26

-23

-26

Interest Expense

8

4

7

10

10

Other income (expense)

8

-187

17

20

40

43

Income before income taxes

-12

-2

-1

-12

7

7

Provision for income taxes

-5

-2

2

0

0

Net income from continuing operations

-7

-1

-2

-12

7

7

Net income

-7

-1

-2

-12

7

7

Net income available to common shareholders

-7

-1

-2

-12

7

7

Earnings per share

Basic

-0.02

0

0

-0.02

0.01

0.01

Diluted

-0.02

0

0

-0.02

0.01

0.01

Weighted average shares outstanding

Basic

442

522

523

580

585

587

Diluted

442

522

523

580

614

613

EBITDA

20

28

32

38

72

75

Appendix F: OCADO balance sheet

OCADO GROUP PLC (OCDO) BALANCE SHEET

Fiscal year ends in November. GBP in millions except per share data.

2010-11

2011-11

2012-11

2013-11

2014-11

Assets

Current assets

Cash

Cash and cash equivalents

125

92

90

110

76

Short-term investments

30

0

Total cash

155

92

90

110

76

Inventories

12

18

24

28

Prepaid expenses

4

6

7

6

12

Other current assets

15

46

24

39

31

Total current assets

186

144

138

180

147

Non-current assets

Property, plant and equipment

Land

118

42

55

Fixtures and equipment

154

207

292

336

400

Other properties

38

-207

Property and equipment, at cost

192

409

378

455

Accumulated Depreciation

-92

-129

-154

-180

Property, plant and equipment, net

100

194

280

224

275

Intangible assets

8

13

22

27

38

Deferred income taxes

7

8

8

9

Other long-term assets

0

10

0

59

68

Total non-current assets

116

217

310

318

391

Total assets

302

362

448

498

538

Liabilities and stockholders' equity

Liabilities

Current liabilities

Short-term debt

19

3

3

4

Capital leases

20

25

26

Accounts payable

35

51

60

53

61

Taxes payable

5

4

5

Other current liabilities

21

49

30

74

71

Total current liabilities

74

99

118

159

168

Non-current liabilities

Long-term debt

55

91

6

2

Capital leases

31

127

142

Deferred taxes liabilities

0

0

0

2

Other long-term liabilities

0

89

2

3

5

Total non-current liabilities

56

89

125

137

152

Total liabilities

130

189

243

296

320

Stockholders' equity

Additional paid-in capital

206

214

248

252

255

Retained earnings

118

118

116

107

119

Treasury stock

-54

-52

Accumulated other comprehensive income

-152

-159

-105

-104

-156

Total stockholders' equity

172

173

206

202

218

Total liabilities and stockholders' equity

302

362

448

498

538

Appendix G: Sainsbury financial statement

SAINSBURY (J) PLC (SBRY) INCOME STATEMENT

Fiscal year ends in March. GBP in millions except per share data.

2011-03

2012-03

2013-03

2014-03

2015-03

TTM

Revenue

21102

22294

23303

23949

23775

23527

Cost of revenue

19942

21083

22026

22562

22567

22061

Gross profit

1160

1211

1277

1387

1208

1466

Operating expenses

Sales, General and administrative

457

444

1132

825

Other operating expenses

370

401

Total operating expenses

370

401

457

444

1132

825

Operating income

790

810

820

943

76

641

Interest Expense

113

124

128

131

123

124

Other income (expense)

150

113

96

86

-25

40

Income before income taxes

827

799

788

898

-72

557

Provision for income taxes

187

201

174

182

94

115

Net income from continuing operations

640

598

614

716

-166

442

Other

-2

Net income

640

598

614

716

-166

440

Net income available to common shareholders

640

598

614

716

-166

440

Earnings per share

Basic

0.34

0.32

0.33

0.38

-0.09

0.23

Diluted

0.34

0.32

0.32

0.37

-0.09

0.21

Weighted average shares outstanding

Basic

1859

1870

1882

1897

1911

1916

Diluted

1921

1930

1948

1968

1991

2082

EBITDA

1422

1422

1433

1580

630

1250

Appendix H: Sainsbury balance sheet

???SAINSBURY (J) PLC (SBRY) CashFlowFlag BALANCE SHEET

Fiscal year ends in March. GBP in millions except per share data.

2011-03

2012-03

2013-03

2014-03

2015-03

Assets

Current assets

Cash

Cash and cash equivalents

501

739

517

1592

1285

Short-term investments

52

69

91

49

69

Total cash

553

808

608

1641

1354

Inventories

812

938

987

1005

997

Prepaid expenses

62

61

48

61

99

Other current assets

294

225

258

1655

1971

Total current assets

1721

2032

1901

4362

4421

Non-current assets

Property, plant and equipment

Land

9422

9652

9932

Fixtures and equipment

5003

5203

5551

5049

4922

Other properties

8562

9055

Property and equipment, at cost

13565

14258

14973

14701

14854

Accumulated Depreciation

-4781

-4929

-5169

-4821

-5206

Property, plant and equipment, net

8784

9329

9804

9880

9648

Goodwill

100

144

143

Intangible assets

151

160

71

142

182

Deferred income taxes

501

739

Other long-term assets

242

80

819

2012

2143

Total non-current assets

9678

10308

10794

12178

12116

Total assets

11399

12340

12695

16540

16537

Liabilities and stockholders' equity

Liabilities

Current liabilities

Short-term debt

74

150

144

507

230

Capital leases

21

27

30

Accounts payable

1836

1903

1908

1846

2089

Taxes payable

201

149

148

189

188

Other current liabilities

831

934

894

4196

4386

Total current liabilities

2942

3136

3115

6765

6923

Non-current liabilities

Long-term debt

2339

2617

2478

2089

2337

Capital leases

139

161

169

Deferred taxes liabilities

172

286

247

227

215

Accrued liabilities

170

194

256

Pensions and other benefits

766

737

708

Minority interest

1

2

Other long-term liabilities

522

672

46

362

390

Total non-current liabilities

3033

3575

3847

3772

4075

Total liabilities

5975

6711

6962

10537

10998

Stockholders' equity

Additional paid-in capital

1048

1061

1075

1091

1108

Retained earnings

3374

3715

4060

3560

3057

Accumulated other comprehensive income

1002

853

598

1352

1374

Total stockholders' equity

5424

5629

5733

6003

5539

Total liabilities and stockholders' equity

11399

12340

12695

16540

16537