25 April 2024
J Sainsbury
Plc
Preliminary Results for the
52 weeks ended 2 March 2024
Strongest year of grocery
performance driving momentum for Next Level Sainsbury's
strategy
The strength of our grocery
performance over the last year, with record market share
gains1 and volume growth accelerating every quarter, is
a clear demonstration of the success of our Food First strategy.
Over the last three years this strategy has enabled us to make
consistent and balanced choices for customers, colleagues,
suppliers and shareholders. Customers continue to respond to the
investments we have made in value, innovation, availability and
service and are doing more of their grocery shopping with
Sainsbury's2. Higher grocery volumes are feeding through
to better profit leverage. This has driven profit and free cash
flow results above the top end of our guidance range despite lower
Financial Services profits and softer General Merchandise
trading.
We are building on this momentum
and the strength of our position in the UK grocery market through
our Next Level Sainsbury's strategy, announced in February.
We expect to continue to outperform the grocery
market and for this volume advantage to drive strong profit
leverage in the year ahead, with retail underlying operating profit
of between £1,010 million and £1,060 million, growth of between
five per cent and ten per cent. Reflecting the strength of our
balance sheet and our commitment to deliver enhanced shareholder
returns, we announced in February that we will buy back £200
million of shares in 2024/25. We will commence the buyback
programme tomorrow.
Financial Summary
|
2023/24
|
2022/23
|
YoY
|
Business performance
|
|
|
|
Group sales (inc. VAT)
|
£36,337m
|
£35,157m
|
3.4%
|
Retail sales (inc. VAT, excl.
fuel)
|
£30,615m
|
£28,664m
|
6.8%
|
Retail underlying operating
profit
|
£966m
|
£926m
|
4.3%
|
Financial services underlying
operating profit
|
£29m
|
£46m
|
(37.0)%
|
Underlying profit before
tax
|
£701m
|
£690m
|
1.6%
|
Underlying basic earnings per
share
|
22.1p
|
23.0p
|
(3.9)%
|
Proposed Full-year dividend per
share
|
13.1p
|
13.1p
|
-
|
Net debt (inc. lease
liabilities)
|
£(5,554)m
|
£(6,344)m
|
£790m
|
Statutory performance
|
|
|
|
Group revenue (excl. VAT, inc.
fuel)
|
£32,700m
|
£31,491m
|
3.8%
|
Profit before tax
|
£277m
|
£327m
|
(15.3)%
|
Profit after tax
|
£137m
|
£207m
|
(33.8)%
|
Basic earnings per
share
|
5.9p
|
9.0p
|
(34.4)%
|
Financial Highlights
·
|
Retail sales (excl. fuel) up 6.8%.
Grocery sales growth of 9.4%, General Merchandise sales up 1.2%
(down 0.5% including the impact of the closure of Argos in the
Republic of Ireland) and Clothing sales down 6.4%. Fuel sales down
14.3%, reflecting lower input prices. Statutory sales up
3.8%
|
·
|
Retail underlying operating profit
of £966 million, up 4.3%, with volume-driven grocery profit growth
and continued strong delivery of cost savings partially offset by
weaker General Merchandise profits
|
·
|
Financial Services underlying
operating profit of £29 million versus £46 million last
year, reflecting the impact of higher
funding costs from increased interest rates not being fully passed
on to customers, as previously guided
|
·
|
Underlying profit before tax of
£701 million, up 1.6%
|
·
|
Statutory profit before tax of
£277 million, down 15.3%. Non-underlying items predominantly relate
to the restructuring of the Financial Services division
|
·
|
Retail free cashflow of £639
million, broadly flat year-on-year
|
·
|
Net debt including leases of
£5,554 million, £790 million lower, reflecting strong cash
generation and a £372 million net reduction as a result of the
Highbury and Dragon property transaction3. Net debt to
EBITDA 2.6x
|
·
|
Proposed final dividend of 9.2
pence, full year dividend of 13.1 pence, in line with last
year
|
2024/25 Outlook
·
|
We are confident of delivering
strong profit growth in the year ahead. We expect
to continue to grow grocery volumes ahead of the market, driving
profit leverage. Combined with continued growth in Nectar profit
contribution, a resilient Argos profit performance and continued
strong cost saving delivery, we expect this to deliver
retail underlying operating profit of between £1,010 million and
£1,060 million, growth of between five per cent and ten per
cent
|
·
|
Our strong grocery momentum has
continued into the new financial year and while we will face
tougher comparatives, we expect to continue to generate volume
growth and outperform the market. Against last year's cool and wet
Summer, we additionally expect a sales benefit across the business
from more normal seasonal weather
|
·
|
We expect a lower profit
contribution from Financial Services this year as we prepare to
change the scope of the business. We expect a continued healthy
profit contribution from the commission-based products we will
retain. However, profits from our core banking products will
continue to be impacted by higher funding costs and will
additionally be impacted by preparations for phased withdrawal from
these areas. Therefore we expect these products to be loss-making
and hence a net Financial Services contribution of between break
even and £15 million
|
·
|
We expect to generate Retail free
cash flow of at least £500 million
|
Simon Roberts, Chief Executive of J Sainsbury plc,
said:
"We said we'd put food back at the
heart of Sainsbury's and that's what we've done. Our food business
is firing on all cylinders. We have the best combination of value
and quality in the market and that's winning us customers from all
our key competitors, driving consistent volume market share growth
as more customers choose us for their weekly shop and all their
special occasions.
"We've done that by relentlessly
investing in price; £780 million over the past three years. We know
it's still tough out there for so many households and we're doing
all we can to save money right across our business to keep prices
low - we have reduced 4,000 products over the last year alone.
Nectar Prices has also been a game changer for customers, saving
them £12 on a typical £80 shop. And we're not compromising on
quality: we've doubled our rate of innovation and Taste the
Difference is performing especially well.
"As we embark on our Next Level
Sainsbury's strategy, we'll continue to make deliberate, balanced
choices to support our customers, colleagues, communities and
farmers. I want to say a big thank you to all our colleagues and
suppliers for all their hard work in delivering another record
year. The business has real momentum and we're excited by our goal
of making good food joyful, accessible and affordable for everyone,
every day."
Delivering our Strategy
In February, we announced eight
commitments that our Next Level Sainsbury's strategy will deliver
by March 2027:
· Food volume
growth ahead of the
market
|
· Deliver profit
leverage from sales
growth
|
· Customer
satisfaction higher 26/27 vs
23/24
|
· £1bn of cost
savings over three years to
26/27
|
· Colleague
engagement higher 26/27 vs
23/24
|
·
£1.6bn+ Retail free cash
flow over three years to
26/27
|
· Deliver our Plan for Better
commitments
|
· Higher return on capital
employed
|
Progress against these commitments
will be driven by four strategic outcomes: First choice for food,
Loyalty everyone loves, More Argos, more often and Save and invest
to win.
·
|
First choice for
food: Consistent focus on improving our food offer, investing in
value, innovation, availability and great service has driven market
share gains over the course of the Food First plan. This year we've
grown volumes in every quarter and made record market share gains,
accelerating through the year4.
|
|
o
|
We're the most competitive we have
ever been5. We have invested £220 million since March
2023 and £780 million over the last three years in keeping prices
low and passing on less inflation than the market6.
Customers' perception of the value we offer is
the strongest it's been in six years7, which is
why we're the only full-choice supermarket gaining volume from
limited choice competitors8
|
|
o
|
We're also gaining more volume
from premium competitors than all other full-choice
grocers9 by continuing to be bold and ambitious on
innovation. In the year we launched nearly 1,200 new products and
delivered Taste the Difference sales growth of 12 per cent. With
sales of £1.6 billion, Taste the Difference is proportionately the
biggest Premium own-label brand of the full-choice
grocers10, in more than one in four baskets during the
year and more than one in three over Christmas
|
|
o
|
We led the market in paying our
colleagues the new Real Living Wage and invested significantly in
other benefits including free food. Our colleague engagement scores
have increased nine percentage points11. We believe
highly engaged colleagues deliver leading customer service and our
overall customer satisfaction is consistently ahead of full-choice
competitors12
|
|
o
|
We're growing customer numbers for
both primary and secondary customers faster than other full-choice
grocers13. Through the rapid rollout of Nectar Prices
this year and by focusing our investment on key centre of the plate
items, we're delivering better value on the products customers buy
most often and as a result more customers are shopping with us
across the full basket and increasingly trusting us for their
bigger shops14
|
|
o
|
In the next phase of our strategy,
our ambition is to build on this momentum and deliver more food
choice to more customers. Currently only 15 per cent of our grocery
stores carry our full food range and so we are investing to bring
more of our range to more customers, particularly enhancing choice
in fresh food, re-allocating space currently used for general
merchandise and clothing to food. We will focus on around 180 of
our highest potential stores over the next three years
|
|
o
|
In the final quarter, we opened
two new supermarkets, in Talbot Green and Southport, which showcase
the 'more for more' investments we will be making: featuring our
full food offering, a refreshed and innovative look and feel,
optimum proposition balance and excellent sustainability
credentials. These stores are performing significantly ahead of
expectations
|
|
o
|
Our strong, long-term
relationships with suppliers put us in a strong position to play a
leading role in creating a resilient and sustainable food system in
the UK. We continue to make investments and changes to the way we
work with and support our British farmers. This year, for example,
we have introduced a cost model with a predictable margin for our
potato suppliers
|
|
o
|
We're making deliberate choices
about the products and services that sit alongside our core food
offer. Lower Tu clothing sales in the year in part reflected a
disciplined trading approach, with good stock management protecting
profitability in a seasonally weak and promotionally-driven market.
However, there were also some disappointing range performances and
in the fourth quarter we experienced availability challenges on
some core lines, both of which are being addressed in plans for the
year ahead
|
|
o
|
Sainsbury's general merchandise
sales were broadly unchanged year-on-year, despite poor Summer
weather in the second quarter. Looking ahead, general merchandise
and clothing inside Sainsbury's stores will become more aligned to
customers' grocery missions, ensuring ranges are more relevant and
desirable
|
|
o
|
We're building further on the
strength of our supermarket locations by rolling out Smart Charge
ultra-rapid EV charging. We now have 371 charging bays in 45 stores
with plans to extend our network over the year ahead
|
·
|
Loyalty everyone
loves: The
role Nectar plays for customers and within our business continues
to develop at pace as we further build a world-leading loyalty
platform and market-leading retail media capabilities. Nectar has
delivered ahead of our plan this year, with the April 2023 launch
of Nectar Prices exceeding expectations and the continued growth of
our Nectar360 business delivering strong returns for clients on
their advertising spend.
|
|
o
|
The vast majority of Sainsbury's
customers now regularly shop with Nectar Prices, saving £12 on a
typical £80 weekly shop. Nectar sales participation has increased
significantly since the launch of Nectar Prices and we now have
over 17 million Nectar Digital Collectors. Nectar Prices are now
available on around 7,000 products, with customers saving £1.3
billion since the launch
|
|
o
|
Your Nectar Prices, Nectar's
personalised offers, are available to online and SmartShop
customers and are shopped by more than one million customers each
week
|
|
o
|
The strength of our Nectar loyalty
programme is fuelling the performance of Nectar360. With a scaled
dataset and deep media capabilities, Nectar360 is very
well-positioned to continue to grow within the UK retail media
market and we expect Nectar360 to deliver an incremental £100
million of profit contribution over the three years to March
2027
|
·
|
More Argos, more
often: We
have transformed the Argos operating model in recent years,
creating a much more resilient business. Through reducing the
standalone store estate, opening more Argos stores inside
Sainsbury's and driving greater operating efficiency, we have
reduced operating costs by more than 3 per cent of sales since
2019/20. This helped protect profits over the last year, where
sales were resilient at a headline level but were skewed towards
lower margin consumer electronics and technology categories, with
poor weather against tough comparatives impacting sales in higher
margin seasonal categories.
|
|
o
|
We forecast a resilient Argos
profit performance in the year ahead, with some benefit from cost
saving plans and the expectation of more normal seasonal weather.
The effect on Argos sales of the closure of Argos in the Republic
of Ireland, (2.4)% during H2 2023/24, will reduce to around (1.5)%
in Q1 2024/25 and will be fully annualised in Q2
|
|
o
|
We are focused on improving growth
through further development of our branded ranges, strengthening
our own-label products and growing awareness of our leading service
proposition. We also aim to build customer engagement through
improving our digital, loyalty and services experiences. We will
continue to refine our operating model in stores and deliver better
availability and service at a lower cost to serve
|
·
|
Save and invest to
win: We
have delivered £1.3 billion of cost savings over the last three
years, future-proofing our business with a structurally lower cost
base and fuelling investment in our customer proposition. As we
start the next phase of our strategy, we are confident of continued
momentum and competitive advantage through unique cost savings
opportunities and are already significantly underway with a
programme of high-returning activities.
|
|
o
|
We're increasingly delivering
productivity benefits through end-to-end programmes, making
decisions across a full cross functional chain of costs. For
example, we are unlocking significant savings and have already
improved ambient availability by 170bps year-on-year15
through our partnership with Blue Yonder, which enables us to use
real-time forecasting to optimise the sales, waste and stock
equation. We are in the process of rolling this out across our
fresh ranges, with the migration due to be completed by Summer
2024
|
|
o
|
We have committed to delivering a
further £1 billion of cost savings by March 2027, more than
offsetting cost inflation. High returning investments in technology
and automation will drive big steps forward in efficiency with more
agile, flexible systems bringing greater efficiency to decision
making and accelerating the speed at which we can bring
improvements to customers
|
·
|
Plan for
Better: We
are making good progress on Plan for Better, investing in resilient
supply chains and continuing to make progress against targets
including plastic packaging and carbon reduction in our own
operations
|
|
o
|
We are accelerating our emission
reduction commitments, with our revised targets for decreasing
greenhouse gas emissions in our own operations and in our value
chain now formally validated by the Science Based Targets
Initiative (SBTi). In February, we were the only UK supermarket
awarded an A rating for our environmental commitments on climate
change for the tenth consecutive year by the Carbon Disclosure
Project and we were also recognised as a 2023 Supplier Engagement
Leader
|
|
o
|
We reduced relative plastic
packaging by 2.8 per cent year-on-year and 12.9 per cent from our
baseline. This year we launched our biggest ever plastic packaging
removal, moving to cardboard trays across our full mushroom range,
which will save over 775 tonnes of plastic per year
|
|
o
|
We raised £36 million for good
causes and our stores now support and donate to over 2,500 good
causes across the UK. We increased our surplus food donations to
communities by 57.8 per cent year-on-year in partnership with
Neighbourly, with 13.5 million meals donated over the course of the
year
|
·
|
Financial
Services: Underlying profit contribution declined for the year, with
lower net interest margins reflecting higher funding costs not
being fully passed through to customers, impacting profits on core
banking products in particular. This offset more resilient income
from commission-based products such as Travel Money and insurance.
In January 2024, we announced a phased withdrawal from core banking
activities, with any financial services products offered in future
to be provided by dedicated financial services partners through a
distributed model. We expect to provide an update on this process
at our Interim results in November
|
Like-for-like sales performance
|
2022/23
|
2023/24
YoY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
Like-for-like sales (excl.
fuel)
|
(4.0)%
|
3.7%
|
5.9%
|
7.8%
|
9.8%
|
6.6%
|
7.4%
|
4.8%
|
7.5%
|
Like-for-like sales (incl.
fuel)
|
2.9%
|
7.7%
|
6.8%
|
5.9%
|
3.9%
|
2.2%
|
5.3%
|
2.9%
|
3.8%
|
|
|
|
|
|
|
|
|
|
|
|
Total sales performance
|
2022/23
|
2023/24
YoY
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
Grocery
|
(2.4)%
|
3.8%
|
5.6%
|
7.4%
|
11.0%
|
8.9%
|
9.3%
|
7.3%
|
9.4%
|
Total General
Merchandise
|
(11.2)%
|
1.2%
|
4.6%
|
7.6%
|
4.0%
|
(2.6)%
|
(0.6)%
|
(5.6)%
|
(0.5)%
|
GM (Argos)
|
(10.5)%
|
1.6%
|
4.5%
|
9.3%
|
5.1%
|
(2.6)%
|
(0.9)%
|
(6.6)%
|
(0.5)%
|
GM (Sainsbury's)
|
(14.6)%
|
(1.3)%
|
5.4%
|
(1.0)%
|
(1.2)%
|
(2.7)%
|
0.9%
|
0.4%
|
(0.5)%
|
Clothing
|
(10.1)%
|
(0.2)%
|
1.3%
|
(1.9)%
|
(3.7)%
|
(14.6)%
|
(1.7)%
|
(11.7)%
|
(6.4)%
|
Total Retail (excl. fuel)
|
(4.5)%
|
3.1%
|
5.2%
|
7.1%
|
9.2%
|
5.8%
|
6.5%
|
4.3%
|
6.8%
|
Fuel
|
48.3%
|
29.1%
|
12.2%
|
(2.8)%
|
(21.4)%
|
(17.1)%
|
(7.2)%
|
(7.8)%
|
(14.3)%
|
Total Retail (incl. fuel)
|
2.5%
|
7.2%
|
6.2%
|
5.4%
|
3.3%
|
1.5%
|
4.4%
|
2.4%
|
3.2%
|
Like-for-like performance exc. Argos ROI in
2023/24
|
2022/23 YoY inc. Argos
ROI
|
2023/24 YoY exc. Argos
ROI
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
Like-for-like sales (excl.
fuel)
|
(4.0)%
|
3.7%
|
5.9%
|
7.8%
|
10.0%
|
6.6%
|
7.4%
|
4.8%
|
7.6%
|
Like-for-like sales (incl.
fuel)
|
2.9%
|
7.7%
|
6.8%
|
5.9%
|
4.0%
|
2.2%
|
5.3%
|
2.9%
|
3.9%
|
Total sales
performance exc. Argos ROI in 2023/24
|
2022/23 YoY inc. Argos
ROI
|
2023/24 YoY exc. Argos
ROI
|
|
Q1
|
Q2
|
Q3
|
Q4
|
Q1
|
Q2
|
Q3
|
Q4
|
FY
|
Grocery
|
(2.4)%
|
3.8%
|
5.6%
|
7.4%
|
11.0%
|
8.9%
|
9.3%
|
7.3%
|
9.4%
|
Total
General Merchandise
|
(11.2)%
|
1.2%
|
4.6%
|
7.6%
|
4.9%
|
(0.6)%
|
1.5%
|
(3.9)%
|
1.2%
|
GM
(Argos)
|
(10.5)%
|
1.6%
|
4.5%
|
9.3%
|
6.1%
|
(0.1)%
|
1.7%
|
(4.7)%
|
1.6%
|
GM
(Sainsbury's)
|
(14.6)%
|
(1.3)%
|
5.4%
|
(1.0)%
|
(1.2)%
|
(2.7)%
|
0.9%
|
0.4%
|
(0.5)%
|
Clothing
|
(10.1)%
|
(0.2)%
|
1.3%
|
(1.9)%
|
(3.7)%
|
(14.6)%
|
(1.7)%
|
(11.7)%
|
(6.4)%
|
Total Retail (excl.
fuel)
|
(4.5)%
|
3.1%
|
5.2%
|
7.1%
|
9.3%
|
6.2%
|
7.1%
|
4.7%
|
7.2%
|
Fuel
|
48.3%
|
29.1%
|
12.2%
|
(2.8)%
|
(21.4)%
|
(17.1)%
|
(7.2)%
|
(7.8)%
|
(14.3)%
|
Total Retail (incl.
fuel)
|
2.5%
|
7.2%
|
6.2%
|
5.4%
|
3.5%
|
1.9%
|
4.9%
|
2.7%
|
3.5%
|
Notes
Certain statements made in this
announcement are forward-looking statements. Such statements are
based on current expectations and are subject to a number of risks
and uncertainties that could cause actual events or results to
differ materially from any expected future events or results
referred to in these forward-looking statements. They appear in a
number of places throughout this announcement and include
statements regarding our intentions, beliefs or current
expectations and those of our officers, directors and employees
concerning, amongst other things, our results of operations,
financial condition, liquidity, prospects, growth, strategies and
the business we operate. Unless otherwise required by applicable
law, regulation or accounting standard, we do not undertake any
obligation to update or revise any forward-looking statements,
whether as a result of new information, future developments or
otherwise.
A webcast presentation and live
Q&A will be held at 9:30 (BST). This will be available to view
on our website at the following link:
https://sainsbury-2023-24-preliminary-results-announcement.open-exchange.net/
A recorded copy of the webcast and
Q&A call, alongside slides and a transcript of the presentation
will be available at
www.about.sainsburys.co.uk/investors/results-reports-and-presentations
following the event.
Sainsbury's will issue its 2024/25
First Quarter Trading Statement at 07:00 (BST) on 2 July
2024.
Enquiries
Investor Relations
|
Media
|
James Collins
|
Rebecca Reilly
|
+44 (0) 7801 813
074
|
+44 (0) 20 7695
7295
|
Strategy Review: Next Level Sainsbury's
In February we announced our Next
Level Sainsbury's strategy, building on the success of the Food
First strategy launched in 2020. Food First put food back at the
heart of Sainsbury's, reset our competitive position and created a
strong financial platform from which we will grow, invest in
further strengthening the business and deliver enhanced returns to
shareholders. Next Level Sainsbury's is underpinned by a new
purpose: We make good food joyful, accessible and affordable for
everyone, every day. The strategy focuses on four key outcomes:
First choice for food, Loyalty everyone loves, More Argos, more
often and Save and invest to win.
First choice for
food
Our work on improving value,
innovation and service has driven volume market share gains over
the course of our Food First plan. Our performance was particularly
strong over the last financial year, with volume growth every
quarter and at an accelerating rate of growth. More customers are
choosing Sainsbury's and we are growing primary and secondary
customers ahead of all full-choice
competitors13.
Value that sticks
We reset our pricing position over
the course of Food First, investing £780 million to improve our
value versus all competitors. We are now the most competitive we
have ever been5 and we are gaining volumes from all key
competitors16. In 2023/24, we invested £220 million in
lowering prices on the products customers buy most often and we
passed on less inflation than our competitors6. We also
launched Nectar Prices in April 2023, rapidly rolling out to around
7,000 products over the year. Customers are noticing, with value
perception scores improving through the year and now the strongest
they have been for six years7.
In January we doubled the number
of products price matched to Aldi, with over 600 products now
included across fresh, grocery and household ranges. We also made
it easier for customers to identify lower prices in store by moving
all of our entry price point products into a single brand, Stamford
Street and by introducing Low Everyday Prices, which has replaced
Price Lock and includes over 1,000 products, primarily
branded.
Innovate to lead
We are being bold and ambitious on
innovation, bringing more new products to customers. We launched
over 4,000 products over the course of Food First and grew our
Taste the Difference brand from £1.2 billion in 2019/20 to £1.6
billion in 2023/24. We launched nearly 1,200 new products in the
year, 40 per cent of those in Taste the Difference, growing the
Taste the Difference range by 7 per cent year-on-year. More
customers are choosing to treat themselves: sales of our Premium
tier grew 12 per cent year-on-year and significantly ahead of the
market17. Ready-prepared meals, Bakery, Food to Go and
FreeFrom all performed particularly well.
Customer favourites across the
year included our Taste the Difference Mushroom, Mascarpone and
Truffle Pizza, our Signature Beef Burger and at Christmas, our
Buttermilk Turkey Crown with maple cured bacon and buttery sage and
onion stuffing.
We consistently outperformed the
market at every seasonal event18, finishing Q4 with a
strong Valentine's Day, with standout sales across flowers,
confectionery and our Taste the Difference meal deal, which was the
best value in the market. We are well set up to continue our
momentum in events and began 2024/25 with a record-breaking Easter
week, performing ahead of the market18 with our biggest
ever Easter grocery sales.
A
more resilient food system
Our strong, long-term
relationships with suppliers put us in a strong position to play a
leading role in creating a resilient and sustainable food system in
the UK. We continue to make investments and changes to the way we
work with and support British farmers. This year, for example, we
have introduced a cost model with a predictable margin for our
potato suppliers, working closely together to protect supply. On a
global scale, working in collaboration with longstanding partner
Fairtrade, we are contributing towards paying banana workers a
living wage three years ahead of the industry
commitment.
Alongside this, we are
increasingly moving to more long-term partnerships with key
suppliers to enable them to invest for the future with confidence.
For example, in March 2023 we began a new long-term partnership
with Moy Park which has provided our chickens with 20 per cent more
space than industry standard along with environmental enrichments
such as perches and play bales. Results indicate that our birds are
happier and more comfortable. We have made this change while
keeping our price position as sharp as ever and our chicken market
share has grown since launch19.
We were the first large
supermarket to launch a dedicated 'Best of British' page on our
Groceries Online website, better championing British grown and
produced products. The page highlights over 450 products which are
100 per cent British sourced, including popular fruit, vegetable,
meat, dairy, eggs and chilled essentials.
More food choice for more customers
Our strengths in fresh food, range
and innovation are at the heart of Sainsbury's heritage and brand
promise, Good Food For All Of Us. However, we do not currently
offer our full range to enough customers in enough locations, with
just 15 per cent of our supermarkets offering our full range. We
are investing to bring more of our range to more customers,
particularly enhancing choice in fresh food, focusing on around 180
of these highest-potential stores over the next three years. While
carrying out these changes we are also updating the look and feel
of many stores and selectively introducing innovations which we
have trialled in a number of stores in recent months, bringing
customer and efficiency benefits.
We opened two new supermarkets in
Q4, Talbot Green and Southport, both centred around a food hall
designed to help customers rediscover the joy of food. Offering our
full range, both stores also feature new digital signage and
displays designed to help customers feel more inspired and make the
stores easier to navigate. To support our Plan for Better targets,
each store has a unified refrigeration, ventilation and heating
system that removes the need for fossil fuel gas heating and runs
on natural CO2 refrigeration, with 100 per cent LED lighting
throughout. These new supermarkets are performing significantly
ahead of expectations.
Products and services that complement the Food
offer
We are tightening our general
merchandise and clothing ranges, aligning them more closely to
customers' shopping missions. In combination with a more profitable
food offer where it's needed, this will generate significantly
better sales and profit returns on store space.
Tu clothing continued to maintain
a disciplined trading approach in the year. Versus a 2019/20 base,
this trading approach has created a more profitable sales mix over
the last three years, with higher full price sales, significantly
lower markdowns, stronger gross margins, higher average selling
price and lower stock. This helped protect profitability over
2023/24 in a seasonally weak and promotionally-driven market.
However, our performance during the year and particularly the
fourth quarter, when we were further impacted by stock shortages,
was below expectations and we have taken action to improve ranges
in the year ahead.
We continue to expand our Habitat
range, with our new home fragrance collection performing ahead of
expectations. Looking ahead, Habitat will celebrate its
60th birthday in May with an innovative 60 Years of
Design collection in partnership with designers including Sebastian
Conran.
In January, we launched our Smart
Charge ultra-rapid EV charging network, now in 45 supermarket
locations with 371 charging bays. Smart Charge provides a quick and
reliable offer using 100 per cent renewable energy. We will build
further on the strength of our supermarket locations and customer
traffic, investing in Smart Charge to increase our network of
reliable ultra-rapid charging bays.
Engaged colleagues delivering leading customer
service
In January we announced that we
would be investing £200 million to increase colleague pay in line
with the new Real Living Wage, increasing pay to £12 per hour
nationally and £13.15 for colleagues in London; leading the market
and taking our investment in colleague pay over three years to more
than £500 million. Over the course of Food First, we have improved
our colleague engagement scores by nine percentage
points11. We believe more engaged colleagues deliver
better service, and our overall customer satisfaction scores were
ahead of full-choice competitors throughout the year, leading in
areas including speed and ease of checkout and friendliness and
availability of colleagues20.
Convenience sales grew ten per
cent, with overall customer satisfaction improving by five
percentage points21. We grew Groceries Online ahead of
the market in the second half22, supporting our strong
grocery sales momentum. Increased customer numbers are driving
higher sales volumes and we have improved customer satisfaction and
retention through better availability and the launch of Your Nectar
Prices on Groceries Online23. We have expanded our On
Demand business to 1,157 stores, resulting in 69 per cent sales
growth year-on-year.
We are always looking for ways we
can improve customer experience while saving money to invest back
into our product offer. We have made significant progress in our
programme of automating some simple customer services functions to
provide a more seamless customer experience and free up colleague
time to provide customers with better service.
Plan for Better
Plan for Better is at the heart of
how we will deliver our new purpose, to make good food joyful,
accessible and affordable for everyone, every day. We are committed
to playing a leading role in offering affordable high-quality food
that supports healthy and sustainable diets and helps customers
reduce their impact on the planet. We know how important it is for
our customers, colleagues, communities and shareholders that we
deliver on our Plan for Better goals. We are making good progress
on our plan, investing in resilient supply chains and continue to
make progress towards our targets.
We have a long history of
providing good food and leading change to help our customers eat
healthier, more sustainable diets. Our Healthy and Better for you
sales tonnage as a proportion of total sales is at 80.9 per cent
and we recognise there is more to do as we work towards our target
of 85 per cent by 2025. Our progress is reflected in our market
outperformance of Produce volume sales24, the fact that
87 per cent of our own-brand sales are Healthy and Better for you
choices and that our primary customers rate us ahead of our
competitors for making it easy for them to choose food that is
healthy. We have also designed our value offering to complement
this work and this year at least 75 per cent of our Aldi Price
Match campaign featured Healthy or Better for you products like
fresh produce, wholewheat pasta, salmon and alternative milk
products.
Plastic reduction initiatives
launched in the year will save nearly 1,800 tonnes of plastic per
year and we reduced relative plastic
packaging by 2.8 per cent year-on-year and 12.9 per cent from our
baseline. We became the first UK retailer to switch from plastic to
paper packaging across our entire own-brand toilet paper and
kitchen towel ranges, saving 485 tonnes. Other plastic saving
initiatives included leading the market in changing our range of
babywear to cardboard hangers and reducing plastic in meat
packaging ranges.
In the last year, we raised £36
million for good causes and redistributed 57.8 per cent more
surplus food to communities through our partnership with
Neighbourly. Over the course of this partnership, we have donated
over 23 million meals to communities. Our stores now support and
donate to over 2,500 good causes across the UK. We also moved from
use-by dates to best-before dates across our own-brand milk range,
helping reduce food waste and impacting 730 million pints of milk
sold by Sainsbury's every year25.
We have restated the 2022/23
result for food waste to anaerobic digestion reported in the
2022/23 Annual Report from 23,443 tonnes to 30,399 tonnes due to an
identified reporting error. The 2019/20 baseline is restated from
31,615 tonnes to 34,609 tonnes. This means that in 2022/23 we
reduced absolute food waste by 12.2 per cent rather than the 25.8
per cent reported versus our 2019/20 baseline. This year we have
reduced food waste to anaerobic digestion by 12.5 per cent absolute
and 13.9 per cent relative to total tonnes handled versus our
2019/20 baseline. We are focused on accelerating our progress and
have put in place a number of new measures including a partnership
with Olio to redistribute 'use by' foods from all of our stores and
are extending trials on new ways to repurpose food waste for animal
feed.
We are building the resilience of
our business and accelerating our emission reduction commitments.
In February, our revised commitments for lowering greenhouse gas
emissions in our own operations and in our value chain were
formally validated by the Science Based Targets initiative. In the
same month, the Carbon Disclosure project awarded us an A rating
for our environmental commitments on climate change for the tenth
consecutive year - the only UK supermarket to be recognised at this
level.
Loyalty everyone
loves
We are continuing to build a
world-leading Nectar loyalty platform, offering personalised,
rewarding and integrated loyalty and market-leading retail media
capabilities. This platform has been a key component in
transforming our value offering and value perception. It has
delivered ahead of our plan and is playing an ever-greater role for
customers and within our business, with over 17 million digital
subscribers.
We launched Nectar Prices in April
last year and rapidly rolled it out across our ranges. It is now
available on around 7,000 products and is saving customers an
average of £12 on a typical £80 shop. The customer response to
Nectar Prices has exceeded our expectations, strengthening value
perception and driving Nectar participation levels, with more than
five million new Nectar Digital Collectors since launch. In
October, we also introduced Your Nectar Prices on Sainsburys.co.uk
and our grocery app, with plans on track to roll this out more
widely. Your Nectar Prices is powered by Nectar's personalised
offers which are world-leading in their scale, generating over 280
million different personalised offers each week.
Nectar360 is well positioned
within the fast-growing UK retail media market, with a scaled
dataset and deep media capabilities. Nectar360 serves over 870
brands directly and has built partnerships with the 10 key agency
groups. Over the last year we signed two new partners, allowing
advertisers to better target campaigns and launching a new supply
chain data sharing and insight platform for our suppliers. We also
announced the expansion of our connected digital screen network to
over 800 screens. To continue to build stronger digital engagement
and deliver even more value to Nectar customers, we are investing
in high return growth by expanding our team and unifying our
capabilities across instore, onsite and offsite. As we continue to
build our coalition of strong partners, we are also investing
further in the integration of Nectar across all our digital
platforms and into payment solutions.
Our Next Level Sainsbury's
strategy will continue to build a world-leading loyalty platform -
one that's even more personalised, joyful, rewarding and
transparent - for everyone. We expect to generate an incremental
£100 million of Nectar360 profit contribution over the three years
to March 2027.
More Argos, more
often
We are focused on transforming
Argos around the three things that have always made it brilliant -
curated range, famously convenient experience and great value - so
that more customers buy more complete baskets more
often.
Over the last three years we have
significantly improved Argos's profitability by transforming our
store operating model, reducing the standalone store estate and
opening more Argos stores inside Sainsbury's. This has reduced the
fixed cost base while expanding the number of points where
customers can conveniently collect products. Argos sales and gross
profit last year were impacted by poor seasonal weather against
tough comparatives in challenging market conditions, but lower
fixed costs helped reduce the impact of weaker sales on Argos
profitability.
Famous for convenience
Customers love and recognise Argos
for the convenience and consistently great value we provide and
this has remained at the heart of the Argos proposition over the
last year. Half of UK households shop at Argos every
year26 and we have the fourth most visited retail
website in the UK27. More than 70 per cent of sales
start online, 70 per cent of sales are collected in store and
nearly 70 per cent of online Click and Collect orders are available
for immediate collection. Over the next three years our focus will
be on building customer awareness of our great service and
convenience, with an ambition to drive greater frequency of
customers shopping with Argos.
Inspiring choice, always great value
Our aim is to inspire customers to
shop bigger baskets with Argos more often by continuing to improve
our ranges and enhance customer experience. Gaming remains a strong
contributor to growth, powered by strong Black Friday deals,
consistent availability and continued demand for hardware and
accessories. Mobile phone sales have also been strong, particularly
iPhones, where we have had better stock allocations and as a result
have grown market share. Premium product sales continue to perform
well.
Argos's key brand health metrics
significantly increased versus last year28 and customer satisfaction
improved over the course of the year in appealing promotions, value
for money, quality and variety of items29.
Supercharged digital capabilities
We are supercharging Argos's
digital capabilities by further developing the website, app and
customer relationship management capabilities, with the aim of
driving traffic, basket spend and conversion. We continue to
improve the digital customer journey by testing new promotional and
personalisation mechanics and enhancing search and browsing
experiences - making checkout easier and faster. We recently
relaunched our delivery checkout to provide a better customer
experience and a more stable platform.
Accessible and relevant credit, care and
services
Having the right range of
accessible and relevant credit solutions is important to help our
customers buy what they want, when they want it. We announced in
January the completion of a strategic review of our Financial
Services division which will over time result in a phased
withdrawal from our core banking business. Whilst financial
services will continue to be an important part of the Argos
proposition, we expect to move to third party provision of Argos
financial services products, improving the range and quality of
payment solutions we can offer customers and increasing
penetration, currently 21 per cent of sales.
Next level service, efficiency and stock
flow
We have significantly transformed
Argos to be a digital first business and have integrated Nectar. At
the same time, we have moved from standalone stores towards a
store-in-store model, increased the number of our collection points
and continued to build a market-leading fulfilment network, as well
as completing our withdrawal from the Republic of
Ireland.
We have made significant changes
to how and where we move and hold stock, driving efficiency and
improving availability by making sure we have the right stock
closer to customers when they need it. The next phase of our store
operating model refinement is moving to a clustering model, which
will replace a one-size-fits-all approach. This approach will
unlock efficiencies and reduce operational complexity. As a result
we will have better tailored ranges, availability and service,
delivering cost-to-serve reductions alongside improved customer
satisfaction. An example of this is our Croydon store, where we've
already moved from three floors to one, resulting in faster service
and improved customer satisfaction.
Save and invest to
win
We have delivered £1.3 billion in
savings over the last three years - double the rate of savings
during Food First compared to prior years - which has been central
to the delivery of our strategy. This has created the fuel to
invest in what matters for our customers and has reset our value
position. In the next three years, we will create a further £1
billion in savings, more than offsetting cost inflation and taking
another big leap forward in efficiency, productivity and customer
focus.
Our investments in technology and
automation are driving big steps forward. More agile, flexible
systems are bringing greater efficiency to decision making and
accelerating the speed at which we can improve customer experience.
For example, we are unlocking significant savings through accurate
real-time grocery forecasting that optimises the sales, waste and
stock equation. We have already migrated all of our ambient grocery
products to machine learning forecasting, resulting in availability
gains of 170bps year-on-year15 - the equivalent of 150
more products available in each of our supermarkets, driving up
basket size. We are underway with rolling
this out across our Fresh ranges, with the migration due to be
completed by Summer 2024.
We are also simplifying our
technology processes using cloud technology. This is helping with
allocation and replenishment processes, enhancing customer
personalisation and rewards and supporting the safety and stability
of our ongoing operations. By automating some of the processes
within our contact centre, we are delivering a more seamless
customer experience and faster resolution times, while saving
colleagues' time.
We are making bold decisions on
business structure and propositions. We are simplifying our Store
Support Centre structure and looking at where we can work more
effectively with third party partners. We are also making good
progress on the programme we began in 2022 to transform our eat-in,
takeaway and home delivery food and drink offer, with fewer
Sainsbury's cafés and more third-party outlets.
A smaller proportion of cost
savings will be driven by structural changes in the future, but we
continue to transform our food service offerings to reduce cost and
complexity across our business while enhancing our customer offer.
For example, leading the market on freshly baked goods is an
important part of our ambition to be First choice for food. We are
well underway with a programme to move many stores to a more
efficient way of freshly baking products in-store, improving range
and quality but also unlocking significant
savings.
Plan for Better is fully
integrated into our Save and invest to win initiatives. We are
rolling out the latest integrated refrigeration and heating
technology, delivering both a saving on energy and helping reduce
our carbon footprint. The Longhill Burn Wind Farm was completed in
August and the wind turbines are the largest and most powerful
onshore in the UK. When all the turbines are operating at maximum
capacity together they can provide enough electricity to supply up
to 33 per cent of our total electricity needs. We have also started
to roll out double decker trailers in our fleet, which will reduce
the number of vehicles on the road, thereby reducing our carbon
footprint, while maintaining the same levels of stock
movement.
1 Nielsen Panel volume market
share 2017/18 to 2023/24. Total FMCG (excluding Kiosk and Tobacco),
Market Universe: Total Outlets
2 Nielsen Panel, total FMCG (exc.
Kiosk and Tobacco). Primary and Secondary Volume Share of wallet
%pt YoY change, 52 weeks to 2 March 2024
3 Please refer to note 2.4 in the
Notes to the consolidated financial statements
4 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco, volume market share change YoY
5 Value Reality, 2023/24; Acuity,
internal modelling. Data available from 2016.
6 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco. Top 100 SKUS Average 4 weekly Trended ASP
(Average Selling Price) vs Total Market - 52 weeks to 2 March
2024
7 YouGov Brand Index - Supermarket
Value for Money Perception metric %
8 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco. Net volume switching to/from Aldi and
Lidl, 52 weeks to 2 March 2024
9 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco. Net volume switching to/from M&S and
Waitrose, 52 weeks to 2 March 2024
10 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco, Nielsen Panel data. Contribution of
Premium Own Label to Total Sales
11 eSAT scores March 2024 vs April
2021
12 CSAT Supermarket Competitor
Benchmark data - Overall Supermarket satisfaction score
13 Nielsen Panel, total FMCG (exc.
Kiosk and Tobacco). Customer numbers YoY growth, 52 weeks to 2
March 2024
14 Nielsen Panel, total FMCG (exc.
Kiosk and Tobacco), Total Shopper Mission customer numbers, YoY %pt
change, 52 weeks to 2 March 2024
15 Q3 23/24 YoY improvement in
availability
16 Nielsen Panel data. Total FMCG
excl. Kiosk and Tobacco. Sainsbury's to/ from net volume switching,
52 weeks to 2 March 2024
17 Nielsen Panel Premium Own Label
Volume Growth YoY - Total FMCG excl. Kiosk and Tobacco. 52 weeks to
2 March 2024
18 Nielsen EPOS data. JS volume
growth YoY% difference to Total Market growth YoY% for key events
week growth versus last year events week
19 Nielsen Panel data, volume
market share % growth YoY, FY23/24 vs FY22/23, Chicken category
(raw chicken)
20 CSAT Supermarket Competitor
Benchmarking data - FY23/24 scores
21 Lettuce Know Convenience
customer satisfaction scores, FY23/24 vs FY22/23. Overall
Satisfaction measure
22 Nielsen, Sainsbury's Online
market share, 24 weeks to 2 March 2024
23 Lettuce Know Groceries Online
customer satisfaction scores, FY23/24 vs FY22/23. Overall
Satisfaction measure
24 Nielsen panel data, Produce
category, volume growth YoY, 52w to 2nd March 2024
25 Includes all fresh and organic
milk sold across England, Scotland, and Wales
26 Kantar Worldpanel. UK
households vs ONS Total UK households 2022
27 SimilarWeb traffic share, 52
weeks to 2 March 2024
28 YouGov - General Retail Brand
Health metrics
29 Argos E2E CSAT
Survey
Financial Review of the year results for the 52 weeks to 2
March 2024
A number of Alternative
Performance Measures ('APMs') have been adopted by the Directors to
provide additional information on the underlying performance of the
Group. These measures are intended to supplement, rather than
replace the measures provided under IFRS. Underlying performance
measures are reconciled to their IFRS equivalents on the face of
the income statement with non-underlying items set out in more
detail in note 3 to the financial statements. Other APMs are
defined and reconciled to their nearest IFRS measures in notes A1
to A4.
Summary income statement
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
Change
|
|
£m
|
£m
|
%
|
|
|
|
|
Group sales (including VAT)
|
36,337
|
35,157
|
3.4
|
Retail sales (including VAT)
|
35,721
|
34,626
|
3.2
|
Retail sales (excluding fuel, including
VAT)
|
30,615
|
28,664
|
6.8
|
|
|
|
|
Group sales (excluding VAT)
|
32,700
|
31,491
|
3.8
|
Retail sales (excluding VAT)
|
32,084
|
30,960
|
3.6
|
|
|
|
|
|
|
|
|
Underlying operating profit
|
|
|
|
Retail
|
966
|
926
|
4.3
|
Financial Services
|
29
|
46
|
(37.0)
|
Total underlying operating profit
|
995
|
972
|
2.4
|
|
|
|
|
Underlying net finance
costs
|
(294)
|
(282)
|
4.3
|
Underlying profit before tax
|
701
|
690
|
1.6
|
Items excluded from underlying
results
|
(424)
|
(363)
|
16.8
|
Profit before tax
|
277
|
327
|
(15.3)
|
Income tax expense
|
(140)
|
(120)
|
16.7
|
Profit for the financial period
|
137
|
207
|
(33.8)
|
|
|
|
|
Underlying basic earnings per share
|
22.1p
|
23.0p
|
(3.9)
|
Basic earnings per share
|
5.9p
|
9.0p
|
(34.4)
|
Interim Dividend per share
|
3.9p
|
3.9p
|
-
|
Final Dividend per share
|
9.2p
|
9.2p
|
-
|
Total Dividend per share
|
13.1p
|
13.1p
|
-
|
In the 52 weeks to 2 March 2024,
the Group generated profit before tax of £277 million (2022/23:
£327 million) and an underlying profit before tax of £701 million
(2022/23: £690 million).
This strong underlying profit
performance was driven by the performance of our grocery business,
which delivered both grocery volume growth and consistent market
share gains throughout the year. This reflected the investment we
have made in our grocery business in recent years to strengthen the
customer proposition, in particular through the improvement of our
value position. The grocery volume performance was further
supported this year by the successful launch of Nectar Prices. Our
ongoing cost savings programme helped us reduce the impact of
rising operating cost inflation in order to deliver for customers,
colleagues and shareholders. The combination of volume growth and
cost savings delivered strong grocery profit growth, partially
offset by the impact of poor weather on general merchandise and
clothing sales and lower Financial Services profits. Strong cash
generation, with retail free cash flow of £639 million,
strengthened our balance sheet and supported dividend payments. We
continue to make balanced investment choices, supporting our
customers and colleagues whilst also delivering for
shareholders.
Group sales
Group sales (including VAT)
increased by 3.4 per cent year-on-year as a 6.8 per cent increase
in Retail sales (including VAT, excluding fuel) more than offset a
14.3 per cent decrease in Fuel sales (including VAT).
Total sales performance by category
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
Change
|
|
£bn
|
£bn
|
%
|
Grocery
|
23.7
|
21.7
|
9.4
|
General Merchandise
|
6.0
|
6.0
|
(0.5)
|
Clothing
|
0.9
|
1.0
|
(6.4)
|
Retail (exc. Fuel)
|
30.6
|
28.7
|
6.8
|
Fuel sales
|
5.1
|
6.0
|
(14.3)
|
Retail (inc. Fuel)
|
35.7
|
34.6
|
3.2
|
|
|
|
|
|
|
|
|
Retail like-for-like sales performance
|
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
Like-for-like sales (exc.
Fuel)
|
|
7.5%
|
2.6%
|
Like-for-like sales (inc.
Fuel)
|
|
3.8%
|
5.7%
|
Grocery sales increased 9.4 per
cent, reflecting strengthening volume growth as inflation reduced,
particularly in the second half of the year. We continued to
prioritise value for customers, inflating behind key competitors.
This included the positive launch of Nectar Prices, offering lower
prices for Nectar customers alongside extra personalised prices
through 'Your Nectar Prices'. As a result, we have seen
volume increases across all major categories and our own brand
participation increased 93 basis points as customers opted to trade
in to better value private label products from branded items to
help manage the cost of living whilst also treating themselves
through our Taste the
Difference range, particularly at key events.
General merchandise sales
decreased by 0.5 per cent. Seasonal and Kids and Home and Furniture
sales both declined due to a cooler, wetter summer and warmer
winter impacting seasonal sales, alongside tough market conditions.
This was partially offset by Electronics and Tech sales increasing
year-on-year, with Gaming being the primary driver. Sales were also
affected by the closure of Argos Republic of Ireland on 24 June.
Stripping out the effect of the Republic of Ireland closure,
general merchandise sales increased by 1.2 per cent. Clothing sales
decreased by 6.4 per cent, with lower volumes partially driven by
unseasonable weather.
Fuel sales decreased by 14.3 per
cent, reflecting a lower average pump price
year-on-year.
Total sales (including VAT) performance by
channel
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
|
%
|
%
|
Total sales fulfilled by
supermarket stores
|
10.3
|
1.9
|
Supermarkets (inc. Argos stores in
Sainsbury's)
|
11.0
|
4.8
|
Groceries online
|
5.5
|
(13.5)
|
Convenience
|
10.3
|
9.9
|
Sales fulfilled from our
supermarkets grew by 10.3 per cent, driven by both grocery
inflation and, particularly in the second half, volume growth.
Groceries online sales increased by 5.5 per cent, driven by
improvements in availability and service. Convenience sales
increased by 10.3 per cent, with growth strongest in 'Food on the
Move' city centre stores and more urban locations.
Space
During 2023/24, Sainsbury's opened
three new supermarkets and closed one, and opened 23 new
convenience stores, closing three.
During the year, we opened 22 new
Argos stores in Sainsbury's and closed 73 standalone Argos stores.
The number of Argos collection points in Sainsbury's stores
increased from 420 to 456. As at 2 March 2024, Argos had 659
stores, including 446 stores in Sainsbury's, and a total of 1,115
points of presence.
Store numbers and retailing space
|
As at 4
March 2023 a)
|
New
stores
|
Disposals / Closures
|
As at 2 March
2024
|
|
|
|
|
|
Supermarkets
|
595
|
3
|
(1)
|
597
|
Supermarkets area '000 sq.
ft.
|
20,691
|
120
|
(10)
|
20,801
|
|
|
|
|
|
Convenience
|
814
|
23
|
(3)
|
834
|
Convenience area '000 sq.
ft.
|
1,961
|
61
|
(6)
|
2,016
|
Sainsbury's total store
numbers
|
1,409
|
26
|
(4)
|
1,431
|
|
|
|
|
|
Argos stores
|
285
|
1
|
(73)
|
213
|
Argos stores in
Sainsbury's
|
424
|
22
|
-
|
446
|
Argos total store
numbers
|
709
|
23
|
(73)
|
659
|
Argos collection points
|
420
|
42
|
(6)
|
456
|
Habitat
|
3
|
-
|
(3)
|
-
|
a) Space
(sq. ft.) adjusted at 4 March 2023 to include the net change of all
store re-measures throughout the year including those made post-
investment
In total for 2024/25, we expect to
open three supermarkets and around 25 new convenience stores, with
four supermarkets and three to five convenience stores to close. In
addition, we expect to open around ten Argos stores inside
Sainsbury's and close around 15-20 Argos stand-alone
stores.
We expect the stand-alone Argos
store estate will reduce to around 190 stores by March 2025 and we
expect to have 450-460 Argos stores inside Sainsbury's supermarkets
as well as 480-500 collection points.
Retail underlying operating profit
Retail underlying operating profit
|
Note
a)
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
Change
|
Retail underlying operating profit
(£m)
|
A1.2
a)
|
966
|
926
|
4.3%
|
Retail underlying operating margin
(%)
|
A1.2
a)
|
3.01
|
2.99
|
2bps
|
|
|
|
|
|
Retail underlying EBITDA
(£m)
|
A1.2
d)
|
2,078
|
2,060
|
0.9%
|
Retail underlying EBITDA margin
(%)
|
A1.2
d)
|
6.48
|
6.65
|
(17)bps
|
a)
Note references for reconciliations refer to the
Alternative Performance Measures.
Retail underlying operating profit
increased by 4.3 per cent to £966 million (2022/23: £926 million)
and retail underlying operating margin increased by two basis
points year-on-year to 3.01 per cent (2022/23: 2.99 per cent).
Strong grocery profit growth was driven by higher volumes and cost
savings offsetting higher operating costs and value investment.
This was partially offset by lower general merchandise margins,
which reflected the mix impacts of lower seasonal sales and higher
Consumer Electronics sales.
In 2024/25, Sainsbury's expects
retail underlying operating profit of between £1,010 million and
£1,060 million, growth of between five per cent and ten per
cent.
Retail underlying EBITDA increased
to £2,078 million (2022/23: £2,060 million). However, retail
underlying EBITDA margin declined 17 basis points to 6.48 per cent
(2022/23: 6.65 per cent). In 2024/25, Sainsbury's expects a retail
underlying depreciation and amortisation charge of around £1.15
billion (2023/24: £1.11 billion), including around £0.4 billion
right-of-use asset depreciation.
Financial Services
Financial Services results
|
|
|
|
|
|
12 months to 29 February
2024
|
Note
|
|
2024
|
2023
|
Change
|
|
|
|
|
|
|
Underlying revenue (£m)
|
|
|
637
|
531
|
20.2%
|
Interest and fees payable
(£m)
|
|
|
(211)
|
(84)
|
152.4%
|
Total income (£m)
|
|
|
426
|
447
|
(4.7)%
|
Underlying operating profit
(£m)
|
|
|
29
|
46
|
(37.0)%
|
|
|
|
|
|
|
Net interest margin (%)
|
a)
|
|
4.7
|
5.1
|
(40)bps
|
Cost:income ratio (%)
|
|
|
70
|
66
|
400bps
|
Bad debt as a percentage of
lending (%)
|
b)
|
|
2.1
|
2.1
|
0bps
|
Tier 1 capital ratio
(%)
|
|
|
17.1
|
15.4
|
170bps
|
Total capital ratio (%)
|
c),e)
|
|
19.4
|
17.8
|
160bps
|
Customer deposits (£bn)
|
|
|
(4.2)
|
(4.7)
|
(10.6)%
|
Total customer lending
(£bn)
|
d)
|
|
4.5
|
5.3
|
(15.1)%
|
of which unsecured lending (£bn)
|
|
|
4.5
|
4.7
|
(4.3)%
|
of which secured lending (£bn)
|
|
|
-
|
0.6
|
(100.0)%
|
a) Net
interest income divided by average interest-bearing
assets
b) Bad
debt expense divided by average net lending
c) Total
capital divided by risk-weighted assets
d) Amounts
due from customers at the balance sheet date in respect of loans,
mortgages, credit cards and store cards net of
provisions
e) The
prior year (February 2023) unaudited CET 1 (15.5 per cent) and
total capital ratio (17.9 per cent) have been updated to reflect a
revised credit value adjustment (CVA) calculation as outlined in
the Pillar 3 Disclosures published in July 2023.
Financial Services underlying
operating profit of £29 million (2022/23: £46 million) reduced by
£17 million, primarily reflecting the impact of higher funding
costs from increased interest rates not being fully passed on to
customers.
Total income of £426 million
reduced by 4.7 per cent and net interest margin reduced by 40 basis
points. Strong underlying revenue growth of 20 per cent was
driven by selective unsecured customer lending growth (with average
balance up five per cent) and customer rate increases, alongside
strong growth in Travel Money and Argos Care. Interest and fees
payable grew 152 per cent, driven by the increase in the Bank of
England base rate since the financial year ended in
2022.
The Financial Services cost:income
ratio increased to 70 per cent (2022/23: 66 per cent), reflecting
the pressure on net income from higher funding costs and the impact
of inflation on operating costs.
Bad debt as a percentage of
lending stayed flat at 2.1 per cent (2022/23: 2.1 per cent) with
slightly higher arrears in Loans offset by lower arrears in Store
Cards.
Financial Services remains well
capitalised, with a total capital ratio of 19.4 per cent (2022/23:
17.8 per cent), an increase of 160 basis points since prior
full-year.
The scope of our Financial
Services business is likely to change during the year. Profits from
our core banking products will continue to be impacted by higher
funding costs and will additionally be impacted by preparations for
the phased withdrawal from these products. Therefore we expect
these products to be loss-making, offsetting profits from Argos
Financial Services and commission-based products such as insurance
and travel money to make an underlying net Financial Services
contribution of between break even and £15 million.
Underlying net finance costs
Underlying net finance costs
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
Change
|
£m
|
£m
|
%
|
Non-lease interest
costs
|
(71)
|
(42)
|
69.0
|
Non-lease interest
income
|
28
|
16
|
75.0
|
Net finance costs on lease
liabilities
|
(251)
|
(256)
|
(2.0)
|
Total underlying net finance costs
|
(294)
|
(282)
|
4.3
|
Underlying net finance costs
increased by 4.3 per cent to £294 million (2022/23: £282 million).
These costs include £43 million of net non-lease interest (2022/23:
£26 million). The increase of net non-lease interest was driven by
increased interest costs of £28 million in respect of the £575
million term loan which was fully drawn from July 2023
to partially fund the Highbury and Dragon
property transaction. This was partially offset
by increased interest income of £12 million due to the benefit of
higher interest rates on cash deposits. Net finance costs on lease
liabilities reduced to £251 million (2022/23: £256 million),
including the impact of the reduction in lease liabilities
resulting from the Highbury and Dragon
transaction.
Sainsbury's expects underlying net
finance costs in 2024/25 of between £310 million and £320 million,
including £260 million lease interest costs.
Items excluded from underlying results
In order to provide shareholders
with insight into the underlying performance of the business, items
recognised in reported profit before tax which, by virtue of their
size and/or nature, do not reflect the Group's underlying
performance are excluded from the Group's underlying results and
shown in the table below.
Items excluded from underlying results
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
|
£m
|
£m
|
Sainsbury's structural
integration
|
(95)
|
(106)
|
Impairment charges
|
-
|
(281)
|
Income recognised in relation to
legal disputes
|
-
|
30
|
IAS 19 pension income
|
44
|
58
|
Property, finance and acquisition
adjustments
|
(86)
|
(64)
|
Items excluded from underlying results before Financial
Services
|
(137)
|
(363)
|
|
|
|
Financial Services phased
withdrawal
|
(273)
|
-
|
Disposal of mortgage
book
|
(14)
|
-
|
Total items excluded from underlying
results
|
(424)
|
(363)
|
Sainsbury's structural integration
costs of £95 million (2022/23: £106 million) were recognised in
relation to the programme relating to the structural integration of
Sainsbury's and Argos announced in November 2020. Cash costs in the
year were £67 million (2022/23: £50 million). The majority of the
programme has now completed, with costs incurred to date of £841
million, and cash costs of £270 million.
In January 2024, the Group
announced that Financial Services products to be offered in the
future will be provided by dedicated financial services providers
through a distributed model. Costs of £273 million associated
with this decision comprise mainly of impairment of non-financial
assets, additional allowances arising from a reassessment of the
effective interest rate applied to the amortised cost of financial
assets, onerous contracts relating to long-dated computer software
contracts, and impairment of the remaining goodwill held in the
Bank. Cash costs in the year were £5 million (2022/23: £nil).
Further costs associated with this restructuring will be incurred
in future years once more detailed plans to execute these changes
are formulated and communicated.
Non-cash impairments of £281
million were recognised in 2022/23, driven by a material increase
in the underlying discount rate, following sustained increases in
gilt interest rates.
During the year, the Bank disposed
of its mortgage portfolio for proceeds of £446 million, which
resulted in a non-underlying charge of £14 million. This loss on
disposal includes goodwill, transaction costs and the recognition
of onerous contract provisions.
IAS 19 pension income decreased to
£44 million (2022/23: £58 million). The lower pension income in the
current year is primarily driven by a settlement credit of £8
million recognised in the prior year relating to a gain on payments
made to members exiting the scheme relative to the liabilities
extinguished, as well as the impact of the lower opening surplus at
the beginning of the financial year, compared to the prior
year.
2022/23 included legal disputes
income of £30 million from credit card companies in respect of
overcharges for credit card processing (interchange)
fees.
Other movements of £86 million
expense (2022/23: £64 million expense) include £15 million related
to property transactions, £15 million of acquisition adjustments
and £56 million of non-underlying finance and fair value
adjustments. Non-underlying finance and fair value adjustments were
impacted by a loss on energy derivatives of £46 million (2022/23:
£29 million loss) caused by decreases in electricity forward prices
in the period. The energy derivatives relate to long-term, fixed
price power purchase arrangements (PPAs) with independent
producers. These are accounted for as derivative financial
instruments, but are not designated in hedging relationships.
Therefore, gains and losses are recognised in the income
statement.
Taxation
The income tax expense was £140
million (2022/23: £120 million). The underlying tax rate was 26.4
per cent (2022/23: 22.8 per cent) and the effective tax rate was
50.5 per cent (2022/23: 36.7 per cent). The 2023/24 charges were
structurally higher due to an increase in the headline rate of
corporation tax to 25 per cent (previously 19 per cent), effective
from 1 April 2023, partially offset by beneficial prior period
adjustments (mainly due to super deduction claims).
The effective tax rate, of 50.5
per cent for the year, is significantly higher than the prior year
and headline tax rates due to the impact of the release of a
deferred tax asset on capital losses (giving rise to a tax charge
of £40 million) previously recognised against fair value gains
within the Highbury and Dragon structure (against which a deferred
tax liability was recognised). During the period, an £80 million credit was recognised in
reserves in respect of the derecognition of the deferred tax
liability against the property pool; this credit had no impact on
the effective tax rate. In addition, the effective rate is
adversely affected by the write off of goodwill as part of the
Financial Services restructuring, for which no tax deduction is
available.
We expect an underlying tax rate
in 2024/25 of around 30 per cent. This is higher than prior years,
because of the headline rate continuing at 25 per cent, but without
any anticipated beneficial prior period adjustments.
Earnings per share
Underlying basic earnings per
share decreased to 22.1 pence (2022/23: 23.0 pence)
as the increase in corporation tax more than
offset the increase in underlying pre-tax earnings. Basic earnings
per share decreased to 5.9 pence (2022/23: 9.0 pence). Underlying
diluted earnings per share decreased to 21.6 pence (2022/23: 22.7
pence) and diluted earnings per share decreased to 5.7 pence
(2022/23: 8.8 pence).
Dividends
The Board has recommended a final
dividend of 9.2 pence per share (2022/23: 9.2 pence). This will be
paid on 12 July 2024 to shareholders on the Register of Members at
the close of business on 7 June 2024. This is in line with the
Group's policy to pay a dividend of around 60 per cent of
underlying earnings, allowing us to maintain a full-year dividend
of 13.1 pence (2022/23: 13.1 pence).
Sainsbury's has a Dividend
Reinvestment Plan (DRIP), which allows shareholders to reinvest
their cash dividends in our shares. The last date that shareholders
can elect for the DRIP is 21 June 2024.
From financial year 2024/25, as
per our capital allocation policy, we are committed to a
progressive dividend policy. We have also announced that we will
buyback £200 million of shares in 2024/25 and that we will review
the level of cash return to shareholders through buyback on an
annual basis.
Net debt and Retail cash flows
Summary Retail cash flow statement
|
|
|
|
|
|
52 weeks
to
|
52 weeks
to
|
|
Note
a)
|
2 March
2024
|
4 March
2023
|
|
|
£m
|
£m
|
Retail underlying operating
profit
|
5
|
966
|
926
|
Adjustments for:
|
|
|
|
Retail underlying depreciation and
amortisation
|
|
1,112
|
1,134
|
Share-based payments and
other
|
|
78
|
49
|
Adjusted retail underlying operating cash flow before changes
in working capital
|
|
2,156
|
2,109
|
Decrease in underlying working
capital
|
b)
|
262
|
159
|
Retail non-underlying operating
cash flows (excluding pensions)
|
|
(72)
|
(23)
|
Pension cash
contributions
|
|
(44)
|
(44)
|
Retail net cash generated from operations
|
|
2,302
|
2,201
|
Interest paid
|
|
(323)
|
(307)
|
Corporation tax paid
|
|
(58)
|
(99)
|
Net cash generated from operating
activities
|
|
1,921
|
1,795
|
Cash capital
expenditure
|
|
(814)
|
(717)
|
Repayments of lease
liabilities
|
|
(505)
|
(512)
|
Initial direct costs on
right-of-use assets
|
|
(6)
|
(16)
|
Proceeds from disposal of
property, plant and equipment
|
|
16
|
29
|
Interest income
|
b)
|
27
|
15
|
Dividends and distributions
received
|
|
-
|
51
|
Retail free cash flow
|
|
639
|
645
|
Dividends paid on ordinary
shares
|
|
(306)
|
(319)
|
Net drawdown / (repayment) of
borrowings
|
|
534
|
(40)
|
Net consideration paid for
Highbury and Dragon property transaction
|
|
(670)
|
-
|
Share related
transactions
|
|
(3)
|
(32)
|
Net increase in cash and cash equivalents
|
|
194
|
254
|
(Increase) / decrease in
debt
|
|
(29)
|
552
|
Highbury and Dragon non-cash lease
movements
|
12
|
1,042
|
-
|
Other non-cash and net interest
movements
|
c)
|
(417)
|
(391)
|
Movement in net debt
|
17
|
790
|
415
|
|
|
|
|
Opening net debt
|
17
|
(6,344)
|
(6,759)
|
Closing net debt
|
17
|
(5,554)
|
(6,344)
|
of which
|
|
|
|
Lease liabilities
|
17
|
(5,354)
|
(6,488)
|
(Net debt) / net funds excluding lease
liabilities
|
|
(200)
|
144
|
a) Note
references relate to the financial statements. Other figures are
reconciled in Notes A2.1 and A2.2 of the APMs
b) The
Group cash flow statement now classifies Interest received within
cash flows from investing activities to provide greater clarity
over the Group's cash flows whereby such cash flows had previously
been included within cash generated from operations. Refer to
Consolidated cash flow statement.
c) Other
non-cash movements include new leases and lease modifications and
fair value movements on derivatives used for hedging long-term
borrowings
Adjusted retail underlying
operating cash flow before changes in working capital increased by
£47 million year-on-year to £2,156 million (2022/23: £2,109
million) supported by an increase in retail underlying operating
profit. Working capital reduced by £262 million, with payables
increasing whilst maintaining a flat inventories and receivables
position overall (2022/23: £159 million working capital
reduction). Retail non-underlying operating cash flows of £72
million relate to restructuring costs, including cash flows
associated with the closure of Argos operations in Republic of
Ireland. Pension cash contributions of £44 million remained
consistent with the prior year as no funding level events
occurred.
We paid corporation tax of £58
million in the year (2022/23: £99 million), £41 million lower than
the prior year benefitting from overpayments on account due to
closing prior years, as well as current year benefits relating to a
partial relief taken on full expensing allowances on our fixed
assets investments. Proceeds of £16 million (2022/23: £29 million)
resulted from disposals of non-trading sites. No dividends and
distributions were received in the year while the prior year
included a £50 million dividend received from Sainsbury's
Bank.
Cash capital expenditure was £814
million (2022/23: £717 million). The year-on-year increase was
primarily driven by investment in electric vehicles (EV) charging
infrastructure (£63 million) and in-store investment. Sainsbury's
expects core retail cash capital expenditure (excluding Financial
Services) in 2024/25 to be £800 million to £850 million, with an
additional £70 million of strategic investment in our EV charging
business.
Retail free cash flow declined by
£6 million year-on-year to £639 million (2022/23: £645 million). In
2024/25 we expect to generate retail free cash flow of at least
£500 million, in line with our commitment of generating at least
£1.6 billion of retail free cash flow over the next three
years.
Dividends of £306 million were
paid in the year, covered 2.1 times by free cash flow (2022/23: 2.0
times). Net drawdown of borrowings includes £575 million drawdown
of the unsecured term loan facility used to part fund the Highbury
and Dragon property transaction.
On 17 March 2023, the Group
completed the purchase of a commercial property investment pool,
known as Highbury and Dragon, in which it already held a beneficial
interest. The investment pool contained 26 supermarkets, all of
which were formerly leased to Sainsbury's. Of the 26 stores
acquired, 21 have been retained, four have been sold and leased
back, and one was held for sale at the balance sheet date. The
total consideration paid for the asset acquisition was £731
million, which included fully funding the bond redemptions attached
to the property pool of £300 million. Proceeds of £61 million were
received for the four supermarkets sold and leased back.
As at 2 March 2024, net debt was
£5,554 million (4 March 2023: £6,344 million), a decrease of £790
million. Excluding the impact of lease liabilities, non-lease net
debt increased by £344 million in the year, moving to a net debt
position of £200 million (4 March 2023: net funds of £144 million),
impacted by the £670 million net consideration relating to the
Highbury and Dragon property transaction and partially offset by
positive cash generation.
Net debt includes lease
liabilities of £5,354 million (4 March 2023: £6,488 million). Lease
liabilities have decreased by £1,134 million, largely impacted by
the Highbury and Dragon property transaction which resulted in a
reduction of lease debt of £1,042 million.
For the financial year ending 1
March 2025, the definition of retail free cash flow will change to
now exclude capital injections to, dividends from, and any other
exceptional cash movements with, Sainsbury's Bank.
Financial Ratios
Key financial ratios a)
|
As at
|
As
at
|
|
2
March 2024
|
4 March
2023
|
Return on capital employed
|
8.3%
|
7.6%
|
Net debt to EBITDA
|
2.6x
|
3.0x
|
Fixed charge cover
|
2.7x
|
2.7x
|
a)
Reconciliations are set out in notes A4.1, A3.2 and A4.2 of the
APMs
Return on capital employed (ROCE)
improved primarily due to lower capital employed, driven by a
decline in the average value of derivatives, right-of-use assets
and property, plant and equipment, and the impacts of the Highbury
and Dragon transaction.
Sainsbury's continues to target
leverage of 3.0x to 2.4x to deliver a solid investment grade
balance sheet. An improvement in net debt to EBITDA to 2.6x from
3.0x at 4 March 2023 reflects the improvement in net debt
benefiting from positive retail free cash flow and the Highbury and
Dragon property transaction. Fixed charge cover is
stable.
Defined benefit pensions
At 2 March 2024, the net defined
benefit surplus under IAS 19 for the Group was £690 million
(excluding deferred tax). This represented a reduction of £299
million from the prior year-end date of 4 March 2023, primarily
driven by a reduction in the value of matching assets used to hedge
against movements in gilt yields and inflation, and experience
losses due to higher deferred pension increase assumptions,
partially offset by updated mortality assumptions reducing scheme
liabilities.
The net surplus reduced as the
Trustees' funding basis is linked to government bond yields, which
increased over the year by circa 0.3 per cent, reducing the value
of the liabilities on the schemes funding basis and consequently
the value of those matching assets. However, the IAS 19 basis in
the financial statements is linked to yields on AA rated corporate
bonds. Despite government bond yields increasing, AA bonds have
remained broadly unchanged over the year. As a result of this
'valuation mis-match', the value of the scheme's liabilities on an
IAS 19 basis was also broadly unchanged over the year, leading to
the overall reduction in the net surplus.
There was no change during the
year to the previously disclosed triennial valuation information.
The next triennial valuation is due 30 September 2024.
For 2024/25, the total defined
benefit pension scheme contributions are expected to be £45 million
(2023/24: £44 million).
Retirement benefit obligations
|
|
|
|
|
|
Sainsbury's
|
Argos
|
Group
|
Group
|
|
as
at
|
as
at
|
as at
|
as
at
|
|
2 March
2024
|
2 March
2024
|
2 March
2024
|
4 March
2023
|
|
£m
|
£m
|
£m
|
£m
|
Present value of funded
obligations
|
(5,172)
|
(816)
|
(5,988)
|
(5,921)
|
Fair value of plan
assets
|
5,777
|
925
|
6,702
|
6,934
|
Pension surplus
|
605
|
109
|
714
|
1,013
|
Present value of unfunded
obligations
|
(14)
|
(10)
|
(24)
|
(24)
|
Retirement benefit
surplus
|
591
|
99
|
690
|
989
|
Deferred income tax
liability
|
(201)
|
(43)
|
(244)
|
(330)
|
Net retirement benefit surplus
|
390
|
56
|
446
|
659
|
Consolidated income statement
|
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
|
Note
|
Underlying
|
Non-underlying items (Note
3)
|
Total
|
Underlying
|
Non-underlying items (Note 3)
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
4
|
32,721
|
(21)
|
32,700
|
31,491
|
-
|
31,491
|
Cost of sales
|
|
(30,127)
|
(139)
|
(30,266)
|
(28,996)
|
(413)
|
(29,409)
|
Impairment loss on financial
assets
|
|
(98)
|
-
|
(98)
|
(78)
|
-
|
(78)
|
Gross profit/(loss)
|
|
2,496
|
(160)
|
2,336
|
2,417
|
(413)
|
2,004
|
Administrative expenses
|
|
(1,553)
|
(309)
|
(1,862)
|
(1,480)
|
(35)
|
(1,515)
|
Other income
|
|
52
|
6
|
58
|
35
|
38
|
73
|
Operating profit/(loss)
|
|
995
|
(463)
|
532
|
972
|
(410)
|
562
|
Finance income
|
7
|
30
|
51
|
81
|
18
|
56
|
74
|
Finance costs
|
7
|
(324)
|
(12)
|
(336)
|
(300)
|
(9)
|
(309)
|
Profit/(loss) before tax
|
|
701
|
(424)
|
277
|
690
|
(363)
|
327
|
|
|
|
|
|
|
|
|
Income tax
(expense)/credit
|
8
|
(185)
|
45
|
(140)
|
(157)
|
37
|
(120)
|
Profit/(loss) for the financial year
|
|
516
|
(379)
|
137
|
533
|
(326)
|
207
|
|
|
|
|
|
|
|
|
Earnings per share
|
9
|
pence
|
|
pence
|
pence
|
|
pence
|
Basic earnings
|
|
22.1
|
|
5.9
|
23.0
|
|
9.0
|
Diluted earnings
|
|
21.6
|
|
5.7
|
22.7
|
|
8.8
|
Consolidated statement of comprehensive
income/(loss)
|
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
|
Note
|
£m
|
£m
|
Profit for the financial year
|
|
137
|
207
|
|
|
|
|
Items that will not be subsequently reclassified to the
income statement
|
|
|
|
Remeasurement on defined benefit
pension schemes
|
19
|
(389)
|
(1,398)
|
Movements on financial assets at
fair value through other comprehensive income
|
|
1
|
1
|
Cash flow hedges fair value
movements - inventory hedges
|
|
(67)
|
123
|
Current tax relating to items not
reclassified
|
|
10
|
25
|
Deferred tax relating to items not
reclassified
|
|
177
|
322
|
|
|
(268)
|
(927)
|
Items that may be subsequently reclassified to the income
statement
|
|
|
|
Currency translation
differences
|
|
(3)
|
4
|
Movements on financial assets at
fair value through other comprehensive income
|
|
-
|
1
|
Items reclassified from financial
assets at fair value through other comprehensive income
reserve
|
|
-
|
(1)
|
Cash flow hedges fair value
movements - non-inventory hedges
|
|
(82)
|
(30)
|
Items reclassified from cash flow
hedge reserve
|
|
4
|
(18)
|
Deferred tax on items that may be
reclassified
|
|
17
|
14
|
|
|
(64)
|
(30)
|
Total other comprehensive loss for the year (net of
tax)
|
|
(332)
|
(957)
|
Total comprehensive loss for the year
|
|
(195)
|
(750)
|
Consolidated balance sheet
|
|
2 March
2024
|
4 March
2023
|
|
Note
|
£m
|
£m
|
Non-current assets
|
|
|
|
Property, plant and
equipment
|
11
|
9,282
|
8,201
|
Right-of-use assets
|
12
|
4,296
|
5,345
|
Intangible assets
|
13
|
806
|
1,024
|
Investments in joint ventures and
associates
|
|
2
|
2
|
Financial assets at fair value
through other comprehensive income
|
|
761
|
515
|
Trade and other
receivables
|
|
108
|
56
|
Amounts due from Financial
Services customers and other banks
|
|
1,467
|
1,908
|
Derivative financial
assets
|
|
68
|
217
|
Net retirement benefit
surplus
|
19
|
690
|
989
|
|
|
17,480
|
18,257
|
Current assets
|
|
|
|
Inventories
|
|
1,927
|
1,899
|
Trade and other
receivables
|
|
582
|
627
|
Amounts due from Financial
Services customers and other banks
|
|
3,050
|
3,484
|
Financial assets at fair value
through other comprehensive income
|
|
17
|
494
|
Derivative financial
assets
|
|
8
|
70
|
Cash and cash
equivalents
|
16
|
1,987
|
1,319
|
|
|
7,571
|
7,893
|
Assets held for sale
|
|
10
|
8
|
|
|
7,581
|
7,901
|
Total assets
|
|
25,061
|
26,158
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other
payables
|
|
(5,091)
|
(4,837)
|
Amounts due to Financial Services
customers and other deposits
|
|
(5,515)
|
(4,880)
|
Borrowings
|
18
|
(65)
|
(53)
|
Lease liabilities
|
12
|
(515)
|
(1,533)
|
Derivative financial
liabilities
|
|
(28)
|
(16)
|
Taxes payable
|
|
(125)
|
(155)
|
Provisions
|
15
|
(113)
|
(140)
|
|
|
(11,452)
|
(11,614)
|
Net current liabilities
|
|
(3,871)
|
(3,713)
|
Non-current liabilities
|
|
|
|
Trade and other
payables
|
|
(11)
|
-
|
Amounts due to Financial Services
customers and other deposits
|
|
(206)
|
(1,066)
|
Borrowings
|
18
|
(1,130)
|
(603)
|
Lease liabilities
|
12
|
(4,839)
|
(4,956)
|
Derivative financial
liabilities
|
|
(59)
|
(58)
|
Deferred income tax
liability
|
|
(329)
|
(476)
|
Provisions
|
15
|
(167)
|
(132)
|
|
|
(6,741)
|
(7,291)
|
Total liabilities
|
|
(18,193)
|
(18,905)
|
Net assets
|
|
6,868
|
7,253
|
|
|
|
|
Equity
|
|
|
|
Called up share capital
|
|
678
|
672
|
Share premium
|
|
1,430
|
1,418
|
Merger reserve
|
|
568
|
568
|
Capital redemption and other
reserves
|
|
955
|
954
|
Retained earnings
|
|
3,237
|
3,641
|
Total equity shareholders' funds
|
|
6,868
|
7,253
|
Consolidated statement of changes in equity
|
|
Called up share
capital
|
Share premium
account
|
Merger
reserve
|
Capital redemption and other
reserves
|
Retained
earnings
|
Total
equity
|
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 5 March 2023
|
|
672
|
1,418
|
568
|
954
|
3,641
|
7,253
|
Profit for the financial
year
|
|
-
|
-
|
-
|
-
|
137
|
137
|
Other comprehensive
loss
|
|
-
|
-
|
-
|
(147)
|
(389)
|
(536)
|
Tax relating to other
comprehensive loss
|
|
-
|
-
|
-
|
99
|
105
|
204
|
Total comprehensive loss
|
|
-
|
-
|
-
|
(48)
|
(147)
|
(195)
|
|
|
|
|
|
|
|
|
Cash flow hedges losses
transferred to inventory
|
|
-
|
-
|
-
|
32
|
-
|
32
|
|
|
|
|
|
|
|
|
Transactions with
owners:
|
|
|
|
|
|
|
|
Dividends
|
10
|
-
|
-
|
-
|
-
|
(306)
|
(306)
|
Share-based payment
|
|
-
|
-
|
-
|
-
|
87
|
87
|
Purchase of own shares
|
|
-
|
-
|
-
|
(18)
|
-
|
(18)
|
Allotted in respect of share
option schemes
|
|
6
|
12
|
-
|
35
|
(38)
|
15
|
At 2 March 2024
|
|
678
|
1,430
|
568
|
955
|
3,237
|
6,868
|
|
|
Called
up share capital
|
Share
premium account
|
Merger
reserve
|
Capital
redemption and other reserves
|
Retained
earnings
|
Total
equity
|
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 6 March 2022
|
|
668
|
1,406
|
568
|
1,021
|
4,760
|
8,423
|
Profit for the financial
year
|
|
-
|
-
|
-
|
-
|
207
|
207
|
Other comprehensive
income/(loss)
|
|
-
|
-
|
-
|
80
|
(1,398)
|
(1,318)
|
Tax relating to other
comprehensive income/(loss)
|
|
-
|
-
|
-
|
14
|
347
|
361
|
Total comprehensive
income/(loss)
|
|
-
|
-
|
-
|
94
|
(844)
|
(750)
|
|
|
|
|
|
|
|
|
Cash flow hedges losses
transferred to inventory
|
|
-
|
-
|
-
|
(139)
|
-
|
(139)
|
Transactions with
owners:
|
|
|
|
|
|
|
|
Dividends
|
10
|
-
|
-
|
-
|
-
|
(319)
|
(319)
|
Share-based payment
|
|
-
|
-
|
-
|
-
|
58
|
58
|
Purchase of own shares
|
|
-
|
-
|
-
|
(45)
|
-
|
(45)
|
Allotted in respect of share
option schemes
|
|
4
|
12
|
-
|
23
|
(26)
|
13
|
Other adjustments
|
|
-
|
-
|
-
|
-
|
5
|
5
|
Tax on items charged to
equity
|
|
-
|
-
|
-
|
-
|
7
|
7
|
At 4 March 2023
|
|
672
|
1,418
|
568
|
954
|
3,641
|
7,253
|
Consolidated cash flow statement
|
|
52 weeks to 2 March
2024
|
52 weeks
to 4 March 2023
|
|
Note
|
£m
|
£m
|
Cash flows from operating activities
|
|
|
|
Profit before tax
|
|
277
|
327
|
Net finance costs
|
7
|
255
|
235
|
Operating profit
|
|
532
|
562
|
Depreciation
|
11,12
|
989
|
1,036
|
Amortisation
|
13
|
189
|
172
|
Net impairment loss on
non-financial assets
|
11,12,13
|
235
|
315
|
Profit on sale of non-current
assets and early termination of leases
|
|
(2)
|
(15)
|
Non-underlying fair value
movements
|
3
|
46
|
29
|
Share-based payments
expense
|
|
89
|
59
|
Defined benefit scheme
expense/(income)
|
19
|
7
|
(2)
|
Cash contributions to defined
benefit scheme
|
19
|
(44)
|
(44)
|
Operating cash flows before changes in working
capital
|
|
2,041
|
2,112
|
Decrease/(increase) in
inventories
|
|
5
|
(105)
|
Decrease in financial assets at
fair value through other comprehensive income
|
|
(135)
|
(207)
|
(Increase)/decrease in trade and
other receivables
|
|
(5)
|
53
|
Decrease/(increase) in amounts due
from Financial Services customers and other deposits
|
|
459
|
(231)
|
Increase in trade and other
payables
|
|
214
|
280
|
(Decrease)/increase in amounts due
to Financial Services customers and other deposits
|
|
(225)
|
687
|
Increase in provisions
|
|
8
|
-
|
Cash generated from operations
|
|
2,362
|
2,589
|
Interest paid
|
|
(336)
|
(316)
|
Corporation tax paid
|
|
(61)
|
(103)
|
Net cash generated from operating
activities
|
|
1,965
|
2,170
|
|
|
|
|
Cash flows from investing activities
|
|
|
|
Purchase of property, plant and
equipment
|
|
(1,381)
|
(525)
|
Initial direct costs on new
leases
|
|
(6)
|
(16)
|
Purchase of intangible
assets
|
|
(178)
|
(213)
|
Proceeds from disposal of
property, plant and equipment
|
|
77
|
29
|
Proceeds from disposal of amounts
due from Financial Services customers
|
|
446
|
-
|
Interest received
|
|
27
|
15
|
Dividends and distributions
received
|
|
-
|
1
|
Net cash used in investing activities
|
|
(1,015)
|
(709)
|
|
|
|
|
Cash flows from financing activities
|
|
|
|
Proceeds from issuance of ordinary
shares
|
|
15
|
13
|
Proceeds from
borrowings
|
18
|
575
|
-
|
Repayment of borrowings
|
|
(41)
|
(95)
|
Purchase of own shares
|
|
(18)
|
(45)
|
Capital repayment of lease
obligations
|
|
(507)
|
(514)
|
Dividends paid on ordinary
shares
|
10
|
(306)
|
(319)
|
Net cash used in financing activities
|
|
(282)
|
(960)
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
668
|
501
|
|
|
|
|
Opening cash and cash
equivalents
|
|
1,319
|
818
|
Closing cash and cash equivalents
|
16
|
1,987
|
1,319
|
The Group now classifies interest
received within cash flows from investing activities to provide
greater clarity over the Group's cash flows whereby such cash flows
had previously been included within cash generated from operations.
The 2023 amounts have therefore been re-presented whereby cash
generated from operations and cash flows from investing activities
were previously £2,604 million and £(724) million
respectively.
Notes to the consolidated financial
statements
1
General information
The financial information, which
comprises the Consolidated income statement, Consolidated statement
of comprehensive income, Consolidated balance sheet, Consolidated
cash flow statement, Consolidated statement of changes in equity
and related notes, is derived from the full Consolidated financial
statements for the 52 weeks to 2 March 2024 (prior financial year:
52 weeks to 4 March 2023) and does not constitute full accounts
within the meaning of section 435 (1) and (2) of the Companies Act
2006.
The Annual Report and Financial
Statements 2024 on which the auditors have given an unqualified
report and which does not contain a statement under section 498 (2)
or (3) of the Companies Act 2006, will be delivered to the
Registrar of Companies in due course, and made available to
shareholders in June 2024.
J Sainsbury plc is a public
limited company (the 'Company') incorporated in the United Kingdom,
whose shares are publicly traded on the London Stock Exchange. The
Company is domiciled in the United Kingdom and its registered
address is 33 Holborn, London EC1N 2HT, United Kingdom.
The consolidated financial
statements for the 52 weeks to 2 March 2024 comprise the financial
statements of the Company and its subsidiaries (the 'Group') and
the Group's share of the post-tax results of its joint ventures and
associates.
The Group's principal activities
are Food, General Merchandise and Clothing retailing and Financial
Services.
2
Basis of preparation
The Group's financial statements
have been prepared in accordance with UK-adopted international
accounting standards.
They have been prepared under the
historical cost convention, except for derivative financial
instruments, defined benefit pension scheme assets and financial
assets at fair value through other comprehensive income
(FVOCI).
Sainsbury's Bank plc and its
subsidiaries have been consolidated for the twelve months to 29
February 2024 being the Bank's year-end date (2023: 28 February
2023). Adjustments have been made for the effects of significant
transactions or events that occurred between this date and the
Group's balance sheet date.
Unless otherwise stated, material
accounting policies have been applied consistently to all periods
presented in the financial statements although certain
presentational changes have been made with the objective of
simplification and to assist in and aid the users'
understanding.
2.1 Going concern
The Directors are satisfied that
the Group has sufficient resources to continue in operation for a
period of at least 12 months from the date of approval.
Accordingly, they continue to adopt the going concern basis in
preparing the financial statements. The assessment period for the
purposes of considering going concern is the 12 months to 24 April
2025.
In assessing the Group's ability
to continue as a going concern, the Directors have considered the
Group's most recent corporate planning and budgeting processes.
This includes an annual review which considers profitability, the
Group's cash flows, committed funding and liquidity positions and
forecasted future funding requirements over three years, with a
further year of indicative movements.
The Group manages its financing by
diversifying funding sources, structuring core borrowings with
phased maturities to manage refinancing risk and maintaining
sufficient levels of standby liquidity via the Revolving Credit
Facility. This seeks to minimise liquidity risk by maintaining a
suitable level of undrawn additional funding capacity.
The Revolving Credit Facility of
£1,000 million comprises two £500 million facilities which were
both extended by a further 12 months during the year. Facility A
has a final maturity of December 2028 and Facility B has a final
maturity of December 2027. As at 2 March 2024, the Revolving Credit
Facility was undrawn.
In assessing going concern,
scenarios in relation to the Group's principal risks have been
considered in line with those disclosed in the viability statement
by overlaying them into the corporate plan and assessing the impact
on cash flows, net debt and funding headroom. These severe but
plausible scenarios included modelling inflationary pressures on
both food margins and general recession-related risks, the impact
of any regulatory fines, and the failure to deliver planned cost
savings.
In performing the above analysis,
the Directors have made certain assumptions around the availability
and effectiveness of the mitigating actions available to the Group.
These include reducing any non-essential capital expenditure and
operating expenditure on projects, bonus and pay awards, and
dividend payments.
The Group's most recent corporate
planning and budgeting processes includes assumed cashflows to
address climate change risks, including costs associated with
initiatives in place as part of the Plan for Better commitment
which include reducing environmental impacts and meeting customer
expectations in this area, notably through reducing packaging and
reducing energy usage across the estate. Climate-related risks do
not result in any material uncertainties affecting the Group's
ability to continue as a going concern.
Specific additional consideration
has been given to the impacts of the strategic review of the
Financial Services division. The strategy change introduces
new or amended risks in respect of liquidity and capital adequacy
which arise from the move to offer financial services products by
dedicated financial services providers and the phased withdrawal
from the core banking business. Taking into account the current and
forecast levels of liquidity and capital together with the related
headroom, the Directors have considered and assessed the potential
impact of the strategic change and the risks arising thereon.
The evaluation has included the quantification of any potentially
adverse impacts of customer behaviour as well as the timing of
repayment of external funding. Having undertaken this assessment,
the Directors are satisfied that the Bank has sufficient liquidity
and capital resources to withstand severe but plausible adverse
scenarios stemming from the risks of the strategic change, prior to
any additional mitigating actions being taken. In the event of any
mitigations being required, the Directors are confident that
additional liquidity could be raised through future asset
securitisations or other sources of funding. Accordingly, it has
been concluded that this does not result in any material
uncertainties affecting the Group's ability to continue as a going
concern.
As a consequence of the work
performed, the Directors considered it appropriate to adopt the
going concern basis in preparing the Financial Statements with no
material uncertainties to disclose.
2.2 New accounting pronouncements
New accounting standards,
amendments to standards and IFRIC interpretations which became
applicable during the year or have been published but are not yet
effective, were either not relevant or had no impact, or no
material impact, on the Group's results or net assets.
In respect of IFRS 17 Insurance
Contracts, which became effective for the current financial year,
an assessment was made as to whether any of the Group's
arrangements met the definition of an insurance contract. While
some contracts may transfer an element of insurance risk, they
relate to warranty agreements and therefore will continue to be
accounted for under the existing revenue and provisions standards.
The Group has identified that IFRS 17 will impact the results of
its captive insurance company as it issues insurance contracts,
however the impact on the income statement and balance sheet is
immaterial. The Group has also assessed its parent company
guarantee arrangements but concluded that the adoption of IFRS 17
has no impact on these.
The accounting policies have
remained unchanged from those disclosed in the Annual Report for
the financial year ended 4 March 2023.
2.3 Alternative Performance Measures (APMs)
In the reporting of financial
information, the Directors use various APMs. These APMs should be
considered in addition to, and are not intended to be a substitute
for, IFRS measurements. As they are not defined by International
Financial Reporting Standards, they may not be directly comparable
with other companies' APMs.
The Directors believe that these
APMs provide additional useful information for understanding the
financial performance and health of the Group. They are also used
to enhance the comparability of information between reporting
periods (such as like-for-like sales and underlying performance
measures) by adjusting for non-recurring factors which affect IFRS
measures, and to aid users in understanding the Group's
performance. Consequently, APMs are used by the Directors and
management for performance analysis, planning, reporting and
incentive setting purposes.
The income statement shows the
non-underlying items excluded from reported results to determine
underlying results with a more detailed analysis of the
non-underlying items set out in note 3. Other APMs are
detailed in notes A1, A2, A3 and A4 of this report which includes
further information on the definition, purpose and reconciliation
to the closest IFRS measure. APMs used by the Group are consistent
with those used in the prior financial year.
2.4 Asset acquisition
During the financial year the
Group purchased Supermarket Income REIT's beneficial interest in a
commercial property investment pool, in which the Group already
held a beneficial interest, through the acquisition of Hobart
Property plc, Avenell Property plc, Horndrift Limited and
Cornerford Limited. The Group signed a Master Framework Agreement
on 13 March 2023 subject to certain conditions being met including
providing sufficient up-front funding to the Security Trustee for
them to redeem each of the bond liabilities attached to the
property pools. These investment pools consisted of 26 supermarket
stores, all of which were formerly leased to Sainsbury's. Of the 26
stores acquired, 21 stores have been retained and one store has
been vacated and recognised within assets held for sale. The
remaining four stores have been sold and leased back to the
Group.
The Group considered both the
optional 'concentration test' and the 'substantive process test'
set out within IFRS 3 Business Combinations to assess whether the
assets and liabilities acquired in the transaction constituted a
business. The value of investment properties represented
substantially all of the fair value of the gross assets acquired
and as such the transaction has been accounted for as an asset
acquisition, with a corresponding derecognition of lease
liabilities and right of use assets whereby the Group already had a
beneficial interest in these assets.
The impact of this transaction on
the Group's accounts is set out in notes to the financial
statements and is summarised as follows.
The Group recognised £1,021
million of property, plant and equipment for the stores acquired
and derecognised £1,042 million in lease liabilities and £1,031
million in right-of-use assets respectively as a result of the
transaction. The net difference in the lease liabilities and
right-of-use assets derecognised is included within the recognition
of the property, plant and equipment. The lease balances had
included the payment of purchase options at the end of the lease
terms, which were rescinded as part of the transaction.
The total consideration paid for
the asset acquisition was £731 million. As part of the purchase
agreement, the Group pre-funded £170 million of consideration in
escrow for the benefit of the Security Trustee on 14 March 2023, to
enable them to redeem the Avenell Bond on 20 March 2023. Similarly,
the Group pre-funded £130 million of consideration in escrow for
the benefit of the Security Trustee on 5 July 2023, to enable them
to redeem the Hobart Bond on 13 July 2023.
The total consideration paid of
£731 million, including the pre-funded £300 million noted above, is
all presented within the Group cashflow statement as investing
activities within purchases of property, plant and
equipment.
Proceeds of £61 million were
received for the four stores sold and leased back. As the proceeds
in the sale and leaseback were equal to the fair value of the
assets sold, these cashflows have been presented within investing
cashflows.
Previously the Group had held a
portion of the beneficial interest in this commercial property
investment pool, recognised within financial assets at FVOCI. This
balance of £366 million was fully derecognised as part of the
acquisition.
The asset acquisition is referred
to as the Highbury & Dragon property transaction.
3
Non-underlying
items
|
|
|
2024
|
|
|
2023
|
|
Restructuring and
impairment
|
Pensions
|
Other
|
Total
|
Restructuring and impairment
|
Pensions
|
Other
|
Total
|
|
3.1
|
3.2
|
3.3
|
|
3.1
|
3.2
|
3.3
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Revenue
|
(21)
|
-
|
-
|
(21)
|
-
|
-
|
-
|
-
|
Cost of sales
|
(73)
|
-
|
(66)
|
(139)
|
(384)
|
-
|
(29)
|
(413)
|
Administrative
(expense)/income
|
(273)
|
(7)
|
(29)
|
(309)
|
(14)
|
2
|
(23)
|
(35)
|
Other income
|
-
|
-
|
6
|
6
|
11
|
-
|
27
|
38
|
Affecting operating profit
|
(367)
|
(7)
|
(89)
|
(463)
|
(387)
|
2
|
(25)
|
(410)
|
Net finance
(costs)/income
|
(1)
|
51
|
(11)
|
39
|
-
|
56
|
(9)
|
47
|
Affecting profit before tax
|
(368)
|
44
|
(100)
|
(424)
|
(387)
|
58
|
(34)
|
(363)
|
Income tax credit
|
|
|
|
45
|
|
|
|
37
|
Affecting profit after tax
|
|
|
|
(379)
|
|
|
|
(326)
|
The impact of non-underlying items
on Retail cash generated from operations is presented in note
A2.2.
3.1 Restructuring and
impairment
Comprises restructuring charges of
£368 million (2023: £106 million) and non-restructuring related
impairment charges of £nil million (2023: £281 million, all of
which was recognised within cost of sales).
a) Restructuring
Financial Services model
In January 2024, the Group
announced that financial services products to be offered in the
future will be provided by dedicated financial services providers
through a distributed model and over time this would result in a
phased withdrawal from the core Banking business. Costs associated
with this restructuring are set out in the table below with key
components comprising full impairment of non-financial assets
(comprising mainly computer software for which the level of
activities which it was designed to fulfil is now significantly
curtailed in terms of both volume and period use), additional
allowances arising from a reassessment of the effective interest
rate applied to the amortised cost of financial assets, onerous
contracts and goodwill. Further costs associated with this
restructuring will be incurred in future years once more detailed
plans to execute these changes are formulated and
communicated.
Sainsbury's structural integration
In the year ended 6 March 2021,
the Group announced a restructuring programme to accelerate the
structural integration of Sainsbury's and Argos and further
simplify the Argos business; create a new supply chain and
logistics operating model, moving to a single integrated supply
chain and logistics network across Sainsbury's and Argos; and
further rationalise/repurpose the Group's supermarkets and
convenience estate. The programme also considered the Group's Store
Support Centre ways of working.
b) Non-Restructuring items
Impairments of non-financial assets
Separate from restructuring
initiatives and property related transactions, the Group has
assessed whether there were any indicators of impairment or
reversals of impairment. No indicators were present in the current
financial year which therefore resulted in no non-restructuring
related impairments or reversals of impairment. In the prior
financial year, the level of uncertainty within the wider
macroeconomic environment, including sustained increases in the
Bank of England gilt rates, represented an indicator of impairment.
It was determined that the increase in discount rates was a
significant impairment indicator and therefore a full impairment
review was undertaken.
Analysis of restructuring and non-restructuring impairment
items
|
|
|
|
2024
|
|
|
2023
|
|
|
Financial Services
model
|
Sainsbury's structural
integration
|
Total
|
Sainsbury's structural integration
|
Impairment of non-financial assets
|
Total
|
|
Note
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Non-financial asset
impairment
|
- Property, plant and
equipment
|
|
(9)
|
(1)
|
(10)
|
(8)
|
(141)
|
(149)
|
- Right-of-use assets
|
|
(3)
|
(3)
|
(6)
|
(21)
|
(122)
|
(143)
|
- Intangible assets
|
|
(200)
|
-
|
(200)
|
(5)
|
(18)
|
(23)
|
|
|
(212)
|
(4)
|
(216)
|
(34)
|
(281)
|
(315)
|
Accelerated depreciation of
assets
|
a)
|
-
|
(19)
|
(19)
|
(20)
|
-
|
(20)
|
Employee costs
|
b)
|
(8)
|
(33)
|
(41)
|
(54)
|
-
|
(54)
|
Onerous contracts
|
c)
|
(17)
|
-
|
(17)
|
-
|
-
|
-
|
Property closure
provisions
|
d)
|
-
|
(33)
|
(33)
|
1
|
-
|
1
|
Effective interest rate adjustment
to financial assets
|
e)
|
(21)
|
-
|
(21)
|
-
|
-
|
-
|
Other (costs)/gains
|
f)
|
(15)
|
(6)
|
(21)
|
1
|
-
|
1
|
|
|
(273)
|
(95)
|
(368)
|
(106)
|
(281)
|
(387)
|
a) The
remaining useful economic lives of corresponding sites have been
reassessed to align with closure dates, resulting in an
acceleration in depreciation of these assets. The existing
depreciation of these assets (depreciation that would have been
recognised absent of a closure decision) is recognised within
underlying expenses, whereas accelerated depreciation above this is
recognised within non-underlying expenses.
b)
Comprises severance costs and for the Financial services model also
includes retention bonuses relating to performance in
2024.
c)
Comprises long dated IT contracts where anticipated early
termination will result in unavoidable costs of meeting obligations
under the contracts which exceed the economic benefits expected to
be received under them. Costs represent the lower of the costs of
fulfilling contracts and the costs of terminating.
d) Relates to
onerous lease costs, dilapidations and strip out costs on sites
that have been identified for closure, as well as business rates
for sites the Group no longer operates from which are recognised as
incurred. The prior year includes amounts reversed in relation to
sites no longer being exited as part of the programme. Upon initial
recognition of such provisions, management uses its best estimates
of the relevant costs to be incurred as well as expected closure
dates.
e) The
withdrawal from core banking operations has a commercial impact
upon future management initiatives and actions which could lead to
different customer behaviours than previously forecasted. This
resulted in revised assumptions about customer behaviours which led
to a reduction in the amortised cost of financial assets (credit
cards) with the impacts being recognised in revenue.
f)
Other costs comprise predominantly consultancy costs offset by
profits recognised on properties sold during the financial year
which had previously been impaired as part of the restructuring
programme.
3.2 Pensions
Such amounts relate to the defined
benefit pension scheme (the Scheme) and are treated as
non-underlying owing to the Scheme being closed to future accrual
and accordingly not forming part of ongoing operating
activities.
3.3 Other
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Disposal of mortgage
book
|
a)
|
(14)
|
-
|
Legal disputes
|
b)
|
-
|
30
|
Property related
transactions
|
c)
|
(15)
|
(9)
|
Non-underlying finance and fair
value movements
|
d)
|
(56)
|
(38)
|
Acquisition adjustments
|
e)
|
(15)
|
(20)
|
ATM business rates
reimbursement
|
|
-
|
3
|
|
|
(100)
|
(34)
|
a) During
the period, the Group disposed of its mortgage portfolio for
proceeds of £446 million which resulted in a non-underlying charge
of £(14) million, included within administrative expenses, which
includes a loss on disposal including goodwill, transaction costs
and the recognition of onerous contract provisions.
b)
Consists of other income representing receipt from credit card
companies in respect of overcharges for credit card processing
(interchange) fees.
c)
Comprises an impairment charge of £19 million of property, plant
and equipment recognised in cost of sales as part of the asset
acquisition of 21 stores, whereby the asset base of these stores'
CGUs had significantly changed as a result of the transaction and
therefore were reviewed for impairment. Offset by a gain on
disposal of non-trading properties of £4 million recognised in
other income. (2023: loss on disposal of non-trading properties of
£3 million recognised in other income, and £6 million of costs
relating to a property transaction recognised in cost of sales and
administrative expenses).
d) Comprises £46
million (2023: £29 million) within cost of sales relating to
unfavourable movements on long-term, fixed price power purchase
arrangements (PPAs) with independent producers. These are
classified as derivatives which are not in a hedge relationship and
owing to potentially significant fluctuations in value from
external market factors are treated as non-underlying to enable
consistency between periods. Remaining movements of £10
million (2023: £9 million) are within net finance costs and relate
to lease interest paid on impaired non-trading sites.
e)
Comprises the unwind of non-cash fair value adjustments arising
from the Home Retail Group and Nectar UK acquisitions.
Classification as non-underlying is because these assets would not
normally be recognised outside of a business
combination.
4
Revenue
Disaggregated revenue
|
2024
|
2023
|
|
£m
|
£m
|
Retail
|
|
|
Grocery and General Merchandise
& Clothing (GM&C)
|
27,830
|
25,993
|
Fuel
|
4,254
|
4,967
|
|
32,084
|
30,960
|
Financial Services
|
|
|
Interest receivable
|
472
|
394
|
Fees and commissions
|
144
|
137
|
|
616
|
531
|
Total
|
32,700
|
31,491
|
5
Segment reporting
The Group's operating segments
have been determined based on the information regularly provided to
the Chief Operating Decision Maker (CODM), which has been
determined to be the Group Operating Board, which is used to make
optimal decisions on the allocation of resources and assess
performance.
The Group's reportable operating
segments have been identified as:
·
Retail: comprising the sale of food, household,
general merchandise, clothing and fuel primarily through store and
online channels.
·
Financial Services: comprising banking and
insurance services through Sainsbury's Bank and Argos Financial
Services.
The CODM uses underlying profit
before tax as the key measure of segmental performance as it
represents the ongoing trading performance with additional insight
into year-on-year performance that is more comparable over time.
The use of underlying profit before tax aims to provide parity and
transparency between users of the financial statements and the CODM
in assessing the core performance of the business and performance
of management.
Segment results, assets and
liabilities include items directly attributable to a segment as
well as those that can be allocated on a reasonable basis. Segment
capital expenditure is the total cost incurred during the period to
acquire segment assets that are expected to be used for more than
one period.
5.1 Income
statement
|
|
|
|
2024
|
|
|
2023
|
|
|
Retail
|
Financial
Services
|
Group
|
Retail
|
Financial
Services
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Underlying revenue
|
|
|
|
|
|
|
|
Retail sales to
customers
|
|
32,084
|
-
|
32,084
|
30,960
|
-
|
30,960
|
Financial Services to
customers
|
|
-
|
637
|
637
|
-
|
531
|
531
|
|
|
32,084
|
637
|
32,721
|
30,960
|
531
|
31,491
|
|
|
|
|
|
|
|
|
Underlying operating profit
|
|
966
|
29
|
995
|
926
|
46
|
972
|
Underlying finance
income
|
|
30
|
-
|
30
|
18
|
-
|
18
|
Underlying finance
costs
|
|
(324)
|
-
|
(324)
|
(300)
|
-
|
(300)
|
Underlying profit before tax
|
|
672
|
29
|
701
|
644
|
46
|
690
|
Non-underlying items
|
|
|
|
(424)
|
|
|
(363)
|
Profit before tax
|
|
|
|
277
|
|
|
327
|
Income tax expense
|
|
|
|
(140)
|
|
|
(120)
|
Profit for the financial year
|
|
|
|
137
|
|
|
207
|
5.2 Balance
sheet
|
|
|
|
2024
|
|
|
2023
|
|
|
Retail
|
Financial
Services
|
Group
|
Retail
|
Financial
Services
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Assets
|
|
18,288
|
6,771
|
25,059
|
18,925
|
7,231
|
26,156
|
Investments in joint ventures and
associates
|
|
2
|
-
|
2
|
2
|
-
|
2
|
Segment assets
|
|
18,290
|
6,771
|
25,061
|
18,927
|
7,231
|
26,158
|
Segment liabilities
|
|
(12,171)
|
(6,022)
|
(18,193)
|
(12,584)
|
(6,321)
|
(18,905)
|
5.3 Other segment
items
|
|
|
|
2024
|
|
|
2023
|
|
|
Retail
|
Financial
Services
|
Group
|
Retail
|
Financial
Services
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Additions to non-current
assets
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
1,654
|
1
|
1,655
|
532
|
2
|
534
|
Intangible assets
|
|
165
|
13
|
178
|
194
|
19
|
213
|
Right-of-use
assets
|
|
435
|
3
|
438
|
398
|
-
|
398
|
Depreciation expense
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
538
|
1
|
539
|
565
|
1
|
566
|
Right-of-use
assets
|
|
449
|
1
|
450
|
469
|
1
|
470
|
Amortisation expense
|
|
|
|
|
|
|
|
Intangible assets
|
|
159
|
30
|
189
|
141
|
31
|
172
|
Impairment of non-financial
assets
|
|
23
|
174
|
197
|
301
|
-
|
301
|
Impairment of goodwill
|
|
-
|
38
|
38
|
14
|
-
|
14
|
Impairment (reversal)/ loss on
financial assets
|
|
(4)
|
102
|
98
|
2
|
76
|
78
|
Share based payments
|
|
83
|
6
|
89
|
54
|
5
|
59
|
5.4 Geographical
segments
In the current year and the prior
year, the Group predominantly traded in the UK and the Republic of
Ireland and consequently the majority of revenues, capital
expenditure and segment net assets arise there. The profits,
revenues and assets of the businesses in the Republic of Ireland
are not material.
6
Supplier arrangements
The types of supplier arrangements
applicable to the Group are as follows:
· Discounts and supplier incentives: Represent the majority of
all supplier arrangements and are linked to individual unit sales.
The incentive is typically based on an agreed sum per item sold on
promotion for a period and therefore is considered part of the
purchase price of that product.
· Fixed amounts: Agreed with suppliers primarily to support
in-store activity including promotions, such as utilising specific
space.
· Supplier rebates: Typically agreed on an annual basis,
aligned with the Group's financial year. The rebate amount is
linked to pre-agreed targets such as sales volumes.
· Marketing and advertising income: Advertising income from
suppliers and online marketing and advertising campaigns within
Argos.
Recognised in income statement
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Fixed amounts
|
|
271
|
192
|
Supplier rebates
|
|
76
|
94
|
Marketing and advertising
income
|
|
134
|
97
|
|
|
481
|
383
|
Discounts and supplier incentives
are not shown as they are deemed to be part of the cost price of
inventory.
Held on the balance sheet
|
|
2024
|
2023
|
|
|
£m
|
£m
|
Within inventory
|
|
(3)
|
(4)
|
Within current trade receivables
|
|
|
|
Supplier arrangements
due
|
|
47
|
45
|
Accrued supplier
arrangements
|
|
48
|
43
|
Within current trade payables
|
|
|
|
Supplier arrangements
due
|
|
39
|
49
|
Accrued supplier
arrangements
|
|
1
|
2
|
Total supplier arrangements
|
|
132
|
135
|
7
Finance income and
finance costs
|
2024
|
2023
|
|
Underlying
|
Non-underlying
|
Total
|
Underlying
|
Non-underlying
|
Total
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Interest on bank deposits and
other financial assets
|
28
|
-
|
28
|
16
|
-
|
16
|
IAS 19 pension financing
income
|
-
|
51
|
51
|
-
|
56
|
56
|
Finance income on net investment
in leases
|
2
|
-
|
2
|
2
|
-
|
2
|
Finance Income
|
30
|
51
|
81
|
18
|
56
|
74
|
|
|
|
|
|
|
|
Secured borrowings
|
(38)
|
-
|
(38)
|
(41)
|
-
|
(41)
|
Unsecured borrowings
|
(33)
|
-
|
(33)
|
(1)
|
-
|
(1)
|
Lease liabilities
|
(253)
|
(11)
|
(264)
|
(258)
|
(9)
|
(267)
|
Provisions - amortisation of
discount
|
-
|
(1)
|
(1)
|
-
|
-
|
-
|
Finance costs
|
(324)
|
(12)
|
(336)
|
(300)
|
(9)
|
(309)
|
8
Taxation
8.1 Income
statement
|
2024
|
2023
|
|
£m
|
£m
|
Current tax
|
|
|
UK Corporation tax
|
100
|
105
|
Overseas tax
|
-
|
3
|
(Over)/under provision in prior
years
|
(4)
|
2
|
|
96
|
110
|
Deferred Tax
|
|
|
Origination and reversal of
temporary differences
|
24
|
9
|
(Over)/under provision in prior
years
|
(19)
|
3
|
Adjustment from change in
applicable rate of deferred tax
|
(1)
|
(2)
|
Derecognition of capital
losses
|
40
|
-
|
|
44
|
10
|
|
|
|
Total income tax expense
|
140
|
120
|
|
|
|
Analysed as:
|
|
|
Underlying tax
|
185
|
157
|
Non-underlying tax
|
(45)
|
(37)
|
Total income tax expense
|
140
|
120
|
|
|
|
Underlying tax rate
|
26.4%
|
22.8%
|
Effective tax rate
|
50.5%
|
36.7%
|
The Spring Budget on 21 March 2023
confirmed the introduction of Pillar Two reporting requirements for
the UK, and were enacted on 18 July 2023, confirming that the rules
will apply to the Group for the period ending 1 March 2025. Pillar
Two reporting introduced a global minimum 15 per cent tax rate by
the end of 2023 and the Group will be required to file certain
returns evidencing the payment of tax at this rate. The potential
impact of this has been assessed based on the most recent tax
filings, country by country reporting and financial statements for
the constituent entities in the Group, and it is not considered
that there is a material top up tax liability at this stage under
the transitional safe harbour rules.
It is unclear if the Pillar Two
model rules create additional temporary differences, whether to
remeasure deferred taxes and which tax rate to use to measure
deferred taxes. The Group has therefore applied the mandatory
temporary exception in the amended IAS 12 'Income taxes' from the
requirement to recognise or disclose information about deferred tax
assets and liabilities related to the proposed Pillar Two model
rules.
9
Earnings per
share
The calculations of basic and
underlying basic earnings per share are based on profit after tax
and underlying profit after tax for the financial year,
respectively, divided by the weighted average number of Ordinary
shares in issue during the year, excluding own shares held by the
Employee Share Ownership Trust (ESOT).
Underlying earnings per share
figures, which represent alternative performance measures as
defined in note 2.3, have been calculated based on earnings before
non-underlying items which are set out in note 3.
Diluted and underlying diluted
earnings per share are calculated on the same basis as basic and
underlying basic earnings per share, but where the weighted average
share numbers has also been adjusted for the weighted average
effects of potentially dilutive shares. Such potentially dilutive
shares comprise share options and awards granted to employees,
where the scheme to date performance is deemed to have been
earned.
|
2024
|
2023
|
|
million
|
million
|
Weighted average number of shares
in issue for calculating basic earnings per share
|
2,334.8
|
2,312.6
|
Weighted average number of
dilutive share options
|
59.2
|
39.6
|
Weighted average number of shares in issue for calculating
diluted earnings per share
|
2,394.0
|
2,352.2
|
|
|
|
|
£m
|
£m
|
Profit attributable to ordinary shareholders of the
parent
|
137
|
207
|
|
|
|
Adjustment for non-underlying
items net of tax
|
379
|
326
|
Profit attributable to ordinary shareholders of the parent -
underlying
|
516
|
533
|
|
|
|
Earnings per share
|
Pence per
share
|
Pence
per share
|
Basic
|
5.9
|
9.0
|
Diluted
|
5.7
|
8.8
|
Underlying basic
|
22.1
|
23.0
|
Underlying diluted
|
21.6
|
22.7
|
10
Dividends
|
2024
|
2023
|
2024
|
2023
|
|
pence
per
share
|
pence
per share
|
£m
|
£m
|
Amounts recognised as distributions to ordinary
shareholders
|
|
|
|
|
Final dividend for financial year
ended 5 March 2022
|
-
|
9.9
|
-
|
229
|
Interim dividend for financial
year ended 4 March 2023
|
-
|
3.9
|
-
|
90
|
Final dividend for financial year
ended 4 March 2023
|
9.2
|
-
|
215
|
-
|
Interim dividend for financial
year ended 2 March 2024
|
3.9
|
-
|
91
|
-
|
|
13.1
|
13.8
|
306
|
319
|
|
|
|
|
|
Proposed final dividend at financial
year-end
|
9.2
|
|
217
|
|
The proposed final dividend was
approved by the Board on 24 April 2024 and is subject to
shareholders' approval at the Annual General Meeting. If approved,
it will be paid on 12 July 2024 to shareholders on the register as
at 7 June 2024. No amount for the proposed final dividend has been
recognised at the balance sheet date.
11 Property, plant and
equipment
|
|
|
|
2024
|
|
|
2023
|
|
|
Land and
buildings
|
Fixtures and
equipment
|
Total
|
Land and
buildings
|
Fixtures
and equipment
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cost
|
|
|
|
|
|
|
|
At beginning of financial
year
|
|
9,865
|
5,029
|
14,894
|
9,693
|
5,288
|
14,981
|
Acquisition
|
|
1,021
|
-
|
1,021
|
-
|
-
|
-
|
Additions
|
- Capitalised
expenditure
|
273
|
360
|
633
|
249
|
284
|
533
|
|
- Capitalised interest
|
|
1
|
-
|
1
|
1
|
-
|
1
|
Disposals
|
|
(1)
|
(470)
|
(471)
|
(71)
|
(540)
|
(611)
|
Transfer to assets held for
sale
|
|
(5)
|
-
|
(5)
|
(7)
|
(3)
|
(10)
|
At end of financial year
|
|
11,154
|
4,919
|
16,073
|
9,865
|
5,029
|
14,894
|
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment
|
|
|
|
|
|
|
|
At beginning of financial
year
|
|
3,153
|
3,540
|
6,693
|
2,917
|
3,662
|
6,579
|
Depreciation expense
|
|
186
|
353
|
539
|
184
|
382
|
566
|
Impairment loss
|
|
8
|
21
|
29
|
110
|
39
|
149
|
Disposals
|
|
-
|
(470)
|
(470)
|
(56)
|
(540)
|
(596)
|
Transfer to assets held for
sale
|
|
-
|
-
|
-
|
(2)
|
(3)
|
(5)
|
At end of financial year
|
|
3,347
|
3,444
|
6,791
|
3,153
|
3,540
|
6,693
|
|
|
|
|
|
|
|
|
Net book value
|
|
7,807
|
1,475
|
9,282
|
6,712
|
1,489
|
8,201
|
|
|
|
|
|
|
|
|
Capital work-in-progress included above
|
115
|
56
|
171
|
206
|
314
|
520
|
12
Leases
Group as a lessee
a) Right-of-use
assets
|
|
2024
|
2023
|
|
|
Land and
buildings
|
Equipment
|
Total
|
Land and
buildings
|
Equipment
|
Total
|
Net book value
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At beginning of financial
year
|
|
5,032
|
313
|
5,345
|
5,266
|
294
|
5,560
|
New leases and
modifications
|
|
334
|
104
|
438
|
283
|
115
|
398
|
Impairment loss
|
|
(6)
|
-
|
(6)
|
(142)
|
(1)
|
(143)
|
Depreciation expense
|
|
(353)
|
(97)
|
(450)
|
(375)
|
(95)
|
(470)
|
Derecognised as part of asset
acquisition
|
|
(1,031)
|
-
|
(1,031)
|
-
|
-
|
-
|
At end of financial year
|
|
3,976
|
320
|
4,296
|
5,032
|
313
|
5,345
|
b) Lease liabilities
|
2024
|
2023
|
|
£m
|
£m
|
At beginning of financial year
|
6,489
|
6,621
|
New leases and
modifications
|
414
|
382
|
Derecognised as part of asset
acquisition
|
(1,042)
|
-
|
Interest expense
|
264
|
267
|
Payments
|
(771)
|
(781)
|
At end of financial year
|
5,354
|
6,489
|
c) Maturity analysis
|
2024
|
2023
|
|
£m
|
£m
|
Contractual undiscounted cash flows
|
|
|
Less than 1 year
|
703
|
1,798
|
1 to 2 years
|
660
|
680
|
2 to 3 years
|
619
|
632
|
3 to 4 years
|
562
|
591
|
4 to 5 years
|
534
|
541
|
Total less than 5 years
|
3,078
|
4,242
|
5 to 10 years
|
2,467
|
2,473
|
10 to 15 years
|
1,779
|
1,981
|
More than 15 years
|
2,770
|
3,505
|
Total undiscounted lease liability
|
10,094
|
12,201
|
Lease liability in the balance sheet
|
5,354
|
6,489
|
Analysed
as:
|
|
|
Current
|
515
|
1,533
|
Non-current
|
4,839
|
4,956
|
13 Intangible assets
|
|
Goodwill
|
Computer
software
|
Acquired
brands
|
Customer
relationships
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Cost
|
|
|
|
|
|
|
At 5 March 2023
|
|
391
|
1,105
|
229
|
32
|
1,757
|
Additions
|
|
-
|
178
|
-
|
-
|
178
|
Disposals
|
|
(7)
|
(48)
|
-
|
-
|
(55)
|
At 2 March 2024
|
|
384
|
1,235
|
229
|
32
|
1,880
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
At 5 March 2023
|
|
39
|
495
|
167
|
32
|
733
|
Amortisation expense
|
|
-
|
171
|
18
|
-
|
189
|
Impairment loss
|
|
38
|
162
|
-
|
-
|
200
|
Disposals
|
|
-
|
(48)
|
-
|
-
|
(48)
|
At 2 March 2024
|
|
77
|
780
|
185
|
32
|
1,074
|
|
|
|
|
|
|
|
Net book value at 2 March 2024
|
|
307
|
455
|
44
|
-
|
806
|
|
|
|
|
|
|
|
Capital work-in-progress included above
|
|
-
|
44
|
-
|
-
|
44
|
|
|
|
|
|
|
|
Cost
|
|
|
|
|
|
|
At 6 March 2022
|
|
392
|
1,077
|
229
|
32
|
1,730
|
Additions
|
|
-
|
213
|
-
|
-
|
213
|
Disposals
|
|
(1)
|
(185)
|
-
|
-
|
(186)
|
At 4 March 2023
|
|
391
|
1,105
|
229
|
32
|
1,757
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
At 6 March 2022
|
|
26
|
521
|
147
|
30
|
724
|
Amortisation expense
|
|
-
|
150
|
20
|
2
|
172
|
Impairment loss
|
|
14
|
9
|
-
|
-
|
23
|
Disposals
|
|
(1)
|
(185)
|
-
|
-
|
(186)
|
At 4 March 2023
|
|
39
|
495
|
167
|
32
|
733
|
|
|
|
|
|
|
|
Net book value at 4 March 2023
|
|
352
|
610
|
62
|
-
|
1,024
|
|
|
|
|
|
|
|
Capital work-in-progress included above
|
|
-
|
48
|
-
|
-
|
48
|
14 Impairment of non-financial assets
14.1 Key assumptions in measuring
VIU
The recoverable amount of Retail
CGUs is measured at the higher of fair value less cost to dispose
and the value-in-use of cash flows expected to be independently
generated. For owned store related assets, a vacant possession
valuation is used as an approximation of fair value less cost to
dispose.
The announcement of the
restructuring of the Financial Services business as described
further in note 3, which will result in a phased withdrawal from
the core Banking business such that in future such services will be
offered by dedicated financial services providers, represented an
indicator of impairment, and as such full impairment review was
undertaken, with a value-in-use calculation adopted as the measure
of recoverability.
Cash flows and discount rate
Assumption
|
Retail Segment
|
Financial Services Segment
|
Cash flows
|
· Derived from the Board approved cash flow projections for
four years with an assumed growth rate of 2% beyond the four-year
forecast period.
·
owned stores: extrapolated into
perpetuity
·
leased stores: taken to lease end
·
properties identified for closure: remaining
period of trading.
· Online grocery are allocated to the individual store CGUs
which fulfil the online sales.
|
· Two scenarios of cash flow projection which assume a sale of
financial services products or a run down were prepared which
represent either end of a reasonably possible range of outcomes
that could occur and have been probability weighted in determining
value in use.
· Value in use has been derived from the Board approved cash
flow projections for four years, measured with reference to the
assets' remaining useful economic life that is being tested,
adjusted for any estimated reduction in life arising from the
phased withdrawal of the core banking business. For products not
directly impacted by the phased withdrawal, the assumed growth rate
of up to 2%, depending on product line, has been extrapolated
beyond management's four year forecast over the remaining useful
life of the assets.
|
Discount rate
|
· Post-tax rate representing the weighted average cost of
capital (WACC), subsequently grossed up to a pre-tax rate of
8.9%.
· Post-tax WACC calculated using the capital asset pricing
model, the inputs of which include a 20-year average risk-free rate
for the UK, a UK equity risk premium, levered debt premium and risk
adjustment and an average beta for the Group.
· Discount rate is applied consistently to all individual store
CGUs and the Group of CGUs supported by Sainsbury's or Argos
stores.
|
· Post-tax rate representing weighted average cost of capital
(WACC), subsequently grossed up to a pre-tax rate of
14.7%.
· Post-tax WACC calculated using a combination of adjusted
market analysis and the actual cost of debt on Tier 2 capital
instruments.
· Discount rate is applied consistently to all individual
product CGUs and the collective CGUs which support the
products.
|
For store pipeline development
sites, where there are plans to develop the store, the carrying
value of the asset is compared with its VIU using a methodology
consistent with the store CGU approach described above. Future cash
flows include the estimated costs to completion. For sites where
there is no plan to develop a store, the recoverable amount is
based on its fair value less costs to dispose.
14.2 Non-financial assets
a) Impairment charges
|
|
|
|
2024
|
|
|
2023
|
|
|
Retail
|
Financial
Services
|
Total
|
Retail
|
Financial Services
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Balance sheet
|
|
|
|
|
|
|
|
Property, plant and
equipment
|
|
20
|
9
|
29
|
149
|
-
|
149
|
Right-of-use assets
|
|
3
|
3
|
6
|
143
|
-
|
143
|
Intangible assets
|
|
-
|
200
|
200
|
23
|
-
|
23
|
Total impairment loss
|
|
23
|
212
|
235
|
315
|
-
|
315
|
Income statement
|
|
|
|
|
|
|
|
Comprising
|
|
|
|
|
|
|
|
Restructuring
programmes
|
|
4
|
212
|
216
|
34
|
-
|
34
|
Non-restructuring
programmes
|
|
19
|
-
|
19
|
281
|
-
|
281
|
Total impairment loss
|
|
23
|
212
|
235
|
315
|
-
|
315
|
b) Sensitivity
For all impairments recognised,
management is satisfied that there are no reasonably possible
changes in assumptions that would lead to the recognition of a
materially different impairment charge.
14.3 Goodwill
a) Impairment charges
The following impairment charges
are included within the intangible assets impairment presented in
note 14.2.
|
|
2024
|
2023
|
|
£m
|
£m
|
Sainsbury's Bank plc
|
a)
|
38
|
-
|
Jacksons Stores Limited
|
b)
|
-
|
10
|
Bells Stores Limited
|
b)
|
-
|
4
|
|
|
38
|
14
|
(a) As described in
note 3.3, following the sale of the Group's mortgage portfolio,
goodwill of £7 million in respect of Sainsbury's Bank plc was
derecognised on disposal. Following the restructuring of the
financial services business announced on 18 January 2024 and
described in further detail in note 3.1, the remaining balance of
goodwill of Sainsbury's Bank plc has been fully
impaired.
(b) Related to the
store CGUs to which Jacksons Stores Limited and Bells Stores
Limited goodwill amounts are allocated to.
The recoverable amount of CGUs to
which the respective goodwill has been allocated are based on the
same key assumptions as noted in 14.1.
b) Sensitivities
Sensitivity analysis on the
impairment tests for each group of CGUs to which goodwill has been
allocated has been performed. The valuations indicate sufficient
headroom such that a reasonably possible change to key assumptions
would not result in any impairment of goodwill that differs to that
recognised. Management is satisfied that there are no reasonable
possible changes to assumptions that would lead to further
impairments.
|
|
|
Headroom
|
|
|
|
Discount
rate
|
Cash flows
|
|
|
Headroom
|
-2%
|
+2%
|
-10%
|
+10%
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
Home Retail Group
|
a),
b)
|
1,920
|
3,066
|
1,291
|
1,653
|
2,188
|
Sainsbury's Bank plc
|
a),
c)
|
-
|
n/a
|
n/a
|
n/a
|
n/a
|
Nectar UK
|
a)
|
1,656
|
2,412
|
1,241
|
1,473
|
1,838
|
Jacksons Stores Limited
|
d)
|
92
|
116
|
77
|
80
|
104
|
Bells Stores Limited
|
d)
|
38
|
44
|
34
|
33
|
43
|
Other
|
|
45
|
74
|
29
|
36
|
54
|
a) Cash flows
derived from Board approved projections for four years and then
extrapolated into perpetuity with an assumed growth rate of
2.0%.
b) Allocated to
the collective Argos store and non-store CGU.
c) Sainsbury's
Bank plc goodwill is allocated to the Financial Services collective
CGUs and has been fully impaired as described in note 3.
There are no reasonably possible changes in key assumptions that
would cause the goodwill to not be impaired.
d) Goodwill
balances are allocated to individual store CGUs to which they
relate.
15
Provisions
|
Property
provisions
|
Insurance
provisions
|
Sainsbury's structural
integration provisions
|
Financial Services- related
provisions
|
Other
provisions
|
Total
|
|
a)
|
b)
|
c)
|
d)
|
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
At 5 March 2023
|
114
|
59
|
58
|
28
|
13
|
272
|
Additional provisions
|
77
|
22
|
42
|
18
|
-
|
159
|
Unused amounts released
|
(19)
|
-
|
(8)
|
(6)
|
(2)
|
(35)
|
Utilisation of
provision
|
(52)
|
(22)
|
(42)
|
(1)
|
-
|
(117)
|
Amortisation of
discount
|
-
|
-
|
1
|
-
|
-
|
1
|
At 2 March 2024
|
120
|
59
|
51
|
39
|
11
|
280
|
Current
|
45
|
13
|
28
|
22
|
5
|
113
|
Non-current
|
75
|
46
|
23
|
17
|
6
|
167
|
|
|
|
|
|
|
|
At 6 March 2022
|
140
|
62
|
29
|
26
|
14
|
271
|
Additional provisions
|
26
|
30
|
64
|
5
|
-
|
125
|
Unused amounts released
|
(33)
|
(4)
|
(3)
|
(1)
|
(1)
|
(42)
|
Utilisation of
provision
|
(19)
|
(29)
|
(32)
|
(2)
|
-
|
(82)
|
At 4 March 2023
|
114
|
59
|
58
|
28
|
13
|
272
|
Current
|
55
|
19
|
30
|
28
|
8
|
140
|
Non-current
|
59
|
40
|
28
|
-
|
5
|
132
|
a)
Property provisions comprise onerous property contract provisions
for the least net cost of exiting from the contract and provisions
for dilapidations.
b)
Insurance provisions comprise liabilities in respect of outstanding
insurance claims in relation to public liability, employer's
liability and third party motor.
c)
Sainsbury's structural integration restructuring provisions
comprise mainly redundancies as described in note 3.
d) Financial
Services related provisions comprise mainly Financial Services loan
commitment provisions reflecting expected credit losses modelled in
relation to loan commitments not yet recognised on the balance
sheet, including on credit cards and Argos store cards. Additional
provisions in the current year relate to onerous contracts arising
from the changes to the Financial Services model restructuring
programme as described in note 3.
16 Cash and cash equivalents
16.1 Balance sheet
|
2024
|
2023
|
|
£m
|
£m
|
Cash in hand and bank
balances
|
606
|
569
|
Money market funds
|
263
|
255
|
Money market deposits
|
232
|
150
|
Deposits at central
banks
|
886
|
345
|
|
1,987
|
1,319
|
|
|
|
Restricted amounts included above
|
|
|
Held as a reserve deposit with the
Bank of England
|
14
|
15
|
For insurance purposes
|
7
|
3
|
Held within the Group's Employee
Share Ownership Trust
|
-
|
10
|
|
21
|
28
|
17 Analysis of net debt
The Group's definition of net debt
includes the following:
·
Cash
·
Borrowings and overdrafts
·
Lease liabilities
·
Debt-related financial assets at fair value
through other comprehensive income
·
Derivatives used in hedging borrowings
Derivatives exclude those not used
to hedge borrowings, and borrowings exclude bank overdrafts as they
are disclosed separately.
17.1 Reconciliation of opening to
closing net debt
|
Cash
Movements
|
Non-Cash
Movements
|
|
|
5 March
2023
|
Cash flows excluding
interest
|
Net interest (received) /
paid
|
Accrued
interest
|
Other non-cash
movements
|
Changes in fair
value
|
2 March
2024
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Retail
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
-
|
-
|
(1)
|
1
|
-
|
-
|
-
|
Borrowings (excluding
overdrafts)
|
(539)
|
(534)
|
60
|
(64)
|
-
|
-
|
(1,077)
|
Lease liabilities
|
(6,488)
|
505
|
264
|
(264)
|
629
|
-
|
(5,354)
|
Arising from financing activities
|
(7,027)
|
(29)
|
323
|
(327)
|
629
|
-
|
(6,431)
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
683
|
194
|
-
|
-
|
-
|
-
|
877
|
Retail net debt
|
(6,344)
|
165
|
323
|
(327)
|
629
|
-
|
(5,554)
|
|
|
|
|
|
|
|
|
Financial Services
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Borrowings (excluding
overdrafts)
|
(122)
|
-
|
13
|
(13)
|
-
|
-
|
(122)
|
Lease liabilities
|
(1)
|
2
|
-
|
-
|
(1)
|
-
|
-
|
Arising from financing activities
|
(123)
|
2
|
13
|
(13)
|
(1)
|
-
|
(122)
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income
|
626
|
135
|
-
|
-
|
-
|
-
|
761
|
Cash and cash
equivalents
|
636
|
474
|
-
|
-
|
-
|
-
|
1,110
|
Financial services net debt
|
1,139
|
611
|
13
|
(13)
|
(1)
|
-
|
1,749
|
|
|
|
|
|
|
|
|
Group
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
-
|
-
|
(1)
|
1
|
-
|
-
|
-
|
Borrowings (excluding
overdrafts)
|
(661)
|
(534)
|
73
|
(77)
|
-
|
-
|
(1,199)
|
Lease liabilities
|
(6,489)
|
507
|
264
|
(264)
|
628
|
-
|
(5,354)
|
Arising from financing activities
|
(7,150)
|
(27)
|
336
|
(340)
|
628
|
-
|
(6,553)
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income
|
626
|
135
|
-
|
-
|
-
|
-
|
761
|
Cash and cash
equivalents
|
1,319
|
668
|
-
|
-
|
-
|
-
|
1,987
|
Group net debt
|
(5,205)
|
776
|
336
|
(340)
|
628
|
-
|
(3,805)
|
Other non-cash movements relate to
new leases and foreign exchange.
|
|
Cash
Movements
|
Non-Cash
Movements
|
|
|
6 March
2022
|
Cash
flows excluding interest
|
Net
interest
(received)/ paid
|
Accrued
interest
|
Other
non-cash movements
|
Changes
in fair value
|
4 March
2023
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Retail
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
5
|
-
|
(5)
|
5
|
(5)
|
-
|
-
|
Borrowings (excluding
overdrafts)
|
(575)
|
40
|
45
|
(40)
|
(9)
|
-
|
(539)
|
Lease liabilities
|
(6,618)
|
512
|
267
|
(267)
|
(382)
|
-
|
(6,488)
|
Arising from financing
activities
|
(7,188)
|
552
|
307
|
(302)
|
(396)
|
-
|
(7,027)
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Cash and cash
equivalents
|
436
|
247
|
-
|
-
|
-
|
-
|
683
|
Bank overdrafts
|
(7)
|
7
|
-
|
-
|
-
|
-
|
-
|
Retail net debt
|
(6,759)
|
806
|
307
|
(302)
|
(396)
|
-
|
(6,344)
|
|
|
|
|
|
|
|
|
Financial Services
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
4
|
-
|
-
|
-
|
-
|
(4)
|
-
|
Borrowings (excluding
overdrafts)
|
(179)
|
55
|
9
|
(12)
|
-
|
5
|
(122)
|
Lease liabilities
|
(3)
|
2
|
-
|
-
|
-
|
-
|
(1)
|
Arising from financing
activities
|
(178)
|
57
|
9
|
(12)
|
-
|
1
|
(123)
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income
|
418
|
207
|
-
|
-
|
-
|
1
|
626
|
Cash and cash
equivalents
|
389
|
247
|
-
|
-
|
-
|
-
|
636
|
Financial services net
debt
|
629
|
511
|
9
|
(12)
|
-
|
2
|
1,139
|
|
|
|
|
|
|
|
|
Group
|
|
|
|
|
|
|
|
Net derivative financial
instruments
|
9
|
-
|
(5)
|
5
|
(5)
|
(4)
|
-
|
Borrowings (excluding
overdrafts)
|
(754)
|
95
|
54
|
(52)
|
(9)
|
5
|
(661)
|
Lease liabilities
|
(6,621)
|
514
|
267
|
(267)
|
(382)
|
-
|
(6,489)
|
Arising from financing
activities
|
(7,366)
|
609
|
316
|
(314)
|
(396)
|
1
|
(7,150)
|
|
|
|
|
|
|
|
|
Financial assets at fair value
through other comprehensive income
|
418
|
207
|
-
|
-
|
-
|
1
|
626
|
Cash and cash
equivalents
|
825
|
494
|
-
|
-
|
-
|
-
|
1,319
|
Bank overdrafts
|
(7)
|
7
|
-
|
-
|
-
|
-
|
-
|
Group net debt
|
(6,130)
|
1,317
|
316
|
(314)
|
(396)
|
2
|
(5,205)
|
18
Borrowings
|
|
|
|
2024
|
|
|
2023
|
|
|
Current
|
Non-current
|
Total
|
Current
|
Non-current
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Loan due 2031
|
|
54
|
442
|
496
|
48
|
491
|
539
|
Term loan due 2026
|
|
6
|
575
|
581
|
-
|
-
|
-
|
Sainsbury's Bank Tier 2
Capital
|
|
6
|
116
|
122
|
6
|
116
|
122
|
|
|
66
|
1,133
|
1,199
|
54
|
607
|
661
|
Transaction costs
|
|
(1)
|
(3)
|
(4)
|
(1)
|
(4)
|
(5)
|
|
|
65
|
1,130
|
1,195
|
53
|
603
|
656
|
18.1 Loan due 2031
The loan is secured against 48
(2023: 48) supermarket properties. This is an inflation linked
amortising loan from the finance company Longstone Finance plc with
an outstanding principal value of £486 million (2023: £527 million)
fixed at a real rate of 2.36 per cent where principal and interest
rate are uplifted annually by RPI subject to a cap at five per cent
and a floor at nil per cent. The loan has a final repayment date of
April 2031. The principal activity of Longstone Finance plc is the
issuance of commercial mortgage-backed securities and applying the
proceeds towards the secured loans due 2031.
The Group has entered into forward
starting inflation swaps to convert £155 million (2023: £490
million) from RPI linked interest to fixed rate interest from April
2025 until April 2026. These transactions have been designated as
cash flow hedges.
Intertrust Corporate Services
Limited holds all the issued share capital of Longstone Finance
Holdings Limited on trust for charitable purposes. Longstone
Finance Holdings Limited beneficially owns all the issued share
capital of Longstone Finance plc. As the Group has no interest,
power or bears any risk over these entities they are not included
in the Group consolidation.
18.2 Sainsbury's Bank Tier 2
Capital
The Group has £120 million of
fixed rate reset callable subordinated Tier 2 notes in issuance
(2023: £120 million), which were issued in September 2022. These
notes pay interest on the principal amount at a rate of 10.5 per
cent per annum, payable in equal instalments semi-annually in
arrears, until March 2028 at which time the interest rate will
reset. The Bank has the option to redeem these notes in March
2028.
18.3 Term loan due
2026
The Group entered into a £575
million unsecured term loan in December 2022, with maturity of
March 2026. As at 2 March 2024, the term loan was fully drawn (4
March 2023: £nil).
18.4 Undrawn
facilities
The Group's Revolving Credit
Facility (RCF) is unsecured and is split into two Facilities, a
£500 million Facility (A) and a £500 million Facility (B). Facility
A has a maturity of December 2028 and Facility B has a maturity of
December 2027.
19 Retirement benefit
obligations
19.1 Background
Retirement
benefit obligations relate to the Sainsbury's Pension Scheme plus
three unfunded pension liabilities for former senior employees of
Sainsbury's and Home Retail Group.
The Sainsbury's Pension Scheme has
two sections, the Sainsbury's Section which holds the assets and
liabilities of the original Sainsbury's Pension Scheme, and the
Argos Section which holds the assets and liabilities of the former
Home Retail Group Pension Scheme. Each section's assets are
segregated by deed and ring fenced for the benefit of the members
of that section. The Scheme is run by a corporate trustee
with nine directors.
The Scheme is also used to pay
life assurance benefits to current (including new)
colleagues.
19.2 Balance sheet
|
|
|
|
2024
|
|
|
2023
|
|
|
Sainsbury's
|
Argos
|
Group
|
Sainsbury's
|
Argos
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Present value of funded
obligations
|
|
(5,172)
|
(816)
|
(5,988)
|
(5,128)
|
(793)
|
(5,921)
|
Fair value of plan
assets
|
|
5,777
|
925
|
6,702
|
6,007
|
927
|
6,934
|
Retirement benefit surplus
|
|
605
|
109
|
714
|
879
|
134
|
1,013
|
Present value of unfunded
obligations
|
|
(14)
|
(10)
|
(24)
|
(12)
|
(12)
|
(24)
|
Retirement benefit surplus
|
|
591
|
99
|
690
|
867
|
122
|
989
|
The retirement benefit surplus and
the associated deferred income tax balance are shown within
different line items on the face of the balance sheet.
Movements in net defined benefit surplus
|
|
|
|
2024
|
|
|
2023
|
|
|
Assets
|
Obligations
|
Net
|
Assets
|
Obligations
|
Net
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
As at the beginning of the
financial year
|
|
6,934
|
(5,945)
|
989
|
11,693
|
(9,410)
|
2,283
|
Interest income/(cost)
|
|
341
|
(290)
|
51
|
277
|
(221)
|
56
|
Remeasurement
(losses)/gains
|
|
(335)
|
(54)
|
(389)
|
(4,739)
|
3,341
|
(1,398)
|
Pension scheme expenses
|
|
-
|
(7)
|
(7)
|
(6)
|
-
|
(6)
|
Employer contributions
|
|
44
|
-
|
44
|
44
|
-
|
44
|
Benefits
(paid)/received
|
|
(282)
|
284
|
2
|
(306)
|
308
|
2
|
Settlement
(losses)/gains
|
|
-
|
-
|
-
|
(29)
|
37
|
8
|
As at the end of the financial
year
|
|
6,702
|
(6,012)
|
690
|
6,934
|
(5,945)
|
989
|
19.3 Actuarial assumptions for measuring
liabilities
Principal actuarial assumptions
|
|
|
2024
|
2023
|
|
|
|
%
|
%
|
Discount rate
|
|
|
5.00
|
5.00
|
Inflation rate - RPI
|
|
|
3.20
|
3.25
|
Inflation rate - CPI
|
|
|
2.55
|
2.55
|
Future pension
increases
|
|
|
1.95 -
3.00
|
1.90 -
2.95
|
a)
Discount rate
The discount rate for the Scheme
is derived from the expected yields on high quality corporate bonds
over the duration of the Group's pension scheme and extrapolated in
line with gilts with no theoretical growth assumptions. High
quality corporate bonds are those for which at least one of the
main ratings agencies considers to be at least AA (or
equivalent).
b)
Inflation
The Government's intention to amend
the RPI calculation methodology to be aligned to that already in
use for the calculation of the CPI (including housing) takes effect
from 2030. As a result, the Group has assumed that RPI will be
aligned with CPI post 2030, resulting in a single weighted average
RPI-CPI gap of 1.00% p.a. up to 2030 (2023: 0.70% p.a.).
c)
Mortality
The base mortality assumptions use
the SAPS S2 and SAPS S3 tables for the Sainsbury's and Argos
sections, respectively, with adjustments to reflect the Scheme's
population.
Following the completion of the
2021 triennial valuation and consideration of the previous three
years of mortality experience both in the Scheme and the UK as a
whole, the Company has decided to update the actuarial mortality
base tables that determine the life expectancy assumptions to
reflect a best-estimate adjustment derived from analysis carried
out for the valuation. Future mortality improvements for the 2024
year-end are CMI 2022 projections with a long-term rate of
improvement of 1.0 per cent p.a. Future mortality
improvements for the 2023 year-end were CMI 2021 projections with a
long-term rate of improvement of 1.25 per cent p.a.
While COVID-19 had an impact on
mortality in 2020, the impact on future mortality trends is
currently unknown. All IAS 19 calculations use the CMI model which
measures potential changes to future mortality trends. The Group's
policy is to use the available version as at the year-end which is
CMI 2022 which was released in June 2023.
As a result of the significant
change to mortality in the CMI 2020 model, the CMI modified the
calibration process for CMI 2020 to allow choice on the weighting
placed on an individual year's data. For the Core version of CMI
2020, a weight of zero per cent was applied to 2020 data and
weightings of 100 per cent for other years, so the potentially
exceptional 2020 experience was ignored when modelling future
improvements. This approach has been amended for CMI 2022, with
zero per cent weighting applied to 2020 and 2021 data and 25%
weighting applied to 2022 data, to reflect the view that the
sustained and less volatile mortality experience provides greater
evidence of a change to future mortality trends.
A 10 per cent weighting above the
core parameters has been applied, reflecting that mortality rates
for 2022 were higher and for 2023 are expected to be higher than
2019, and recognising the uncertain outlook. From 2028, mortality
improvements are in line with the CMI 2022 Core model. The impact
of different weightings on the Scheme liabilities is included in
the sensitivities section within this note.
Life expectancy at age 65
|
|
|
|
2024
|
|
|
2023
|
|
|
Sainsbury's section Main
Scheme
|
Sainsbury's section
Executive Scheme
|
Argos
section
|
Sainsbury's section Main Scheme
|
Sainsbury's section Executive Scheme
|
Argos
section
|
|
|
Years
|
Years
|
Years
|
Years
|
Years
|
Years
|
Members aged 65 at balance sheet date
|
|
|
|
|
|
|
|
Male pensioner
|
|
18.9
|
22.2
|
19.7
|
19.5
|
22.7
|
20.3
|
Female pensioner
|
|
22.8
|
23.4
|
22.8
|
23.3
|
24.0
|
23.4
|
Members aged 45 at balance sheet date
|
|
|
|
|
|
|
|
Male pensioner
|
|
19.8
|
23.1
|
20.7
|
20.7
|
24.0
|
21.6
|
Female pensioner
|
|
23.9
|
24.6
|
24.0
|
24.9
|
25.5
|
24.8
|
20 Contingent
liabilities
The Group has a number of
contingent liabilities in respect of historical lease guarantees,
particularly in relation to the disposal of assets, which if the
current tenant and their ultimate parents become insolvent, may
expose the Group to a material liability, however this liability
decreases over time as the leases expire. The Group has considered
a number of factors, including past history of default as well as
the profitability and cash generation of the current leaseholders,
and has concluded that the likelihood of pay-out is
remote.
Along with other retailers, the
Group is currently subject to claims from current and ex-employees
in the Employment Tribunal for equal pay under the Equality Act
2010 and/or the Equal Pay Act 1970. There are currently
circa 16,300 equal pay claims from
circa 10,900 claimants and the Group believes that
further claims may be served. The claimants are alleging that their
work within Sainsbury's stores is or was of equal value to that of
colleagues working in Sainsbury's distribution centres, and that
differences in terms and conditions relating to pay are not
objectively justifiable. The claimants are seeking the differential
back pay based on the higher wages in distribution depots, and the
equalisation of wages and terms and conditions on an ongoing
basis.
There are three stages in the
tribunal procedure for equal value claims of this nature and the
claimants will need to succeed in all three. The first stage is
whether store claimants have the legal right to make the comparison
with depot workers. Following European and Supreme Court decisions
in other litigation, Sainsbury's has conceded this point. The
second stage is the lengthy process to determine whether any of the
claimants' roles are of equal value to their chosen comparators. In
the event that any of the claimants succeed at the second stage,
there will be a third stage comprising further hearings, in the
following years, to consider Sainsbury's material factor defences,
relating to non-discriminatory reasons for any pay differential.
Completion of these two stages is likely to take many
years which will involve hearings and appeals. It is not
possible to predict a final date with any certainty. If the
Group is unsuccessful at the end of the litigation the liability
could be material but due to the complexity and multitudinous
factual and legal uncertainties we are
not in a position to predict an
outcome, quantum or impact at this stage. There are
substantial factual and legal defences to these claims and the
Group intends to defend them vigorously.
Given that the outcome of the
second and third stages in the litigation remains highly uncertain
at this stage, the Group cannot make any assessment of the
likelihood nor quantum of any outcome and accordingly, no provision
has been recognised.
Alternative performance measures (APMs)
In the reporting of financial
information, the Directors use various APMs which they believe
provide additional useful information for understanding the
financial performance and financial health of the Group. These APMs
should be considered in addition to, and are not intended to be a
substitute for, IFRS measurements. As they are not defined by
International Financial Reporting Standards, they may not be
directly comparable with other companies who use similar
measures.
All of the following APMs relate
to the current financial year's results and comparative financial
year where provided.
A1 Income statement
measures
A1.1 Revenue
a) Retail like-for-like sales
(Closest IFRS equivalent: none)
Definition and purpose
Year-on-year growth in sales
including VAT, excluding Fuel and Financial Services, for stores
that have been open for more than one year. The relocation of Argos
stores into Sainsbury's supermarkets are classified as new space,
while the host supermarket is classified as
like-for-like.
The measure is used widely in the
retail sector.
Reconciliation
|
2024
|
2023
|
Retail like-for-like (exc. Fuel, inc. VAT)
|
7.5%
|
2.6%
|
Underlying net new space
impact
|
(0.7)%
|
(0.6)%
|
Retail sales growth (exc. Fuel, inc. VAT)
|
6.8%
|
2.0%
|
Fuel impact
|
(3.6)%
|
3.2%
|
Total retail sales growth (inc. Fuel, inc.
VAT)
|
3.2%
|
5.2%
|
VAT impact
|
0.4%
|
(0.1)%
|
Total retail sales growth
|
3.6%
|
5.1%
|
A1.2 Profit
a) Retail underlying operating profit and
margin (Closest IFRS equivalent:
Profit before tax)
Definition and purpose
Profit before interest and tax for
the retail segment excluding non-underlying items.
This is the lowest level at which
the retail segment can be viewed from a management perspective,
with finance costs managed for the Group as a whole.
Reconciliation
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Retail underlying operating profit
|
5.1
|
966
|
926
|
|
|
|
|
Retail sales
|
4
|
32,084
|
30,960
|
Retail underlying operating margin
|
|
3.01%
|
2.99%
|
b) Underlying profit before tax
(Closest IFRS equivalent: Profit before
tax)
Definition and purpose
Profit before tax excluding
non-underlying items.
Provides shareholders with
additional insight into the year-on-year performance.
Reconciliation
Face of the income
statement.
Non-underlying items as set out in
note 3 to the financial statements.
c) Underlying basic and diluted earnings per
share (Closest IFRS equivalent:
Basic and diluted earnings per share)
Definition and purpose
Earnings per share using
underlying profit as described above.
A key measure to evaluate the
performance of the business and returns generated for
investors.
Reconciliation
Note 9 to the financial
statements.
d) Retail underlying EBITDA
(Closest IFRS equivalent: None)
Definition and purpose
Retail underlying operating profit
as above, before underlying depreciation, and
amortisation.
Used to review the retail
segment's profit generation and the sustainability of ongoing
capital reinvestment and finance costs.
Reconciliation
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Retail underlying operating
profit
|
5.1
|
966
|
926
|
Add: Retail underlying
depreciation and amortisation
|
A2.1
|
1,112
|
1,134
|
Retail underlying EBITDA
|
|
2,078
|
2,060
|
|
|
|
|
Retail sales
|
4
|
32,084
|
30,960
|
Retail underlying EBITDA margin
|
|
6.48%
|
6.65%
|
e) Underlying net finance costs
(Closest IFRS equivalent: Finance income less
finance costs)
Definition and purpose
Net finance costs before any
non-underlying items that are recognised within finance income /
expenses.
Provides shareholders with
additional insight into the underlying net finance
costs.
Reconciliation
Note 7 to the financial
statements.
f) Underlying tax rate
(Closest IFRS equivalent: Effective tax
rate)
Definition and purpose
Tax on underlying items, divided
by underlying profit before tax.
Provides an indication of the tax
rate across the Group before the impact of non-underlying
items.
Reconciliation
Non-underlying tax items as set
out in note 3 to the financial statements.
A2 Cash flows and
borrowings
A2.1 Retail cash flows
(Closest IFRS equivalent: Group cash
flows)
Definition and purpose
Retail cash flows identified as a
separate component of Group cash flows.
Retail free cash flow: Net cash
generated from retail operations, after cash capital expenditure
and including payments of lease obligations, cash flows from joint
ventures and associates and Sainsbury's Bank capital injections.
This measures cash generation, working capital efficiency and
capital expenditure of the retail business.
Other retail cash flows:
Individual cash flow line items segregated from Group cash flows to
allow individual Retail cash flows to be identified. This enables
management to assess the cash generated from its core retail
operations, and to assess core retail capital expenditure in the
financial year in order to review the strategic business
performance.
Reconciliation
|
2024
|
2023
|
|
|
Retail
|
Financial
Services
|
Group
|
Retail
|
Financial Services
|
Group
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
Profit before tax
|
|
|
483
|
(206)
|
277
|
284
|
43
|
327
|
Net finance costs
|
|
|
255
|
-
|
255
|
235
|
-
|
235
|
Operating profit/(loss)
|
|
738
|
(206)
|
532
|
519
|
43
|
562
|
Depreciation and
amortisation
|
- Underlying
|
|
1,112
|
32
|
1,144
|
1,134
|
33
|
1,167
|
- Non-underlying
|
|
34
|
-
|
34
|
41
|
-
|
41
|
|
|
1,146
|
32
|
1,178
|
1,175
|
33
|
1,208
|
Net impairment charge on
non-financial assets
|
|
23
|
212
|
235
|
315
|
-
|
315
|
(Profit)/loss on sale of
non-current assets and early termination of leases
|
- Underlying
|
b)
|
(5)
|
-
|
(5)
|
(5)
|
-
|
(5)
|
- Non-underlying
|
|
(11)
|
14
|
3
|
(10)
|
-
|
(10)
|
|
|
|
(16)
|
14
|
(2)
|
(15)
|
-
|
(15)
|
Non-underlying fair value
movements
|
|
46
|
-
|
46
|
29
|
-
|
29
|
Share-based payments
expense
|
b)
|
83
|
6
|
89
|
54
|
5
|
59
|
Defined benefit scheme
expense/(income)
|
|
7
|
-
|
7
|
(2)
|
-
|
(2)
|
Cash contributions to defined
benefit scheme
|
|
(44)
|
-
|
(44)
|
(44)
|
-
|
(44)
|
Operating cash flows before changes in working
capital
|
|
1,983
|
58
|
2,041
|
2,031
|
81
|
2,112
|
Movements in working
capital
|
-Underlying
|
|
262
|
(20)
|
242
|
159
|
307
|
466
|
-Non-underlying
|
|
57
|
22
|
79
|
11
|
-
|
11
|
|
|
|
319
|
2
|
321
|
170
|
307
|
477
|
Cash generated from operations
|
a)
|
2,302
|
60
|
2,362
|
2,201
|
388
|
2,589
|
Interest paid
|
a)
|
(323)
|
(13)
|
(336)
|
(307)
|
(9)
|
(316)
|
Corporation tax paid
|
a)
|
(58)
|
(3)
|
(61)
|
(99)
|
(4)
|
(103)
|
Net cash generated from operating
activities
|
|
|
1,921
|
44
|
1,965
|
1,795
|
375
|
2,170
|
Cash flows from investing activities
|
|
|
|
|
|
|
|
Purchase of property, plant and
equipment
|
-Additions
|
a)
|
(649)
|
(1)
|
(650)
|
(523)
|
(2)
|
(525)
|
-Acquisitions
|
c)
|
(731)
|
-
|
(731)
|
-
|
-
|
-
|
Purchase of intangible
assets
|
a)
|
(165)
|
(13)
|
(178)
|
(194)
|
(19)
|
(213)
|
Capital expenditure
|
|
(1,545)
|
(14)
|
(1,559)
|
(717)
|
(21)
|
(738)
|
Initial direct costs on new
leases
|
a)
|
(6)
|
-
|
(6)
|
(16)
|
-
|
(16)
|
Proceeds from disposal of
property, plant and equipment
|
-Core disposals
|
a)
|
16
|
-
|
16
|
29
|
-
|
29
|
-Acquisition related
|
c)
|
61
|
-
|
61
|
-
|
-
|
-
|
Proceeds from disposal of amounts
due from Financial Services Customers
|
|
-
|
446
|
446
|
-
|
-
|
-
|
Dividends and distributions
received/(paid)
|
a)
|
-
|
-
|
-
|
51
|
(50)
|
1
|
Interest received
|
a)
|
27
|
-
|
27
|
15
|
-
|
15
|
Net cash (used in)/generated from investing
activities
|
(1,447)
|
432
|
(1,015)
|
(638)
|
(71)
|
(709)
|
Cash flows from financing activities
|
|
|
|
|
|
|
|
Proceeds from issuance of ordinary
shares
|
|
15
|
-
|
15
|
13
|
-
|
13
|
Purchase of own shares
|
|
(18)
|
-
|
(18)
|
(45)
|
-
|
(45)
|
Share related
transactions
|
|
(3)
|
-
|
(3)
|
(32)
|
-
|
(32)
|
Proceeds from
borrowings
|
|
575
|
-
|
575
|
-
|
-
|
-
|
Repayment of borrowings
|
|
(41)
|
-
|
(41)
|
(40)
|
(55)
|
(95)
|
Net drawdown/(repayment) of
borrowings
|
|
534
|
-
|
534
|
(40)
|
(55)
|
(95)
|
Capital repayment of lease
obligations
|
a)
|
(505)
|
(2)
|
(507)
|
(512)
|
(2)
|
(514)
|
Dividends paid on ordinary
shares
|
|
(306)
|
-
|
(306)
|
(319)
|
-
|
(319)
|
Net cash used in financing activities
|
|
(280)
|
(2)
|
(282)
|
(903)
|
(57)
|
(960)
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash
equivalents
|
|
194
|
474
|
668
|
254
|
247
|
501
|
|
|
|
|
|
|
|
|
|
Capital expenditure
|
|
(1,545)
|
|
|
(717)
|
|
|
Less amounts paid for asset
acquisition (note 2.6)
|
|
731
|
|
|
-
|
|
|
Core Retail capital expenditure
|
|
(814)
|
|
|
(717)
|
|
|
|
|
|
|
|
|
|
|
| |
Items in the retail cash flow
marked a) to c) reconcile to the summary cash flow statement in the
financial review as outlined in note A2.2.
As set out in the Group cash flow
statement the Group now classifies Interest received within Cash
flows from investing activities whereby the previous treatment was
within Cash flows from operations. 2023 amounts have therefore been
re-presented whereby Retail Cash generated from operations and
Retail Cash flows from investing activities were previously £2,216
million and £(653) million respectively. There has been no impact
on cash flows within the Financial Services
segment.
A2.2 Underlying retail cash flow
movements (Closest IFRS equivalent:
None)
Definition and purpose
Identifies cash movements in
respect of Retail non-underlying items and also sets out a
breakdown of items included in the summary cash flow statement set
out in the Financial Review.
Reconciliation
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Cash contribution to defined benefit scheme
|
A2.1
|
(44)
|
(44)
|
|
|
|
|
Non-underlying cash movements:
|
|
|
|
Financial services
model
|
|
(5)
|
-
|
Sainsbury's structural
integration
|
|
(67)
|
(50)
|
Legal disputes income
|
|
-
|
30
|
ATM business rates
reimbursement
|
|
-
|
3
|
Property-related
transactions
|
|
-
|
(6)
|
Operating cash flows
|
|
(72)
|
(23)
|
|
|
|
|
Effect on Retail cash generated from
operations
|
|
(116)
|
(67)
|
Sum of items marked a), b), and c) in note A2.1 as they
appear in the financial review
|
|
2024
|
2023
|
|
Reference
|
£m
|
£m
|
Retail free cash flow
|
a)
|
639
|
645
|
Share based payments and
other
|
b)
|
78
|
49
|
Net consideration paid for
Highbury & Dragon property transaction
|
c)
|
(670)
|
-
|
|
|
|
|
A3 Borrowings
A3.1 Net debt (Closest IFRS
equivalent: Borrowings, cash, derivatives, financial assets at
FVTOCI, lease liabilities)
Definition and purpose
Net debt includes the capital
injections into Sainsbury's Bank, but excludes the net debt of
Sainsbury's Bank and its subsidiaries. Financial Services'
net debt balances are excluded because they are required as part of
the business as usual operations of a bank, as opposed to specific
forms of financing for the Group. Derivatives exclude those not
used to hedge borrowings, and borrowings exclude bank overdrafts as
they are disclosed separately. Hence net debt is represented as
Retail net debt.
This metric shows the liquidity
and indebtedness of the Group and whether the Group can cover its
debt commitments.
Reconciliation
Note 17 to the financial
statements.
A3.2 Net debt / underlying EBITDA (Closest IFRS equivalent: None)
Definition and purpose
Net debt divided by Group
underlying EBITDA.
Helps management measure the ratio
of the business's debt to operational cash flow.
Reconciliation
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Net debt
|
17
|
5,554
|
6,344
|
Group underlying EBITDA
|
A4.2
|
2,139
|
2,139
|
Net debt/underlying EBITDA
|
|
2.6x
|
3.0x
|
Group underlying EBITDA is
reconciled within the fixed charge cover analysis in note
A4.2.
A4 Other measures
A4.1 Return on capital employed
(Closest IFRS equivalent: None)
Definition and purpose
Return divided by average capital
employed.
Return is defined as 52 week
rolling underlying profit before interest and tax.
Capital employed is defined as
Group net assets excluding pension surplus, less net debt. The
average is calculated on a 14-point basis which uses the average of
14 data points.
Represents the total capital that
the Group has utilised in order to generate profits. Management use
this to assess the performance of the business.
Reconciliation
Net debt as set out in note
17.
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Return (Group underlying
operating profit)
|
5.1
|
995
|
972
|
|
|
|
|
|
|
£m
|
£m
|
Group net assets
|
Balance
sheet
|
6,868
|
7,253
|
Less: Pension surplus
|
Balance
sheet
|
(690)
|
(989)
|
Deferred tax on pension
surplus
|
|
244
|
330
|
Less: Net debt
|
17
|
5,554
|
6,344
|
Effect of in-year
averaging
|
|
42
|
(101)
|
Capital employed
|
|
12,018
|
12,837
|
|
|
|
|
Return on capital employed
|
|
8.3%
|
7.6%
|
A4.2 Fixed charge cover (Closest IFRS equivalent: None)
Definition and purpose
Group underlying EBITDA divided by
rent (representing capital and interest repayments on leases) and
underlying net finance costs, where interest on perpetual
securities is treated as an underlying finance cost. All items are
calculated on a 52 week rolling basis.
This helps assess the Group's
ability to satisfy fixed financing expenses from performance of the
business.
Reconciliation
|
|
2024
|
2023
|
|
Note
|
£m
|
£m
|
Group underlying operating profit
|
5.1
|
995
|
972
|
Add: Group underlying depreciation
and amortisation expense
|
A2.1
|
1,144
|
1,167
|
Group underlying EBITDA
|
|
2,139
|
2,139
|
Capital repayment of lease
obligations
|
A2.1
|
(507)
|
(514)
|
Underlying finance
income
|
7
|
30
|
18
|
Underlying finance
costs
|
7
|
(324)
|
(300)
|
Fixed charges
|
|
(801)
|
(796)
|
Fixed charge cover
|
|
2.7x
|
2.7x
|