Wm Morrison Supermarkets (LON:MRW) has said that the new IFRS 16 lease standard would have lowered its 2018/19 profit before tax and exceptionals. The news comes after blue-chip rival Tesco (LON:TSCO) updated investors on the impact of the new standard earlier this year.
Morrisons’ share price has advanced in London in today’s session, having gained 1.38 percent to 206.20p as of 14:24 BST, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.53 percent higher at 7,537.42 points. The group’s shares have given up just under 15 percent of their value over the past year, as compared with about a 0.2-percent fall in the Footsie.
Morrisons updates on IFRS 16 impact
Morrisons announced in a statement today that under the new IFRS 16 lease standard, its restated 2018/19 profit before tax and exceptionals is £10 million lower, falling from £406 million to £396 million, or 2.5 percent. The group’s operating profit before exceptionals, however, increases by £45 million, to £510 million. The blue-chip grocer meanwhile reassured investors that the new standard will have no economic effect on the business or cash flow.
The company’s first financial statements to be prepared under the IFRS 16 will be the 2019/20 interims, scheduled to be reported on September 12.
In other Morrisons news, Kantar Worldpanel reported last week that the company’s UK grocery sales had decreased by 0.5 percent in the 12 weeks to June 16, lowering its market share to 10.4 percent.
Analysts on blue-chip supermarket
The 15 analysts offering 12-month targets for the Morrisons share price for the Financial Times have a median target of 235.00p, with a high estimate of 290.00p and a low estimate of 195.00p. As of June 28, the consensus forecast amongst 21 polled investment analysts covering the FTSE 100 group advises investors to hold their position in the company.