Preliminary Results52 weeks ended 1 February 2009

12 March 2009

2

Sir Ian GibsonChairman

3Agenda

• Introduction – Ian Gibson

• Results – Richard Pennycook

• Business highlights – Marc Bolland

• Q&A

4Overview 2008/09

• Continuing growth in sales and profits

• Underlying profit* up 13% to £636m

• Total dividend of 5.8p – up 21%

• Board changes– Roger Owen – retired January 2009

– Philip Cox – appointed with effect from 1 April 2009

• Optimisation Plan going well

* Excluding property transactions and IAS 19 pension interest

5

Richard PennycookGroup Finance Director

6Financial summary

£m2008/0

92007/0

8

Turnover 14,528 12,969

Operating profit* 669 580

Net finance costs -16 -

Profit on property related transactions

2 32

Profit before tax 655 612

Net debt 642 543

12%

15%

7%

* Excluding property transactions

7Underlying earnings

£m2008/0

92007/0

8

PBT reported 655 612

Underlying adjustments

•Profit on property related transactions

-2 -32

•Net pension income (IAS 19) -17 -17

Underlying profit 636 563

Tax (normalised 2007/08 30%) -195 -180

Underlying profit after tax 441 383

Number of shares (m) 2,645 2,664

Underlying basic eps 16.7 14.4

Dividend per share 5.8p 4.8p

Dividend cover 2.9 3.0

13%

16%

21%

8Operating profit

2008/09 2007/08

£m % £m %

Gross profit

–H1 436 6.1 370 6.2

–H2 477 6.4 448 6.4

–Total 913 6.3 818 6.3

Other operating income 37 0.2 30 0.2

Administrative expenses -281 -1.9 -268 -2.0

Operating profit* 669 4.6 580 4.5

* Excluding property transactions

9Turnover bridge

12,969

14,528

273

346

726

214

07/08 New stores Like for likegrowth

Fuel price Fuel volume 08/09

7.9%

£m

10Cash flow

24%£m

2008/09

2007/08

Cash flow from operations 1,064 856

Special pension contribution -100 -100

Proceeds from disposals 22 94

Capital expenditure -678 -402

Sale and issue of shares 3 17

Shares repurchased -146 -

Tax, interest, servicing of finance -133 -128

Dividends -131 -108

Cash flow -99 229

Opening net debt 543 772

Closing net debt 642 543

11Optimisation plan 2 - status

Impact on EBITDA vs. 05/06

Actual delivery

£m 07/08 08/09 To dateTotal target

Gross margin 44 18 62 100

In store efficiency benefits

23 12 35 50

Manufacturing - 5 5 15

Distribution 38 2 40 25

Centre - 3 3 10

Total incremental benefit 105 40 145 200

Total capital investment 68 182 250 450

12Capital plans

2009/10 projection £m

Completion of Optimisation Plan 200

Organic space growth 350

Co-op/Somerfield acquisition 320

Other normal capex 230

Total investment plan 1,100

13

Marc BollandCEO

14The Morrisons journey

2006 Morrisons/Safeway

• Strong retail skills

• Consumer perception still weak

2007 strategy: ‘Food specialist for everyone’

• Optimisation Plan target: improve operating margin whilst shaping for growth

• Focus on fresh, value and service

2008 year of strong growth

• Our performance brought us closer to our vision

15Sales performance

Group like for like

52 weeks ended1 February

2009

52 weeks ended3 February

2008

Sales – exc. fuel 7.9% 4.6%

Sales – inc. fuel 11.1% 5.0%

Customers 4.2% 2.6%

Other metrics

Sales per customer (£) £23.92 £23.07

Sales (£ per sq. ft.) £21.65 £20.31

16Regional performance

Total grocery sales exc. fuel 2008/09

9.1%

South 11.1%

London 18.6%

Scotland 12.7%Source TNS: Grocery Till Roll 52we 25 January 2009

• Good performance across the whole country

• Particularly strong in the South (especially London) and Scotland

17Customers

Discountersegment

Premium segment

Main competitor 3

Main competitor 2

Main competitor 1

Customer switching to Morrisons

Source TNS: Grocery Till Roll 52we 25 January 2009 Net switching £m

£25m £50m

18Customers

14.8%

17.1%

Pre-family Young family 0-4 Years

Growing younger customers

Source TNS: Grocery Till Roll 52we 25 January 2009

Broader appeal

Cu

stom

er

gro

wth

%

19Category performance

10.9%10.9%11.4%11.1%9.8%

7.9%

Group Pizza Salad bar Butchery Bakery &cake shop

Pre packedfresh food

Like for like sales growth %

Source: internal data

20

Optimisation plan update – key building blocks

Manufacturing

• Spalding abattoir opened in Q2

• Vegetable pack house at Flaxby extended and re-opened in Q4

Completed

Distribution

• Drive time planning systems implemented

• New South East RDC in Sittingbourne– operational by end of calendar year 2009

• New South West RDC in Bridgewater, Somerset– planning application filed December 2008

On track

21

Optimisation plan update – key building blocks

New retail space

• 2008/09:– 9 stores opened

– 207k sq. ft. of net new sales space

– 90k sq. ft. of net sales extensions

• 3 year programme:– 1m sq. ft. by Jan 2010

On track

22

Optimisation plan update – key building blocks

IT system replacement

• Development team is in place

• Payroll and HR systems were launched in Q4

• Roll out of new financial systems, distribution systems and EPOS systems this year

On track

23

Optimisation plan update – key building blocks

• In-store

• Finished by July 2008:– range segmentation

– refresh

– shelf-ready packaging

• Rollout started:– IQM system

– self scan checkouts

On track

24

Optimisation plan update – key building blocks

Range Development

• ‘Value’

• ‘Fresh Ideas’

• Non-food

25

Optimisation plan update – key building blocks

CSR

• We are the only grocery retailer that has been awarded the new Carbon Trust Standard for carbon reduction

On track

26Optimisation plan update

• The target

• “Strongly improve operating margin whilst shaping for growth”

• Where we are now– improving our operating margin

– shaping building blocks

– growing like for like sales

Our strategy is working for us

27Current market background

• Food market so far resilient to recession

• Consumers switching stores and products more than ever before to help their budgets stretch further

• Consumers choosing to dine and cook more at home

• Consumers buying more convenience food

• Consumers interested in treats

• Consumers still care about fresh and healthy food but less interested in ethical foods

28Morrisons points of difference

Vertical integration

• Industry leading availability

• Flexibility/competitive pricing

• Industry leading food deals

29Morrisons points of difference

Market Street

• Fresh Food Academy

• Fresh value food products

Innovative value promotions

• Industry leading deals

• Sun media promotion

• Collector Card scheme

• ‘Let’s Grow’ campaign

30Opportunities – new customers

• Our perception among new customers has soared over the last 2 years

• New customers like our unique Market Street shopping experience, our fresh food and the great value we offer

• We have strongly grown customer numbers but 40% (10m) of households have not yet been in one of our refreshed stores

Big potential to attract new customers

31Opportunities - new locations

• 382 stores (11.1m sq. ft.)

• We are a national company but we are not yet nationwide

• There are approximately 25m households living in the UK

• 16.6m (66%) households live within 15 minutes drive of our stores

8.4m (34%) households do not have the same access to any of our existing stores

32Opportunities - smaller stores

• 60 stores (11k - 20k sq. ft.) - 16% ofour estate

• Highest sales density growth

• Higher fresh food participation than standard stores

• Recently developed Northallerton, Blandford, Gorleston & Clifton (all 11k-18k sq. ft.) with full Market Street

• Bespoke range and segmentation

• Out of town, edge of town and in town

Not convenience shops but convenient shopping

33

Potential new representation to become nationwide

• We now have the flexibility to operate a wider range of stores (10k – 40k+ sq. ft.)

• We can now reach many more places and households

• The blue areas represent more than 100 potential new sites for bigger and smaller stores

34Our focus

• Morrisons is currently under represented in key areas nationwide

to “Nationwide”

“National”

Focus in the coming years will be on space growth

35

Integration of Co-op/Somerfield stores in 2009/10

• Co-op/Somerfield stores– c.500k sq. ft. of new sales space

this year

– An extra 1.2m (5%) households within 15 mins drive of these stores

– Largest number in the South East, Greater London & the South West

– We will use the knowledge from our recent rebuilds, spending £2.5m per store

36Space growth

• We will accelerate growth from 350k to 500k sq. ft. in 2010/11

Space growth Sq. ft.(‘000)

Optimisation Plan to date 650

2009/10: c.10 new stores and 75k sq. ft. extensions

350

Optimisation Plan target met 1,000

2009/10: Co-op/Somerfield stores 500

2010/11: additional space growth 500

Additional space growth over 4 years to 2010/11 2,000

37Summary

• Strong LFL sales exc. fuel up 7.9%

• Underlying profit up 13%

• Healthy cash flow and strong balance sheet

• Dividend growth of 21%

• Morrisons is now embraced by a wider audience

Our strategy is working for us

• Flexibility to develop a wider range of stores

• Opportunity to move from:

to “Nationwide”

“National”

Supplementary Slides

40Balance sheet

£m2008/0

92007/0

8

Fixed assets and investments 7,079 6,683

Working capital -1,868 -1,694

Pensions deficit -49 -68

Net debt -642 -543

Net assets 4,520 4,378

Gearing 14% 12%

Interest cover 41.9 -

Interest cover adjusted* 20.3 34.1

Dividend cover - underlying 2.9 3.0

* Excluding property profits and IAS 19 pension interest

41Stores analysis

Group

Estate at 3 February 2008 375

New openings 9

Replacements -2

Estate at 1 February 2009 382

Total sales area (‘000 sq. ft.) 11,131

Freeholds and long leaseholds 92%

Petrol filling stations 287

42Depreciation

• H2 06/07 & H1 07/08 – accelerated depreciation of branded assets

• H2 07/08 – Safeway structural assets fully depreciated

• H1 08/09 – business as usual

• H2 08/09 – Optimisation Plan investments accelerating

129 153 163126

289

130160

290282

H1 H2 FY H1 H2 FY H1 H2 FY

06/07 07/08 08/09

£m

* 06/07 & 07/08 – 26 weeks

43Recognition

• Industry recognition