REG - Sainsbury(J) PLC - Final Results <Origin Href="QuoteRef">SBRY.L</Origin> - Part 2
15/07/2015 16:12
- Part 2: For the preceding part double click ID:nRSF2754Ma
expected £110 million in 2015/16.
We will remain competitive on price in the market.
Financial services - Sainsbury's Bank
Sainsbury's completed its purchase of the remaining 50 per cent of Sainsbury's Bank on 31 January 2014 and the Bank has
been 100 per cent consolidated throughout 2014/15. The Bank contributed £62 million to Group underlying profit before tax
(2013/14: £24 million).
Sainsbury's Bank results 20151 20142 Change %
Total income (£m)3 260 229 13.5
Underlying operating profit (£m) 62 53 17.0
Recognised as a joint venture (£m) - 18
Consolidated as a subsidiary (£m) 62 6
Impact on Group underlying profit before tax (£m) 62 24 158.3
Net interest margin (%)4 3.9 3.1 79bps
Bad debt as a percentage of lending (%)5 0.7 1.1 40bps
Tier 1 capital ratio (%)6 12.7 13.6 (91)bps
1 12 months to 28 February 2015.
2 50 weeks to 28 February 2014.
3 Net interest and net commission income.
4 Net interest receivable divided by average interest-bearing assets.
5 Bad debt expense divided by gross lending as at year-end.
6 Year-end tier 1 capital divided by year-end risk-weighted assets.
Sainsbury's Bank total income increased by 13.5 per cent to £260 million (2013/14: £229 million), mainly due to lower
market savings rates which resulted in a reduction in interest payable. In addition, lending increased, however this was
offset by competition in the personal loans market causing headline rates to fall.
Sainsbury's Bank delivered an underlying operating profit of £62 million, a 17.0 per cent increase year-on-year. This
increase was driven by the higher total income and favourable bad debt levels, partly offset by incremental running costs
associated with the move to a new, more flexible banking platform.
Net interest margin increased by 79 basis points year-on-year to 3.9 per cent (2013/14: 3.1 per cent) mainly driven by
changes to the funding structure. Bad debt levels as a percentage of lending improved to 0.7 per cent (2013/14: 1.1 per
cent) as a result of improved recovery processes, low market interest rates and improving economic conditions. The tier 1
capital ratio decreased by 91 basis points year-on-year to 12.7 per cent (28 February 2014: 13.6 per cent), reflecting
increased customer lending and intangible assets and one-off costs associated with transitioning Sainsbury's Bank to a new,
more flexible banking platform.
Whilst our transition plans remain on time and in line with budget to date, we see total costs (capital and revenue) for
the project going forward rising by between £80 million and £120 million, taking our overall spend to between £340 million
and £380 million. In 2015/16, Sainsbury's Bank is expected to deliver mid-single digit year-on-year growth in underlying
operating profit. Capital injections to the Bank in 2015/16 are expected to be circa £80 million.
Property and other joint ventures ('JV')
Sainsbury's underlying share of post-tax profit from its JV with British Land was £13 million (2013/14: £14 million). Its
underlying share of post-tax profit from the JV with Land Securities was £2 million (2013/14: £2 million).
An investment property fair value increase of £7 million was recognised within the share of post-tax profit from the JVs in
the income statement (2013/14: £nil), with average property yields of the JVs decreasing to 5.0 per cent, 0.2 percentage
points lower than the prior year (2013/14: 5.2 per cent), partly offset by rental increases.
In June 2014, Sainsbury's announced a 50 per cent JV with Dansk Supermarked to trial Netto, a discount retailer, within the
UK market. Netto opened five stores in November 2014 in the north of England with the next 10 stores to be opened by the
end of 2015/16.
Sainsbury's recognised a net £9 million share of loss (2013/14: net £4 million share of loss) from the three start-up JVs:
Netto, Mobile by Sainsbury's and I2C. This loss was driven by start-up costs.
In 2015/16, Sainsbury's expects the share of profit from the property JVs to be slightly lower year-on-year. Sainsbury's
share of loss from the start-up JVs, including Netto, is expected to be similar to 2014/15.
Underlying net finance costs
Underlying net finance costs decreased by £4 million year-on-year to £107 million (2013/14: £111 million). This was mainly
driven by a change in mix of borrowings, partly offset by a reduction in capitalised interest.
Underlying net finance costs152 weeks to 14 March 2015 2015£m 2014£m
Underlying finance income 19 20
Interest costs (143) (157)
Capitalised interest 17 26
Underlying finance costs (126) (131)
Underlying net finance costs (107) (111)
1 Finance income/costs before financing fair value movements and the IAS 19 pension financing charge.
Sainsbury's expects underlying net finance costs in 2015/16 to increase slightly year-on-year driven by lower capitalised
interest.
Items excluded from underlying results
Items excluded from underlying results totalled a charge of £753 million (2013/14: £100 million credit), mainly due to
one-off items.
Items excluded from underlying results52 weeks to 14 March 2015 2015 2014
£m £m
Profit on disposal of properties 7 52
Investment property fair value movements 7 -
Retail financing fair value movements (30) (8)
IAS 19 pension financing charge (31) (23)
Defined benefit pension scheme expenses (6) (7)
Acquisition adjustments 13 18
One-off items (713) 68
Total items excluded from underlying results (753) 100
One-off items
The charge to one-off items of £713 million (2013/14: £68 million credit) includes: a non-cash impairment and onerous
contract charge of £628 million; costs of £53 million in relation to transitioning Sainsbury's Bank to a new, more flexible
banking platform; £17 million pension compensation payments made to employees as a result of the closure of Sainsbury's
defined benefit pension scheme to future accrual; and internal restructuring costs of £15 million.
The £628 million charge was announced in November 2014 following our strategic review, during which we reassessed our store
pipeline and the potential to achieve an appropriate return on capital. This resulted in a decision that some sites will no
longer be developed, for which a non-cash impairment charge of £257 million and onerous contract provisions of £30 million
have been recognised. A charge of £341 million has also been incurred in relation to unprofitable and marginally profitable
stores, comprising a £291 million impairment and £50 million of onerous lease provisions.
One-off items52 weeks to 14 March 2015 2015£m 2014£m
Impairment and onerous contract charge (628) (92)
Sainsbury's Bank costs (53) (45)
Pension past service credit and compensation payments (17) 148
Nectar VAT - 76
Other (15) (19)
Total one-off items (713) 68
In 2015/16, Sainsbury's Bank costs for transitioning to a new, more flexible banking platform are expected to be around £50
million (capital costs relating to the transition are expected to be around £75 million).
Property profits over the next two years from mixed-use developments are expected to be around £200 million.
Taxation
The income tax charge was £94 million (2013/14: £182 million), with an underlying tax rate of 25.8 per cent (2013/14: 21.9
per cent) and an effective tax rate of (130.6) per cent (2013/14: 20.3 per cent). The underlying rate is higher than last
year, mainly due to the revaluation of deferred tax balances reducing the rate in the prior year, but not repeated in the
current year. The effective tax rate was negative, mainly as a result of the impairment costs not being deductible for tax
purposes.
Underlying tax rate
52 weeks to 14 March 2015 Profit Tax Rate%
£m £m
Profit before tax, and tax thereon (72) (94) (130.6)
Adjustments (and tax thereon) for:
Profit on disposal of properties (7) (10)
Investment property fair value movements (7) -
Retail financing fair value movements 30 (5)
IAS 19 pension financing charge 31 (7)
Defined benefit pension scheme expenses 6 (1)
Acquisition adjustments (13) 4
One-off items 713 (63)
Underlying profit before tax, and tax thereon 681 (176) 25.8
In 2015/16, Sainsbury's expects the underlying tax rate to be similar to 2014/15.
In the UK, there are a large number of taxes, of which many are relevant for Sainsbury's. In 2014/15, Sainsbury's paid £1.7
billion (2013/14: £1.8 billion) to the UK government, of which £854 million (2013/14: £825 million) was borne by
Sainsbury's and the remaining £863 million (2013/14: £949 million) was collected on behalf of our colleagues, customers and
suppliers. Sainsbury's participate in the Total Tax Contribution PwC Survey for The 100 Group of Finance Directors. In the
year to March 2014, our total taxes borne ranked seventh amongst the survey participants.
The key taxes paid by Sainsbury's were business rates of £489 million (2013/14: £432 million), employers' national
insurance of £145 million (2013/14: £141 million) and UK corporation tax of £90 million (2013/14: £140 million). Other
taxes including customs duty, excise duty, VAT and energy taxes totalled £130 million (2013/14: £112 million). In addition,
£1 million of corporation tax was paid to overseas governments.
Earnings per share
Underlying basic earnings per share decreased by 19.5 per cent to 26.4 pence (2013/14: 32.8 pence) reflecting the fall in
underlying profits, a higher underlying tax rate year-on-year and additional shares issued during the year.
The weighted average number of shares in issue was 1,911.0 million (2013/14: 1,896.8 million), an increase of 14.2 million
shares or 0.7 per cent. Basic loss per share was 8.7 pence (2013/14: 37.7 pence earnings). The basic loss per share was
lower than the underlying basic earnings per share due to the items excluded from underlying results.
Underlying earnings per share
52 weeks to 14 March 2015 2015pence per share 2014pence per share
Basic (loss)/earnings per share (8.7) 37.7
Adjustments (net of tax) for:
Profit on disposal of properties (0.9) (2.8)
Investment property fair value movements (0.4) -
Retail financing fair value movements 1.3 0.4
IAS 19 pension financing charge 1.3 0.9
Defined benefit pension scheme expenses 0.3 0.3
Acquisition adjustments (0.5) (0.9)
One-off items 34.0 (1.7)
Revaluation of deferred tax balances - (1.1)
Underlying basic earnings per share 26.4 32.8
Dividends
The Board has recommended a final dividend of 8.2 pence per share (2013/14: 12.3 pence). This will be paid on 10 July 2015
to shareholders on the Register of Members at the close of business on 15 May 2015, subject to approval by shareholders at
the AGM. This will result in a decrease to the full-year dividend of 23.7 per cent to 13.2 pence per share (2013/14: 17.3
pence).
The proposed final dividend was recommended by the Board on 5 May 2015 and, as such, has not been included as a liability
as at 14 March 2015.
In 2015/16, Sainsbury's will maintain dividend cover at two times our underlying earnings for the full year.
Financing
The Group's key financing objectives are to diversify funding sources, to minimise refinancing risk and to maintain
appropriate standby liquidity. As at 14 March 2015, the Group had drawn borrowing facilities of £2.8 billion and undrawn
but committed borrowing facilities of £1.0 billion at its disposal.
The principal elements of the Group's core borrowings comprise two long-term loans of £850 million due 2018 and £811
million due 2031, both secured over property assets. In addition, the Group has unsecured borrowings totalling £339 million
with maturities ranging from 2015 to 2019, and £127 million of hire purchase facilities.
During the year, the Group maintained a syndicated committed revolving credit facility ('RCF') for £1,150 million. The
facility is split into two tranches; a £500 million Facility (A) maturing in March 2017 and a £650 million Facility (B)
maturing in March 2019. As at 14 March 2015, £120 million had been drawn under Facility (A) (2013/14: £200 million) and
£nil under Facility (B) (2013/14: £nil). The £1,150 million facility and bank loans contain only one financial covenant,
being the ratio of EBITDAR to consolidated net interest plus net rental expenditure, the 'Fixed Charge Cover' ratio. As at
14 March 2015, Sainsbury's comfortably passed this covenant test.
On 5 May 2015, the Group refinanced its unsecured RCF with a new secured recourse £1,150 million RCF, with a final maturity
of 2020. The new secured corporate facility is the same size as, and has substantially similar economic terms to, the
previous unsecured facility, with the structure also maintained on a dual tranche basis (a £500 million Facility (A) due
April 2018 and £650 million Facility (B) due April 2020). The new facility, which is secured against 60 supermarket
properties, contains no financial covenants.
The Group also amended its £200 million unsecured bank loan due November 2019 and its E50 million unsecured bank loan due
September 2016 into a secured recourse £200 million bank loan due November 2019 and a secured recourse E50 million bank
loan due September 2016. The amended bank loans, which are secured against ten supermarket properties, contain no financial
covenants.
Since March 2014, two bilateral bank loans have been repaid for a combined total of £65 million and in July 2014 the
Group's £190 million convertible bond was repaid. The five unsecured private placement loans for £184 million were repaid
in March 2015, before year-end. Of these, the $100 million (£63 million) tranche due March 2017 was prepaid before its
maturity date.
A new five-year £450 million 1.25 per cent convertible bond was entered into in November 2014. A new bilateral bank loan
for £200 million was drawn down in August 2014 and a new hire purchase loan for £30 million was entered into in May 2014.
Net debt and cash flows
Sainsbury's net debt includes the cost of acquiring Sainsbury's Bank, but excludes Sainsbury's Bank's own net debt
balances. As at 14 March 2015, net debt was £2,343 million (15 March 2014: £2,384 million), a decrease of £41 million
year-on-year. The year-on-year decrease was primarily driven by an improvement in retail working capital, partly offset by
higher net capital expenditure, due to no sale and leaseback activity and a lower underlying operating profit.
Operating cash flows before changes in working capital decreased by 17.8 per cent to £1,123 million (2013/14: £1,366
million) and cash generated from operations decreased by 7.4 per cent to £1,136 million (2013/14: £1,227 million, 3.2 per
cent decrease), mainly due to a lower underlying operating profit.
Total working capital decreased by £13 million from 15 March 2014, driven by a £313 million improvement in retail working
capital, partly offset by a £300 million increase in Sainsbury's Bank working capital. The increase in Sainsbury's Bank
working capital reflects positive steps taken by the Bank to optimise its funding position and support lending via the
government's Funding for Lending Scheme. The £313 million improvement in retail working capital was mainly due to an
increase in trade payables of £243 million as a result of operational efficiencies.
The net cash used in investing activities of £900 million was £310 million higher year-on-year (2013/14: £590 million),
driven by lower proceeds from property transactions. Receipt of new debt of £674 million during the year mainly relates to
a £200 million bilateral bank loan drawn down in August 2014 for a five-year term, £30 million from a five-year hire
purchase agreement, and a new five-year £450 million convertible bond. The new debt offsets £659 million of borrowings
repaid during the year.
Summary cash flow statement
52 weeks to 14 March 2015 2015 2014
£m £m
Operating cash flow before changes in working capital 1,123 1,366
Decrease/(increase) in retail working capital 313 (128)
Increase in Sainsbury's Bank working capital (300) (11)
Cash generated from operations 1,136 1,227
Interest paid (134) (148)
Corporation tax paid (91) (140)
Net cash from operating activities 911 939
Net cash used in investing activities (900) (590)
Acquisition of Sainsbury's Bank, net of cash acquired - 1,016
Proceeds from issue of shares 19 19
Purchase of own shares (18) -
Receipt of new debt 674 450
Repayment of borrowings (659) (439)
Dividends paid (330) (320)
(Decrease)/increase in cash and cash equivalents (303) 1,075
Elimination of net increase in Sainsbury's Bank cash and cash equivalents 343 (1,225)
Increase in debt (31) (27)
Fair value and other non-cash movements 32 (45)
Movement in net debt 41 (222)
Sainsbury's expects 2015/16 year-end net debt to reduce year-on-year and a small improvement in retail working capital.
Retail capital expenditure
Core retail capital expenditure increased by £59 million year-on-year to £947 million (2013/14: £888 million). Core retail
capital expenditure as a percentage of retail sales (including fuel, including VAT) was 3.7 per cent (2013/14: 3.4 per
cent).
Supermarket openings decreased by five during the year to eight (2013/14: 13 supermarkets). Sainsbury's stepped up its
convenience opening programme in the year with 98 new convenience stores (2013/14: 91 convenience stores).
During the year, there were five extensions completed (2013/14: six extensions). Sainsbury's also delivered 56
refurbishments during the year (2013/14: 54 refurbishments) consisting of 13 supermarkets (2013/14: 15 supermarkets) and 43
convenience stores (2013/14: 39 convenience stores).
There were no sale and leaseback proceeds in the year (2013/14: £301 million), resulting in net retail capital expenditure
of £941 million (2013/14: £628 million).
Retail capital expenditure52 weeks to 14 March 2015 2015 2014
New store development (£m) 425 418
Extensions and refurbishments (£m) 284 274
Other - including supply chain and IT (£m) 238 196
Core retail capital expenditure (£m) 947 888
Acquisition of freehold and trading properties (£m)1 (9) 41
Proceeds from property transactions (£m)2 3 (301)
Net retail capital expenditure (£m) 941 628
Capex/sales ratio (%)3 3.7 3.4
1 2014/15 balance includes income from Harvest, our JV with Land Securities, relating to the repayment of a loan.
2 Includes movement in timing of capital debtors and creditors.
3 Core retail capital expenditure divided by retail sales (including fuel, including VAT).
In 2015/16, Sainsbury's expects core retail capital expenditure (excluding Sainsbury's Bank) to be around £550 million.
Return on capital employed
The return on capital employed ('ROCE') over the 52 weeks to 14 March 2015 was 9.7 per cent (2013/14: 11.3 per cent), a
decrease of 157 basis points year-on-year. ROCE is enhanced by the net pension deficit, which reduces capital employed.
ROCE excluding the net pension deficit over the 52 weeks to 14 March 2015 was 9.0 per cent (2013/14: 10.4 per cent), a
year-on-year decrease of 149 basis points. ROCE decline was due to the fall in underlying operating profit driven by lower
LFL sales, partly offset by the non-cash impairment and onerous contract charge of £628 million, reducing closing capital
employed.
Return on capital employed52 weeks to 14 March 2015 2015 20142
Underlying operating profit (£m) 782 879
Underlying share of post-tax profit from JVs (£m) 6 30
Underlying profit before interest and tax (£m) 788 909
Average capital employed (£m)1 8,136 8,073
Return on capital employed (%) 9.7 11.3
Return on capital employed (excluding pension fund deficit) (%) 9.0 10.4
52 week ROCE movement to 14 March 2015 (157)bps
52 week ROCE movement to 14 March 2015 (excluding pension fund deficit) (149)bps
1 Average of opening and closing net assets before net debt.
2 The closing capital employed for the 52 weeks to 15 March 2014 has been reduced by 50 per cent of Sainsbury's Bank
consolidated net assets (£243 million) to reflect the fact that the Bank was only consolidated in the accounts for four
weeks of the 2013/14 financial year.
Summary balance sheet
Shareholders' funds as at 14 March 2015 were £5,539 million (15 March 2014: £6,005 million), a decrease of £466 million,
mainly attributable to the non-cash impairment and onerous contract charge of £628 million.
The book value of property, plant and equipment, including land and buildings, decreased by £240 million (excluding
Sainsbury's Bank) since the year-end driven by the impairment, offset by continued space growth.
Net debt was £41 million lower than at 15 March 2014 driven by improvements in retail working capital, partly offset by
increases in capital expenditure and lower profit.
Sainsbury's Bank net assets at 28 February 2015 of £504 million (28 February 2014: £485 million) have been consolidated and
separately identified.
Adjusted net debt to EBITDAR was 4.1 times (2013/14: 3.9 times) and interest cover reduced to 7.4 times (2013/14: 8.2
times). Fixed charge cover reduced to 2.9 times (2013/14: 3.1 times). Gearing increased year-on-year to 42.3 per cent (15
March 2014: 39.7 per cent) as a result of the reduction in equity shareholder funds. Excluding the pension deficit, gearing
increased to 37.9 per cent (15 March 2014: 35.7 per cent).
Summary balance sheet (Sainsbury's Bank separated)
at 14 March 2015 2015 2014 Movement
£m £m £m
Land and buildings (freehold and long leasehold) 6,890 7,127 (237)
Land and buildings (short leasehold) 791 751 40
Fixtures and fittings 1,941 1,984 (43)
Property, plant and equipment 9,622 9,862 (240)
Other non-current assets 828 790 38
Inventories 997 1,005 (8)
Trade and other receivables 294 290 4
Sainsbury's Bank assets1 4,267 4,113 154
Cash and cash equivalents 403 367 36
Debt (2,746) (2,751) 5
Net debt (2,343) (2,384) 41
Trade and other payables and provisions (3,712) (3,364) (348)
Retirement benefit obligations, net of deferred tax (651) (679) 28
Sainsbury's Bank liabilities1 (3,763) (3,628) (135)
Net assets 5,539 6,005 (466)
Key financial ratios
Adjusted net debt to EBITDAR2 4.1 times 3.9 times
Interest cover3 7.4 times 8.2 times
Fixed charge cover4 2.9 times 3.1 times
Gearing5 42.3% 39.7%
Gearing (excluding pension deficit)6 37.9% 35.7%
1 As at 28 February.
2 Net debt of £2,343 million plus capitalised lease obligations of £5,417 million (5.5 per cent discount rate),
divided by Group underlying EBITDAR of £1,890 million.
3 Underlying profit before interest and tax divided by underlying net finance costs.
4 Group underlying EBITDAR divided by net rent and underlying net finance costs.
5 Net debt divided by net assets.
6 Net debt divided by net assets, excluding pension deficit.
As at 14 March 2015, Sainsbury's estimated market value of properties, including our 50 per cent share of properties held
within property JVs, was £11.1 billion (15 March 2014: £12.0 billion). The £0.9 billion decrease year-on-year was mainly
due to a reduction in market rental values which has impacted the portfolio value by £0.6 billion, as well as a £0.2
billion non-cash impairment taken in the first half. The summary balance sheet presented above discloses Sainsbury's Bank
assets and liabilities separately to aid interpretation. A summary balance sheet is also presented with Sainsbury's Bank
consolidated by line.
Summary balance sheet (Sainsbury's Bank consolidated)
at 14 March 2015 2015 2014 Movement
£m £m £m
Land and buildings (freehold and long leasehold) 6,892 7,127 (235)
Land and buildings (short leasehold) 791 751 40
Fixtures and fittings 1,965 2,002 (37)
Property, plant and equipment 9,648 9,880 (232)
Other non-current assets 2,411 2,234 177
Inventories 997 1,005 (8)
Trade and other receivables 2,070 1,716 354
Sainsbury's Bank cash and cash equivalents 882 1,225 (343)
Cash and cash equivalents 403 367 36
Debt (2,746) (2,751) 5
Net debt (2,343) (2,384) 41
Trade and other payables and provisions (7,475) (6,992) (483)
Retirement benefit obligations, net of deferred tax (651) (679) 28
Net assets 5,539 6,005 (466)
Defined benefit pensions
As at 14 March 2015, the post-tax pension deficit was £651 million, an improvement of £28 million year-on-year (15 March
2014: £679 million). The year-on-year reduction in the deficit was driven by outperformance of assets, partly offset by a
fall in the real discount rate that increased the present value of funded obligations. Sainsbury's defined benefit pension
scheme was closed to future accrual from September 2013.
Retirement benefit obligations
at 14 March 2015 2015£m 2014£m
Present value of funded obligations (7,680) (6,855)
Fair value of plan assets 6,988 6,131
Pension deficit (692) (724)
Present value of unfunded obligations (16) (13)
Retirement benefit obligations (708) (737)
Deferred income tax asset 57 58
Net retirement benefit obligations (651) (679)
Enhanced disclosure
In response to the Financial Reporting Council issued press notice in December 2014, calling on boards of retailers,
suppliers and other businesses to provide investors with sufficient information on their accounting policies, judgements
and estimates arising from their complex supplier arrangements, we have provided additional information explaining the
types of supplier income at Sainsbury's and any significant judgements and estimates.
Supplier incentives, rebates and discounts, collectively known as 'supplier income', are recognised within cost of sales on
an accruals basis as they are earned for each relevant supplier contract. These fall into three key categories:
· Discounts and supplier incentives, representing the majority of all supplier income, linked to individual unit sales.
The incentive is typically based on an agreed sum per item sold on promotion for a period. These are calculated through a
mechanical process with no judgement and estimation involved in recording the income received, which is collected in a
timely manner throughout the period.
· Fixed amounts agreed with suppliers primarily to support in-store activity including promotions, such as utilising
specific space. These involve a degree of judgement and estimation in ensuring the appropriate cut-off of arrangements for
fixed amounts which span period-end. These require judgement to confirm that the terms of the arrangement are satisfied and
that amounts are recognised in the correct period.
· Supplier rebates are typically agreed on an annual basis, aligned with the financial year and are earned based on
pre-agreed targets, mainly linked to sales. These require estimates of the income earned up to the balance sheet date, for
each relevant supplier contract. Where agreements span a financial period-end, estimations are required of projected
turnover and judgement may also need to be applied to determine the rebate level earned as agreements may involve multiple
tiers. In order to minimise any risk arising from estimation, supplier confirmations are also obtained to agree the value
to be recognised at year-end, prior to it being invoiced. Rebates represent the smallest element of Sainsbury's supplier
income and by aligning the agreements to Sainsbury's financial year where possible, judgements required are minimised.
Supplier income represents a material deduction to cost of sales and directly affects the Group's reported margin. The
supplier arrangements resulting in this supplier income can be complex, with income spanning multiple products over
different time periods, and there can be multiple triggers and discounts.
We have not disclosed the quantum of supplier income within the Group income statement as this information is commercially
sensitive. We have not disclosed the quantum of supplier income within the balance sheet as the amounts are considered to
be not significant in the context of the balance sheet as a whole and give no further understanding or comparability to
others companies for the reader of the financial statements.
Group income statement
for the 52 weeks to 14 March 2015
2015 2014
Note £m £m
Revenue 4 23,775 23,949
Cost of sales (22,567) (22,562)
Gross profit 1,208 1,387
Administrative expenses (1,132) (444)
Other income 5 66
Operating profit 81 1,009
Finance income 5 19 20
Finance costs 5 (180) (159)
Share of post-tax profit from joint ventures and associates 8 28
(Loss)/profit before tax (72) 898
Analysed as:
Underlying profit before tax 681 798
Profit on disposal of properties 3 7 52
Investment property fair value movements 3 7 -
Retail financing fair value movements 3 (30) (8)
IAS 19 pension financing charge 3 (31) (23)
Defined benefit pension scheme expenses 3 (6) (7)
Acquisition adjustments 3 13 18
One-off items 3 (713) 68
(72) 898
Income tax expense 6 (94) (182)
(Loss)/profit for the financial year (166) 716
(Loss)/earnings per share 7 pence pence
Basic (8.7) 37.7
Diluted (8.7) 36.9
Underlying basic 26.4 32.8
Underlying diluted 25.7 32.2
Dividends per share 8 pence pence
Interim 5.0 5.0
Proposed final (not recognised as a liability at balance sheet date) 8.2 12.3
Group statement of comprehensive income
for the 52 weeks to 14 March 2015
2015 2014
£m £m
(Loss)/profit for the financial year (166) 716
Items that will not be reclassified subsequently to the income statement
Remeasurements on defined benefit pension schemes (19) (326)
Current tax relating to items not reclassified 6 34
Deferred tax relating to items not reclassified (1) 19
(14) (273)
Items that may be reclassified subsequently to the income statement
Currency translation differences 3 (2)
Available-for-sale financial assets fair value movements
Group (39) 34
Items reclassified from available-for-sale assets reserve 1 -
Cash flow hedges effective portion of fair value movements
Group (13) (43)
Joint ventures and associates 3 2
Items reclassified from cash flow hedge reserve 21 4
Current tax relating to items that may be reclassified - (1)
Deferred tax relating to items that may be reclassified 9 (2)
(15) (8)
Total other comprehensive loss for the financial year (net of tax) (29) (281)
Total comprehensive (loss)/income for the financial year (195) 435
Groupbalance sheet
At 14 March 2015 and 15 March 2014
2015 2014
Note £m £m
Non-current assets
Property, plant and equipment 9,648 9,880
Intangible assets 325 286
Investments in subsidiaries - -
Investments in joint ventures and associates 359 404
Available-for-sale financial assets 184 255
Other receivables 83 26
Amounts due from Sainsbury's Bank customers 1,412 1,292
Derivative financial instruments 21 28
12,032 12,171
Current assets
Inventories 997 1,005
Trade and other receivables 471 433
Amounts due from Sainsbury's Bank customers 1,599 1,283
Derivative financial instruments 69 49
Cash and bank balances 9b 1,285 1,592
4,421 4,362
Non-current assets held for sale 84 7
4,505 4,369
Total assets 16,537 16,540
Current liabilities
Trade and other payables (2,961) (2,692)
Amounts due to Sainsbury's Bank customers and banks (3,395) (3,245)
Borrowings (260) (534)
Derivative financial instruments (75) (65)
Taxes payable (188) (189)
Provisions (44) (40)
(6,923) (6,765)
Net current liabilities (2,418) (2,396)
Non-current liabilities
Other payables (265) (204)
Amounts due to Sainsbury's Bank customers and banks (266) (302)
Borrowings (2,506) (2,250)
Derivative financial instruments (38) (21)
Deferred income tax liability (215) (227)
Provisions (77) (29)
Retirement benefit obligations 11 (708) (737)
(4,075) (3,770)
Net assets 5,539 6,005
Equity
Called up share capital 548 545
Share premium account 1,108 1,091
Capital redemption reserve 680 680
Other reserves 146 127
Retained earnings 3,057 3,560
Equity attributable to owners of the parent 5,539 6,003
Non-controlling interests - 2
Total equity 5,539 6,005
Total equity
5,539
6,005
Group cash flow statement
for the 52 weeks to 14 March 2015
2015 2014
Note £m £m
Cash flows from operating activities
Cash generated from operations 9a 1,136 1,227
Interest paid (134) (148)
Corporation tax paid (91) (140)
Net cash generated from operating activities 911 939
Cash flows from investing activities
Purchase of property, plant and equipment (951) (916)
Purchase of intangible assets (78) (13)
Proceeds from disposal of property, plant and equipment 40 335
Acquisition of subsidiaries net of cash acquired (6) 1,016
Increase in loans to joint ventures - (7)
Investment in joint ventures (12) (13)
Proceeds from repayment of loan to joint venture 17 4
Interest received 20 20
Dividends and distributions received 70 -
Net cash (used in)/generated from investing activities (900) 426
Cash flows from financing activities
Proceeds from issuance of ordinary shares 19 19
Proceeds from short-term borrowings - 200
Repayment of short-term borrowings (381) (200)
Proceeds from long-term borrowings 674 250
Repayment of long-term borrowings (240) (206)
Purchase of own shares (18) -
Repayment of capital element of obligations under finance lease payments (29) (25)
Interest elements of obligations under finance lease payments (9) (8)
Dividends paid 8 (330) (320)
Net cash used in financing activities (314) (290)
Net (decrease)/increase in cash and cash equivalents (303) 1,075
Net opening cash and cash equivalents 1,579 504
Closing cash and cash equivalents 9b 1,276 1,579
Closing cash and cash equivalents
9b
1,276
1,579
Group statement of changes in equity
for the 52 weeks to 14 March 2015
Called up share capital Share premium account Capital redemption and other reserves Retained earnings Total Non-controlling interests Total equity
Note £m £m £m £m £m £m £m
At 16 March 2014 545 1,091 807 3,560 6,003 2 6,005
Loss for the year - - - (166) (166) - (166)
Other comprehensive (loss)/income:
Currency translation differences - - 3 - 3 - 3
Remeasurements on defined benefit pension schemes (net of tax) - - - (14) (14) - (14)
Available-for-sale financial assets fair value movements (net of tax):
Group - - (30) - (30) - (30)
Items reclassified from available-for-sale financial asset reserve - - 1 - 1 - 1
Cash flow hedges effective portion of changes in fair value (net of tax):
Group - - (13) - (13) - (13)
Joint ventures - - 3 - 3 - 3
Items reclassified from cash flow hedge reserve - - 21 - 21 - 21
Total comprehensive loss for the year ended 14 March 2015 - - (15) (180) (195) - (195)
Transactions with owners:
Dividends paid 8 - - - (330) (330) - (330)
Convertible bond - equity component - - 39 - 39 - 39
Amortisation of convertible bond - equity component - - (5) 5 - - -
Share-based payment (net of tax) - - - 21 21 - 21
Purchase of own shares - - - (18) (18) - (18)
Shares vested - - - 9 9 - 9
Allotted in respect of share option schemes 3 17 - (12) 8 - 8
Purchase of non-controlling interest - - - 2 2 (2) -
At 14 March 2015 548 1,108 826 3,057 5,539 - 5,539
At 17 March 2013 541 1,075 820 3,401 5,837 1 5,838
Profit for the year - - - 716 716 - 716
Other comprehensive income/(loss):
Currency translation differences - - (2) - (2) - (2)
Remeasurements on defined benefit pension schemes (net of tax) - - - (273) (273) - (273)
Available-for-sale financial assets fair value movements (net of tax):
Group - - 31 - 31 - 31
Cash flow hedges effective portion of changes in fair value (net of tax):
Group - - (43) - (43) - (43)
Joint ventures
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