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J Sainsbury plc Annual Report and FinancialStatements 2024
Good food
for all of us
Annual Report and
FinancialStatements
2024
We make good food joyful, accessible
and affordable for everyone, every day
Offering delicious, great quality food at competitive
prices has been at the heart of what we do since
Sainsbury’s was founded in 1869. Today, inspiring
and delighting our customers with tasty food remains
our priority.
Our Next Level Sainsbury’s strategy is about giving
customers more of what they come to Sainsbury’s for
– outstanding value, consistently excellent quality
and great service.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 1
Performance highlights
Strategic Report
1 Performance highlights
2 Chair’s letter
4 Chief Executive’s letter
8 Our business model
10 Our strategy
12 Delivering on our outcomes
15 Plan for better
18 Our people
22 Our Section 172 statement
23 Engaging with our stakeholders
30 Climate change and Task Force on
Climate-related FinancialDisclosures
(TCFD)
41 Climate Transition Plan (TCFD)
44 Key performance indicators
46 Financial review
53 Principal risks and uncertainties
62 Statement of viability
64 Non-financial and sustainability
information statement
Governance Report
66 Introduction to the governance report
68 J Sainsbury plc – Board of Directors 2024/25
71 J Sainsbury plc – Operating Board 2024/25
73 Board leadership and Company purpose
81 Composition, succession and evaluation
84 Division of responsibilities
85 Nomination and Governance
Committeereport
89 Corporate Responsibility and Sustainability
Committee report
92 Audit Committee report
99 Annual Statement from the Remuneration
Committee Chair
102 Summary of 2023/24 remuneration
decisions
103 Summary of remuneration for 2024/25
104 Remuneration in context
106 Annual Report on Remuneration
118 Additional statutory information
Financial Statements
123 Statement of Directors’ responsibilities
124 Independent auditor’s report to the
members of J Sainsbury plc
132 Consolidated income statement
133 Consolidated statement of comprehensive
income/(loss)
134 Consolidated balance sheet
135 Consolidated statement of changes
inequity
136 Consolidated cash flow statement
137 Notes to the consolidated financial
statements
194 Company balance sheet
195 Company statement of changes in equity
196 Notes to the Company financial statements
199 Alternative performance measures (APMs)
204 Additional shareholder information
206 Glossary
See our KPIs
on pages 44 to 45
Financial highlights Non-financial highlights
6.8%
Retail sales growth (excl. fuel) versus the 2022/23 financial
year. Including fuel sales increased 3.2%
£780m
Invested in lowering prices over the past three years,
sincethe launch of Food First strategy
£701m
Underlying profit before tax, up 1.6% versus the 2022/23
financial year
£500m
Invested into colleague pay over three years
22.1p
Underlying basic earnings per share, down 3.9% versus 23.0p
in the 2022/23 financial year. Basic earnings per share 5.9p
51.7%
Reduction in absolute greenhouse gas emissions within
ourown operations, from our 2018/19 baseline
£639m
Retail free cash flow, versus £645 million in the 2022/23
financial year. Statutory net cash generated from operating
activities was £1,965 million, versus £2,170 million in the
2022/23 financial year
£36m
Raised for good causes
£966m
Retail underlying operating profit, up 4.3% versus the
2022/23 financial year
12.9%
Relative reduction in own brand plastic packaging, from our
baselines in 2018 for food and 2020 for general merchandise
£277m
Statutory profit before tax down 15.3% versus the 2022/23
financial year
8.3%
Return on capital employed, up 70 basis points versus the
2022/23 financial year
Strategic Report Governance Report Financial Statements
2 J Sainsbury plc Annual Report and Financial Statements 2024
Chair’s letter
We had another strong year
at Sainsbury’s, continuing
todeliver for our customers,
colleagues and shareholders
and deepening our
relationships with suppliers.
As we look back on our performance over the last year, our results reflect the
success of our three-year Food First strategy and provide a strong platform
from which to grow as we progress our new Next Level Sainsbury’s plan.
Reflecting on Food First
The Food First strategy has transformed Sainsbury’s, creating a stronger
business with a much sharper value position and a refreshed focus on
innovation. Customers have recognised the progress we’ve made, as our
market share gains have shown.
The sector continues to face huge pressures, with an increasingly complex
and cost-heavy legislative environment. We have proven our resilience
against significant macroeconomic challenges and, against this backdrop,
we have supported our customers and colleagues. We invested £780 million
over the last three years in value and passing on cost savings to customers,
helping transform our value proposition. We also invested £500 million in
colleague pay over three years, including our biggest ever single investment
in colleague pay in March of this year.
We delivered on our priorities and continue to make bold decisions to speed
up the pace of change and development across the business. Over the course
of Food First, we delivered a £1.3 billion cost savings programme, improving
the structural efficiency of the business and enabling us to continue to
invest at scale where it matters most. Our programme to transform our
Argos store estate has also been significantly progressed, driving the
digitisation and resilience of Argos.
Over the last year, we have also made necessary decisions to improve our
business model. In January, we announced 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.
We remain firmly committed to protecting our planet, helping customers
move to healthier and more sustainable diets and supporting our suppliers,
colleagues and the broader communities we operate in. Our accelerated
carbon reduction targets have been approved by the Science Based Targets
Initiative and we have reduced plastic packaging from our own brand
products by 12.9 per cent in relative terms versus our baseline. Read more on
our Plan for Better progress on page 15.
Our updated strategy and commitments
We have spent the past three years putting food back at the heart of the
business and now, as we look ahead at the next three years, our new Next
Level Sainsbury’s strategy will build on this momentum. We have 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.
To progress our Next Level Sainsbury’s plan, we are making eight commitments
that we will deliver over the three years to March 2027. First, we will deliver
grocery volume growth ahead of the market. This commitment is
underpinned by our transformed value perception, great range and
consistently high levels of customer service.
Next, we commit to deliver profit leverage from sales growth. This means
we’ll put more volume over our largely fixed cost base. We will invest to
bring more of our range to more customers, particularly enhancing choice
infresh food, and will create more space for food in many locations.
Weexpect this to be a key driver of grocery volume gains.
We’ve built a leadership position on customer satisfaction over the other
fullchoice competitors in the market and we’re really committed, over the
life of this plan, to build on this level of performance. Our core belief is that
well-motivated and engaged colleagues deliver excellent service, leading to
higher productivity. This is why we will maintain our commitment to invest
in our people and continue to improve productivity over the course of this
plan, with colleague engagement ahead of where we are now by March 2027.
We’re fully committed to our goal of reaching net zero by 2035 in our own
operations and to delivering all of our commitments across healthier diets,
climate, nature and people. This is why Plan for Better is integrated into
each of our four key outcomes and will continue to underpin our ambitions
into the future.
We’re also committing to deliver £1 billion of structural cost savings over the
life of this plan, improving efficiency, offsetting operating cost inflation and
enabling us to continue to invest in the customer offer.
Our strong financial position and momentum mean we’re able to invest
more capital to drive growth and strengthen the key strategic capabilities of
this business in areas like technology and automation. We will be investing
with a clear focus on efficiencies and productivity, helping drive higher
returns. We will capitalise on our scale and invest at a time when many
others can’t, further building on our competitive advantage and reducing
our cost base.
This higher level of capital investment is balanced with a reinforced
commitment to strong free cash flow generation– at least £500 million
every year, growing as we deliver higher profits.
We have committed to delivering stronger returns for our shareholders.
Specifically, a progressive dividend from the start of the next financial year
and a share buyback programme, starting with a £200 million buyback this
financial year.
Building a business for the future
As we look ahead to the next three years and well beyond, we’re driven by
aclear purpose: to make good food joyful, accessible and affordable for
everyone, every day. Our new purpose is all about how we deliver for our
customers, how we do business and how we work right across our industry
to create a more sustainable UK food system. Central to this is our Plan for
Better. It is a core part of our broader strategy and is fully integrated into
theway we operate as a business, driving improved commercial and
sustainability outcomes. The way we partner with our suppliers is vital
tothis, with longer term relationships that will help to drive the resilience
ofour businesses and the broader food system.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 3
Through our Plan for Better, we have reduced our carbon emissions by
transitioning to 100 per cent renewable electricity across the whole of our
store estate through the long-term purchasing of new-to-planet energy,
significantly reducing our reliance on fossil fuels. 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.
We continue to build on this progress and to evolve our ambitions around
key issues, including healthy, sustainable diets; plastic and nature –
growing sales of plant-rich foods, improving protein diversity, considering
packaging holistically and protecting and restoring nature. We will continue
to work with our entire value chain, supporting our suppliers wherever
wecan – including through longer-term partnerships. We also remain
committed to supporting our colleagues and will be setting out new
genderand ethnicity targets to further increase diverse representation.
Financial Review
We delivered another strong performance this year, demonstrating the
success of our Food First strategy, with profit and free cash flow results
above the top end of our guidance range. Our grocery performance was
particularly strong, with record market share gains and volume growth
accelerating every quarter. This delivered better profit leverage, with retail
underlying operating profit of £966 million, up 4.3 per cent versus 2022/23
asthe strong grocery performance and continued strong delivery of cost
savings more than offset softer Argos trading. Including a weaker contribution
year-on-year from Financial Services and higher finance costs, underlying
profit before tax of £701 million, up 1.6 per cent versus 2022/23.
Statutory profit before tax was £277 million, which was down 15.3 per cent
on 2022/23, with non underlying items predominantly reflecting impairments
relating to the restructuring of the Financial Services division. Retail free
cashflow was £639 million, broadly flat year-on-year.
Net debt including leases reduced by £790 million to £5,554 million,
reflecting strong cash generation and a £372 million reduction as a result of
the Highbury and Dragon property transaction. Underlying basic earnings
per share was 22.1 pence and basic earnings per share was 5.9 pence, with
both reflecting the impact of the increase in the corporation tax rate.
It should also be noted that over the last three years we have paid over
£2.8billion in taxes borne. This includes £1.38 billion of business rates,
£646million in Employer’s National Insurance Contributions and £181 million
in Corporation Tax, as well as other tax obligations. As we strive to invest in
ourcolleagues and deliver consistently great value, a reformed business
ratessystem would enable us to do even more. Long-term reform will not
onlybenefit Sainsbury’s, but boost growth, create jobs and revitalise our
highstreets.
More information on our financial performance can be found in the
Financial Review on page 46.
Delivering for our shareholders
The Board proposed a final dividend of 9.2 pence, bringing the full-year
dividend to 13.1 pence per share, which is in line with last year. Our policy of
paying a dividend of around 60 per cent of underlying earnings has allowed
us to maintain a full-year dividend which is flat year-on-year, despite the
impact on underlying earnings per share of the higher corporation tax rate.
Remuneration
When determining incentive outcomes and total remuneration received by
the Executive Directors, the Remuneration Committee carefully assesses
performance against a framework – including several factors, like executive
pay in the context of the broader workforce and investments – to ensure
that incentive outcomes are aligned to the underlying performance of the
business and the experience of shareholders.
Simon’s remuneration for the year reflects the strong performance of the
business over the period and considers the prevailing market and economic
conditions. Under Simon’s leadership, Sainsbury’s has made great progress
in delivering the Food First strategy as well as developing the Next Level
strategy, including operating model changes that will deliver further
costsavings.
For more information on this year’s remuneration awards, please see
pages99 to 117.
Operating board changes
We move into the next phase of our strategy with a more focused structure
for our Operating Board, now with eight members.
To help drive Next Level Sainsbury’s, Graham Biggart has taken on new
responsibilities as Chief Transformation Officer and General Merchandise
Commercial Officer, helping to further accelerate both our transformation
and our performance. Rhian Bartlett’s role on the Operating Board is now
Chief Food Commercial Officer, recognising the continued acceleration of
our Food First strategy. This change to our leadership came as Paula Nickolds,
General Merchandise Commercial Director, made the decision to leave the
business, having led much progress across Argos, Habitat and Tu.
Jim Brown, Chief Executive Officer of Sainsbury’s Bank, decided to retire.
Jimjoined the business in 2019 and his strategy to align Financial Services
to loyal Sainsbury’s customers resulted in the Bank paying its first dividend
in 2022. Robert Mulhall has been appointed as CEO of Sainsbury’s Bank,
reporting into the Bank Board and connecting into the Sainsbury’s Operating
Board via Bláthnaid Bergin, our Chief Financial Officer.
Finally, Tim Fallowfield has decided to retire from his role as Company
Secretary and Corporate Services Director at our AGM in July, after more
than 22 years with Sainsbury’s. Tim joined the business in 2001, becoming
an Operating Board Director in 2004 and he has made a major contribution
to Sainsbury’s. His role as our Board sponsor for disability and carers and his
leadership and support to the Government in raising awareness of the
benefits of recruiting, retaining and developing disabled people led to his
being awarded an OBE in the 2020 New Years Honours List.
I would like to personally thank Jim, Paula and Tim, who have each made an
outstanding contribution to the success of Sainsbury’s and we wish them all
the very best for the future.
Final thoughts
I would like to thank all of my colleagues; you are at the heart of everything
we do at Sainsbury’s and your dedication to serving and helping every
customer is critical to the long-term success of our business.
I also want to thank the Operating Board and Simon for their huge efforts
and support over the past year. There is no clearer demonstration of the
ability of this management team to execute than the progress the business
has made in the last three years. The Board and I have seen the impact this
has made throughout the organisation. When I look to the new Next Level
Sainsbury’s strategy we’ve set out, it is ambitious but it is also grounded in
the progress we’ve made and I have every confidence in the ability of Simon
and his team to deliver.
Martin Scicluna
Chair
24 April 2024
Strategic Report Governance Report Financial Statements
4 J Sainsbury plc Annual Report and Financial Statements 2024
Chief Executive’s letter
As we embark on the next
phase of our strategy,
NextLevel Sainsbury’s,
Simon Roberts reflects on
the last three years, why
food is now firmly back at
the heart of Sainsbury’s
andhow we are delivering
for customers, colleagues,
communities and
shareholders.
When John James and Mary Ann Sainsbury opened their very first store in
1869, their purpose was clear: to provide good quality food at affordable
prices. More than 150 years later, I am proud to say Sainsbury’s has stayed
true to these values.
Over the last three years, we have reset the business and food is now firmly
back at its heart. It’s from this position that in February, we launched our
new purpose: We make good food joyful, accessible and affordable for
everyone, every day. This is a clear statement of our intent and commitment
about what Sainsbury’s is here to do consistently, every day. Above all else,
it sets a high bar for our future ambition.
It is our purpose that has driven every decision we have made in building
our strategy for Next Level Sainsbury’s – and we believe that to deliver on
our plan and purpose means us taking a leading role in building a more
resilient UK food system. We are, first and foremost, a food company and
weknow that making the difference here will be fundamental to ensuring
we develop and grow our business for decades to come.
The last three years
Food First was all about refocusing and resetting Sainsbury’s core food business.
And we have delivered. We have significantly improved our value,
innovation, availability and service. More customers are now doing more of
their grocery shopping with us and this is driving record market share gains
and volume growth.
When we launched Food First in November 2020 we were just too expensive.
Since then we have invested £780 million into lowering our prices, fundamentally
resetting our competitive position. While some of this investment has been
in specific response to support our customers through a period of higher
food inflation, our major strategic focus since 2020 has been to consistently
deliver much better value for all our customers. We have transformed our
value position and significantly improved price perception with customers.
Nectar Prices has been a game changer, bringing market leading offers
across our food and grocery range: launched in April 2023 with just a few
hundred products, Nectar Prices are now available on around 7,000 products
across our stores and online, saving customers £12 on a typical £80 shop.
Wehave also continued to grow Aldi Price Match, now with over 600products,
at least 75 per cent of which are Healthy or Better for you products. Most
recently, we launched our newest value proposition, Low Everyday Prices, on
over 1,000 big brand products, giving customers the reassurance that
whatever is in their basket and trolley, they can always besure of great
value at Sainsbury’s.
£780m
investment in lowering prices
over three years
Nectar Prices on around
7,000
products
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 5
While significantly improving our value position, we have not compromised
on quality. In fact, we have made a step-change in our quality and product
innovation, launching over 4,000 new products over the last three years and
at the same time reformulating, or improving, thousands more. Our Taste
the Difference product ranges have been particularly popular with
customers and sales have grown to £1.6 billion this year. Taste the Difference
is proportionately the biggest premium own label brand of the full choice
grocers and has contributed to our market outperformance through every
key seasonal event of the year.
Over the last three years, our Brands that Deliver – Argos, Nectar, Tu, Habitat,
Sainsbury’s Bank – have been refocused to ensure that they contribute
positively in their own right and support our core food business. We have
made real progress, but we still have further to go here.
Argos has been through a major transformation in the past three years, moving
from a catalogue business to become a digital-first retailer – we have
integrated Nectar, improved our same-day coverage and now 70 per cent
ofArgos sales start online. As a result of these changes and in response to
changing customer shopping behaviours, nearly 70 per cent of online
Click&Collect orders are now available for immediate collection from over
1,000 Argos collection points. All of this has enabled Argos to become a
structurally more resilient business with a lower cost to serve than in
previous years. We have taken more than three percentage points out of
ourcosts to sales ratio and improved the core profitability of the business.
The job of continuing to transform and improve Argos, of course, continues
as this will always be a cyclical business. As technology and customer
behaviour continues to change, there will always be more to do, which
weare addressing through Next Level Sainsbury’s.
Looking to our other brands, our trading approach on Tu over the period of
Food First has delivered a more profitable sales mix, with higher full price
sales and stronger gross margins. However, clothing sales declined over the
last year, given both the more promotional market dynamics and more
periods of unseasonable weather. Some of our clothing ranges also weren’t
where they needed to be and we had interruptions in availability in the final
quarter. We have taken action to improve our ranges and availability as we
look ahead.
Turning to our Financial Services business, we announced in January a
phased withdrawal from core banking, so while it is business as usual for our
customers for now, the financial services we continue to offer in the future
will be provided by dedicated financial services providers through a
distributed model.
We are really clear we are a food first, people first business. I am proud we
again led our industry in improving colleague pay and in making the right
decisions to support and invest in our people over the last three years. This
is because we fundamentally believe that the more engaged our colleagues
are, the better customer service we deliver and the more productive we can
become. Our approach has led us to achieve improved customer satisfaction,
ahead of our competitors over the last three years and more people are now
choosing Sainsbury’s more often.
Since 2018, we have increased colleague pay at Sainsbury’s by 50 per cent.
InJanuary this year we became the first full choice supermarket to
announce we would pay colleagues £12 per hour nationally, £13.15 in London.
This brings our rate of pay in line with the new Real Living Wage and takes
our three-year total investment in colleague pay to over £500 million.
Wealso announced that we would extend free food during shifts and
increase the frequency of additional colleague discounts.
Having a diverse workforce is so important to us. Three years ago we set
ourselves ambitious gender and ethnicity targets because it matters that
Sainsbury’s is a place where everyone can thrive and where our leadership
reflects the colleagues and communities we serve. While we haven’t met
allof our targets given the high bar we set, I am pleased to report we have
made significant progress. Representation of women, ethnically diverse and
black colleagues in senior leadership have all increased and we were one of
only two retailers in the Times Top 50 list for gender equality. There is clearly
still much more to do in working to build on our industry leading position
and we will be setting out our gender and ethnicity targets for the next
threeyears as part of Next Level Sainsbury’s.
We are a food first,
people first business.
Simon Roberts
Chief Executive
We have increased
colleague pay by
50%
since 2018
We work with over
15,000
British farmers
Strategic Report Governance Report Financial Statements
6 J Sainsbury plc Annual Report and Financial Statements 2024
Chief Executive’s letter continued
The last three years continued
Turning to our suppliers, we recognise the significant pressures faced in
foodsupply chains, particularly with our farmers and growers. We work with
over 15,000 British farmers, sourcing £2 billion worth of produce every year
– and our close relationships give us real insight into the issues they are
facing. From increasing business operating costs and climate change to
policy challenges, we are committed to working together with our suppliers
to build resilience in their businesses, benefitting not just our supply chain
but ultimately, the resilience of the UK food system. That’s why, over the
past two years, we have moved increasingly to offering longer term
contracts with a number of our key suppliers, providing them with the
security theyneed to plan and invest in their businesses. We are also
working in collaboration with many of our suppliers on new and emerging
methods of production and with new technologies, allowing us to develop
better surety of supply, while helping us towards achieving targets across
our Plan for Better. For example, working with ABP Food Group and more
than 540 trusted British farmers, in September we launched a new, first to
market reduced carbon beef range, offering high quality, great tasting
steak, with 25 per cent reduced carbon compared to the industry average.
I’ve addressed the investments and the consistent and balanced choices we
have prioritised for our customers, colleagues, suppliers and communities
over the last three years. None of these would have been possible without
the significant cost savings delivered through our Save to Invest programme.
We have achieved the £1.3 billion of cost savings we targeted since March
2021, doubling the rate of cost savings compared to the three years prior to
Food First.
We have transformed and simplified our logistics operations and continued
to implement leading automation and machine learning into our food
supply chain, with new systems driving end-to-end efficiencies, reducing
manual tasks and leading to better outcomes across supply chain,
commercial and retail teams.
We made clear choices and deliberate investments over the course of our
Food First strategy to become a more profitable and sustainable business,
doing the right thing for our customers, colleagues and suppliers while
ensuring we deliver for our shareholders. More customers are doing more
oftheir shopping with us, we have more engaged and productive colleagues
and strong relationships with our suppliers and partners. We continue to
invest where it matters, growing our volumes and market share versus our
key competitors and delivering strong financial results, creating long-term
value for our shareholders.
Moving to the Next Level
Our updated strategy, Next Level Sainsbury’s, is driven by our reset and
refreshed purpose. Underpinning our strategy are four outcomes: First
choice for food, Loyalty everyone loves, More Argos, more often and Save
and invest to win. These build on the success of our Food First strategy and
ultimately, will give customers more of what they come to Sainsbury’s for
– outstanding value, unbeatable quality and great service.
First choice for food
While Food First was about refocusing and resetting back on the core food
business, First choice for food represents a very different ambition to bring
more customers to do more of their shopping with us. Currently, only 15 per
cent of our 600 supermarkets offer our full food range and so our key focus
is investing to bring more of our range to more customers. We will be adding
more chilled space to offer more choice from our fresh food range and
improving the look and feel of 180 of our highest potential stores. Through
making more of our food range available to more of our customers, we have
a unique opportunity to drive grocery volume gains by becoming first choice
for more customers.
Within the 180 stores, we will tighten the range and space allocated to
general merchandise , aligning our offer more closely to customers’
groceryshopping missions. By providing customers with more of the
rightproducts they want and in combination with improved profit
densitiesfrom food, we will generate significantly better sales and
profitreturns from our store space.
We will also build on the strength of our supermarket locations and
customer traffic, by investing in our Smart Charge ultra-rapid EV charging
network. We launched Smart Charge at 40 supermarkets this year and will
increase our network over the new financial year as we build on the strength
of our supermarket locations and customer traffic, helping customers to
reduce their carbon emissions.
Over the last three years, we have fully integrated our Plan for Better into
the way we operate and work as a business to drive improved customer,
commercial and sustainability outcomes – and in the way we partner with
our suppliers. Our new purpose is about how we show up for customers, how
we do business and how we work right across our industry. The UK food
system requires significant change – we all know that – and we’re committed
to play a leading role in improving it, focusing on how we source our
products and how we help our customers to have access to good food.
Over the next three years, we are making a clear commitment to enable and
drive food system change, collaborating with all parts of our industry, our
suppliers and policy makers to begin to realise the change we need to see.
Loyalty everyone loves
Our Nectar ecosystem is split in two halves: our customer-facing Nectar
loyalty scheme, rewarding customers with pricing and reward points to be
spent at Sainsbury’s or with one of our nine redemption partners, and
Nectar360, our fully integrated loyalty, insights and media services agency.
Over the last three years, we have made strong progress in developing
ourNectar loyalty scheme, moving towards a more digital customer
experience and building our personalisation capability. However, the
majortransformational change has been the introduction of Nectar Prices,
which has been one of the key drivers in our improved value perception.
We are learning more about the importance of loyalty in grocery for
customers and we have a clear plan to continue growing and strengthening
Nectar within our business, increasing personalisation, improving digital
integration and growing the coalition, while always remaining transparent
with customers over how we use their data.
Our retail media business, part of Nectar360, allows brands to advertise
toour customers in a tailored way to ensure both brands and customers
benefit. We believe retail media has huge untapped potential in the UK and
we aim to build on our first-mover advantage and become world-leading in
our capabilities. We expect Nectar360 to deliver an incremental £100 million
of profit contribution over the next three years.
More Argos, more often
We have been progressing well with our plans to transform Argos,
significantly reducing the standalone store estate and opening many
moreArgos stores and collection points inside Sainsbury’s making it a
moreprofitable business. We have also made changes to how and where
wemove and hold our stock, driving efficiencies through our local
fulfilmentnetwork and making sure we have the right stock close to
customers, at the right time.
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J Sainsbury plc Annual Report and Financial Statements 2024 7
Looking ahead, we have a real opportunity. Half of households in the UK
shop with Argos and the customer feedback on what is most important is
clear: value, convenience and ease. But we are not always front of mind for
customers. By providing a more inspiring range of desirable brands and
design-led own label and encouraging more frequent browsing occasions,
we have ambitions to grow customer basket sizes, frequency of visits and
encourage customers to shop across our full range of products. We also
haveplans in improving our digital proposition, increasing awareness of
ourmarket-leading Click and Collect service and will be continuing our
programme of transforming our operating model, benefitting customers
while providing efficiencies in our business.
Save and invest to win
Our Save to Invest programme has been at the very heart of delivering Food
First, creating the fuel to reinvest back in the customer proposition and reset
our value position. We’ve changed the way this business approaches cost
and we’ve made bold decisions as a team about what really matters,
doubling the rate of our cost saving delivery.
We achieved some big structural wins early in Food First, saving £1.3 billion
over the course of the strategy, and we will continue this momentum with
our new Save and invest to win outcome.
We’re confident we can maintain our current run rate of cost savings, and
sounlock another £1 billion worth of cost savings over the next three years.
Our high returning investments in technology and automation will drive
bigsteps forward in our efficiency and in improving what we deliver for
customers. We’ve signalled before that we will be unlocking productivity
benefits more and more through these end-to-end programmes, taking cost
out of an entire cross functional chain of costs, rather than just looking at
siloed divisional savings.
We enter this next phase of
our strategy with a clear plan,
strong momentum and the
necessary focus to realise
ourgoals, deliver for our
customers, colleagues,
communities and shareholders
and take Sainsbury’s to the
Next Level.
Simon Roberts
Chief Executive
And it’s not just cost and productivity that are benefitting: Plan for Better
targets are integrated across all our outcomes. We are rolling out the latest
in integrated refrigeration and heating technology, removing the need for
fossil fuel gas heating and running on natural CO
2
refrigeration. We have also
committed to buy 100 per cent of the electricity produced by Longhill Burn
Wind Farm, which when all turbines are operating at maximum capacity has
the capability to power up to 33 per cent of our estate. 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.
Save and invest to win is about driving more cost out of our business,
improving our people and technology capabilities, fuelling investment
inourcustomer proposition and as a result, improving our performance.
Inmoving to the next level, we are making strategic and deliberate choices
to invest capital in a very targeted way and with a clear focus on unlocking
further efficiency, driving new capabilities and productivity and enabling
our growth.
Taking Sainsbury’s to the Next Level
We firmly believe that our plan for the next three years will lead to strong
delivery and returns for our shareholders. We are also committing to a
progressive dividend policy from the start of 2024/25 and to the start
ofashare buyback programme, with £200 million of share capital to be
bought back over the course of the year.
We have a fantastic team right across Sainsbury’s. Our people are at the
heart of everything we do and I want to thank every one of my colleagues
for the brilliant job they do in delivering for our customers, supporting each
other and looking after this business.
I feel inspired by our renewed purpose, to make good food joyful, accessible
and affordable for everyone, every day. And to deliver on this, we will be
ambitious and proactive in collaborating with all our stakeholders to drive
the change that will enable a more resilient UK food system.
We enter this next phase of our strategy with a clear plan, strong
momentum and the necessary focus to realise our goals, deliver for our
customers, colleagues, communities and shareholders and take Sainsbury’s
to the Next Level.
Simon Roberts
Chief Executive
24 April 2024
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8 J Sainsbury plc Annual Report and Financial Statements 2024
Our business model
We make goodfood joyful, accessible
andaffordable foreveryone, everyday
We want to be first choice for food, attracting many more people to choose Sainsbury’s as the place they come to for good food
– and play a leading role in creating a sustainable food system in the UK. We create value for stakeholders by building on the
heritage and scale of our food business and our strong assets. Everything we do is underpinned by data and technology
innovation. And the infrastructure that supports our brands enables us to drive value and efficiency.
Find out more about Plan for Better
on page 15
Building on our brand and strong assets
Sainsbury’s
brand and own
brand heritage
Scale
advantage
Second largest
full choice
supermarket
Reputation for
service, quality
and range
Growing
customer base
Volume growth
Nectar and
Nectar360
investment in
loyalty and
personalisation
Financial
strength
Strength in
real estate
and online scale
and capability
Strong supplier
relationships
Winning culture
and higher
productivity
Underpinned by data, technology innovation and capability
Our Plan for Better is integrated into everything we do and critical to building
long-term resilience in our business and across our supply chains. We are committed
to playing a leading role in creating a more sustainable UK food system.
Creating value for our stakeholders
Customers Colleagues Communities Suppliers Shareholders
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J Sainsbury plc Annual Report and Financial Statements 2024 9
The Sainsbury’s difference
Sainsbury’s brands
Sainsbury’s is a trusted, well-loved brand that has been bringing
highquality, great value food to customers for over 150 years.
Argos,Nectar, Tu, Habitat, Smart Charge and Sainsbury’s Bank are
complementary brands and give customers more reasons to shop
with us.
Scale advantage
We offer customers a choice of quality products. We have scale
positions in both food and general merchandise and can profitably
deliver a wide range of products and services to customers. Our scale
also gives us the unique ability to drive collaboration and action
towards a more sustainable UK food system.
Reputation for service, quality
andrange
Customers come to Sainsbury’s for our outstanding customer service
and our 148,000 colleagues are integral to our long-term success. Our
consistent quality, responsible sourcing and tailored assortment in
each store provides customers with everything they need.
Growing customer base
Sainsbury’s is a trusted brand, loved by millions of customers
acrossthe UK. We serve an attractive, growing customer base.
Around70 per cent of the UK population have shopped with
Sainsbury’s over the last year with a bias to a more affluent
sociodemographic than key competitors.
Volume growth
The investments we are making, particularly in our fresh food range,
are helping us to continually grow grocery volumes ahead of the
market, driving profit leverage.
Nectar and Nectar360
Nectar aims to be a world-leading loyalty programme and provides
avital competitive advantage to our food business, our brands and a
wide range of partners. It has strong profit growth prospects through
data monetisation and growing coalitions. It enables us to offer our
customers personalised, joyful rewards for their loyalty. We are
committed to a transparent use of data.
Financial strength
Our strong financial position allows us to reinvest in our customer
offer and make targeted investments in areas like technology, while
also paying dividends and strengthening the balance sheet.
Strength in real estate and
onlinescale
Our stores are well-placed, with a strong presence in the South and in
high footfall convenience locations. This helps us offer customers
complementary products, through Tu, Argos, Habitat and carefully
selected concession partners, as well as complementary services
such as Smart Charge.
We continue to improve the productivity of Groceries Online,
consistently improving the speed of items picked. Last year, Argos
was the UK’s fourth most visited retailer website; we are making good
progress to reduce the number of Argos standalone stores we have
and to offer more Argos stores inside Sainsbury’s stores.
Strong supplier relationships
We are proud of our strong supplier relationships and we work
collaboratively with them over the longer term to grow and
strengthen the resilience of our business and theirs. By improving
technology and simplifying processes we are making it easier for our
suppliers to do business with us.
Winning culture and higher
productivity
We invest in our colleagues. By creating an engaged workforce that is
invested in the progress of the business and the role they play in our
success, and unlocking productivity benefits, we achieve high
retention rates and deliver superior customer service.
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10 J Sainsbury plc Annual Report and Financial Statements 2024
Our strategy
Purpose
Outcomes
Valued
Behaviours
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 11
In February 2024, we set out our
NextLevel Sainsbury’s strategy,
drivenby our new purpose.
Focusing on four key outcomes, our strategy is
designedtogive customers more of what they come
toSainsbury’s for: outstanding value, unbeatable
qualityfood and great service.
First choice for food
Attract many more people tochoose
Sainsbury’s as the place they come to
for good food– and play a leading role
increating a sustainable food system
in the UK
• More food choice for more customers
• Consistent value, every day
• The leader in freshness, availability and innovation
• A complementary range of relevant products and services
• A more resilient food system
More Argos, more often
Unleash and transform Argos around
the three things that have always made
it brilliant – curated range, famously
convenient experience and great value
– so more customers buy more
complete baskets more often
• Famous for convenience
• Inspiring choice, always great value
• Supercharged digital capabilities
• Accessible and relevant credit, care and services
• Next level service, efficiency and stock flow
Loyalty everyone loves
Build a world-leading loyalty platform
– more personalised, joyful, rewarding
and transparent – for everyone
• Personalised, rewarding and integrated loyalty
• Joy and connection beyond transactions
• World-leading Nectar360 capabilities
• Strong coalition of partners
• Always transparent use of data
Save and invest to win
Save £1 billion and invest in
transforming our capabilities – taking
another big leap forward in efficiency,
productivity and customer focus,
continuing to build a platform
forgrowth
• £1 billion of structural cost reduction
• Well-invested technology platform protecting, competing
andunlocking the next level
• Simplified, automated, more process-led business
• Right-sized organisation, set up to win
Plan for Better
Our Plan for Better is fully integrated through the way we operate
as a business to deliver commercial and sustainability outcomes.
Find out more about Plan for Better
on page 15
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12 J Sainsbury plc Annual Report and Financial Statements 2024
Delivering on our outcomes
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 competitors
a)
.
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 been
b)
and we are gaining volumes from all key competitors
c)
. 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 competitors
d)
. 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 years
e)
.
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
market
f)
. 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 event
g)
, 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 market
g)
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 launch
h)
.
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 CO
2
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, son of
Habitat’s founder.
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 deliver 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 points
i)
. We believe more engaged colleagues
deliver better service, and our overall customer satisfaction scores were ahead
of full choice competitors in the year, leading in areas including speed and
ease of checkout and friendliness and availability of colleagues
j)
.
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J Sainsbury plc Annual Report and Financial Statements 2024 13
Convenience sales grew ten per cent, with overall customer satisfaction improving
by five percentage points
k)
. We grew Groceries Online ahead of the market in the
second half
l)
, 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 Online
m)
. 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 sales
n)
, 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 relative reduction 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year
o)
.
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
year
p)
and we have the fourth most visited retail website in the UK
q)
. 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.
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14 J Sainsbury plc Annual Report and Financial Statements 2024
Delivering on our outcomes continued
More Argos, more often continued
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 year
r)
and customer satisfaction improved over the course of the year in appealing
promotions, value for money, quality and variety of items
s)
.
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 re-launched our delivery checkout,
providing a better customer experience and 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-year
t)
– 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.
a) Nielsen Panel data. Total FMCG excl. Kiosk and Tobacco. Customer numbers YoY growth,
52 weeks to 2 March 2024
b) Value reality, 2023/24; Acuity, internal modelling. Data available from 2016
c) Nielsen Panel data. Total FMCG excl. Kiosk and Tobacco. Sainsbury’s to/ from net volume
switching, 52 weeks to 2 March 2024
d) 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
e) YouGov Brand Index – Supermarket Value for Money Perception metric %
f) Nielsen Panel Premium Own Label Volume Growth YoY - Total FMCG excl. Kiosk and
Tobacco. 52 weeks to 2 March 2024
g) Nielsen EPOS data. JS volume growth YoY% difference to Total Market growth YoY% for
key events week growth versus last year events week
h) Nielsen Panel data, volume market share % growth YoY, FY23/24 vs FY22/23, Chicken category
(raw chicken)
i) eSAT scores March 2024 vs April 2021
j) CSAT Supermarket Competitor Benchmarking data – FY23/24 scores
k) Lettuce Know Convenience customer satisfaction scores, FY23/24 vs FY22/23. Overall
Satisfaction measure
l) Nielsen, Sainsbury’s Online market share, 24 weeks to 2 March 2024
m) Lettuce Know Groceries Online customer satisfaction scores, FY23/24 vs FY22/23. Overall
Satisfaction measure
n) Nielsen panel data, Produce category, volume growth YoY, 52w to 2nd March 2024
o) Includes all fresh and organic milk sold across England, Scotland, and Wales
p) Kantar Worldpanel. UK households vs ONS Total UK households 2022
q) SimilarWeb traffic share, 52 weeks to 2 March 2024
r) YouGov – General Retail Brand Health metrics
s) Argos E2E CSAT Survey
t) Q3 23/24 YoY improvement in availability
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 15
Our Plan for Better sets out our sustainability goals across our whole business, outlining our priority areas of
focus, our key commitments and our progress. We have aligned our focus to the UN Sustainable Development
Goals and, through a materiality assessment, we have identified which issues matter most to our stakeholders
so that we can make the biggest difference. Our plan has three interlocking pillars: Better for you, Better for the
planet and Better for everyone.
We are committed to providing access to
affordable, nutritious, diverse food to help make
future generations and our planet healthier for
longer. We believe everyone should enjoy good
food and that means healthier, more sustainable
diets for all.
In the face of the climate and nature crises, we
need more leadership and collaboration than
ever before. We are committed to playing our role
in mobilising action across our value chain to
protect and restore our planet.
We rely on people, locally and globally, to help us
provide good food for the communities we serve.
In a world of rising inequality, we are committed
to championing human rights, ensuring fair
treatment for both people and animals and
creating a place where everyone can feel safe
and supported.
Plan for Better
For over 150 years, providing
affordableand good quality food
forallhas been at the heart of who
weareand everything we do.
Today, we face significant global challenges, from climate
change to social inequality to nature loss, and we need to
do even more to build the resilience of our planet, our
communities and our business.
Our Plan for Better
Our new purpose is to make good food joyful, accessible and affordable for
everyone, every day. Delivering good food will only be possible by building
resilience into our food system and only by collaborating across our industry.
We need our many suppliers and partners to work together with us to build a
resilient supply chain which enables us to offer good food to our customers,
now and in the future. Without action, the challenges we already face such
as climate change, resource pressure and biodiversity loss will become more
intense and make our purpose increasingly difficult to achieve. Plan for Better
sets out our ambition to play a leading role in creating a more sustainable
food system. To create a new culture of collaboration and long-term
partnership and enable a food system which supports farmers and growers,
improves planetary outcomes, helps enable a healthier population, and
drives economic growth and shared value across the system.
We continue to support our colleagues, customers and suppliers, which is
why we made further investments across the value chain this year. We supported
our customers, making good food affordable through strong price investment
and promotions such as Aldi Price Match, which included at least 75 per cent
Healthy or Better for you choices. We supported our colleagues through our
biggest ever single investment in colleague pay, well ahead of inflation and
the government’s 2024 National Living Wage.
And we supported our suppliers both in the UK and internationally, building
security through investment and longer-term partnership contracts,
launching our Making It Happen action groups to drive action in soil health
and fertiliser use and contributing towards paying a living wage for banana
workers in our supply chain three years ahead of industry commitments.
We continue to drive action on our environmental agenda, and, this year,
weaccelerated our emission reduction targets to align with limiting global
warming to 1.5°C. As part of this, we updated our targets to be FLAG (Forest,
Land and Agriculture) compliant and they were approved by the Science
Based Targets initiative (SBTi). For the tenth consecutive year, we achieved
an A rating for Climate Change by CDP. We were also recognised in industry
awards, becoming the first UK supermarket to win both the Marine Stewardship
Council (MSC) UK Supermarket of the Year and Aquaculture Stewardship
Council (ASC) UK Retailer of the Year awards.
Through innovation we are helping our customers to make more sustainable
choices. We launched the largest low carbon beef range in the UK and started
to roll out our new customer ultra-rapid EV charging offer. We also delivered
our biggest ever plastic packaging removal across our whole mushroom
range and introduced first to market plastic innovations, reducing relative
plastic packaging by 2.8 per cent year-on-year (12.9 per cent reduction from
our baseline).
a)
To effectively respond to the challenges we are facing, we need to continue
to work with industry to align on data measurement and capture, advocate
for effective, evidence based policy change and work collaboratively across
our supply chain and sector to build a more resilient food system for
futuregenerations.
a) Relative: removing volume impact.
Strategic Report Governance Report Financial Statements
16 J Sainsbury plc Annual Report and Financial Statements 2024
Plan for Better continued
Our most material
issues
Target Progress Key achievements
Healthy and
sustainable
diets
At least 85 per cent
Healthy and Better for
you sales tonnage sold
by 2025
80.9%
of our sales are
Healthy and Better
foryou
Down 0.4%
year-on-year
Down 1.4% versus
baseline
• We outperformed the market on produce volume sales and 87 per cent of our own-brand
sales are also Healthy and Better for you choices
• We are making healthier food more affordable, and this year at least 75 per cent of our
Aldi Price Match campaign featured Healthy or Better for you products
• We are making healthier food more appealing, with customers who participated in our
fourth Fruit and Vegetable challenge buying 113 million portions of fruit and vegetables,
which was 25 million more portions than the year before. We also issued 278 million
points through the app, which is 2.5x more than last year. Through trials, we have
identified that incentives can be one of the most impactful ways to promote healthier
choices however, customer behaviour remains challenging to change
• Since 2015, we have reduced our sugar tonnage by 35 per cent in the top five sugar
contributing categories (biscuits, cakes, ice cream, yogurts and puddings) and 85 per cent
of our products meet the salt maximum target for 2024
• We won the Food Foundation’s Peas Please Pledger Champion Award for 2023, which
recognises our work to embed our pledge to grow, serve and sell more vegetables across
our organisation
Reduce
carbon
emissions
Reduce absolute
greenhouse gas
emissions from our
own operations to net
zero by 2035
Reduce absolute Scope
3 greenhouse gas
emissions in line with
1.5
o
C trajectory
458,973
tCO
2
e
of absolute
greenhouse gas
(GHG) emissions
from our own
operations
a)
Down 0.6% year-on
year
Down 51.7% versus
baseline
6%
of our Scope 3
emissions have SBTi
1.5
o
C net zero targets
approved
b)
• We accelerated our emission reduction targets to align with limiting global warming to 1.5°C
• Our carbon reduction targets for FLAG (Forest, Land and Agriculture) and Energy/
Industry emissions were approved by SBTi
• We were awarded with an A rating for Climate Change by the CDP for the tenth
consecutive year, as well as an A rating for supplier engagement
• We committed to buy 100 per cent of the electricity produced by Longhill Burn Wind
farm, which when all turnbines are operating at maximum capacity, has the capacity to
power up to 33 per cent of our estate
• We continue to engage our suppliers to understand their journey to net zero. In addition
to 23 suppliers (six per cent of emissions) who have approved SBTi 1.5
o
C net zero targets,
afurther 68 (36 per cent of emissions) have committed to have approved targets within
two years or have another target already approved by SBTi
• 218 suppliers (63.8 per cent of emissions) have also disclosed their emissions through CDP
and 683 (57.2 per cent of emissions) have done so for Higg and Manufacture 2030
• We continue to work with industry to agree an approach to accurately measure Scope 3
emissions to enable us to report on our Scope 3 target
• We launched our new Taste the Difference Aberdeen Angus range, with a 25 per cent
lower carbon footprint compared to industry standard, the largest low carbon beef range
in the UK
• We launched Smart Charge, powered by Sainsbury’s, our ultra-rapid EV charging service
with 343 charging bays across 40 Sainsbury’s stores
Reduce food
waste
Reduce food waste by
50 per cent by2030
0.627%
of food handled sent
to anaerobic
digestion
c)
Down 2.7%
year-on-year
Down 13.9% versus
baseline
• We removed all ‘use by’ dates on our milk (including all fresh and organic milk sold
across England, Scotland and Wales) and have moved over to ‘best before’ to help
customers reduce food waste in their homes
• We joined FareShare’s Alliance Manufacturing programme, part of the Coronation Food
Project, to redistribute surplus food to charities across the country
• We redistributed 57.8 per cent more surplus food to communities through Neighbourly
and our other redistribution partners and over the entire course of this partnership we’ve
donated over 23 million meals worth of surplus food
• Due to a restatement of our food waste figures
d)
we recognise the need to accelerate
progress. We have run a successful trial with Olio to redistribute ‘use by’ foods, which
weare now rolling out to all of our stores and we are extending trials on new ways to
repurpose food waste for animal feed
Reduce
plastic
packaging
Reduce our own brand
plastic packaging by
50per cent by 2025,
increase recycled
content and recyclability
58,379
tonnes
of own brand plastic
packaging
Down 2.8% relative
year-on-year
e)
Down 12.9% relative
versus baseline
• On an absolute basis, our own brand plastic packaging tonnage increased by 1.3 per cent
year-on-year and declined by 16.4 per cent versus our baseline
• We launched our biggest ever plastic packaging removal, moving to cardboard trays in
our whole mushroom range, saving 775 tonnes of plastic per year
• Firsts in the market including a move to paper packaging on our own brand of toilet rolls
and kitchen rolls and a move to cardboard hangers in our Tu clothing baby range, saving
485 and 103 tonnes of plastic per year respectively
Our progress this year
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 17
Future priorities
• Evolve our approach to ‘Healthy and sustainable diets’, finding new ways to
grow sales of plant-rich choices (fruit and vegetables, fibre-rich carbohydrates,
beans and legumes), improve protein diversity and grow sales of better protein
and influence the system through sector advocacy
• Evolve our approach on plastic to consider the broader impact that different
processes and materials involved in our products’ packaging have on the
planet and take a leading role to drive action in the sector, working with
industry to align behind the right solutions
• Develop our approach to protecting and regenerating nature, including
responding to emerging frameworks and investing in landscape initiatives
that protect and restore nature, while also supporting sustainable farming
inareas where there is a high risk of deforestation or land conversion,
including Brazil and Indonesia
• Develop roadmaps for each of our Human Rights commitments
• Accelerate action on food waste, reviewing our approach, across the whole
value chain to drive progress and identify further opportunities
• Collaborate with our supply chain partners on our climate, nature and human
rights efforts to drive further progress in building more resilient supply chains
• 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 throughout 2024/25
Nature
positive
• We have made great progress on our percentage of wild caught certified seafood, now at 86 per cent, while our sustainably certified farmed
seafood remained at 100 per cent. In recognition of our sustainable fish sourcing policy, we became the winner of both the Marine
Stewardship Council (MSC) UK Supermarket of the Year and Aquaculture Stewardship Council (ASC) UK Retailer of the Year awards, becoming
the only UK supermarket to have ever achieved this
• We published new policies for key raw materials: Manmade cellulosic fibres, Palm oil, Cotton, Leather, Precious metals and minerals, Feather and down
• We have collaborated with our suppliers, mobilising action through our new working groups to target specific priorities, including soil health
and the rollout of LandApp across key supply chains, to enable UK suppliers and farmers to strategically plan land use to balance food
production and nature into the future
Minimise
water use
• We reduced our water usage in our own operations by 1.3 per cent year-on-year, to 2,621,341m³ through better management of water in our
estate and through leak prevention
• We committed over £750,000 over the next three years of additional funding to accelerate the implementation and delivery of the WRAP
water roadmap
• We improved our CDP rating to achieve an A- for water
Increase
recycling
• We launched a new recycling hub trial that brings our recycling offer together for customers and removes duplication with kerbside collections
• This year, we launched furniture recycling for our online customers in partnership with Clearabee
Support our
communities
• We raised £36 million for good causes this year
• Across our community initiatives, including our Nourish the Nation programme with Comic Relief, we donated £11.4 million to tackle food
poverty and redistributed 13.5 million meals to those who most needed them through our partnership with Neighbourly
• Through our Community Grant scheme, we supported 798 local good causes and committed over £1 million to initiatives supporting our
localcommunities
• We continued to test mechanisms to encourage low-income families to try healthier food options, including trialling a new coupon mechanic
this year targeting low affluent customers to redeem of fruit and vegetable purchases
Improve
animal
health and
welfare
• Our sales volume from welfare standards above the UK industry baseline was 62.3 per cent
• 78.5 percent of our animal health and welfare outcome KPIs achieved Sainsbury’s KPI performance targets
• 86.7 per cent of our key animal supply chains achieved Sainsbury’s responsible use targets for total antibiotic use and 66.7 per cent for
antibiotic critically important for human health
For ‘An inclusive place to work’ and shop and ‘Skills and opportunities for all’ pillars, please see pages 18-21 in this report.
Our progress this year continued
Key achievements
Our most material
issues
Target Progress Key achievements
Championing
human rights
Respect human rights
across our value chain
and ensure our
businesses’ transition
to net zero is just and
equitable for the
communities we
sourcefrom
Roadmaps in
development
• Working in collaboration with longstanding partner, Fairtrade, we are contributing towards
paying banana workers a living wage three years ahead of the industry commitment
• We worked alongside industry to create and implement a corrective action plan in our
tea supply chain to remediate human rights impacts
• We scored 92 per cent completion and 86 per cent public disclosure on the WDI Disclosure
a) We have received third party limited assurance on our Scope 1 and 2 greenhouse gas emissions. For more information go to page 119 in this report.
b) While we work with industry stakeholders on establishing best practice to measure emissions reductions, we are using as a proxy metric the proportion of suppliers (by emissions) that
have science-based targets. Our Scope 3 targets depend on our suppliers’ reducing emissions and this metric captures the proportion of emissions that should be on the same emissions
reduction trajectory as Sainsbury’s Group. Sainsbury’s requests suppliers who represent the top 80 per cent of emissions to set science-based targets by the end of 2025/26 as part of our
WWF’s Retailer’s Commitment for Nature.
c) Going forwards we will be using the relative metric ‘food waste sent to anaerobic digestion as a percentage of total tonnes handled’ as our primary food waste metric as this is considered
best practice by The Waste and Resources Action Programme (WRAP).
d) 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 a reporting error identified. 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.
e) Relative: removing volume impact.
Strategic Report Governance Report Financial Statements
18 J Sainsbury plc Annual Report and Financial Statements 2024
Our People
Building an inclusive culture
Our vision is to be the most trusted retailer, where people love to work and
shop.That means harnessing talent, creativity and diversity of colleagues in
anenvironment where everyone can thrive. We are committed to being a truly
inclusive employer where all our colleagues are treated fairly and with respect
and are encouraged to develop their skills and fulfil their potential.
Our valued behaviours
Our valued behaviours are embedded across everything we do
inorder to deliver our purpose and strategy. They enable all
colleagues to understand our ways of working and what we expect
from colleagues, leaders and managers to make a difference for
ourcustomers and colleagues.
• Do what you say you’ll do
• Don’t walk past a problem
• Improve things for your customer
• Spot opportunities to simplify
• Walk in the shoes of your colleagues and customers
• Show care and respect to everyone
Aligned with our valued behaviours, we have set performance
expectations for our leaders and colleagues. These provide a
framework which enables colleagues to understand what’s
expected of them, as well as what they deliver in their roles.
Theseexpectations underpin how we manage performance
andsupport career and development conversations.
Investing in colleagues
We are committed to doing all that we can to support our colleagues and
have continued to make significant investments in pay. During the year,
wehave made our biggest ever single investment to reward hourly paid
colleagues, accelerating our commitment to always invest in our
peoplefirst.
To further support our colleagues, we provide free food for store anddepot
colleagues during their shifts and, in July 2023, we introduced free sanitary
products across all sites and stores for colleagues. We have also increased
the frequency of additional discounts atSainsbury’s for all colleagues.
Thecolleague discount on Sainsbury’s purchases increases from 10 per cent
to 15per cent every Friday and Saturday. This provides additional certainty
to our colleagues and makes their weekly shop more affordable.
Own It
Be
Human
Make It
Better
During the year, we introduced Simple Savings and Help to Save, where
colleagues can save directly from salary, helping them to save more easily.
Our partnership with Salary Finance includes loans and Pay Advance, which
gives colleagues the option to access their pay ahead of pay-day. There are
also a number of financial and emotional wellbeing resources available
tocolleagues, particularly those relating to budgeting, savings and
debtmanagement.
We continue to make an annual contribution to GroceryAid, a charity that
supports grocery workers across a range of areas, including financial support.
Training and development
We have a wide variety of development programmes and opportunities
available for colleagues. This includes personal development toolkits and
programmes, including apprenticeships.
Under Plan for Better, we committed that at least 75 per cent of colleagues
on an apprenticeship will successfully complete their programme, ahead of
nationally reported apprenticeship completion rates. We offer a variety of
apprenticeships across the business and have already supported 1,950 of our
colleagues and managers with apprenticeship roles since 2016. We utilise
apprenticeship programmes to enhance colleagues’ knowledge, skills and
behaviours across a structured programme aligned to their job role, so they
can make an even greater impact in their role and have greater confidence
with their increased knowledge.
Colleagues have access to a learning platform which hosts a variety of online
courses, including mandatory training and personal development. We also
offer colleagues the opportunity to attend Skills Boosts, targeted
development workshops on a singlebehaviour or skill.
During the year, we hosted Company-wide webinars. In these sessions,
thought leaders and experts share concepts, tools, and tips related to our
valued behaviours and cultural initiatives. Colleagues have the opportunity
to submit questions to the speaker via a chat during the session.
Our range of leadership programmes includes Leading@Sainsbury’s,
Accelerate YOU and our Leadership Acceleration Programme, which helps
colleagues develop the key leadership behaviours needed to thrive within
the Sainsbury’s group. Under Better for Everyone, we aim for 70 per cent of
colleagues who are on our Leading@Sainsbury’s programme to be promoted
within nine months of its completion.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 19
Health, safety and wellbeing
The health and safety of our colleagues and customers is a top priority
andis essential to the smooth running of our business. As a result of the
measures and processes we have put in place, there continues to be a
reduction in injuries to both colleagues and customers. Reported colleague
accidents have decreased by 27 per cent and customer accidents by
49percent over the last seven years.
An independent safety team supports our retail and logistics operations and
provides expertise, coaching and challenge to our line managers. We use
ourinnovative risk mapping tool and data from a wide range of sources to
identify those sites which require support. This ensures that we continue to
reduce harm whilst ensuring we have the right level of compliance in place
around key areas such as training, fire safety and adherence to procedures.
Our governance processes ensure colleagues can feedback on issues,
regularly engage with unions and benefit from Board oversight. We have
strong and well-established Primary Authority relationships in place that
cover all our risk areas including health, food, fire and petroleum safety.
These relationships are built on a foundation of trust and we openly share
information with our Primary Authority.
Supporting the wellbeing of our colleagues really matters. It’s our aim that
every colleague will have access to physical, mental and financial wellbeing
support through benefits, tools and resources that enable them to make
positive and proactive choices to thrive in all aspects of life. We offer a range
of wellbeing programmes, initiatives and education, like our Employee
Assistance Programme, to do just that.
At Sainsbury’s, we have empowered our colleagues to work differently.
Weintroduced Smarter Working, which covers flexible working, hybrid
working, meeting frameworks and our Core Days concept – all to maximise
performance, productivity and flexibility. Smart Weeks are all about greater
choice to work flexibly whilst meeting the needs of a seven-day-a-week
business. We recognise that not every week is the same and Smart Weeks
allows our colleagues flexibility in when they work by flexing the length of
their days to accommodate workload peaks or personal commitments.
An inclusive place to work and shop
We get feedback from our colleagues through our annual engagement
survey, regular ‘temperature check’ surveys and ongoing colleague
listening. This helps us to understand what is important to our colleagues
and to identify how we can continue to support them. After each colleague
engagement survey, line managers discuss the results with their teams
andwork together to plan and implement actions that will help make
Sainsbury’s a truly great place to work.
We continue to focus on representation and transparency across the
business and again published our integrated Gender and Ethnicity Pay
Report. In our most recent report, our mean gender pay gap has decreased
from 8.5 per cent to 8.4 per cent, while our median gender pay gap has
increased from 6.3 per cent to 6.7 per cent. While we have seen a further
improvement in representation of women at senior levels in our organisation
over the last year (up 5.4 per cent), the pay gap still exists as we have more
men in higher-paid management and senior leadership roles. Ourhourly
paid retail colleagues are all paid the same base rate of pay, but certain roles
attract a premium, including drivers and bakers, where men represent over
90 per cent of the population. Our median pay gap increase isa result of
recruitment of men into retail hourly paid colleague roles, withmore men
now receiving a skills premium compared to last year.
Our mean ethnicity pay gap is -2.9 per cent (-1.6 per cent in 2022) and
median gap is -5.4 per cent (-4.0 per cent in 2022). Location pay is key in
explaining our ethnicity pay gaps. Although all retail hourly paid colleagues
receive the same base rate of pay, stores in London attract a location
premium. Around 50 per cent of retail hourly paid Ethnically Diverse
colleagues work in a London store, compared to only 5 per cent of
Whitehourly paid colleagues.
Progress on our current Better for Everyone commitment to achieve diverse
representation at senior leadership and senior management positions by
2024 can be seen in the tables on page 21.
We are committed to being an inclusive employer with diverse representation
at all levels of our business. We train senior managers who are responsible
for recruitment to be inclusive in their decision-making and manage bias
through the process. Our recruitment dashboard helps us to identify how
successful we are in attracting diverse talent for our store support centre,
retail and logistics roles and highlights any adverse impact in the
recruitment process. Using this data, we work with our Talent partners
across the business to agree interventions to support our inclusivity objectives.
Our range of leadership development programmes includes acceleration
programmes to support a diverse talent pipeline. This year, we launched
Accelerate YOU, which aims to accelerate the progression of high potential
Ethnically Diverse colleagues by maximising talent and increasing cognitive
diversity, creativity and competitiveness through targeted and personalised
development. We also sponsored the Diversity in Retail Ethnic Future
Leaders Programme. Their successful completion of the programme reflects
our commitment to nurturing diverse talent within the business and industry.
I firmly believe we all need
to take time to reflect on
how we’re really doing, to
ensure we’re as happy and
healthy in all aspects of our
lives as we can be.
Clodagh Moriarty
Operating Board Sponsor for Wellbeing
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20 J Sainsbury plc Annual Report and Financial Statements 2024
An inclusive place to work and shop continued
Sainsbury’s Colleague Networks
Our networks are led by our colleagues are open to colleagues of that community and other allies.
Over 13,000 colleagues are members of the networks.
Our EnAble network supports all colleagues with disabilities and long-term conditions to fulfil their potential by increasing
awareness, boosting confidence and helping to simplify processes. It is sponsored by Tim Fallowfield, OBE, Company Secretary
and Corporate Services Director, and Mark Given, Chief Marketing Officer.
Most recently, the EnAble team hosted Sainsbury’s Disability Week 2024. This event explored the breadth of disability and
neurodiversity that exists in our business, enabling colleagues to talk about the opportunities inclusivity presents and how
tobeeffective allies through colleague panels and a keynote speaker.
Our I AM ME network aims to build ethnically diverse colleague confidence, support better progression, celebrate different
cultures and build an inclusive culture. It is sponsored by Graham Biggart, Chief Transformation & General Merchandise
Commercial Officer. In the year, the I AM ME team have hosted many business-wide events, including Race Equality Week,
SouthAsian Heritage Month and Black History Month, providing our colleagues and allies with a voice to raise awareness
andunderstanding whilst celebrating diverse cultures.
Our Inspire network drives positive change within Sainsbury’s, creating an inclusive culture that inspires, connects, and supports
colleagues to reach their potential, regardless of gender. It is sponsored by Rhian Bartlett, Chief Food Commercial Officer.
Throughout the year, the Inspire team have connected with colleagues to highlight key issues and provide guidance on how
colleagues can overcome related challenges. The team marked many important events, including International Men’s Day,
International Women’s Day and World Menopause Day.
Our Proud@Sainsbury’s network aims to create and nurture a workplace where everyone is free to be themselves, irrespective
ofgender identity, gender expression or sexual orientation.
This year, the Proud@Sainsbury’s team and allies were a visible presence at more than 20 Pride events across the country.
Theymarked many important moments, including Trans Awareness Week, International Day Against Homophobia,
Transphobiaand Biphobia, Non-Binary People’s Day, Bi Visibility Day and LGBT+ History Month.
Our We Care network aims to make caring visible by raising awareness and supporting our Carer colleagues to reach their full
potential. It is sponsored by Tim Fallowfield OBE, Company Secretary and Corporate Services Director. During the year, the
WeCare network focused on providing resources, guidance and advice for our Carers and Line Managers. They also celebrated
Carers Week, Young Carers Rights Day and Carers Rights Day and hosted informal support sessions throughout the year.
We have a lot more to do, but with 71% of colleagues happy
atwork and 79% of colleagues able to be themselves at work,
we are proud to be making progress inenhancing inclusivity
across the business.
Prerana Issar
Chief People Officer
We are proud that our diversity, equity and inclusion initiatives have been
recognised at a national level.
For the second consecutive year, we’ve been included as a ‘The Times’ Top 50
Employer for Gender Equality, one of only two retailers recognised in the list
and setting the benchmark for gender inclusivity in our industry. We are one
of only 68 companies in the FTSE 350 to have met, or exceeded, the FTSE
Women Leaders’ 40 per cent Women in Leadership Target.
We were awarded the Leading Edge Employee Journey award from Diversity
in Retail for the effort we have made in ensuring that inclusion is at the
heart of each stage of the colleague lifecycle.
We continue to be accredited as a Disability Confident Leader, which is the
highest tier of accreditation in the government’s Disability Confident scheme.
We launched Thrive with Sainsbury’s in 2022, the UK’s first retail incubator
programme for Black founded and owned brands. As a result, we were
delighted to launch four new brands in our stores this year.
Three Sainsbury’s colleagues were recognised in Diversity in Retail’s Women
to Watch and Role Models for Inclusion in Retail Index. A Sainsbury’s
colleague was also listed in The Grocer’s Top 10 activists to make grocery a
better industry for the LGBTQ+ community and nominated for the 2024
British Diversity Awards. Our I AM ME network has been recognised as a
Top10 colleague network by the Investing in Ethnicity Awards for the third
consecutive year and our Proud@Sainsbury’s network was nominated for
the LGBTQIA DIVA Award in the category Network of the Year.
We are making progress in driving positive, sustainable change to improve
the lived experience and opportunities for underrepresented groups. There
is more that we can do and we continue to work with a number of partners,
including Business Disability Forum, Carers UK, Stonewall, Business in the
Community, Diversity and Inclusion in Grocery and Diversity In Retail.
Further information can be found in the Better for Everyone section of our
corporate website and in our Gender and Ethnicity Pay Report at
www.about.sainsburys.co.uk
Our People continued
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J Sainsbury plc Annual Report and Financial Statements 2024 21
Diversity and Inclusion targets
Senior leadership positions (the top 230 leaders)
Diversity and Inclusion targets
Senior management positions (the top 1,200 leaders beneath the top 230 senior leadership positions)
Total colleagues
Women 50%
Ethnically Diverse 12%
Black 3%
Women 43%
Ethnically Diverse 12%
Black 3%
Women (76,247) 51%
Men (72,251) 49%
2024 Target
2024 Target
Women 46.6%
Ethnically Diverse 10.1%
Black 3.2%
2023/24
Women 40.7%
Ethnically Diverse 10.6%
Black 1.2%
2023/24
Women 44.2%
Ethnically Diverse 9.3%
Black 2.8%
2022/23
Women 39.7%
Ethnically Diverse 9.1%
Black 1%
2022/23
We are committed to continue to work
on diversity, equity and inclusion, and
I am passionate about making sure
that every one of our colleagues has
avoice and is heard.
Simon Roberts
Chief Executive
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22 J Sainsbury plc Annual Report and Financial Statements 2024
Our Section 172 statement
Stakeholder considerations
play an important part in
the Board’s discussions
anddecision-making in
promoting the long-term
success of theCompany.
During the year ended 2 March 2024, the Board has acted in accordance with
Section 172(1) of the Companies Act 2006. Each Director has acted in the way
they consider, in good faith, would be most likely to promote the success of
the Company for the benefit of its members as a whole.
In doing so, the Directors have regard to the interests of other stakeholders,
whilst maintaining high standards of business conduct. Examples of how
Directors have applied these matters in Board discussions and their
decision-making are included throughout this Annual Report.
The Board considers the potential consequences of its decisions on
stakeholders, recognising that decisions made will not necessarily result
ina positive outcome for every stakeholder group. Processes are in place
toensure effective decision-making, which balances the needs of our
stakeholders with the business’s strategic priorities, purpose, culture
andvalues.
An overview of our key stakeholder considerations that influenced
discussions and the outcomes of these discussions is outlined below.
Furtherexamples of how the stakeholder voice has been brought into
theboardroom can be found in our Governance section on pages 66 to 80.
As we embed our Next Level
Sainsbury’s strategy, strong
stakeholder engagement will
continue to be a key priority.
Simon Roberts
Chief Executive
Section 172 duties Relevant disclosure and page number
The likely
consequences of
Board decision-
making in the
long term
Chair’s letter on page 2
Chief Executive’s letter on page 4
Business model on page 8
Our strategy on page 10
Delivering on our outcomes on page 12
Plan for Better Report on page 15
Our people on page 18
Engaging with our stakeholders on page 23
Key performance indicators on page 44
Financial Review on page 46
Principal Risks and Uncertainties on page 54
Statement of Viability on page 62
Chair’s governance letter on page 66
Board leadership and Company purpose on page 73
Annual Report on Remuneration on page 104
The interests of
our colleagues
Chair’s letter on page 2
Chief Executive’s letter on page 4
Business model on page 8
Delivering on our outcomes on page 12
Plan for Better Report on page 15
Our people on page 18
Engaging with our stakeholders on page 23
Key performance indicators on page 44
Chair’s governance letter on page 66
Board leadership and Company purpose on page 73
Annual Report on Remuneration on page 104
The need to foster
our business
relationships
withsuppliers,
customers
andothers
Chief Executive’s letter on page 4
Business model on page 8
Our strategy on page 10
Delivering on our outcomes on page 12
Engaging with our stakeholders on page 23
Key performance indicators on page 44
Chair’s governance letter on page 66
Board leadership and Company purpose on page 73
Corporate Responsibility and Sustainability
Committee Report on page 89
Section 172 duties Relevant disclosure and page number
The impact of our
operations on the
community and
the environment
Chief Executive’s letter on page 4
Our strategy on page 10
Delivering on our outcomes on page 12
Plan for Better Report on page 15
Task Force on Climate-related Financial
Disclosures(TCFD) on page 30
Principal Risks and Uncertainties on page 54
Board leadership and Company purpose on page 73
Corporate Responsibility and Sustainability
Committee Report on page 89
The desirability
ofmaintaining
areputation for
high standards of
business conduct
Our strategy on page 10
Engaging with our stakeholders on page 23
Key performance indicators on page 44
Principal Risks and Uncertainties on page 54
Non-financial information statement on page 64
Chair’s governance letter on page 66
Board leadership and Company purpose on page 73
Composition, succession and evaluation on page 81
Division of responsibilities on page 84
Nomination and Governance Committee report on
page 85
Annual Report on Remuneration on page 104
The need to act
fairly between
shareholders
Engaging with our stakeholders on page 23
Chair’s governance letter on page 66
Board leadership and Company purpose on page 73
Audit Committee Report on page 92
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J Sainsbury plc Annual Report and Financial Statements 2024 23
Engaging with our stakeholders
Regular stakeholder engagement develops ourunderstanding of key issues
andunderpins decision-making by the Board and Operating Board. Throughout
theyear, we endeavoured to buildopportunities for two-way, open and
positiveengagementwith all of our stakeholder communities.
Why they matter
Over two-thirds of the total retail shoppers in the UK have shopped
with Sainsbury’s over the last year and there were over 22.3 million
active Nectar users. Within Argos, we have 19 million active
customers, and the website is the fourth most visited online
retailer in the UK. In Financial Services, we have 1.8 million active
Sainsbury’s Bank customers and 2.0 million Argos Financial
Services customers.
Understanding the needs of our customers allows us to provide
relevant products and services. Satisfied customers are key to
ourlong-term success.
What matters to them
• Competitiveness and value
• Availability and range of products
• Convenience and location
• Great service levels
• Speed of Groceries Online delivery
• Quality of products
• Sustainability
How we engage
• 3.2 million responses this year across all of our Sainsbury’s and Argos
customer feedback programmes
• Nectar data, which helps us understand how customers are shopping
• Qualitative customer focus groups and quantitative surveys
• Social media listening
• Brand tracking, which assesses the performance and perception of our
different brands
• I Care, a satisfaction survey which helps us understand the overall
shopping experience for our customers
Engagement outcomes
Over 1,100
new products launched
• The Board and Operating Board reviewed customer feedback and overall
metrics on consumer sentiment and trends to inform our responses to the
key issues impacting customers, such as price inflationary pressures and
availability of products
• The Chief Marketing Officer provided regular updates to ensure that the
Board received feedback from our customer listening sessions
• The Board continues to focus on delivering for customers in line with our
priorities in this final year of the current strategy and as we move into our
Next Level Sainsbury’s strategy:
– First choice for food: customers choosing Sainsbury’s as the place they
come to for good food, providing more food choice and consistent
value, whilst offering a complementary range of relevant products
– Loyalty everyone loves: we are building a world-leading loyalty
platform that is more personalised, joyful, rewarding and transparent
– More Argos, more often: providing a brilliant and convenient range of
products at great value
– Save and invest to win: ongoing internal transformation enabling us to
reinvest in our customer offer
• Our strategy is underpinned by our Plan for Better: supporting our
customers to eat healthily and sustainably, whilst delivering on our
commitment to become net zero in our operations by 2035
• The Board used its understanding of our customers when evaluating and
supporting the Next Level Sainsbury’s strategy, enabling the business to
invest further in what really matters to customers
• We launched 1,100 new products as we continued to deliver food
innovation to customers to put food back at the heart of Sainsbury’s
• The Board supported the launch of Smart Charge in response to our
customers’ need for convenient EV charging and ongoing interest
insustainability
More information
More information on our customer engagement activities can be found
onpage 12.
Customers
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24 J Sainsbury plc Annual Report and Financial Statements 2024
Let’s Talk
As in previous years, direct dialogue between colleagues and the
Board and Operating Board has been essential in creating a culture
of open, honest feedback. This feedback has always informed
decision-making within the business.
This year, we have introduced ‘Let’s Talk’ sessions to create more
opportunities for colleagues to talk directly with the Operating
Board. These colleague listening sessions provide the space for
more colleagues to address the issues that concern them, while
getting a better understanding of why our new purpose and
strategy are so important for the future success of the business.
Colleagues are also invited to continue the conversation between
‘Let’s Talk’ sessions via our internal social network.
Feedback from these sessions will be shared with relevant
colleagues and decision-makers in the business, so that
appropriate and swift action can betaken.
Engaging with our stakeholders continued
Why they matter
Our colleagues include everyone who is employed by the
business.Colleagues are at the heart of everything we do
andtheircommitment to our purpose and values is critical
tothebusiness’slong-term success.
What matters to them
• Reward and benefits
• Career progression
• Colleague engagement
• Communication
• Training and development
• Wellbeing
• Health and safety
• Diversity, equity and inclusion
How we engage
• Regular Non-Executive Director, Chief Executive and Operating Board
meetings with our workforce advisory panel, the National Make It Better
Together group, to directly understand the views of colleagues from
across the business via their elected peers
• Operating Board Director Listening Sessions to provide an opportunity
tohear directly from colleagues across the business
• Continual two-way communication through internal channels, including
monthly live presentations, question and answer sessions and internal
social media discussions with the Operating Board
• Honest, confidential colleague feedback on what it is like to work for the
business through our annual colleague engagement survey, ‘We’re Listening’,
and regular pulse surveys
• Colleague feedback through topic-specific ‘temperature check’
surveysthroughout the year, helping us to understand colleagues’
viewsand sentiments
• Regular updates provided to the Board and its Committees on culture,
engagement, diversity, equity and inclusion, colleague pay and benefits
and talent and succession
Engagement outcomes
£200 million
Investment into colleague pay
• Colleague feedback from all channels was shared and discussed at
Boardmeetings. This provided the Board with insight and challenge,
feeding into the review of the Next Level Sainsbury’s strategy and
widerdecision-making
• Decision-makers across the business received timely feedback, allowing
colleague interests to remain a priority when considering key concerns,
including the cost of living crisis and inflationary pressures, safety
andcommunication
• Updates on decisions made as a result of colleague feedback were
sharedwith colleagues through regular communications from the
ChiefExecutive and Operating Board members
• We made our biggest ever single investment into colleague pay –
£200million. From March 2024, Sainsbury’s and Argos store colleagues
receive a base rate of at least £12.00 per hour (£13.15 per hour for those
inLondon). We continue to pay in line with the Real Living Wage and
significantly ahead of the government’s National Living Wage
• Further supporting colleagues with cost of living, we continue to provide
free food for colleagues in stores, depots, Local Fulfilment Centres and
contact centres, and in response to colleague feedback, have moved
colleague discount uplifts in Sainsbury’s to 15 per cent every Friday
andSaturday
• We continue to deliver development and career growth opportunities
forcolleagues through apprenticeships, early-career engineering and
technology programmes and acceleration programmes, resulting in
increased engagement scores for colleaguedevelopment
More information
More information on our colleague engagement activities can be found on
pages 18 to 21.
Colleagues
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J Sainsbury plc Annual Report and Financial Statements 2024 25
Why they matter
We have over 96,000 shareholders, including large institutional
investors and smaller individual shareholders.
Access to capital is vital to the long-term performance of
ourbusiness. We provide fair, balanced and understandable
information to shareholders and equity analysts and work to
ensure they have a strong understanding of our purpose, strategy,
performance and culture. Regularly engaging with shareholders
helps us to inform strategic decision-making and to understand
their views.
What matters to them
• How consumer spending habits are changing as cost of living pressures
recede but higher interest rates persist, particularly in general
merchandise spend
• How industry grocery volumes are trending now that inflation is falling
• Outlook for grocery inflation and possible price deflation, and what this
means for industry dynamics
• Whether there are signs of a change in competitive behaviour
• Argos’s trading momentum and the outlook for sales and profit, as well as
clothing performance
• Sustainability of Sainsbury’s grocery volume share momentum and
sources of market share gains beyond value improvement
• Providing detail on the Next Level Sainsbury’s strategy and drivers of
profit growth
• Providing confidence in cash flow guidance, including capital expenditure
discipline and the impact of working capital
• Providing clarity on ongoing shareholder returns and potential future
share buybacks
• Understanding the moving parts of cost inflation, such as lower energy
costs, but ongoing wage inflation
• The impact of exiting core Sainsbury’s Bank services, including the
impact on profit guidance and future cash returns
• Progress against our Plan for Better sustainability targets
How we engage
• One-on-one investor meetings with the Chair, Chief Executive, Chief
Financial Officer and Director of Investor Relations and Financial Planning
• Real-time feedback from investors after meetings and presentation
• The Annual General Meeting
• Capital Markets Day
• Attendance at results presentations, key investor conferences and tours
of our stores
• Regular email and telephone contact with investors and analysts
• A shareholder event for retail investors
• Dialogue with shareholder groups
• Regular engagement with investors on Environmental, Social and
Corporate Governance (ESG), including holding a deep dive investor group
meeting and issuing Investor ESG newsletters
• Analyst attendance at the Board Strategy meetings, providing insight and
perspective on the retail sector
Engagement outcomes
Next Level
Sainsbury’s
Launched updated strategy in February 2024
• The Board regularly received reports and updates on shareholder
relations, summarising key feedback from our principal shareholders, to
ensure that shareholders’ views informed decision-making throughout
the year
• The Board used its understanding of investor viewpoints when evaluating
and supporting strategy, ensuring the strategic outcomes and financial
outcomes will deliver for shareholders over the course of the plan
• In February 2024, we hosted an in-person event for investors and analysts
to launch our Next Level Sainsbury’s strategy, providing direct access to
the Operating Board
• In October 2023, we engaged with our investors in an open Q&A around
the successes we are seeing and challenges we are facing to drive bigger
and faster results
• We commission a detailed Investor Study as part of our Next Level
Sainsbury’s strategy formation. This activity involved interviewing 16
leading investors, representing 34 per cent of the issued share capital,
and reporting key findings back to the Board
Shareholders
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26 J Sainsbury plc Annual Report and Financial Statements 2024
Suppliers as partners
Our suppliers have always been integral to the success of the
business, helping us to provide good food and innovative products
to meet our customers’ needs. We pride ourselves on building
long-term relationships with our GFR and GNFR suppliers.
In planning for the launch of the Next Level Sainsbury’s strategy,
we re-focused these supplier relationships in order to reframe our
suppliers as partners. This approach has encouraged two-way
conversation with suppliers to ensure ongoing high quality
products and services for our business and customers. It is a key
way in which we manage and improve the increasingly complex
ethical, environmental and social challenges that we face to build a
more sustainable food system in the UK.
Our partnership with Moy Park demonstrates this approach in
action. In March 2023, we made improvements to our chicken
welfare standards, becoming the first retailer of our scale to make
this change to provide safe and healthier environments for
chickens, while maintaining the great value that our customers
expect. Working collaboratively with Moy Park, scientific experts
and our trusted farmers on research and development projects also
enabled us to use technology to improve the monitoring of welfare.
Engaging with our stakeholders continued
Why they matter
We have over 6,000 Goods For Resale (GFR) suppliers that supply
products for food, general merchandise and clothing, and over
1,700 Goods Not For Resale (GNFR) suppliers across the Group that
support all functions, including logistics, marketing, technology
and retail. Our suppliers range from large multi-national
companies to small independently-run businesses.
Our GFR suppliers are fundamental to the quality and variety of
products we sell and enable us to meet the high standards that we
set ourselves.
Our GNFR suppliers provide operational excellence and access to
new technology and innovation that ensures we keep pace with the
evolving and changing needs of our business.
What matters to them
• Long-term relationships
• Cost-efficiency
• Responsible procurement, trust and ethics
• Technological advances
• Payment practices
How we engage
• Supplier events to bring suppliers and senior decision-makers together
and share progress
• Consistent communication and updates with our supply base through
online supplier portals
• Taking part in annual, independent surveys which benchmarked us
against other retailers and highlighted areas for improvement; these
included the Supplier Advantage survey and the Groceries Supply Code of
Practice supplier survey
• Clearly communicated expectations in relation to our Plan for Better
commitments through sustainability working groups for collaboration
and engagement
• Publishing our Modern Slavery Statement to ensure suppliers understand
the importance of preventing Modern Slavery and human trafficking to
our business
• Setting up new sustainability working groups
Engagement outcomes
• Cognisant of the impact of its decisions on suppliers, the Board received
regular updates on supplier relationships and encouraged collaborative
working with our supplier partners
• In May 2023, we held our major food supplier event with over 2,000
attendees, updating suppliers on our progress, strategy and priorities.
Two-way engagement at this event enabled us to outline expectations
and suppliers to explore the themes that mattered most to them. We also
held a smaller event for our own brand food suppliers in September 2023
to update them on key matters that were specific to suppliers of
Sainsbury’s branded products
• In February 2024, we hosted a briefing for suppliers to launch our
NextLevel Sainsbury’s strategy
• Our management teams actively engaged with our supply chains to
manage key short and longer-term risks, focusing on building more
resilient supply chains for the future
• The Corporate Responsibility and Sustainability Committee received
updates during the year on the outcomes of the annual, independent
surveys, which helped shape supplier-related initiatives and prioritise
focus areas to deliver tangible improvements for our suppliers
• Our ongoing collaborative approach to our Plan for Better commitments
has resulted in a greater understanding of progress towards net zero with
23 of our suppliers (6 per cent of emissions) having approved SBTi 1.5
o
C
net targets and 683 suppliers (57.2 per cent of emissions) are disclosing
their emissions through Higg and Manufacture 2030
• In recognition of our engagement efforts, we were awarded an A rating
for supplier engagement by the CDP
• The Corporate Responsibility and Sustainability Committee regularly
discussed the approach and actions we are taking to mobilise action in
our supply chains on all areas of sustainability
More information
More detail on how we work with our suppliers on sustainability can be
found on page 15 and in our standalone Plan for Better Report.
Suppliers
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J Sainsbury plc Annual Report and Financial Statements 2024 27
Why they matter
We believe that everyone deserves access to good food. However,
our communities continue to be impacted by the rising cost of
living, with 15 per cent of UK households living in food insecurity
in the UK. As a responsible retailer, we want to support the
communities that we serve in the UK and internationally.
Nurturing resilient communities is at the heart of our brand
heritage and we have a long history of making a positive difference
to the communities we serve, both locally and internationally.
What matters to them
• Tackling food poverty for communities at risk now and in the future
• Improving access to food to prevent the risks of falling into food poverty
• Impacting our communities at a local and national level
• Supporting communities internationally exposed to humanitarian disasters
How we engage
• Ongoing partnerships with our food redistribution partners, including
Neighbourly, FareShare and The Felix Project, to address the immediate
need for access to food within our communities
• Longstanding partnership with Comic Relief on our Nourish the Nation
community programme, providing us with first-hand insights into the
needs of our communities and funded partners to inform funding
decisions
• Consulting key NGOs to understand the context around food insecurity
inthe UK and their recommended changes
• Rallying customers and colleagues behind our efforts through fundraising
and awareness campaigns
• Community champions in our stores and store support centres, who
amplify our impact to ensure it is relevant to the communities we
areserving
Engagement outcomes
13.5 million
meals donated
• Our community and charity partnerships have raised £36 million for
goodcauses
• Moving into its third year, our Nourish the Nation programme has raised
£11.4 million to support Comic Relief. This will fund initiatives designed to
tackle food insecurity and ensure communities have access to balanced,
nutritional and sustainable foodsources
• Together with some of our key suppliers, we have committed to donating
over one million meals in support of the Coronation Food Project
• We distributed 13.5 million meals to those who needed them most
through our partnership with Neighbourly
• Our community grants for local good causes supported 798 good causes
aimed at helping to tackle food poverty
• We redistributed 57.8 per cent more surplus food to communities through
our partnership with Neighbourly and other redistribution partners
• Our ongoing partnership with FareShare online has generated over
£700,000 in customer donations
More information
More information on our communities can be found on in our Plan for Better
Report on www.about.sainsburys.co.uk
Communities
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28 J Sainsbury plc Annual Report and Financial Statements 2024
Engaging with our stakeholders continued
Why they matter
The UK Government and devolved administrations in Scotland,
Wales and Northern Ireland set the regulatory environment in
which our business operates.
As a UK-based business and a major employer of over 148,000
colleagues, it is appropriate and responsible for a business of
ourscale to engage in a transparent way with government
andregulators.
What matters to them
• Openness and transparency
• Compliance with regulation, including Groceries Supply Code of Practice
• Action on sustainability matters
• Diversity, equity and inclusion
• Industry insight to support legislation
How we engage
• Engagement with government and policymakers through regular
correspondence and attendance at parliamentary and politicalevents
• Public responses to government consultations and through NGO/
industrygroups
• Direct meetings, including store-based engagement with elected representatives
• Government-organised roundtables
• Participation in government-organised forums, such as the Retail Sector
Council, Defra Retailer Forum, Department for Business and Trade Retail
Forum and Food Data Transparency Project
• Liaison with key bodies and departments, including the Groceries Code
Adjudicator, HMRC, Trading Standards, Food Standards Agency,
Environment Agency and Department for Health and Social Care
• Trade association meetings, including those convened by the British
Retail Consortium and the Institute of Grocery Distribution
Engagement outcomes
• The Board and the Corporate Responsibility and Sustainability Committee
received updates in relation to our work with government and regulators
to monitor developments and ensure Board engagement
• The Board and senior leadership have been in regular dialogue with
ministers and officials, in respect of wide range of issues of relevance to
our business sector
• We proactively engaged with these stakeholders on public policy issues
affecting our customers and colleagues. Key areas of discussion this year
include the reform of business rates and the removal of downward
transitional relief; implementation of the Northern Ireland Protocol and
Windsor Framework; implementation of new High Fat, Sugar and Salt
restrictions in our stores; development of new schemes to improve
recycling, such as the Deposit Return Scheme and Extended Producer
Responsibility; and challenges facing the food supply chain, such as
highenergy and commodity costs and labour shortages
• We hosted a Health Policy discussion at Westminster Parliament, sharing
Nectar insights on the gap between customer health attitudes and
purchases, helping consumers adopt healthier diets
More information
More information on our activities with Government, parliamentarians and
regulators can be found in our standalone Plan for Better report.
Government, parliamentarians and regulators
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 29
Why they matter
Non-governmental organisations (NGOs) are the force maintaining
focus, facilitating collaboration and driving pace and change on
pivotal issues across the spectrum within our industry. Through
engagement with NGOs, our business is able to reflect on the
progress made and identify the steps to go further in unlocking
sector-wide challenges, which is particularly important at the
launch of the Next Level Sainsbury’s strategy and through related
business transformation.
What matters to them
• Openness and transparency
• Collaboration with NGOs and other members of the industry
• Business responsibility
• Insight from business leaders
• Dedication of time and resources to address key challenges and issues
How we engage
• Ongoing development of long-term partnerships with NGOs
• Regular industry meetings and collaboration, supported by NGOs
• Key figures within our partner NGOs provided upskilling sessions within
the business
Engagement outcomes
• The Chief Executive continued to meet with signatories to the WWF’s
Retailers’ Commitment for Nature. We submit our data annually to
support the monitoring of progress across UK retailers halving the
environmental impact of UK baskets by 2030 through the WWF
BasketReport
• We worked closely alongside many NGOs, including WRAP, to unlock
sector-wide challenges on data definition and measurement in a variety
of areas
• Under the Food Data Transparency Project, we have actively participated
in the Data and Health working groups, supporting aligned definitions
and disclosures for the food sector on healthier sales
• Through our work with the Obesity Health Alliance, we shared private
sector perspectives with food system actors on this key topic
• Alongside IGD, FIO-FOOD and DIO-FOOD, we worked with academics
toindependently assess retailing interventions to establish successful
methods for supporting customers shopping in line with the
EatwellGuide
• Our work with Mondra, IGD and FIO-FOOD explored data solutions
tosystemically build sustainability metrics into recipe information,
allowing us to identify material areas for action and help support
moresustainable sales in future
Non-governmental organisations
Strategic Report Governance Report Financial Statements
30 J Sainsbury plc Annual Report and Financial Statements 2024
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD)
Introduction
With the impacts of climate change being felt around the world, we are
acutely aware of the leadership role we must play in addressing the current,
evolving and future climate risks faced.
We have approved Science Based Targets initiative (SBTi) 1.5
o
C aligned targets
to reduce greenhouse gas (GHG) emissions to net zero within our own
operations by 2035 and in our Scope 3 emissions by 2050. We have proven
success in reducing our own emissions and we are also collaborating closely
with our suppliers to ensure we’re driving positive change across our supply
chain (see pages 41 to 43 for an overview of our Climate Transition Plan).
No one business or organisation can tackle the challenge of climate change
in isolation and collaboration across industry, NGOs, government and
beyond is required if we are to deliver the action required to meet our
collective targets. Collaboration with our supply base is a critical unlocker.
However we must also look at sector-level action through initiatives like the
World Wide Fund for Nature’s (WWF) Retailers’ Commitment for Nature to
drive greater action as a collective force.
Taking action on climate change is not a new step for us. In fact we have
taken many strides forward over the last decade in our efforts to decarbonise
our business. However, we are very aware that climate change risk is
evolving and we must look ahead and scenario plan to inform decisions
overthe short, medium and long term. Our Task Force on Climate-related
Financial Disclosures (TCFD) explain how we have identified, responded to
and monitored the impacts of climate-related risks and opportunities on our
business, including how we incorporate our findings into our wider strategy
to bolster our climate resilience. This is our fourth year of reporting against
the recommendations set by the Task Force. We have complied with the
Financial Conduct Authority listing rule LR 9.8.6R by including climate-
related financial disclosures consistent with all of the TCFD
recommendations, which we discuss below.
Governance
Governance a) Board’s oversight of climate-related risks
andopportunities
The Board
The Board is accountable for risk management, strategy and target
setting,including climate-related matters. The Board monitors how we are
responding to climate-related risks and opportunities, identified through
the risk management process and scenario analysis. The Board also
oversees our Plan for Better strategy, which includes climate-related
matters and is responsible for setting targets and monitoring progress
against our climate-related metrics.
The Board recognises the importance of ensuring that there is appropriate
climate-related expertise within the business and has undertaken training
by the Cambridge Institute for Sustainability Leadership. The Board
continues to upskill in this area and understands that responding to the
impacts of climate change involves everyone in the organisation. To date we
have provided relevant training for the wider commercial teams across the
food and general merchandise divisions. See page 68 to 70 for biographies of
our Board members, including their skills and experience.
Board Committees
The Corporate Responsibility and Sustainability Committee reviews the
sustainability strategy and monitors the business engagement with our
keystakeholders, including climate-related matters.
The Remuneration Committee reviews remuneration for Executive Directors
against our Plan for Better targets and metrics, including long-term targets
for Scope 1, 2 and 3 GHG emission (see page 99 for more details).
The Audit Committee reviews risks and confidence in the climate-related
metrics that we disclose. Further information on the Corporate Responsibility
and Sustainability, Remuneration and Audit Committees can be found on
pages 74 to 80.
Governance b) Management’s role in assessing and
managing climate-related risks and opportunities
Operating Board
The Operating Board defines and monitors the business-wide strategy,
including climate-related matters, adapting to new regulatory requirements
and trends and approving major investments including capital allocation.
The Operating Board is chaired by the Chief Executive, who also sits on the
Board and Corporate Responsibility and Sustainability Committee. Further
information on the key climate-related discussions is on page 79.
Plan for Better Steering Committee
The Plan for Better Steering Committee supports the Operating Board
andleads the operational execution of our Plan for Better strategy, by
overseeing business activity and monitoring performance against our
climate-related metrics. The Plan for Better Steering Committee is chaired
by the Chief Marketing Officer and has cross-divisional representation at
Director level. Climate risks are reviewed annually at the Plan for Better
Steering Committee with Board level oversight from the Corporate
Responsibility and Sustainability Committee. Climate risks and mitigations
are monitored throughout the year by the Plan for Better business leads and
Steering Committee. The Government Affairs team provides regular updates
to the Plan for Better Steering Committee, Operating Board and Corporate
Responsibility and Sustainability Committee on relevant legislation and
regulation impacting Plan for Better, including those relating to climate.
Further information on the Corporate Responsibility and Sustainability
Committee can be found in its report on pages 89 to 91, providing
information on the governance structure, its responsibilities, meeting
frequency and principal activities in the year.
Strategy
Strategy a) Climate-related risks and opportunities
identified over the short, medium and long term
Climate change impacts our business over the short, medium and
long-term. Climate-related risks are categorised into physical and transition
risks. Physical risks could impact our operations and supply chain through
extreme weather events, such as flooding or droughts. Transition risks, as a
result of moving to a low-carbon future, could impact us through changing
consumers preferences or climate-related regulation, such as carbon taxes.
Climate change also presents opportunities to build business resilience and
efficiency, create new climate-friendly products for our customers and
develop and invest in new technology.
To classify climate-related impacts on our business we use our existing
corporate processes (for risk management and financial planning cycles) to
set the boundaries for financial impact ranges and time horizons (described
further in the risk management section on page 53).
Financial Impact Ranges
Impact Financial range (revenue)
High Greater than £125 million
Medium £25 million to £125 million
Low Less than £25 million
Time Horizons
Time period Years Reason
Short 0 to 5 years Aligned to our financial planning cycle
Medium 5 to 15 years Nearer term focusing on transition risks and
opportunities
Long 15 to 50 years Longer term focusing on physical risks
andopportunities
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 31
The table below captures the key climate-related risks and opportunities impacting our business, identified through our risk management process and
qualitative scenario analysis. The financial impacts assume that actions are taken by the business to mitigate the climate-related risks and maximise the
climate-related opportunities (see pages 34 to 35 for key actions).
Risks
Risk Description* Time Horizon Risk Type Classification
Financial Impact (assuming
actions are taken to mitigate risks)
Introduction of a carbon price leading to an increase in
the cost of higher GHG emission products
Short /
Medium
Transition Policy and Legal Low revenue loss
Ban on the sale of new petrol/diesel cars and vans from
2035 leading to a reduction in fuel sales
Medium Transition Policy and Legal High revenue loss
Increased likelihood of heat events, flooding and
droughts leading to a reduction in crop yields and
increased sourcing costs
Short /
Medium / Long
Physical Acute Medium / high revenue loss
Increased likelihood of flooding leading to water
damage and closure of stores and depots
Short /
Medium / Long
Physical Acute Low revenue loss / cost
Opportunities
Opportunity Description
a)
Time Horizon Risk Type Classification
Financial Impact (assuming
actions are taken to mitigate risks)
Climate-conscious consumers favouring lower GHG
emission products
Short /
Medium
Transition Reputation Revenue opportunity
Investment in climate change solutions Short /
Medium
Transition Technology Equity growth opportunity
Increasing demand for electric vehicle charging Medium Transition Policy and Legal Revenue opportunity
a) There are interdependencies between the climate risks and opportunities identified, such as the introduction of a carbon price providing further incentive for climate-conscious customers
to favour lower GHG emission products.
Strategy b) Impact of climate-related risks and opportunities on business, strategy and financial planning
Our climate-related strategy is designed to respond to and manage the impacts of climate-related risks and opportunities that we have identified as well
assupport us in our journey to net zero by transitioning to a low carbon economy.
The table below shows the key actions we are taking to address the impacts of climate-related risks and opportunities.
Key climate-related risk/opportunity How our strategy addresses the risks and opportunities identified
Climate-conscious consumers
favouring lower GHG emission
products
Healthy and
sustainablediets
Reduction in
carbonemissions
Our aim is to make it easy for our customers to afford and access food that forms part of a healthy and sustainable diet.
We know that consumer preferences are changing, with more customers wanting to make sustainable choices when it
comes to food. We have an innovation pipeline of products geared towards supporting a healthy and sustainable
portfolio with a focus on the development and promotion of lower GHG animal protein and nutritionally positive meat
alternatives, to capture switching calories from existing and new customers. This year, after significant development,
welaunched a new Taste the Difference Aberdeen Angus beef range which offers a 25 per cent lower carbon footprint
compared to UK average consumed beef.
We have collaborated with Mondra, a third-party provider, on a pilot that explores the composition of our products and
helps identify opportunities where we can produce lower emission products. We also focus on ensuring that lower GHG
products remain nutritionally positive. More information on Mondra and Scope 3 can be found on page 39.
We are increasing our use of recycled and alternative fibres, exploring projects focusing on durability in clothing
blueprints to increase longevity of garments and looking into suitable options for circularity programmes, improving
efficiency as well as appealing to climate-conscious consumers.
To better understand the financial impacts of these transition risks we have performed quantitative scenario analysis
onour Meat, Fish and Poultry and Clothing categories (see page 34 for more details).
Introduction of a carbon price
leading to an increase in the
cost of higher GHG emission
products
Reduction in
carbonemissions
Strategic Report Governance Report Financial Statements
32 J Sainsbury plc Annual Report and Financial Statements 2024
Key climate-related risk/opportunity How our strategy addresses the risks and opportunities identified
Investment in climate
changesolutions
Reduction in
carbonemissions
Reduction in food waste
We continue to invest significantly in engineering innovation, energy efficiency and carbon reduction initiatives in order
to achieve our net zero targets. This investment is embedded into our corporate financial plans and has been approved
by the Board.
Our capital expenditure is prioritised on the areas that will help us meet our Scope 1 and 2 net zero target by 2035. This
includes actions to reduce energy consumption through efficiency measures, remove gas heating, replace HFC refrigerant
gas with natural alternatives, increase on-site renewable electricity generation and additional procurement of electricity
through new-to-the-planet purchase power agreements and transition our full fleet to alternative fuel by 2035.
Examples of innovative technology that we have introduced includes the installation of Refrigeration Integrated Heating
and Cooling (RIHC) systems which replaces natural gas heating by using the refrigeration systems to provide all heating
and cooling requirements. We replace refrigeration systems in store in line with their lifecycles so that fridges that use
hydrofluorocarbon refrigerant gas are replaced with those that use natural CO
2
refrigerants, which are also more energy
efficient. We have an ongoing programme of installing solar photovoltaics (PV) panels across our estate, increasing
on-site renewable electricity generation.
Changes in temperature due to climate change could negatively impact the shelf life of products we sell and increase our
operational food waste. We are investing in technology to mitigate and reduce air infiltration within our stores to both
minimise heating and cooling requirements and the impact of higher ambient air temperatures. This feature was
installed in our new Hook store last year and will be rolled out to all new stores.
We work closely with external academic partners to support us in making investments in climate change solutions.
Imperial College provides us with academic independence – we are working with them on short term studies relating
toengineering solutions to support energy efficiency and carbon reduction programmes and a longer term project to
understand the potential impact of climate change across our estate. We have also launched the Sainsbury’s Innovation
Investments (S2I) initiative in partnership with Williams Advanced Engineering, to support early-stage companies who
specialise in developing disruptive technology to tackle climate change. We have committed to investing £5 million over
four years in early-stage companies who are developing disruptive technology to tackle climate change and giving them
the opportunity to trial the technology within our operations. See page 38 for more information.
Ban on the sale of new petrol/
diesel cars and vans from 2035
leading to a reduction in
fuelsales
Reduction in
carbonemissions
This year we launched Smart Charge, a brand-new, dedicated Electric Vehicle (EV) charging business that will give
customers access to ultra-rapid EV charging points across our stores. Within our own direct operations we are
transitioning to alternative fuel across our full fleet by 2035.
To better understand the financial impacts of this transition risk we have performed quantitative scenario analysis
onour Fuel category (see page 34 for more details).
Increased likelihood of heat
events, flooding and droughts
leading to a reduction in crop
yields and increased
sourcingcosts
Reduction in
carbonemissions
Protecting and
regenerating nature
Championing human rights
We are working collaboratively with our key strategic suppliers on sustainability issues to build resilience and improve
security of supply. This includes creating climate adaptation plans and ensuring the protection of human rights across
our supply chain. Our analysis also looks at how physical risks can impact labour capacity so that we can identify which
supply chains and geographical locations could be most at risk of reduced labour capacity due to heat stress.
We understand the importance of working together with our suppliers to achieve a common goal. We have set up an
Own Brand Technical Innovation Fund which aims to offer our own brand supply base opportunities to build in efficiency
and resilience, including climate-related innovations.
To better understand the financial impacts of these physical risks we have performed quantitative scenario analysis
onour Produce, Cotton, Coffee and Tea categories (see page 35 for more details).
Increased likelihood of
flooding leading to water
damage and closure of
storesand depots
Water neutral by 2040
We use real-time information to identify properties most at risk of flooding and conduct extensive flood risk
assessments across our estate. In the highest risk sites we have installed a variety of flood defence measures such
assandbags and hard infrastructure for longer-term flood protection.
In 2023 we piloted the Volumetric Water Benefit Accounting (VWBA – Replenish) methodology to support us to reach our
operational water neutrality target through nature-based solutions. We purchased Replenish volumes associated with
interventions being implemented in the Wyre catchment by the Wyre Rivers Trust, which seek to reduce the flood risk
ofthe local area through upstream targeted measures to store water in times of peak flow.
To better understand the impacts of these physical risks we have performed scenario analysis on our own operations
(see page 33 for more details).
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD) continued
Strategy continued
Strategy b) Impact of climate-related risks and opportunities on business, strategy and financial planning continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 33
Case study – Tadcaster Store Flood Protection
Tadcaster is one of our stores we have identified as at high risk of flooding. In February 2022, during Storm Franklin, our early flood warning system
meant that we were able to put up flood defences eight hours ahead of the Environment Agency flood warning, enabling us to avoid damage from
the heavy rain and rising River Wharfe and reopen our store quickly once the flood risk passed.
Strategy c) Resilience of strategy, taking into consideration different climate-related scenarios,
including a 2°C orlowerscenario
Since 2021, we have continued to deepen our understanding of the climate-related risks and opportunities facing our business through qualitative and
quantitative scenario analysis. This year we expanded our analysis to model the impact of future flood risk on our own operations. Scenario analysis can
actas a ‘stress test’ for our current business operations and supply chain and help to explore a range of different outcomes. This allows us to evaluate the
potential effects on our strategic and financial position under each of the defined scenarios. We use the results to inform strategic thinking on how to
manage the identified risks and opportunities.
Qualitative scenario analysis
Our own operations
The increasing frequency and intensity of flood events demonstrate the physical impact that climate change can have on our own operations directly through
water damage to our infrastructure and indirectly by hindering access for our customers and suppliers. Improving our understanding of future water-related
risks helps us inform our property investment strategy and assess the need for future building adaptations.
For several years we have worked with a third-party risk specialist to help us actively manage flood risk across our property estate through our real-time
flood warning system, flood emergency plans for at-risk stores and investments in flood defences. Our flood warning system uses geospatial mapping of our
sites to predict flood location and threat level, allowing us to make timely decisions and targeted investments to minimise the impact of flooding.
This year we expanded our qualitative scenario analysis to model the impact of future flood risk on our operations under four climate pathways
a)
(2.6, 4.5, 6
and 8.5) up to 2100. Each store was assigned a floodability rating, measuring the frequency and flood depth to the risks of flooding from rivers, seas and
surface level water. Over 10 per cent of our estate is assessed as ‘very high’ or ‘high’ risk of flooding and this does not significantly vary over time or across
thefour climate scenarios – this means that we are not expecting flood risk to impact a significant proportion of our estate in the future. Going forwards,
using the store floodability rating and profitability of stores will allow us to make proactive decisions on where to perform future risk surveys and determine
the most effective way to use capital to install physical flood defences across our estate. We will also explore how the insight can further our understanding
of the potential financial impacts flooding could have through damage to infrastructure or loss of revenue due to store closures.
a) Climate pathways refer to different scenarios and actions that can be taken to manage climate change over time. A Representative Concentration Pathway (RCP) is a greenhouse gas
concentration trajectory adopted by the IPCC.
Our products and supply chain
Working with a third-party climate specialist we have performed qualitative scenario analysis to evaluate the impacts of a wide range of different climate
change risks on the product categories we sell. We considered the potential impact of 27 climate-related risks, including physical and transition risks.
Forphysical risks, we considered the geographical sourcing for each of our product categories and assessed different physical risks under a high emissions
scenario. To evaluate transition risks, we considered the greenhouse gas emissions of our different product categories, as well as how changing market
dynamics and increased regulations could impact both production costs and revenue.
The below table shows the most material climate-related risks identified as well as the product categories most exposed, which are reviewed annually
bythePlan for Better Steering Committee with oversight from the Corporate Responsibility and Sustainability Committee.
Type of risk Most material risks Most exposed categories
Physical risks • Heat events
• Labour capacity
• Drought
• Flooding
• Produce
• Cotton
• Coffee
• Tea
Transition risks • Regulation, including carbon taxes
• Changes in consumer preferences
• Meat, Fish and Poultry
• Dairy
• Clothing
• Fuel
Strategic Report Governance Report Financial Statements
34 J Sainsbury plc Annual Report and Financial Statements 2024
Quantitative scenario analysis
Our products and supply chains
To further build on the qualitative scenario analysis, we performed quantitative scenario analysis to determine the potential financial impacts of the most
material climate risks on the most exposed product categories. The scenarios are built using data from the Intergovernmental Panel on Climate Change
(IPCC) over two time horizons (2030 and 2050) and include a 2°C or lower scenario per the recommendations of the TCFD. These time horizons align with our
definition of medium and long term:
• 1.5°C – A pathway that limits global warming to below 1.5°C (low physical risk, high transition risk)
• 2.4°C – Described by the IPCC as an intermediate scenario (medium physical and transition risk)
• 4.3°C – A high emissions worst case scenario pathway (high physical risk, low transition risk)
Our analysis indicated that transition risks will be material leading up to 2030 as the global community strives to limit global warming to below 1.5°C,
whereas the impacts of physical risks are expected to manifest by 2050 if transition goals are not met. Extending transition risk analysis beyond 2030
introduces significant amount of uncertainty to our analysis. We have divided this section by looking at the impact of transition risk and physical risk
separately and outlining mitigations that we are taking. We looked at the impact of transition risks, such as regulation and changes in consumer preferences,
on the following product categories: Meat, Fish and Poultry, Clothing and Fuel. We did not include Dairy as the climate-related risks are assumed to be similar
to Meat, Fish and Poultry. We looked at the impact of physical risks, such as heat events, labour capacity, flooding and droughts in the following product
categories: Produce, Cotton, Coffee and Tea.
For all quantitative scenario analysis results disclosed in this section, the impacts for each product category are considered in isolation and assumes no
actions are taken by the business to mitigate the climate risks. The results should be treated as an indicative ‘order of magnitude’ assessment with
significant uncertainty attached and we have used a range for the potential revenue loss to reflect this uncertainty.
Potential financial impact of climate-related transition risks on most exposed products in a low emissions scenario in 2030
To assess the financial impact associated with regulation and changes in consumer preferences, we evaluated the sale of Meat, Fish and Poultry, Clothing and
Fuel in the UK. For regulation risks, we considered the impact of a carbon price on the Meat, Fish and Poultry category and the ban of the sale of new petrol, diesel
and hybrid cars and vans from 2035 on the Fuel category. For Meat, Fish and Poultry the carbon prices applied in our scenario analysis align with IPCC data and
costs are assumed to pass on directly to customers, reducing demand for the highest emission Meat, Fish and Poultry products. For Fuel we have assumed a rapid
uptake of battery electric vehicles leading to a 50 per cent reduction in fuel demand by 2030. For consumer preference, we considered the impact of more
climate-conscious customers favouring lower GHG emission protein and purchasing more second-hand clothing (displacing new clothing purchases).
The results show the potential revenue loss in a 1.5°C (low emissions) world in which physical risks associated with climate change are limited, but high
transition risks are experienced as the world attempts to meet the Paris Agreement. As the results do not reflect the impact of any mitigating actions, the
Meat, Fish and Poultry results do not capture the business opportunity of developing and promoting lower GHG animal protein and nutritionally positive
meat alternatives to capture switching calories from existing and new customers. The Fuel result does not capture the business opportunity from providing
customer electric vehicle charging.
Annual revenue loss to most exposed categories in
isolation in 1.5°C scenario in 2030, assuming no
actions are taken to mitigate risks:
Mitigations that are being implemented/considered as part of our strategic planning to minimise the financial
impacts of the risks identified:
Most material
transitional
climate risks
a)
:
Meat, Fish and
Poultry
Clothing Fuel
Meat, Fish and Poultry
• Working with suppliers to reduce GHG emissions in our supply chains, e.g. supplier targets,
animal health and welfare and feed efficiency
• Long-term contracts with key suppliers (e.g. Moy Park and ABP) to collaborate on
long-term sustainability projects
• Development of lower GHG emission animal protein within existing product (see low
carbon beef case study below) and promotion of nutritionally positive meat alternatives
to capture switching calories from existing and new customers
• Working with third-party service providers to understand the carbon emission impacts of
changing ingredients within ready meals
Clothing
• Increasing the use of recycled and alternative fibres
• Exploring options for circularity programmes
• Signatories of Textiles 2030, which aims to reduce the aggregate water footprint of new
products sold by 30 per cent
• Target for 100 per cent of our cotton to be sourced to an independent sustainability
standard by 2025
• ‘Test and trial’ projects focusing on durability in clothing blueprints to increase longevity
of garments
Fuel
• Making it easier for people to transition to electric vehicles with the launch of Smart
Charge and the rollout of our ultra-rapid charging hubs
• Investigating lower carbon fuel offerings at our petrol filling stations
Regulation £50m to
£100m
revenue loss
to MFP
category in
isolation
Overall
opportunity to
business
post-
mitigations
N/A £2,900m to
£3,000m
revenue loss
to fuel
category in
isolation
Smaller
revenue loss
risk/potential
opportunity to
business
post-
mitigations
Changes in
consumer
preferences
£350m to
£400m
revenue loss
to MFP
category in
isolation
Overall
opportunity to
business
post-
mitigations
£35 to
£40m
revenue
loss to
Clothing
category in
isolation
N/A
a) Risks should be considered in isolation as the complex interrelationship between multiple risks has not been considered.
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD) continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 35
Case study – ‘Lower Carbon Beef Scheme’
In September 2023, we launched a new Taste the Difference Angus Aberdeen beef range – offering a 25 per cent lower carbon footprint compared to
UKaverage consumed beef – reducing emissions through a combination of superior cattle breeding and animal management, which results in more
sustainable, highly consistent and traceable beef product for our customer. The range has been intentionally designed to provide greater security and
stability for farmers through fixed, forward pricing and free-of-charge farm management technology.
Potential financial impact of climate-related physical risks to most exposed crops in high emissions scenarios
in 2050
To assess the financial impact of the increased likelihood of heat events, reduced labour capacity, drought and flooding, we evaluated the production of Produce,
Cotton, Coffee and Tea in our key sourcing locations. We considered two scenarios, one where global warming reaches 4.3°C (high emission) as a result of no
global action taken to reduce emissions, leading to extreme physical risks manifesting in the long term and a 1.5°C (low emission) scenario where the Paris
Agreement is met but physical risks are still experienced, albeit more mildly. The below table shows the results of the 4.3°C (high emission) scenario only.
Our scenario analysis considered the impacts of these acute physical risks and the resulting diminished or lost crop yields that would result in increased
supply costs. We assume these additional costs are passed on directly to the consumer, reducing demand and impacting our revenue.
Annual revenue loss to most exposed crops in isolation in
4.3°C scenario in 2050, assuming no actions are taken to mitigate risks:
Mitigations that are being implemented/considered as part of
our strategic planning to minimise the financial impacts of
the risks identified:
Most material
physical climate
risks
a)
:
Produce
b)
Cotton Coffee Tea • Engage: continue to work closely with our
suppliers to understand growing locations
andassociated sustainability programmes,
e.g.engaging with factories who have low
performance in water conservation on their
water resilience plans
• Explore supply chain adaption options with
suppliers: higher altitude locations, lower flood
risk areas, vertical farming, glass growing
structures, installing reservoirs, drainage
channels, using drought and temperature-
resistant crop strains
• Investment: supporting suppliers on projects
that contribute to climate resilience through our
Own Brand Technical Innovation Fund
• Certification: sourcing of sustainable crops
through Fairtrade, Rainforest Alliance and BCI
Cotton, expanding to instant coffee from
December 2024 and exploring other types
ofcotton
• Human rights: commitments to ensure that
our transition to net zero is just and equitable
for the communities we source from
Heat events £35m to £40m
revenue loss to
crops
£90m to £95m
revenue loss to
crops
£30m to £35m
revenue loss to
crops
£40m to £45m
revenue loss to
crops
Labour capacity N/A N/A £10m to £15m
revenue loss to
crops
£20m to £25m
revenue loss to
crops
Drought £25m to £30m
revenue loss to
crops
£20m to £25m
revenue loss to
crops
£10m to £15m
revenue loss to
crops
£0m to £5m
revenue loss to
crops
Flooding £0m to £5m
revenue loss to
crops
£10m to £15m
revenue lost factory
operation days
£0m to £5m
revenue loss to
crops
£0m to £5m
revenue loss to
crops
Key sourcing
locations:
Spain
UK
Benin
Brazil
India
U.S.A
Bangladesh
(manufacturing)
Brazil
Columbia
Honduras
Peru
India
Kenya
Malawi
Rwanda
a) Risks should be considered in isolation as the complex interrelationship between multiple risks has not been considered.
b) Produce considers citrus fruits, lettuce, berries and potatoes grown in Spain and the UK.
To assess the resilience of our business to the impacts of climate change we reviewed how our analysis could impact our revenue losses within our most
exposed product categories. Each year we incorporate the analysis into the Group’s impairment review to ascertain the impact that climate change could
have on the carrying value of the Group’s store assets, by modelling the impact on cash flows (page 160). The results do not have a material impact on the
Group’s impairment considerations and the Group remains resilient to climate impacts under the scenarios assessed. Finally, Sainsbury’s Bank considers
climate-related risks as part of its Internal Capital Adequacy Assessment Process (ICAAP). Sainsbury’s Bank concluded there were limited impacts related to
both the physical and transition climate-related risks over the next 30 years as the Bank does not have a mortgage portfolio or undertake any corporate
lending. The Bank determined that its strategy remained resilient to these risks and no significant changes to its strategy was required.
Strategic Report Governance Report Financial Statements
36 J Sainsbury plc Annual Report and Financial Statements 2024
Risk management
Risk management a) Processes for identifying and assessing climate-related risks
Climate risk is one of our principal risks and is a key pillar in our Plan for Better strategy.
We identify climate-related risks through quarterly bottom-up divisional and governance forum risk assessments and then review annually top-down in a
dedicated climate risk workshop to assess completeness. The process manages our ability to deliver our Plan for Better strategy, progress towards our Scope
1, 2 and 3 targets and consideration of physical and transition climate risks impacting our operations and supply chain, including existing and emerging
regulatory requirements.
Climate risks are mapped against our corporate risk metrics, including financial and reputational and likelihood of occurring (from remote to almost certain).
To assess the effectiveness of existing climate controls, each risk has two positions: gross risk (before existing controls); and net risk (after existing controls).
Management set a target risk (management’s target position) to align any net risks with corporate risk tolerance. Climate risks where the impact is not yet
well understood are captured separately on an emerging risk map (plotted against likelihood of occurring and timeframe).
Risk management b) Processes for managing climate-related risks
Each climate risk is assigned a Director-level business owner who is responsible for monitoring and mitigating the risk. Climate risks are agreed annually
atthe Plan for Better Steering Committee with Board level oversight from the Corporate Responsibility and Sustainability Committee. Climate risks and
mitigations are monitored throughout the year by the Plan for Better business leads and Steering Committee. These risks are considered in tandem with
other business-related risk (for example those relating to human rights) to form a holistic view of the impact of the risk on the business. Climate risks are
prioritised according to the heat map which plots impact and likelihood. To further enhance capacity and ownership of climate risks across the business,
theSteering Committee has cross-divisional representation at Director level.
Risk management c) Processes for identifying, assessing and managing climate-related risks are integrated into the
organisation’s overall risk management
The output from this climate risk process, in aggregate, is elevated to the corporate risk map owned by the Board with support from the Audit Committee and
informs the Environment and Social Sustainability principal risk shown on page 61. The risk management process for climate is in line with the business-wide
risk management framework described on pages 53 to 61.
Case study – ‘UK-grown Brassicas’
One of the ways we mitigate flood risk is to have multiple growing locations for a crop. For example, for UK-grown Brassicas we use three distinct
areas – Cornwall, East Anglia and Scotland. These areas have similar growing conditions but are far enough apart to reduce the risk of all areas
suffering from a severe weather event.
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD) continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 37
Metrics and targets
Metrics and targets a) Metrics used to assess climate-related risks and opportunities in line with its strategy and risk
management process
The below table shows the key metrics and methodology used to measure climate strategy and risk management.
Plan for Better Commitment Metric Methodology
Reduction in carbon
emissions
Absolute GHG emissions within our own
operations (tCO
2
e)
Absolute, market-based, Scope 1 and 2 GHG emissions in the financial year for
Sainsbury’s Group and supported by third party South Pole and verified by ERM CVS
(limited assurance ISAE 3000). Follows the GHG protocol.
Electricity which comes from renewable
sources (%)
The amount of renewable energy used by Sainsbury’s Group as a proportion of the
total electricity consumption in the financial year, supported by third party South
Pole. Combination of energy sourced directly from on-site solar and wind farms as
well as certificate-backed renewable electricity from the UK.
Absolute Scope 3 GHG emissions (tCO
2
e) Near term (2030) target boundary includes emissions from the material categories:
1a) purchased goods for resale, 4) upstream transport and distribution, and 11) our
customers’ use and consumption of the products we sell. Emissions associated with
business travel is verified by ERM CVS (limited assurance). Follows the GHG protocol.
Suppliers disclosing through CDP
(%ofemissions)
Suppliers disclosing through CDP, which is an environmental impact
disclosuresystem.
Suppliers disclosing through Manufacture
2030 or Higg (% of emissions)
Suppliers disclosing through Manufacture 2030 or Higg, which are environmental
impact disclosure systems.
Suppliers with SBTi 1.5
o
C net zero targets
approved (% of emissions)
Suppliers with approved SBTi 1.5
o
C aligned net zero targets recorded on the SBTi
platform. This is considered the gold standard for GHG emission targets.
Suppliers who have signed up to the UK Soy
Manifesto (% of soy footprint)
Critical suppliers who have signed up to the UK Soy Manifesto. The manifesto is an
industry commitment to sourcing deforestation and conversion-free soy by 2025.
Suppliers disclosed their information through third party 3Keel.
Reduction in
wateruse
Absolute water usage within our own
operations (m
3
)
Absolute water usage in the financial year for both Sainsbury’s and Argos, supported
by third parties WaterScan and South Pole and verified by ERM CVS (limited
assurance post-publication of annual report).
Healthy and
sustainable diets
Healthy and better for you sales tonnage as
a proportion of total sales tonnage (%)
Food sales tonnage of healthy, healthier choice and better for you products as a
percentage of total food sales tonnage in the financial year (exclusive of beers,
wines, spirits and baby food). Healthy, healthier choice and better for you defined
using a nutrition criteria tool, including criteria from the Eatwell Guide which is
lower in GHG emissions.
Reduction in food
waste
Food waste to anaerobic digestion as a
percentage of food handled (%)
Food waste to anaerobic digestion as a percentage of food handled for the financial
year, as per the WRAP recommendation we calculate this as tonnes food waste/
(tonnes food product sold as intended + tonnes food waste + tonnes food surplus
sent to other destinations).
Nature Soy sourced to an independent
sustainability standard (%)
Sustainably sourced soy tonnage as a percentage of total soy tonnage footprint,
ascalculated by third party 3Keel.
Palm oil sourced to an independent
sustainability standard (%)
Sustainably sourced palm oil tonnage as a percentage of total palm oil tonnage
footprint, as calculated by third party 3Keel.
Timber sourced to an independent
sustainability standard (%)
Cubic metre volume of assessed sustainably sourced timber products sold as a
percentage of total cubic metre volume of all assessed timber products sold during
2023 calendar year. Sustainability assessments were carried out by third party Track
Record Global Ltd.
Cotton sourced to an independent
sustainability standard (%)
Cotton tonnage sustainably sourced and certified by third party Better Cotton
Initiative (BCI) as a percentage of total cotton tonnage sourced during the
financialyear.
Number of woodland trees planted (number) Total number of trees planted in the financial year through partnership with the
Woodland Trust.
Strategic Report Governance Report Financial Statements
38 J Sainsbury plc Annual Report and Financial Statements 2024
Metrics and targets continued
Metrics and targets a) Metrics used to assess climate-related risks and opportunities in line with its strategy and risk
management process continued
In line with TCFD recommended disclosures, we are also required to report on cross-industry metrics to enable comparability across different sectors. These
metrics are deemed important proxies for measuring climate-related risks and opportunities.
Metric Category Unit of Measurement Narrative
GHG Emissions
Absolute Scope 1, Scope
2 and Scope 3
MT of CO
2
e Absolute GHG emissions for Scopes 1, 2 and 3 are included within our climate-related metrics table on page
39. This includes our most recently approved 1.5
o
C aligned SBTi targets.
Transition and
physical risks
Amount and extent
ofassets or business
activities vulnerable
totransition or
physicalrisks
Percentage In our own operations we assessed that over 10 per cent of stores are at ‘high’ or ‘very high’ risk of a flood
event occurring, causing damage to stores and potential revenue loss from closure.
The product categories that we have performed climate scenario analysis covers over 25 per cent of total
revenue. Our scenario analysis focuses on our most material transition and physical risks: heat events,
reduced labour capacity, droughts, flooding, regulation and changing consumer preferences.
Our quantitative scenario analysis shows the potential financial impact of climate change on our most
exposed product categories. We use these results as assumptions within our financial planning models
todetermine whether these risks resulted in material impacts on performance or position as at year-end.
As part of our Group impairment work we considered all of the climate-related risks identified in our
quantitative scenario analysis. The most material transitional risk was the impact on fuel due to legislation.
As such, the Group’s current year impairment review included cash flow assumptions in relation to the
expected future revenue loss within the fuel category. The other climate change risks identified did not
result in a material financial impact to the accounts.
Further details can be found in our scenario analysis page 34 and note 17 of the financial statements on page 160.
Capital deployment
Amount of capital
expenditure, financing,
or investment deployed
toward climate-related
risks and opportunities
Reporting currency We have committed to significant capital investment to become net zero in our own operations by 2035 and
our future capital investment is aligned with our decarbonisation roadmap. This year we spent £18 million
on Solar PV optimisation and the installation of solar, refrigeration efficiency and engineering innovation.
More information can be found within our 2024 CDP submission found on our website in the reports and
policies section.
Our capital spend to date has focused on the decarbonisation of heat, increasing the amount of renewable
energy, energy efficiency, the removal of hydrofluorocarbon refrigerant gas, transitioning our fleet to
alternative fuels.
We have also invested in our Smart Charge Electric Vehicle (EV) charging network.
Climate-related
opportunities
Proportion of revenue,
assets, or other business
activities aligned with
climate-related
opportunities
Amount or
percentage
The impact of climate issues informs our risk management and drives our strategy to identify and consider
climate-related opportunities that we can benefit from.
Part of our capital expenditure is used to remove natural gas heating and replace it with Refrigeration
Integrated Heating and Cooling (RIHC) systems – using the refrigeration systems to provide all heating and
cooling requirement in 51 stores. We have fully mapped our estate to help us make decisions on the most
effective way to deploy capital expenditure to reduce emissions. Our mapping tool allows us to identify which
sites need to be invested in and when. Due to the success of our Hook store last year, we have used this as a
model for rolling out new stores that use similar technology (such as Talbot Green and Southport this year).
Our Sainsbury’s Innovation Investments (S2I) initiative has attracted 742 opportunities to date and we are
considering next stages for investment in 13 opportunities.
Internal carbon prices
Price on each ton of
GHG emissions used
internally by an
organisation
Price in reporting
currency, per MT of
CO
2
e
An Internal Carbon Price (ICP) is a method used by companies to appraise investments, aid decision-
making and manage risks for projects that relate to transitioning to a low-carbon economy. By assigning
amonetary price to GHG emissions, it allows businesses to efficiently deploy capital and assess the best
course of action to address climate-related risks and opportunities.
Following detailed modelling using real-life investment scenarios to determine how an ICP could impact our
decisions, considering required net present value/gross investment hurdle rates, it was determined that
investment in initiatives delivering carbon reductions did not currently require any further support to justify
expenditure and that the pipeline of current projects hit the required hurdle rates set by the business. Carbon
reduction initiatives outside of the current pipeline may benefit from the introduction of a carbon price.
As part of our carbon emission footprinting we assigned category level emission factors at an individual
product level based on the most appropriate industry average data available. We are developing an internal
carbon dashboard which will be made available to our commercial teams to facilitate better linkages
between internal financial budgets and SKU level carbon emission factors.
We will continue to evaluate whether an ICP is a mechanism that may be relevant to the organisation in future.
Remuneration
Proportion of executive
management
remuneration linked to
climate considerations
Description Our Plan for Better metrics, which include climate-related metrics, form part of the Executive Directors’
long-term incentive arrangements.
Further details can be found on page 116.
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD) continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 39
Metrics and targets b) Scope 1, Scope 2 and Scope 3 greenhouse gas (GHG) emissions and the related risks
Scope 1 and 2
Financial year
Scope 1 and 2 GHG
market-based
emissions (tCO
2
e)
Reduction against
baseline (%)
2018/19 (baseline) 949,744 —
2019/20 840,680 11.5%
2020/21 817,42 0 13.9%
2021/22 746,681 21.4%
2022/23 461,692 51.4%
2023/24 458,973 51.7%
For a more detailed breakdown of our Scope 1 and 2 GHG emissions, please see our Streamlined Energy and Carbon Reporting (SECR) disclosure on page 119.
We have a proven track record of delivering GHG emissions reductions in our own operations and a robust plan to reach net zero by 2035; however, there is
some risk as our transition plan requires industry innovation, such as a commercially viable alternative fuel solution for heavy goods vehicles. Our near-term
target is to reduce our Scope 1 and 2 GHG emissions by 68 per cent by 2030/31. Further details on our transition to net zero within our own operations including
the main actions we are taking can be found on page 41.
Scope 3
Baseline 2018/19 tCO
2
e
Scope 3 GHG target boundary emissions 25,652,904
FLAG Energy/Industry
8,168,793 17,484,111
Of which category:
1a – purchased goods for resale 8,168,793 5,798,324
4 – transport 812,782
11 – consumer use 10,873,005
In January 2024 we obtained SBTi approval of our revised near-term and net zero science-based Forest, Land and Agriculture (FLAG) targets, following on
from approval of our 1.5
o
C aligned net zero by 2050 target, in December 2023. Our Scope 3 baseline for our near-term 2030 target covers emissions from the
following material categories: 1a) purchased goods for resale, 4) transport and 11) consumer use.
We are continuously improving the accuracy of our Scope 3 footprint. Each year we review the appropriateness of the data sources we use to ensure that
ourfootprint is as accurate as possible. To follow the SBTi’s new FLAG requirements, we have updated our emission factors to product level FLAG-compliant
emission factors based on a third-party database from Agribalyse. Because of this, we have restated our baseline. Whilst we are not able to accurately report
our Scope 3 emissions for the current year it remains a priority. We know that we need to focus on accurately reporting on our Scope 3 emission reductions
and move beyond industry average factors. We are collaborating with other retailers and WRAP on reporting Scope 3 emissions which includes accurately
and transparently reporting emission reductions.
At present we continue to use industry average carbon emission factors to calculate our Scope 3 footprint. Our current methodology enables us to identify
ourmost carbon-intensive products and the suppliers who constitute the top 80 per cent of our Group emissions. We are actively working towards an
alignedindustry approach to measure supplier-specific emissions as this is the most effective way to track emissions reductions within our own supply
chain. However, in the absence of a universally recognised approach, we are engaging with our strategically important suppliers to carry out lifecycle
analyses ofthe products they sell us and continue to request suppliers to disclose emissions data through the following environmental impact disclosure
systems: Manufacture 2030 and Higg.
We request all of our suppliers to disclose on either Manufacture 2030 or Higg and our key suppliers (covering 80 per cent of our emissions footprint) to set
SBTi-approved targets.
We are engaging directly with our strategically important suppliers to understand their carbon reduction roadmaps and we are working with the British
Retail Consortium (BRC) Mondra Coalition, a third-party service provider, to understand the environmental impact of our emissions at a product and
ingredient level across 5,000 products to accelerate decarbonisation and enable effective business decision-making. This is a pilot initiative involving
manystakeholders in the industry thereby helping to steer the industry to a consistent approach to Scope 3 data collection.
We recognise we cannot solve the challenges relating to reducing Scope 3 emissions on our own and are therefore committed to work at industry level to find
a solution. We continue to participate in industry-wide working groups and are signatories, alongside other retailers, to the WWF Retailers’ Commitment for
Nature, which involves a commitment to halve the environmental impact of UK baskets by 2030. More information on our Scope 3 strategy can be found in our
Climate Transition Plan section on pages 42 to 43.
Strategic Report Governance Report Financial Statements
40 J Sainsbury plc Annual Report and Financial Statements 2024
Metrics and targets continued
Metrics and targets c) Targets used to manage climate-related risks and opportunities and performance against targets
The following metrics and targets are used to monitor progress against climate-related risks and opportunities and are embedded in our Plan for Better.
These metrics and targets governed by the Plan for Better Steering Committee with oversight from the Corporate Responsibility and Sustainability
Committee. We understand the importance of setting GHG emission reduction targets and have recently obtained SBTi-approved FLAG compliant near-term
and net zero targets. We have long-term remuneration targets for Executive Directors on (see page 116 for more details).
Plan for Better
Commitment
Metric
Baseline
Results
Target2022/23 2023/24
Reduction in
carbon emissions
Absolute GHG emissions within our own operations
(tCO
2
e)
949,744 tCO
2
e
2018/19
461,692 tCO
2
e 458,973 tCO
2
e Net zero by 2035/36 68%
by2030/31
Electricity which comes from renewable sources (%) 17% 2019/20 100% 100% 100%
Absolute Scope 3 GHG emissions (tCO
2
e) 25,652,904 tCO
2
e
2018/19
a)
n/a N/A 72% FLAG and 90% energy/
industry emissions reduction
by 2050/51
36.4% FLAG and 50.45%
energy/industry emissions
reduction by 2030/31
Suppliers disclosing through CDP (% emission)
b)
N/A 54.8% 63.8% 80% of emissions by 2025/26
Suppliers disclosing through Manufacture 2030 or
Higg (% emissions)
b)
N/A 43.8% 57. 2% 80% of emissions by 2025/26
Suppliers with SBTi 1.5
o
C net zero target approved
(%emissions)
b)
N/A Less than 2% 6% 80% of emissions by 2025/26
Critical suppliers who have signed up to the UK Soy
Manifesto (% of soy footprint)
86% 2022/23 86% 88% 100% by 2025/26
Reduction in
wateruse
Absolute water usage within our own operations (m
3
) 3,224,000 m
3
2018/19
2,655,753 m
3 c)
2,621,341 m
3
Water Neutral 2040/41
Healthy and
sustainable diets
Healthy and better for you sales tonnage as a
proportion of total sales tonnage (%)
82% 2019/20 81.2% 80.9% 85% 2025/26
Reduction in food
waste
d)
Food waste to anaerobic as a percentage of food
handled (%)
0.728% 2019/20 0.645% 0.627% 0.364% 2030/31
Nature Soy sourced to an independent sustainability
standard (%)
6% 2019 43% 88% 100% 2025
Palm oil sourced to an independent sustainability
standard (%)
99.1% 2019 100% 100% 100% 2025
Timber sourced to an independent sustainability
standard (%)
e)
58% 2019 83% 93% 100% 2025
Cotton sourced to an independent sustainability
standard (%)
76% 2019 98% 97% 100% 2025
Number of woodland trees planted (number) 493,750 trees
2019/20
1,114,583 1,292,583 1,500,000 (cumulative) 2025
a) Scope 3 baseline has been restated from 26,663,081 tCO
2
e to 25,652,904 tCO
2
e on approval of new SBTi targets. The change is primarily driven by more accurate input data and emission factors.
b) Scope 3 engagement metrics have been restated in 2022/23 to show the percentage of emissions covered by our suppliers who have responded to the relevant platforms. The percentage of
emissions covered is based on the 2021/22 emissions data which was used to generate the key carbon supplier list for this year’s engagement cycle, therefore it does not align with current
year emissions.
c) 2022/23 Water consumption has been restated from 2,655,817m
3
to 2,655,753m
3
following receipt of the ERM audit certificate which was received post signing of the 2022/23 Annual Report.
d) Food waste metric has been restated to show food waste to anaerobic digestion relative to total tonnes handled as our primary food waste metric as is considered best practice by
TheWaste and Resources Action Programme (WRAP).
e) 2022/23 Timber result has been restated from 92 per cent to 83 per cent due identification of incorrect item weights being used in the third party TRG report. The baseline has also been
restated from 60 per cent to 58 per cent.
Climate change and Task Force on Climate-related
FinancialDisclosures (TCFD) continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 41
Introduction
We are committed to protecting and restoring our planet and supporting a transition to a low carbon economy. To achieve this, we have set ambitious
near-term and net zero targets across our Scope 1, 2 and 3 greenhouse gas emissions aligning to a 1.5
o
C scenario. We have a clear strategy to drive progress
against these targets which, in line with emerging best practice, acknowledges the interconnectedness of action on diets, nature and climate and works to
ensure no negative unintended consequence with many of our Plan for Better commitments supporting our carbon reduction strategy (see our Plan for
Better Rerport for details on our targets).
Driving progress
Reduction targets from
baseline
Absolute emissions
target tCO
2
e
2018/19 Baseline 949,744
2023/24 51.7% 458,973
2030 near-term target 68% 304,812
2035 net zero target 100% —
Own operations – Scope 1 and 2 – Net zero by 2035
We have a strong track record of reducing greenhouse gas emissions in our own operations (Scope 1 and 2), over the last 17 years, reducing our emissions
by51.7 per cent from our 2018/19 baseline, with progress being delivered through energy efficiency programmes, including a move to 100 per cent LED lights
across our estate, replacement hydrofluorocarbon refrigerant gases with natural alternatives, electrification of our heating and moving to 100 per cent
renewable energy since 2022, committing tolong-term purchasing of renewable energy from new-to-the-planet power purchase agreements.
In collaboration with Imperial College we have developed a transition roadmap for our entire estate and direct operations which provides modelled scenarios
up to 2035, indicating projected GHG emissions and ‘when’ and ‘where’ investments should take place to generate adequate returns whilst meeting our
targets. We have committed to significant capital investment to achieve net zero by 2035 across our own operations, and leveraged our transition roadmap to
ensure the business makes targeted investments aligned to carbon mitigation efforts. This investment is built into our corporate financial plan, with capital
allocation aligned with our decarbonisation roadmap and has been approved by the Board (see governance for overview of key decisions). In 2022 we also
pledged to invest at least £5 million over the next four years in the Sainsbury’s Innovation Investments (S2I), an initiative in partnership with Williams
Advanced Engineering to help accelerate dynamic start-up companies in developing, testing, and deploying transformational sustainable technologies,
toachieve our net zero ambitions, reduce water usage and support the wider food retail sector.
Our strategy is focused on emissions reductions in three areas outlined in the following table. The success of our Scope 1 and 2 strategy is dependent on
prioritising and having access to the required finances to carry out our capital programme, the availability of suitable innovation technology and being able
to implement the latest engineering solutions in the most efficient way possible, whilst also considering the associated business cases.
Strategy
Proportion of
emission footprint Key actions Progress to date
Logistics:
Zero carbon vehicles
andinfrastructure
53% • Transitioning our entire delivery fleet to electric or
hydrogen powered by 2035
• Moving the majority of company cars to electric
andhybrid
• Exploring a range of solutions across property and
logistics through S2I
• Nine Elms uses a fully electric delivery fleet
• Further trials ongoing
Refrigerants:
Switch to natural
refrigerants
26% • Replacing our remaining refrigeration systems that
usehydrofluorocarbon (HFC) refrigerant gas with
naturalalternatives
• Working with external partners to develop solutions for
using natural refrigerant gas
• Removing refrigerant gas in logistics
• Align refrigeration replacements with equipment
lifecycles by prioritising stores where the fridges need
replacing first, either due to age or condition
• 51 stores have switched to natural refrigerants
• Net zero stores (Hook, Talbot Green)
Heating:
Electrification of heat
21% • Remove the use of gas heating and replace with our
Refrigeration Integrated Heating and Cooling (RIHC)
andheat pumps programme
• 29 RIHC system installations
Whilst we have transitioned to purchasing 100 per cent renewable electricity, our focus remains on energy efficiency to reduce electricity consumption. We
will maintain our commitment to 100 per cent renewable electricity, on-site generation, secure long-term power purchase agreements with new-to-the-planet
windfarms and energy efficiency programmes to support the switch to electrification of heat and transport as well as mitigating costs.
Climate Transition Plan (TCFD)
Strategic Report Governance Report Financial Statements
42 J Sainsbury plc Annual Report and Financial Statements 2024
Value chain – Scope 3 – net zero by 2050
Emission reduction targets from our 2018/19 target
boundary baseline
Energy/Industrial/
Transport (non-FLAG)
emissions
Forest, land and
agriculture (FLAG)
emissions
2030 near-term target 50.4% 36.4%
2050 net zero target 90% 72%
We know that 96 per cent of our emissions are in our value chain (Scope 3),
with 278
1
suppliers making up 80 per cent of the emissions covered by our
2030 Scope 3 target. SBTi have approved our Scope 3 targets, which are in
line with limiting global temperature increases to 1.5
o
C and FLAG-compliant.
Purchased goods and services 47.35%
Upstream transport 2.76%
Use of sold products 36.86%
Other 13.03%
Total Scope 3 baseline emissions
1 The number of suppliers changes slightly annually with our annual calculations of emissions based on most recent volumes and product ranges.
Climate Transition Plan (TCFD) continued
Our strategy is focused on emissions reductions in three areas outlined below:
Strategy
Proportion of
emission
footprint Key activities Progress to date
Production of
products
Agriculture and
land management
100% FLAG
emissions
• Create supplier working groups on key
climate-related topics
• Develop incentive initiative schemes
forsuppliers
• Improve farm-level efficiencies and yield
and work to reduce food waste, fertiliser
and pesticide use
• Continue to develop nature positive/
regenerative agriculture principles
including soil health improvements and
where relevant, supporting through
certification schemes
• Deliver our commitment to zero
deforestation by 2025, focusing on supply
chain traceability, certified materials and
policy development in high-risk
commodities
• Created working groups with strategic suppliers
focused on soil and fertiliser use
• Enhanced our point-based reward system for our
Sainsbury’s Dairy Development Group, which rewards
suppliers for on-farm initiatives that improve animal
welfare and environmental outcomes
• Agroforestry advice scheme: a project offering free
advice to farmers and producers in our supply chain
on planting the right trees in the right places on
farms
• Collaboration with The Land App and the UK Centre
for Ecology and Hydrology: working with farmers
and producers in Great Britain to enable them to
map their biodiversity and land use footprint and
improve biodiversity and climate resilience within
their farming systems
• Internal policies on deforestation for timber and
rubber requiring certified products supports
sustainable forest management and ensure these
products do not contribute todeforestation
Supplier
operations
29% • Engage suppliers on energy efficiency and
track transition to renewable energy use
• Collaborate to reduce waste through
circularity initiatives, packaging and food
waste reduction
• Track environmental performance at
supplier site-level
• Collaborate with suppliers on product
development, innovation and efficiencies
• M2030 and Higg platforms provide data insights on
where collaboration or support is needed to
overcome barriers to climate action
• Working with suppliers in product development, e.g.
crownless pineapples, vacuum-packed beef, lower
carbon beef
Healthy and
Sustainable diets
• Making it easier for customers to make
healthy, affordable, accessible,
sustainable diet choices
• Reduce consumption of high emission
products through reformulations,
innovation, range change and promotion
• Collective industry action to encourage
improvements to consumer diets
• Join or create working groups/and
coalitions to support research and
policyadvocating
• We are calling for collective change on issues where
sector-wide action is needed, e.g. common
definitions of ‘healthier’, through the Food Data
Transparency Partnership (FDTP), consistent
disclosures for a more sustainable diet, aligned
disclosures for investor benchmarks on health
(Access to Nutrition Initiatives (ATNI)), and
independently evaluating initiatives to help support
healthier purchases (Institute of Grocery
Distribution (IGD), FIO-FOOD)
• BRC engagement on product-level emission
footprinting, IGD on Eco Labelling development
and FDTP/WRAP engagement to develop a food
sector approach to reporting and disclosure for
Carbon reporting
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 43
Strategy
Proportion of
emission
footprint Key activities Progress to date
Supply chain
transport
4.3% • Increase usage of sustainable
shippingfuels
• Lower carbon transport alternatives
• Map modes of transport and distances
• Participate in working groups focused on
innovation in transportation
• Signatory of the Cargo Owners for Zero Emission
Vessels (coZEV)’s 2040 Ambition Statement
Use of products Fuel 48.3% • Making it easier for people to transition to
electric vehicles with the launch of Smart
Charge and the rollout of our ultra-rapid
charging hubs
• Investigating lower carbon fuel offerings
at our petrol filling stations
• Launch of EV charging points
Acknowledging the uncertainties for Scope 3
By definition, Scope 3 is beyond our direct control which creates uncertainty in meeting our Scope 3 targets. Our plan maps out how best to engage with key
stakeholders and drive change but there are dependencies and critical success factors beyond value chain stakeholders. For FLAG emissions, transparency of
the whole supply chain for all products is an ongoing challenge we’re solving through different mechanisms (e.g. complying with EU Deforestation Regulation
and engagement with high-risk commodities). National farming policies are also critical success factors for Scope 3. Within supplier operations and transport,
our Scope 3 plan depends on infrastructure changes to support the transition to renewables and EVs, as well as progress in shipping and aviation emissions
reductions. Healthy and sustainable diets requires exploring mechanisms across industry and with government to explore optimum nutritional and
sustainable diets, engaging customers while also providing range of customer choice.
Stakeholder engagement (including governance)
Effective engagement is fundamental to achieving our Scope 3 reduction targets and underpins our Scope 3 strategy and the success of the actions we have
outlined in the five distinct areas above. We are committed to playing our role in mobilising action across our entire value chain. Within our supply chain we
have focused our engagement with our most material suppliers, asking them to set 1.5
o
C net zero science-based targets through the SBTi by 2025/26, and
supporting them to create emission reduction plans (see a summary of our engagement strategy below). We are committed to supporting our suppliers on
key issues through collaboration and engagement and understanding where they are on their journey through disclosure frameworks such as Manufacture
2030 and Higg. We actively participate in industry working groups and have found this has been key to progressing Scope 3 accounting and reporting.
Working with the Government is fundamental to achieving the global ambition and we understand the important role we play as a leading food retailer.
Weare also doing what we can to influence customer behaviours and making it easier for our customers to support our net zero targets.
Stakeholder group Engagement strategy
Value chain • Identify key suppliers for engagement
• Ask key suppliers to set 1.5
o
C net zero science-based targets (to match our own)
• Create supplier working groups focused on key climate-related topics, projects relating to efficiency and innovation in
products and services
• Develop incentive initiative schemes for suppliers
• Engage with and encourage suppliers to set net zero targets and disclose on environmental disclosure platforms to collect
environmental performance data
• Collaborate with suppliers on product development, innovation and efficiencies
• Work closely with our insights team to understand customer behaviours
Industry • Participate in leading retail working groups to facilitate collective action
• Collaborate with third-party providers towards innovation
Government, public sector
and civil society
• Establish company policy position
• Join or create working groups/lobbying groups/researchers
• Engage with Government-led groups
We leverage robust internal governance for oversight and decision-making across our Plan for Better. We also engage our stakeholder groups widely to drive
action towards a low carbon economy. For more detail on the key challenges we face, the issues we engage stakeholders on, and our engagement channels
see our Plan for Better Report (www.about.sainsburys.co.uk).
Reporting and disclosure
We monitor and report our progress transparently on our Plan for Better annually and through this disclosure we outline our high-level strategy and plans to
transition to a low carbon economy. These key activities will form the basis of our future Climate Transition Plan. We have engaged in consultation with the
Transition Plan Taskforce (TPT) and have contributed to the developments of both the sector-neutral and sector-specific TPT framework. We acknowledge
that our transition plan will be an iterative document and will annually report progress against our plan within our TCFD disclosure.
Strategic Report Governance Report Financial Statements
44 J Sainsbury plc Annual Report and Financial Statements 2024
Key Performance Indicators
Operational
Grocery market share performance (%)
Definition: Sainsbury’s grocery market share of total market and of full
choice supermarkets measured by Nielsen Volume Market share.
11.5%
in 2023/24
Customer satisfaction (score)
Definition: The percentage of ‘highly satisfied’ answers out of the total
sample in response to the following question: Based on your most recent
visit or online order to this Sainsbury’s, how satisfied were you with your
overall experience?
+190bps
since 2019/20 baseline
Plan for
Better
commitment
Definition: Our Plan for Better sets out our sustainability goals across
our whole business, outlining our priority areas of focus, our key
commitments and our progress. See below for status against targets
inthe priority areas.
Engagement – Ahead of target
Diversity and Inclusion – Behind target, but made progress
Carbon Scope 1 and 2 – Ahead of target
Carbon Scope 3 – Industry reporting challenges
Food waste – Behind target
Healthy and sustainable diets – Behind target
Plastic – Low end of target range
Colleague engagement (score)
Definition: Percentage of our colleagues who feel that we are a
greatplace to work. Colleague engagement score out of 100 from the
internal, annual ‘We’re Listening’ survey. Target to maintain strong
engagement score.
+300bps
in 2023/24
Diversity and inclusion
Definition: We have three internal measures for diversity and inclusion,
which come together to form a colleague representation target for 2024.
We have grown representation
acrossall our colleagues’
measurements from 2021-24,
hittingone of our stretch targets.
Prerana Issar
Chief People Officer
2023/24
2023/24
2023/24
2023/24
11.5
21.8
+190
+300
2022/23
2022/23
2022/23
2022/23
11.3
21.1
+40
+300
2021/22
2021/22
2021/22
2021/22
11.3
20.8
+230
+200
2020/21
2020/21
2020/21
11.4
20.5
+220
Total market share
Customer satisfaction bps
Colleague engagement bps
Share of full choice supermarkets
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 45
Return on capital employed (%)
Definition: Underlying profit before interest and tax, divided by average
net assets excluding pension deficit/ surplus, less net debt, calculated on
a 14 point basis. Target to increase. Refer to note A4.1 on page 203 for
reconciliation.
+0.7%
since 2019/20 baseline
Underlying profit before tax (£m)
Definition: Profit before tax adjusted for certain items in note 5 which,
by virtue of their size and/or nature, do not reflect the Group’s underlying
performance. Target to maintain growth. Refer to note A1.2 on page 200
for reconciliation.
£701m
in 2023/24
2023/24 2023/24
8.3 701
2022/23 2022/23
7.6 690
2021/22 2021/22
8.4 730
2020/21 2020/21
5.6 357
Retail free cash flow (£m)
Definition: Net cash generated from retail operations, after cash capital
expenditure and after investments in joint ventures and associates. Target
at least £500 million per annum on average to2024. Refer to note A2.1 on
page 200 for reconciliation.
£639m
in 2023/24
Retail operating cost to sales (bps)
Definition: Retail operating costs as a percentage of retail sales
including VAT. Target to reduce by at least 200bps by 2024 year-end.
165bps
improvement since 2019/20
Financial
2023/24
(165)
2022/23
(97)
2021/22
(83)
2020/21
(57)
2023/24
2023/24
639
1,787
2022/23
2022/23
645
1,932
2021/22
2021/22
503
1,898
2020/21
2020/21
784
1,851
Retail free cash flow Bps improvement v 2019/20
3-year total
ROCE (%) Underlying PBT (£m)
Strategic Report Governance Report Financial Statements
46 J Sainsbury plc Annual Report and Financial Statements 2024
Financial review
Group sales were up 3.4 per cent year-on-year, with grocery volume growth
strengthening as inflation reduced over the course of the year. Grocery
salesincreased 9.4 per cent as we continue to prioritise value for customers,
inflating behind key competitors and winning volume market share. General
merchandise sales declined slightly as the weather impacted seasonal
salesperformance, alongside tough market conditions. General merchandise
sales were additionally impacted by the closure of Argos in the Republic of
Ireland. Fuel sales decreased by 14.3 per cent, reflecting a lower average
pump price year-on-year with volume remaining resilient.
Statutory profit before tax declined £50 million year-on-year to £277 million
(2022/23: £327 million). Our underlying profit before tax of £701 million
(2022/23: £690 million), increased year-on-year driven by strong grocery
profit growth, partially offset by lower general merchandise and Financial
Services underlying profit. At the statutory level, underlying profit growth
was offset by non-underlying costs of £424 million (2022/23: £363 million)
which increased year-on-year driven by increased property, finance and
acquisition adjustments and costs associated with the disposal of the
mortgage portfolio in the Bank.
Retail profits increased 4.3 per cent, driven by incremental profit from higher
grocery volumes and cost savings from our Save to Invest programme.
Higher grocery volumes were the result of continued switching gains from
competitors, reflecting Sainsbury’s improved value proposition, product
innovation and improved availability. The Save to Invest program helped to
mitigate significant operating cost inflation, including the cost of continued
investment in our colleagues. Higher grocery profits were partially offset
bylower general merchandise margins, reflecting higher promotional sales
participation in tough trading conditions and the impact on margins of
lower sales in higher margin seasonal categories and higher sales of lower
margin Consumer Electronics products.
Financial Services underlying operating profit decreased 37 per cent,
reflecting the impact of higher funding costs from increased interest
ratesnot being fully passed on to customers.
Non-underlying items included costs of £273 million associated with the
decision that Financial Services products to be offered in the future will be
provided by dedicated financial services providers through a distributed
model. We continued with the restructuring programme announced in
November 2020, incurring £95 million of costs, which was in line with our
expectations. Group statutory profit after tax was £137 million (2022/23:
£207 million).
Underlying basic earnings per share decreased to 22.1 pence (2022/2023:
23.0pence) as the impact of the increase in corporation tax rate more than
offset the increase in underlying pre-tax earnings. Basic earnings per share
decreased to 5.9 pence (2022/23: 9.0 pence).
Non-lease net debt increased by £344 million, moving to a net debt position
at year-end and total net debt reduced by £790 million. These movements
were impacted by the purchase of a commercial property investment pool,
known as Highbury and Dragon, in which the Group already held a beneficial
interest. The impact of this property transaction increased non-lease debt
as a result of the £670 million net consideration with an offsetting reduction
in lease net debt of £1,042 million.
Working capital reduced by £262 million with an increase in payables
whilstmaintaining a flat inventory and receivables position and supported
by growing sales. Retail free cash flow generation remained strong at
£639million (2022/23: £645 million) despite higher capital investment to
ensure continued enhancement of both of our physical and digital assets
and the benefit last year of a £50 million dividend payment from
Sainsbury’s Bank.
In February it was announced that we would move to a progressive dividend
policy from the start of the next financial year. We also announced a share
buyback programme, starting with £200 million for the financial year to
March2025. As the new dividend policy is due to start in 2024/25, for 2023/24
ourprevious policy of around 60 per cent of underlying earnings after tax
ismaintained and our dividend remains flat year-on-year at 13.1 pence
pershare. Against lower earnings per share year-on-year, the payout ratio
increased to 59 per cent from 57 per cent in the prior year.
We delivered a return on capital employed of 8.3 per cent, up from 7.6 per cent
in 2022/23, reflecting improved underlying profits and a reduction in average
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. The business had £1 billion of
undrawn facilities at the end of the year.
As at 2 March 2024 the net defined benefit pension surplus under IAS 19
forthe Group was £690 million (excluding deferred tax). The £299 million
reduction from 6 March 2023 was driven by a reduction in the value of
matching assets used to hedge against movements in gilt yields and
inflation, and higher than previously expected pension increase
assumptions. For 2024/25 we expect total pension scheme cash
contributions of around £45 million.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 47
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 5 to the
financial statements. Other APMs are defined and reconciled to the nearest IFRS measures in notes A1 to A4 on pages 199 to 203.
Summary income statement
52 weeks to
2 March 2024
£m
52 weeks to
4 March 2023
£m
Change
%
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.
Strategic Report Governance Report Financial Statements
48 J Sainsbury plc Annual Report and Financial Statements 2024
Financial review continued
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
£bn
52 weeks to
4 March 2023
£bn
Change
%
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.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 49
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 on pages 199 to 203.
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 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
e)
170bps
Total capital ratio (%) c) 19.4 17.8
e)
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 CET1 (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
£m
52 weeks to
4 March 2023
£m
Change
%
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 Higbury 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.
Strategic Report Governance Report Financial Statements
50 J Sainsbury plc Annual Report and Financial Statements 2024
Financial review continued
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
£m
52 weeks to
4 March 2023
£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 adjustment
s.
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.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 51
Net debt and Retail cash flows
Summary Retail cash flow statement Note
a)
52 weeks to
2 March 2024
£m
52 weeks to
4 March 2023
£m
Retail underlying operating profit 7 966 926
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 cash generated from operations 2,302 2,201
Interest paid (323) (307)
Corporation tax paid (58) (99)
Retail 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 15 1,042 —
Other non-cash and net interest movements c) (417) (391)
Movement in net debt 32 790 415
Opening net debt 32 (6,344) (6,759)
Closing net debt 32 (5,554) (6,344)
of which
Lease liabilities 32 (5,354) (6,488)
(Net debt)/net funds excluding lease liabilities (200) 144
a) Note references relate to the Alternative Performance Measures in Notes A2.1 and A2.2 on pages 199 to 203.
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 the consolidated cash flow statement on page 136.
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.
Strategic Report Governance Report Financial Statements
52 J Sainsbury plc Annual Report and Financial Statements 2024
Net debt and Retail cash flows continued
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
2 March 2024
As at
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 notes A4.1, A3.2 and A4.2 of the Alternative Performance
Measures on pages 199 to 203
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–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
benefitting 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.
Refer to note 34 for further details.
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
as at
2 March 2024
£m
Argos
as at
2 March 2024
£m
Group
as at
2 March 2024
£m
Group
as at
4 March 2023
£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
Bláthnaid Bergin
Chief Financial Officer
24 April 2024
Financial review continued
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 53
Principal Risks and Uncertainties
We are a resilient, values-led business and managing risk is part of how we
operate and is also recognised as key to achieving our ambitions. As we
embark on the Next Level Sainsbury’s strategy, the Board has undertaken
acomprehensive review of the specific risks we face and how we mitigate
them, investing time in ensuring that governance, oversight and risk
frameworks remain key pillars of our delivery. We have also focused on
ensuring that risk appetite is explicitly defined and embedded into key
risk-based decision-making across the organisation.
Over the following pages, we set out an overview of our risk management
framework, the principal risks at year-end, ongoing mitigations and how
these align to our strategy. The Operating Board monitors these principal
risks on an ongoing basis, considering our risk appetite and amending
mitigations where appropriate.
Our approach to risk management
Our risk management framework is designed to:
1. Identify key risks that could prevent us from achieving our strategic
objectives. Both ‘bottom up’ divisional and ‘top down’ Operating
Board-led assessment processes are used with results consolidated.
Todrive consistency, we use risk categories to identify and assess
completeness within three core groups:
– Strategic risks that are borne out of the choices we make and our
external environment, e.g. change delivery or trading environment
– Operational and compliance risks that are inherent in the way we
operate, e.g. business resilience or data security
– Financial risks that reflect our financial environment, performance
and our deployment of resources, e.g. funding
2. Assess the likelihood of these risks occurring, in combination with the
operational, reputational and financial impact they may introduce
We evaluate these risks over different timeframes and through different
lenses. We have refreshed our risk metrics in the last year to ensure they
remain relevant to the business and aligned to our corporate risk
appetite. This ensures that the level of focus and mitigation strategies
can be adapted for our current principal risks, that we can respond
toevents and uncertainties we face in the course of business and that
we are keeping tabs on emerging risks
3. Manage the risks through implementing appropriate mitigation plans
and controls, in line with our risk appetite and tolerances
The risk management framework in the business is devolved, ensuring
that ownership for managing risks is embedded throughout the
organisation. This drives accountability and is aligned to our valued
behaviours. The risk management process, set out on the following page,
shows how this is brought together to ensure integrity andvisibility
4. Monitor and report on our risks, key risk indicators, associated
mitigation plans and changes to the internal/external environment to
the relevant governance fora
The following diagram provides an overview of the key risk management
activities undertaken by leadership, that support this risk management
process and allow the Board to fulfil its obligations under the 2018
Corporate Governance Code. Please refer to pages 73 to 74 for the role
and remit of these governance bodies
The Board has overall responsibility for risk management, the system of
internal control and for reviewing the effectiveness of these at least
annually. As such, they have approved our principal risks disclosure, as set
out on pages 55 to 61. Certain responsibilities have been delegated to the
Audit Committee, as outlined on page 94.
Key elements of our risk management process
A ‘bottom up‘ risk assessment process is run with divisional leadership that
identifies the key risks which may prevent the achievement of their
strategic, operational, compliance or financial objectives. A risk map is
maintained for each division, allowing assessment of the gross and net
position of key risks and setting of targets and actions to achieve risk
appetite where applicable. A consolidated view of relevant risks and the
effectiveness of mitigating activities, are also discussed at relevant
governance fora covering: safety; data governance; and environmental,
social and governance matters.
The Operating Board maintains the overall corporate risk map, which
captures key risks to achieving our strategic objectives. The risk map is
evaluated in line with our agreed risk appetite and tolerances for the
supporting measures defined for each corporate risk. It is formally reviewed
from a ‘top down’ perspective twice a year to consider the outputs of the
‘bottom up’ process to assess themes, risk movements and new risks. The
Operating Board discusses and agrees the level of risk within the business
and whether the business is prepared to accept each key risk. Actions and a
target risk position are agreed and tracked for any risks where
management’s risk appetite differs to the current net position.
Operating Board members confirm annually that the corporate risk map
accurately reflects their view of key risk across the organisation. They also
confirm that they are responsible for managing risks relevant to their
division and that internal controls exist to provide reasonable, but not
absolute, assurance that the risks in their areas of responsibility are
appropriately identified, evaluated and managed; this is also reported to
theBoard.
Board
Review of risk process
corporate risks and
approvalof risk disclosures
• Annual internal controls certification
by management
• Principal Risk and Uncertainty
disclosures
• Corporate and emerging risk maps reviewed
• Risk deep dives received
• Risk Policy and framework approved
• Internal Audit reporting
• Corporate risk map updated and
actionsmonitored
• Risk deep dives received
• Emerging risk map reviewed
• Divisional risks relevant to forums’ area
of scope reviewed
• Governance forums’ risk maps reviewed
• Divisional risk maps reviewed
andchallenged
• Divisional emerging risk map reviewed
• Monitor risk actions
Audit Committee
Corporate risk updates,
deep dives and review
risk framework
Operating Board
Bi-annual corporate risk
updates and deep dives
Governance Forums
Risk identification
andmonitoring
Divisional
leadership teams
Bottom-up risk
identification
Strategic Report Governance Report Financial Statements
54 J Sainsbury plc Annual Report and Financial Statements 2024
Principal Risks and Uncertainties continued
Key elements of our risk management process
continued
To ensure a joined-up view of risk from the ‘bottom up’ and ‘top down’
processes, the Risk and Internal Audit team are involved in each process.
They provide the Audit Committee with a risk management update at each
meeting to support them to fulfil their risk management objectives. This
includes an overview of changes to the corporate risk map and risk
disclosures agreed by the Operating Board for their review and comment, as
well as any changes to our risk framework, policies or processes.
Risk and Internal Audit also provide independent assurance to management
and the Audit Committee over specific risk areas as part of their annual
audit plan. Risk deep dives were also undertaken with the Operating Board
and/or Audit Committee for a selection of principal risks, as set out over the
following pages.
The Audit Committee Chair provides updates on Risk Management to
theBoard.
Emerging risks and opportunities
Emerging risks and opportunities are formally reviewed in the year as part
of the bottom-up divisional risk management process. This allows emerging
risks to be considered and discussed by each division and then collated to
perform a business-wide assessment of how emerging risks and
opportunities may impact our business, considering their potential
timeframe and degree of certainty. The risks are reported to the Operating
Board and Audit Committee, considered in strategic planning and relevant
actions are agreed. Emerging risk themes continue to relate to:
• Increasing environmental, social and governance awareness, regulation
and impacts on our operations, supply chains and customers
• Technology acceleration, which presents both risks and opportunity to
our customers, our business operations, transformation programmes and
the overall market sector
• Increasingly complex regulations and legal obligations, which can lead to
the risk of fines or compensation for non-compliance and the potential
for consequential litigation
Changes to principal risk disclosures
As described above, the principal and emerging risks are discussed and
monitored throughout the year to identify and respond to changes in the
risk landscape.
There has been one change to the principal risks we are disclosing compared
to last year. We have combined the Trading Environment and Customer
principal risks reported last year, reflecting the core focus on our customers
and their expectations in how we manage our response to external factors,
such as the cost of living crisis, supply chain issues or changing dynamics in
the UK grocery market.
There have been no movements in the net position of risks compared to last
year. The increased Trading Environment net risk reported last year remains
elevated. whilst Political and Regulatory net risks have fluctuated in year
with government and regulator focus on dynamics within our market and
changes in customer expectations, the risk position at time of reporting
remains is level with last year.
Our principal risks
The most significant principal risks identified by the Board and the
associated mitigations are set out on the following pages. We have ordered
them to first show those that have been included in the risk modelling
undertaken as part of the preparation of the viability statement (see page
62). This reflects that these risks have the potential to have the largest
impact on the business. They are highlighted with this symbol:
v
We have also clearly set out the link between each principal risk and the
group’s key performance indicators (see pages 44 to 45) and continue to
highlight the link with the strategy of the business, as follows:
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
The net risk movement from the prior year for each principal risk and
uncertainty has been assessed and is presented as follows:
Mitigations in place, supporting the management of the risk to a net risk
position, are also described for each principal risk.
No
change
Increased net
risk exposure
Reduced net
risk exposure
New
risk
NEW
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 55
Business continuity, operational resilience and major incident response
Risk Mitigations
A major incident or catastrophic event could affect the
business or its individual brands’ ability to trade. Sainsbury’s
exposure to operational resilience and major incident risks
may be greater because of operational complexities and some
ageing systems.
External factors, such as the continued disruption as a result of
regional conflicts, fluctuating costs of fuel and materials and
resilience of global supply chains, have impacted the business
at points through the year. Such disruptions are actively
managed either through day-to-day ways of working or, if
needed, through the Incident Response Team (IRT).
The IRT was convened at various times through the year,
including to support our response to external protests and
operational issues.
• The Operating Board sets the operational resilience strategy for the business, ensuring it
is targeted on our core operations required to run the business, priorities to minimise the
impact of any disruption and the operational and product suppliers we partner with
• The Operational Resilience Committee, which includes representatives from functions
across Sainsbury’s, including the Bank, meets regularly to implement the operational
resilience policy and strategy
• Business-wide resilience exercises are undertaken to simulate real-life business
continuity scenarios and test our ability to respond effectively. This includes testing our
emergency call cascade. Actions in response to lessons learnt are agreed
• Key business processes are assessed for operational resilience impacts against a set of
minimum standards. The Operational Resilience team performs a programme of
assurance reviews over these assessments and contingency measures are regularly
tested. Remote working solutions have reduced the risk of loss of a key site
Crisis management
• In the event of any unplanned or unforeseen events, the IRT is convened to manage the
response and any associated risk to the business
• The IRT Chair reports to the Operating Board, which provides strategic direction and
decision-making across financial, operational and regulatory matters, considering
allstakeholders
Direct oversight: Operating Board
Link to strategy: All strategic priorities
Link to key performance indicators: N/A
Movement:
Business strategy and change
v
Risk Mitigations
Delivering the Next Level Sainsbury’s strategy requires
significant, concurrent change activities to be delivered in
the right sequence and at pace to drive business value.
Key risks associated with this include our ability to
effectively, govern, prioritise and land competing change
activities across business process, operating model, tech
capabilities, savings delivery and investment returns. To
support this there is focus on embedding our purpose, goals
and objectives, ensuring organisational alignment, as well as
building capability and capacity to deliver.
• Our Next Level Sainsbury’s strategy, as set out in this Strategic Report, is focused on
delivering our purpose through achieving four key outcomes:
– First choice for food
– Loyalty everyone loves
– More Argos, more often
– Save and invest to win
• The Strategy and Transformation functions drive aligned decision-making, supported by
visibility and resource prioritisation across our major change portfolio. They support all key
elements of strategic delivery and transformation across the business, to ensure we realise
maximum value whilst balancing risk, dependencies and operational performance
• The Operating Board has had deep and thorough sessions to create the Next Level
Sainsbury’s strategy, supported by a wide range of stakeholders – including shareholders,
colleagues, customers and suppliers
• To ensure focus is maintained on delivering the strategic priorities of the business, major
new projects are approved by the Operating Board once they have been through robust
challenge on strategic alignment, expected returns and risks associated with their delivery.
The Operating Board also monitor and reviews the in-year implementation of the plans to
meet budget targets through weekly and periodic formal reviews, supported by our Finance
and Transformation teams
Direct oversight: Business Performance Review (BPR),
Operating Board
Link to strategy: All strategic priorities
Link to key performance indicators: All metrics
Movement:
v
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
56 J Sainsbury plc Annual Report and Financial Statements 2024
Principal Risks and Uncertainties continued
Our principal risks continued
Data security
v
Risk Mitigations
It is essential that the security of customer, colleague and
company confidential data is maintained. A major breach of
information security could have a significant operational,
financial and reputational impact on the business.
The risk landscape is increasingly challenging, with deliberate
acts of cybercrime including ransomware attacks on the rise,
targeting all markets and heightening the risk exposure to
broader business disruption as well as to data breaches.
• A Data Governance Committee (DGC) is in place to oversee the management of colleague,
customer and commercial data, information security and associated awareness and
training. Deep dives on specific areas of our control environment are performed through
the year and metrics to measure alignment to our risk appetite are reviewed in
eachmeeting
• The Data Governance and Information Security function works with our Technology
division to continuously develop information security strategies and build the necessary
capabilities to respond to the increasing number and sophistication of attacks, alongside
focusing on improving how we handle data and protect systems across the organisation
• There is active monitoring and analysis of changes to legal and regulatory compliance
requirements in this area and current and emerging threats. This analysis is used to tune
and apply our security framework accordingly. There are regular updates to the DGC,
Operating Board and the Audit Committee on progress in delivering our information
security strategies
• A suite of 16 information security policies is in place, which focus on areas including
effective use of AI, encryption, network security, access controls, data protection and
information handling. There is continued investment in technology to support the
implementation of policy and regulatory requirements
• There is continued focus on ensuring robust governance and control frameworks are
implemented, including monitoring and improving maturity via continuous reviews of our
controls against the NIST framework for information security and GDPR regulation and
PCI standards in terms of data security
• A risk-based security testing approach across IT infrastructure and systems is in place
toidentify and address vulnerabilities and allow us to adapt and improve our defences
• Reviews of key third parties who hold sensitive customer or colleague data continue
totake place and progress of the review and agreed actions is monitored by the DGC
• All colleagues are required to complete mandatory training on how to keep our
information safe. This is supplemented by regular colleague awareness campaigns,
focusing on specific aspects of data and information security, for example monthly
e-mail phishing exercises, with results reported to the DGC and defined escalations for
colleagues who fail
Direct oversight: Data Governance Committee
Link to strategy: All strategic priorities
Link to key performance indicators: N/A
Movement:
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 57
Financial and treasury
v
Risk Mitigations
The main financial risk relates to availability of short and
long-term funding to meet business needs and fluctuations in
interest, commodity and foreign currency rates.
There has been increased uncertainty during the last year with
high inflation, significant FX fluctuations in the autumn and
high increases in fuel prices.
• Treasury policies, approved by the plc Board, are in place to address liquidity, refinancing,
financial markets and counterparty credit risks. In addition, the business funding
strategy is approved annually by the plc Board
• Hedging policies, approved by the Chief Finance Officer, are in place to address energy
(electricity, gas and diesel) price risk. Adherence to the hedging policies is overseen by the
Energy Price Risk Committee
• The Treasury function is responsible for managing liquid resources, funding requirements,
interest rate and currency exposures as set out in line with the Treasury policy and
overseen by the Treasury Committee
• The Audit Committee reviews and approves the viability and going concern statements on
an annual and half-yearly basis respectively
• The Treasury function has clear operating procedures and adherence to these is regularly
reviewed and audited
• A long-term funding plan is developed as part of the annual corporate plan process, which
includes an assessment of short and long-term core funding requirements and contingent
funding requirements. A revolving credit facility is in place, the maturity of which was
extended by one year during the year
• A short-term funding plan is formalised as part of the annual budget process, which
includes an assessment of the core and contingent funding requirements for the following
year and the market conditions for each of the debt markets accessible to the business
• There is a long-term funding framework in place for the pension deficit and there is
ongoing communication and engagement with the Pension Trustees
• Detailed cash flow forecasts are produced by the Finance and Treasury functions. Finance
commercial reviews are also held each period, chaired by the Chief Finance Officer, with
relevant actions and mitigations agreed
• Cash and debt position reported and discussed at every Audit Committee meeting
• Financial and Treasury risks in respect of Sainsbury’s Bank are detailed separately
Direct oversight: The Board of J Sainsbury plc
Link to strategy: Save and invest to win
Link to key performance indicators: Retail free cash flow
Movement:
Safety and security
v
Risk Mitigations
Prevention of injury and loss of life for both customers and
colleagues is of utmost importance and is paramount to
maintaining the confidence our customers and colleagues
have in our business.
The business continues to change and evolve to meet
customer and colleague needs, impacting the safety and
security risk profile.
• The Group Safety Committee oversees safety and security management across the Group.
It met regularly during the year, receiving detailed reports on a wide range of topics,
including across Facilities Management, Food Technical, Retail, Audit and Product. Key
areas of focus this year included improving data quality, understanding root causes and
risk removal
• The Operating Board and plc Board receive regular reporting on safety, including an
annual deep dive facilitated by the Director of Safety and Insurance on safety
andsecurity
• Our approach to both safety and security continue to evolve in line with changes in the
risk profile in the business
• A safety vision is defined and a set of reactive and proactive metrics that align to each
core area of the business is in place to support effective monitoring and planning
• Clear policies and procedures are in place detailing the controls required to manage
health and safety across the business, aligned to Assured Primary Authority advice, to
comply with all applicable laws and regulations. Primary Authority oversight, internal
training and monitoring support process compliance, with oversight provided by field
teams in both Safety and Internal Audit
• Work has continued to further enhance capabilities, data and measures of success. This
will drive prioritisation, simplification and stakeholder alignment across the business in
order to maintain our focus on reducing harm and its associated costs by removing
unnecessary complexity. As a result of the continued focus, overall incidents continue
todecrease
• To support a safer environment for colleagues and customers to work and shop,
mitigations are risk based and data led, whilst incorporating external benchmarking and
collaboration. Engagement remains a priority across Policing and Government
• Mitigating measures include security officers, store detectives, Security Operations Centre
and multiple technology investments, including body worn cameras and CCTV. Retail
colleagues received updated Keeping Colleagues Safe training and incident reporting
remains a priority to ensure data remains up to date
Direct oversight: Group Safety Committee
Link to strategy: First choice for food, More Argos, more often
Link to key performance indicators: N/A
Movement:
RISK DEEP DIVE
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
58 J Sainsbury plc Annual Report and Financial Statements 2024
Principal Risks and Uncertainties continued
Our principal risks continued
Political and regulatory environment
v
Risk Mitigations
Our business operations are impacted by a wide range of legal
and regulatory requirements. There remains an increasing
trend of industry focus, regulation (often with uncertainty
around timelines, adoption in devolved nations and impact) as
well as enforcement action impacting all areas of our business.
This adds significant cost as we respond to requirements,
drives complexity into our business processes and increases
the risk of non-compliance, which could lead to fines, criminal
penalties for Sainsbury’s or our colleagues or litigation, e.g.
class actions such as the ongoing equal value claim.
• Assessment of regulatory and compliance requirements continues to directly inform our
strategic planning and investment choices, which are embedded within our Next Level
Sainsbury’s strategy
• Key regulatory risks impacting our business operations include Competition Law, Pricing
and Promotional requirements, e.g. High Fat, Salt and Sugar, (HFSS), Grocery Suppliers
Code of Practice (GSCOP) and Bribery Act
• Accountability is defined for each key risk with key elements of the compliance
framework evaluated through a biennial regulatory risk assessment, targeted audits and
monitoring. Policies, mandatory training and key processes, including global Rightline
whistleblowing arrangements, are in place to support compliance with key
regulatoryareas
• We liaise with external parties and our internal stakeholders to monitor changes to
existing regulations that would impact the business, so that we can respond
appropriately. During the year we have:
– continued to evaluate the impact of the post-Brexit regulatory and enforcement
regime, the impact of corporate governance reform and changes to business rates,
the apprenticeship levy and health regulations
– attended the Business and Trade select committee on food and fuel pricing and will
attend an EFRA select committee on 30 April 2024
– proactively responded to regulatory consultations and worked with governments to
understand the impact of deposit return schemes, extended producer responsibility
for packaging (EPR), plastics and food waste regulations
– anticipated and responded to other emerging areas of regulatory focus on
environment and climate change, and associated reporting requirements
– continued to defend the equal value claims vigorously
• As a responsible business, we proactively engage with Government, devolved
administrations, regulators and industry bodies in the areas in which we operate, on
public policy issues impacting our customers and colleagues. Our engagement is
transparent and we allow our responses to government consultations to be made public
Direct oversight: Operating Board
Link to strategy: All strategic priorities
Link to key performance indicators: N/A
Movement:
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 59
Product safety and sourcing
v
Risk Mitigations
Failure to manage safety and sourcing risks for both food and
non-food products leads to injury or loss of life, breach of
regulation and/or reputational damage.
• The Group Safety Committee received regular reports on product safety from the Director
of Technical – Food, Director of Commercial Operations and Development – GM and from
the Director of Safety and Insurance on operational food safety risks. In addition, the
Corporate Responsibility and Sustainability Committee discussed matters related to
product sourcing risk, including supply chain transparency, Modern Slavery and
humanrights
• Clear policies, procedures and governance are in place managing and detailing the
controls required to mitigate product safety, product integrity and ethical risks across
both the food and general merchandise businesses and to comply with all
applicableregulations
• These help ensure product safety is maintained through the end-to-end operations. This
includes safety processes in place in our depots and stores covering refrigeration, security
and storage quality management controls in place to ensure product safety and integrity
for all products
• There are separate Technical functions implementing safety and quality frameworks,
including training, for the Food and General Merchandise businesses. This ensures
arrangements reflect the specific products risks in each area for our own brand products
• Across both food and general merchandise, there are established supplier audit and
product testing programmes in place to support rigorous monitoring of supplier sites,
product safety, traceability, integrity and ethical issues, including Modern Slavery.
Supplier terms, conditions and product specifications set clear standards for product/raw
material safety and quality with which suppliers are expected to comply. Third-party
Ethical audits are minimum requirements for all sites and in Food all suppliers have
minimum Third Party Food Safety and Quality audit requirements
• In food, there is an established supplier risk assessment and supplier requirements are
detailed in Food Safety, Non-Food Safety and Responsible Sourcing Manuals. An Audit
Programme assesses and verifies compliance with these requirements. All direct
manufacturing sites have a Food Safety audit a minimum of once every three years (risk
dependent) and all new sites have an Onboarding Audit. New Integrity audit launches this
year in high risk areas, to verify compliance authenticity, product claims and welfare
requirements in the Responsible Sourcing Manual
• In general merchandise, technical standards are signed-off and tracked through the
product development lifecycle. General merchandise site audits and visit programmes are
established based on performance and risk. As a minimum sites are audited every two
years and visited every three years by the Technical and Ethical Team
• There are incident management escalation procedures in place to quickly resolve issues
for food and non-food product incidents, including risk assessing and removing product
from sale if required
Direct oversight: Group Safety Committee
Link to strategy: First choice for food, Loyalty everyone loves,
More Argos, more often
Link to key performance indicators: N/A
Movement:
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
60 J Sainsbury plc Annual Report and Financial Statements 2024
Principal Risks and Uncertainties continued
Our principal risks continued
Sainsbury’s Bank
v
Risk Mitigations
Sainsbury’s Bank is exposed to a number of risks, including
those related to operational, regulatory, credit, capital,
funding, liquidity and market risks.
In January 2024, the Group announced a shift to offering
financial services via a distributed model, leading to a phased
withdrawal from its core banking business. This introduces
execution-related risks and heightens some risk types
including people, liquidity and capital adequacy. High interest
rates and cost of living pressures, together with subdued GDP
growth, continue to stretch household budgets. Customer
impacts are closely monitored with tailored support offered as
required. The Bank undertakes stress testing to ensure it
remains financially resilient over a range of economic
outcomes including higher inflation.
• The Bank is managed through defined governance structures that include the Board of
Sainsbury’s Bank plc, its Risk Committee and Audit Committee. The Board of Sainsbury’s
Bank plc is comprised of Executive Directors, independent Non-Executive Directors and a
member of the Operating Board
• The Bank has a defined risk appetite aligned to delivery of strategic objectives and has
implemented a risk management framework that is overseen by its Risk Committee. This
Committee monitors the effectiveness of risk management activities against strategic,
operational, compliance and financial risks, and is updated on, and discusses, emerging
risk areas. In particular, the Risk Committee reviews the results of stress testing including
the internal Liquidity and Capital Adequacy Assessments
• The actual management of risks is through an executive governance structure, which
manages the day-to-day operations of the business. This includes the Sainsbury’s Bank
Management Board, an Executive Risk Committee and an Asset and Liability Committee.
This is underpinned by a three line of defence framework which provides a basis for the
identification and management of all risks associated with our business model and
strategy whilst ensuring there is effective oversight and challenge in place
• Oversight by J Sainsbury plc is provided through:
– Updates on key matters arising from meetings of the Bank Risk and Audit
Committees are reported to the J Sainsbury plc Audit Committee
– A Joint Oversight Committee including Group and Bank representation has been
established to guide execution of the new financial service strategy
– There are a number of reserved matters that require Sainsbury’s Bank plc to receive
prior approval from the Board of J Sainsbury plc
Direct oversight: The Boards of J Sainsbury plc and Sainsbury’s
Bank plc
Link to key performance indicators: N/A
Movement:
Trading environment and customer expectations
v
Risk Mitigations
We operate in a highly competitive market during a time of
increased economic uncertainty, driven by the cost of living
crisis, high inflation impacting the cost of goods and
operations and continuing global supply chain issues. The
business, across all brands, must continue to ensure we
remain competitive and evolve to meet customer
expectations.
With the outlook set to remain challenging, we need to
respond appropriately and at pace to external market
conditions while maintaining clear focus on delivering our
strategic objectives.
We also need to be mindful of the ongoing risk of supplier
failure, either through insolvency or through an inability to
deliver products due to global supply chain challenges.
• We have a wide, differentiated portfolio of brands, including Sainsbury’s, Argos, Habitat,
Tu clothing, Nectar and Sainsbury’s Bank, which provides some inherent resilience to
unforeseen changes
• The Customer, Commercial and Channels Forum, chaired by the Chief Marketing Officer, is
responsible for ensuring the customer is at the heart of our decision-making on range and
execution. During the cost of living crisis, we have supported our customers through price
investment activities
• We continually monitor customer attitudes, behaviours and satisfaction, current market
trends and price points across competitors. We respond through actively managing price
positions, developing sales propositions and adjusting promotional and
marketingactivity
• We remain focused on value, quality, innovation and convenience, reflecting both what
existing customers want and what will attract new customers
• We continue to offer and develop different price points to meet customer needs, ensuring
we retain existing and attract new customers
• In terms of supplier continuity specifically, we maintain regular, open dialogue with key
suppliers concerning their ability to trade, and collaborate with them on solutions where
appropriate. The variety and breadth of our supply base allows us to continue to source
products and mitigate the risk of local disruption, with sourcing offices located in key
buying regions including India, Bangladesh, Hong Kong and Shanghai
• Reflecting the continued challenges faced in global supply chains including the impact of
regional conflicts and other geo-political factors, we have continued to work closely and
collaboratively with all our suppliers to maintain availability of products. Actions taken
include working with our carrier partners to mitigate the impact of supply route
disruption, onboarding alternate suppliers, rationalising products, forecasting demand
and providing logistics support
Direct oversight: Customer, Commercial and Channels Forum;
Operating Board
Link to strategy: All strategic priorities
Link to key performance indicators: Grocery Market Share
Movement:
RISK DEEP DIVE
RISK DEEP DIVE
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J Sainsbury plc Annual Report and Financial Statements 2024 61
Colleague engagement, retention and capability
Risk Mitigations
The business employs over 148,000 colleagues who are critical
to the success of our business. Attracting talented colleagues,
investing in training and development and rewarding
colleagues fairly are all essential to the sustainability of our
operations. An inability to attract, motivate and retain talent,
specific skillsets and capability would impact our ability to
deliver our strategic objectives. The availability of skills in
specific areas is a key area of focus, given the challenging
labour market.
The challenging trading environment requires a focus on
efficient operations, which may include change initiatives that
affect colleagues, impacting trust or engagement.
• Employment policies and remuneration and benefits packages are regularly reviewed
and are designed to be fair, consistent and competitive. This year we have invested £200
million in colleague pay. We continue to offer free food in our stores, depots, LFCs and
Contact Centres and we introduced free sanitary products in all sites in July 2023. During
the year, we made further enhancements to our colleague discount offer, increasing
discount in Sainsbury’s from 10% to 15% every Friday and Saturday
• The workforce strategy was developed with and owned by the Operating Board to identify
the key skills and capability shifts needed to help plan for the long term
• Formal processes are in place to nurture talent and provide fulfilling career opportunities
through performance and development discussions, talent management, succession
planning and investment in developing leaders to build capability and support a
positiveculture
• Stretching gender, ethnically diverse and Black representation targets have been set,
linked to leadership long-term incentives
• Colleague sentiment and views are sought through regular ‘We’re Listening’ surveys,
analysis of Viva Engage activity direct colleague engagement and engagement with trade
unions. We benchmark our engagement against global benchmarks and specific retail
benchmarks. In addition, Operating Board Directors hold active listening sessions on a
regular basis
• Specific programmes are in place to target hard-to-recruit areas, presenting a wide range
of opportunities for colleagues from across the business, as well as attracting new talent
Direct oversight: Operating Board
Link to strategy: All strategic priorities
Link to key performance indicators: Colleague engagement
Movement:
Environment and Social Sustainability
Risk Mitigations
Plan for Better was launched in 2021 and puts our
responsibilities towards our planet and people at the core of
our purpose and business.
By understanding and mitigating the impact of the climate,
biodiversity loss and nature crises on our business operations,
reducing our environmental impact as well as using our size
and scale to mobilise action, we want to build a more resilient
business and play a leading role in creating a more sustainable
food system.
• Our Plan for Better sets out our sustainability goals across our whole business, outlining
our priority areas of focus, our key commitments and our progress. We have aligned our
focus to the UN Sustainable Development Goals and, through a materiality assessment,
we have identified which issues matter most to our stakeholders so that we can make the
biggest difference. Our plan has three interlocking pillars: Better for you, Better for the
planet and Better for everyone (see page 15 for further detail)
• The Plan for Better Steering Committee met regularly during the year and provided
regular updates to the Corporate Responsibility and Sustainability Committee and to the
Operating Board as required. This Steering Committee oversees delivery of the Plan for
Better programme
• One of our key metrics to measure and report on Plan for Better performance is our
progress towards becoming net zero by 2035 in our own operations and in our value chain
by 2050. We will continue to monitor our progress in achieving our targets, flexing our
approach as needed. We also publicly report on progress towards achieving all of our
targets within Plan for Better annually to ensure transparency
• See pages 30 to 43 for more information on our approach to managing climate risk and
actions to transition to net zero by 2035 included in our TCFD disclosure
Direct oversight: Corporate Responsibility and Sustainability
Committee, Plan for Better Steering Committee
Link to strategy: All Strategic Priorities
Link to key performance indicators: Plan for Better
commitment
Movement:
RISK DEEP DIVE
Strategic Report Governance Report Financial Statements
62 J Sainsbury plc Annual Report and Financial Statements 2024
Statement of Viability
1) How Sainsbury’s assesses
itsprospects
The Group’s business activities and strategy are central to assessing its
future prospects. These, together with factors likely to affect its future
development, performance and position are set out in the Strategic Report
on pages 1 to 65. The financial position of the Group, its cash flows and
liquidity are highlighted in the Financial Review on pages 46 to 52.
The Group manages its financing by diversifying funding sources,
structuring core borrowings with phased maturities to manage refinancing
risk and maintaining sufficient levels of committed funding via the
Revolving Credit Facility. Maintaining a suitable level of undrawn additional
funding capacity minimises liquidity risk.
The Group’s prospects are assessed primarily through its corporate planning
process. This includes an annual review which considers profitability, the
Group’s cash flows, committed funding and forecasted future funding
requirements over three years, with a further year of indicative movements.
As part of the strategic planning process, the Directors make a number of
assumptions about business performance and the availability and effectiveness
of mitigating actions available to the Group. In particular, cash flow forecasting
gives visibility of the Group’s funding headroom, comparing net debt to the
level of committed facilities over the planning period.
The most recent corporate plan was signed off in January 2024, as part of
the normal budgeting process. This is reviewed by the Operating Board and
ultimately by the Board with involvement throughout from both the CFO and
Chief Executive. Part of the Board’s role is to consider the appropriateness of
the key assumptions, taking into account the external environment,
business strategy and model.
In its assessment of the Group’s prospects, the Board has taken into account:
• The Group’s Next Level Sainsbury’s strategy. Building on the success
of the Food First strategy, we’re determined to be First choice for food,
ensuring more customers in more of our stores can enjoy more brilliant
Sainsbury’s food. We’ve committed to deliver profitable sales growth and
further grocery volume share gain
• Changes to the Group’s Financial Services Model. We announced in
January 2024 that financial services products offered in the future will be
provided by dedicated financial services providers, with a phased
withdrawal from the core Banking business. This will result in a
significant period of change for the Bank. In the short term, there will be
no immediate changes to existing products and services. Our forecasts
have taken into account a number of different potential outcomes to
achieve the strategic changes
• Inflationary pressures. Sustained levels of high inflation continue to
put pressure on aspects of the Group’s cost base. Impacts for inflationary
pressures could persist for longer or at a greater degree than currently
expected, which could result in more cautious consumer spending,
particularly on discretionary items
• Climate change considerations. The Group’s most recent corporate
planning and budgeting processes includes assumed cash flows to
address climate change risks, including costs associated with initiatives
in place as part of the Plan for Better commitment. These include
reducing environmental impacts and meeting customer expectations
inthis area, notably through reducing packaging and reducing energy
usage across the estate
• The Group’s financial position. The Group has continued to generate
strong free cash flow and successfully reduced total net debt over the
year as part of the continued focus on deleveraging. Furthermore, the
committed Revolving Credit Facility, which enables the Group to maintain
sufficient levels of contingent funding, has two £500 million facilities that
were extended by a further 12 months during the year. Facility A has a
maturity of December 2028 and Facility B has a maturity of December
2027. As at 2 March 2024, the Revolving Credit Facility was undrawn.
Inaddition, the Group has in place a £575 million committed term loan
facility with maturity of March 2026. This was fully drawn at the report
date in order to part fund the acquisition of a property portfolio.
Inassessing the Group’s prospects it has been assumed that this
facilitywill be repaid in full at maturity from the Group’s cash resources
2) The assessment period
The Directors have determined that the three years to March 2027 is an
appropriate period over which to provide its viability statement. This was
considered the appropriate timeframe by the Directors because:
• This period is consistent with that used for the Group’s corporate planning
process as detailed above, and reflects the Directors’ best estimate of the
future prospects of the business
• The Group does not earn revenue through long-term contracts. Therefore,
changes to the Group’s Corporate Plan are predominantly impacted by
sales and cost assumptions. These are more difficult to predict beyond
athree-year time horizon. Both have been stress-tested as part of the
viability assessment
3) Assessment of viability
To make the assessment of viability the following has been performed:
• Scenarios have been modelled over and above those in the corporate plan,
based upon a number of the Group’s principal risks and uncertainties (as
documented on pages 53 to 61). The scenarios were overlaid into the
corporate plan to assess the potential impact on net debt of one or more
of these crystallising over the assessment period. These have been tested
in isolation and in combination with one another. The impact of the
movements in net debt on the Group’s funding headroom were then
assessed. Where required, available mitigating actions to maintain
funding headroom were considered as part of the assessment. These
include reducing any non-essential capital expenditure and operating
expenditure on projects, discretionary pay and dividend payments
• Reverse stress-testing was performed to determine the extent to which
cash flows would need to deteriorate before fully utilising the Group’s
funding headroom or breaching its financial covenants and after taking
into account any mitigating actions as detailed above
Whilst each of the risks on pages 53 to 61 has a potential impact and have
been considered as part of the assessment, only those that represent severe
but plausible scenarios were selected for modelling through the corporate plan.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 63
All scenarios modelled and their link to the Group’s Principal Risks and Uncertainties are detailed below:
Scenario modelled Link to Principal Risk
Scenario 1 – Recessionary scenario
With sustained macroeconomic pressures, consumers continue to experience elevated levels of inflation and high
interest rates. There is a risk that this could persist for longer or at a greater degree than currently expected, impacting
consumer confidence and disposable incomes. This could result in a reduction in consumer spending on discretionary
items across our general merchandise and clothing business, and in downtrading in our grocery business.
Assumptions:
• Sales – volume losses in line with the 2008 recession phasing have been applied to forecast sales
• Business continuity, operational
resilience and major incidence
response
• Trading environment and
customer expectations
Scenario 2 – Data and legal breaches and regulatory changes
The impact of any regulatory fines has been considered. The largest considered are the General Data Protection
Regulation (GDPR) fine for data breaches, and fines levied by the Groceries Supply Code of Practice (GSCOP).
Assumptions:
• Costs – amount paid for regulatory fines
• Data security
• Safety and security
• Product safety and sourcing
• Political and regulatory
environment
Scenario 3 – Sainsbury’s Bank capital and liquidity requirements
We have considered the strength of the Bank’s capital and liquidity positions to withstand extreme-but-plausible stress
scenarios such as a pandemic, or political instability leading to high unemployment and very low interest rates.
Additionally, we have considered the cost impacts of the strategic change of financial services products offered in the
future being provided by dedicated financial services providers. The evaluation included the quantification of potential
adverse impacts of customer behaviour as well as the timing of repayment of amounts due to external parties.
Assumptions:
• Sales – reflecting another severe recession stress as per the Annual Cyclical Scenario testing release by the Bank of England
• Costs – those associated with restructuring the financial services model are significantly in excess of that estimated
• Liquidity – early repayment of amounts due to external parties
• Liquidity – significant reduction as a result of potential adverse customer behaviour in the first year of assessment
• Sainsbury’s Bank
Scenario 4 – Failure to deliver sustainable cost savings
Delays in delivering the Save to Invest programme, which would have an impact of c. £130 million in each year of the
assessment period, were considered.
Assumptions:
• Costs – additional costs of c. £130 million per annum as result of failure to deliver cost savings
• Business strategy and change
Scenario – Reverse stress test
In addition to modelling regulatory fines and price investments as above, the level of forecast sales decline required
before the Group fully utilises its available funding and mitigations, or breaching its financial covenants, was
considered. The required reduction was considered extreme and implausible.
In performing the above analysis, the Directors have made certain assumptions around the availability and effectiveness of the mitigating actions available
to the Group.
The scenarios above are hypothetical and severe for the purpose of creating
outcomes that have the ability to threaten the viability of the Group;
however, multiple control measures are in place to prevent and mitigate any
such occurrences from taking place.
The modelling has shown that the business is able to withstand a
combination of all of the scenarios and still maintain funding headroom
throughout the plan period.
Taking into account the Group’s current prospects and principal risks and
uncertainties, the Directors confirm that they have a reasonable expectation
that the Group will be able to continue in operation and meet its liabilities as
they fall due over the three years to March 2027.
4) Going concern
As a consequence of the work performed to support the viability statement
above, the Directors also considered it appropriate to adopt the going
concern basis in preparing the financial statements which are shown on
pages 122 to 198.
Strategic Report Governance Report Financial Statements
64 J Sainsbury plc Annual Report and Financial Statements 2024
Non-financial and sustainability information statement
In the following pages, we present
information relating to the non-
financial reporting requirements
contained in sections 414CA and
414CBof the Companies Act 2006.
These reflect our commitment to and management of environmental and
social matters (as listed in the requirements) and how these impact our
business and key stakeholders.
Our Commitment Our approach Where to find more information and outcomes
Colleagues
We want to be a place where people love to work and shop.
This means being an inclusive employer where colleagues
aretreated fairly and with respect, and where they are
encouraged to develop their skills and fulfil their potential.
Colleague wellbeing and safety is a priority. We are
committed to doing all that we can to support our colleagues,
particularly in the current environment, and have continued
to make significant investments in pay.
• Chair’s letter on page 2
• Plan for Better Report on page 15
• Our people on page 18
• Engaging with our stakeholders and our Section 172
statement on page 22
• Operational KPIs on page 44
• Nomination and Governance Committee Report on page 85
• Annual Statement from the Remuneration Committee
Chair on page 99
• Gender and Ethnicity Pay Reports
Environment
Our sustainability plan, Plan for Better, is integrated across
our business to ensure that we achieve our sustainability
goals. One of its key pillars, Better for the Planet, includes our
environmental targets, priority areas of focus, and key
commitments. Progress against these targets is described
inthis Annual Report and Accounts and in our standalone
Plan for Better Report.
With the impacts of climate change being felt around the
world, we understand the important leadership role we can
play to address these challenges. We have embedded the
recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) within our Plan for Better to
strengthen our climate resilience. Climate-related Financial
Disclosures (CFD), in accordance with Companies (Strategic
Report) (Climate-related Financial Disclosure) Regulations
2022 are included within our TCFD report.
• Plan for Better Report on page 15
• Task Force on Climate-related Financial Disclosures,
onpage 30
• Engaging with our stakeholders and our Section 172
statement on page 22
• Corporate Responsibility and Sustainability Committee
Report on page 89
Further information, including the following disclosures
andpolicies, can be found at www.about.sainsburys.co.
uk/sustainability.
• Plan for Better Report
• SASB Disclosure
• CPD Water Disclosure
• CPD Climate Change Disclosure
• CPD Forests Disclosure
• Policy on Ethical Sourcing
• Policy on Palm Oil
• Policy on Manmade Cellulosic Fibres
• Policy on Cotton
• Policy on Timber
• Policy on Leather
• Policy on Precious Metals and Minerals
• Policy on Forest Products
• Policy on Feather and Down
• Requirements for Soy Feed
Community
We have a long history of building partnerships and delivering
great impact in our communities, locally and internationally.
Our business relies on strong, resilient communities and
we’recommitted to supporting social cohesion, economic
prosperity and inclusive growth. We have presence in
thousands of communities across the country and aim to
helppositively impact those in need through fundraising,
volunteering, donations and raising awareness. Our
Community and Partnership strategy is aligned to Good
foodfor all of us.
Alongside our community investment, we make positive
economic contributions through our responsible approach to
tax. We contributed approximately £2.3 billion in cash taxes
borne and collected this year.
• Chair’s letter on page 2
• Plan for Better Report on page 15
• Engaging with our stakeholders and our Section 172
statement on page 22
• Corporate Responsibility and Sustainability Committee
Report on page 89
• Groceries Supply Code of Practice
• Policy on Whistleblowing
Further information can be found at https://about.
sainsburys.co.uk/sustainability/better-for-everyone/
community-and-partnerships.
All our public policies, reports and standards are available at
www.about.sainsburys.co.uk
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 65
Our Commitment Our approach Where to find more information and outcomes
Human
rights
At Sainsbury’s, we fully recognise our responsibility as a
company to respect and protect human rights throughout all
our operations. We have a long history of setting high
standards and working collaboratively with our suppliers to
ensure they are met, and we work hard to embed respect for
human rights and ethical practices throughout our business.
We are committed to respecting human rights across our
value chain to ensure the people who make or grow our
products are not being exploited or exposed to unsafe
working conditions. We also ensure that our business’s
transition to net zero is just and equitable for the
communities we source from. We have identified and
prioritised our salient human rights risks and set ambitious
commitments to drive forward progress in these priority
areas: forced labour, sustainable livelihoods, safe and healthy
working environments, discrimination and grievance
mechanisms. Through our due diligence processes, we seek to
identify, prevent and, where needed, mitigate and remediate
adverse human rights risks that are linked to our operations,
products or services.
• Chair’s letter on page 2
• Plan for Better Report on page 15
• Engaging with our stakeholders and our Section 172
statement on page 22
• Corporate Responsibility and Sustainability Committee
Report on page 89
• Modern Slavery Statement
• Policy on Ethical Sourcing
• Policy on Human Rights
• Policy on Whistleblowing
• Policy on Home Work
• Policy on Prison Labour
Further information can be found at www.about.
sainsburys.co.uk/sustainability/better-for-everyone/
human-rights.
Anti-bribery
and
corruption
Our values form the framework which guides the behaviours
of all colleagues and suppliers across the business. We expect
all our colleagues, contractors and suppliers to act with
honesty and integrity and never to engage in any activity
which could be considered as accepting or giving a bribe.
Our Policy on Anti-Bribery and Corruption provides guidance
and expectations on our colleagues’ responsibilities and
behaviour, and our expectations to prevent bribery and fraud.
We have a Disciplinary and Appeals Policy to help encourage
everyone to maintain our rules and standards of conduct,
attendance, capability and performance.
Our Policy on Whistleblowing covers how to report
wrongdoing when honesty and integrity are compromised.
• Audit Committee Report on page 92
• Compliance with the Grocery Supply Code of Practice on
page 96
• Policy on Anti-Bribery and Corruption
• Policy on Whistleblowing
Other
information
Other information to support this statement can be found on
the following pages:
• Business Model on page 8
• Our strategy on page 10
• Non-financial KPIs on page 44
• Principal Risks and Uncertainties on page 53
• Statement of Viability on page 62
• Board leadership and Company purpose on page 73
• Audit Committee Report on page 92
The Strategic Report was approved by the Board of Directors and signed on its behalf by:
Bláthnaid Bergin
Chief Financial Officer
66 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Introduction to the Governance Report
Dear Shareholder
The Board’s continued focus on the
implementation of the strategy we outlined
inNovember 2020 has delivered a balanced
outcome for our customers, colleagues,
suppliers and shareholders. In February 2024,
we announced our Next Level Sainsbury’s
strategy, which builds on the current
momentum as well as ensuring that we
deliverreturns to shareholders.
In November 2020, we shared the key metrics by which we would judge our
progress against the strategy. I am pleased to report that we have achieved our
objective of putting food back the heart of Sainsbury’s and Simon and the
Operating Board have done an excellent job at delivering against our key
performance measures across each of our five strategic pillars. This has been
delivered in a balanced way, whilst investing in our colleagues and increasing
customer satisfaction. We are, today, a fundamentally stronger business than
we were in November 2020.
The Board and the Operating Board have worked collaboratively during 2023/24 to
review our strategy, culture, purpose and values and to set outour new multi-year
purpose and strategy and the strategic priorities that will help us to deliver against
it. Our focus on being a purpose-led organisation will allow us to continue to be a
Food First and People First business, to stay competitive, accelerate growth and
generate strong free cash flow and higher returns. Further detail on our updated
strategy and priorities can be found on pages 10 to 14.
Our purpose articulates the impact we want to create for customers and wider
stakeholders. This year, we have established a new purpose which creates multiple
opportunities for commercial and social growth. As a Board, we are responsible for
ensuring that the business is purpose-led and our decision-making and activities
reflect the purpose and drive the right behaviours. This means that we will be
asking ourselves in every decision wemake how this will ensure that we make
good food joyful, accessible andaffordable for everyone, every day.
My role as Chair is to maintain high standards of corporate governance and ensure
the Board is equipped to carry out its duties, spending sufficient time on key areas
that enable the delivery of our strategic priorities. Ourcorporate governance
framework clearly defines responsibilities andensures that the Group has the
right systems and controls to enable theBoard and its Committees to effectively
oversee the business, providingchallenge where necessary.
The Board regularly engages with shareholders to help inform strategic
decision-making and to understand their views. Throughout the year, the Board
received updates on shareholders, including their feedback and key areas of
focus and views on the retail sector. We are pleased to recommend a final
dividend of 9.2p per share, reflecting our commitment to deliver strong
dividends for shareholders. Updates on customer feedback, insight, consumer
sentiment metrics and trends are regularly provided to the Board,steering our
responses to the key issues impacting customers. Thisunderstanding of our
customers has helped the Board to shape the implementation of our Next Level
Sainsbury’s strategy, including key decisions on price investment to offer
customers consistent value.
Our colleagues have continued to deliver for our customers and I am grateful for
their exceptional service and commitment. The Board is committed to
supporting our colleagues and we have made our biggest ever single investment
to reward hourly paid colleagues, accelerating our commitment to always invest
in our people first. This investment brings the three-year total investment to
over £500 million.
Colleague feedback is critical to the Board and we continue to monitor our
culture through our Make It Better Together panels, colleague listening and
the outputs of our We’re Listening colleague engagement survey. The Board
engages directly with colleagues through our National Make It Better Together
Group to understand the views of colleagues from across the business.
Updates from these sessions are shared and discussed at Board meetings,
Compliance with
the Corporate
Governance Code
2018 (Code)
The Board considers that the
Company has complied in full
with the Principles and
Provisions of the Code
(available at www.frc.co.uk).
Further details on how we
comply with the Code are
available in the Strategic and
Governance Reports,
asoutlined below.
Board leadership and
Company purpose
More information can be found
on pages 73 to 80
Division of
responsibilities
More information can be found
on page 84
Composition, succession
and evaluation
More information can be found
on pages 81 to 83
Audit, risk and internal
control
More information can be found
on pages 92 to 98
Remuneration
More information can be found
on pages 99 to 117
feeding into our decision-making process. Further information onhow we
monitor culture can be found on pages 18 to 21 and 78.
The Board is also mindful of the impact its decisions have on our suppliers.
During the year, the Board received regular updates on supplier relationships
and directly engaged with key suppliers, enabling greater understanding of the
challenges they face and building stronger partnerships.
The Group’s diversity, equity and inclusion strategy is a key area of focus
forthe Board and its Committees. Our commitment to this strategy is
demonstrated by the composition of the Board and senior leadership teams.
The Board has set ambitious targets to increase representation of women and
Ethnically Diverse colleagues in our senior leadership and senior management
positions, whilst also ensuring that all appointments are madeon merit and
meet the needs of the Group.
Our sustainability strategy is a key priority for the Board and the Corporate
Responsibility and Sustainability Committee, whose report is set out on pages
89 to 91. Plan for Better is a core part of our broader strategy and Board agenda
and we have made significant progress over the last year, further integrating
sustainability into our daily business operations. Plan for Better is at the core of
our new purpose and we are taking a leading role in creating a sustainable food
system to truly make good food for all of us.
Central to setting the right tone from the top and maintaining high standards of
corporate governance is the review of the Board’s own performance. Aninternal
evaluation was conducted in 2023/24, which concluded that theBoard and each
of its Committees continue to be effective. The Board’s strengths included our
stakeholder-led approach, the ability to execute onstrategy and the
constructive engagement between the Board and the Operating Board. Our
progress against last year’s areas of focus, as well as further information on this
year’s evaluation, can be found on pages 82 to 83.
After 22 years with Sainsbury’s, Tim Fallowfield has decided to retire as Company
Secretary and Corporate Services Director this July, after our AGM.On behalf of the
Board, I would like to thank Tim for his exceptional contribution to the success and
governance of the business and for all of the support he has provided to me, the
Board and the Operating Board. Tim’s legacy includes our brilliant Sainsbury
Archive, which he founded with LordJohn Sainsbury in 2003. I’m delighted that
Tim has become Chair oftheArchive and we will continue to benefit from Tim’s
leadership and experience in the future. I would like to thank all of my Board
colleagues fortheir commitment, support and flexibility over the past year.
Martin Scicluna
Chair
J Sainsbury plc Annual Report and Financial Statements 2024 67
Strategic Report Governance Report Financial Statements
Governance at a glance
We have delivered on our priorities to develop and grow the business, whilst
ensuring that our strategy remains aligned with our purpose, culture and values.
Our year
Key Board decisions
• Overseen the changes and planning required for the finalisation of the Group’s updated strategy, together with a revised purpose and
commitments
• Approval of a share buyback programme and a progressive dividend policy
• Entry into the EV charging market and the launch of Smart Charge
• Concluded its strategic review of the Financial Services division
Board and Committee attendance (scheduled meetings)
Board
Audit
Committee
Corporate Reporting and
Sustainability Committee
Nomination and
Governance Committee
Remuneration
Committee
Martin Scicluna 8/8 – 2/2 1/1 –
Bláthnaid Bergin 8/8 – – – –
Jo Bertram 8/8 – 2/2 1/1 –
Brian Cassin 8/8 4/4 – 1/1 –
Jo Harlow 8/8 4/4 2/2 1/1 3/3
Adrian Hennah 8/8 4/4 – 1/1 3/3
Tanuj Kapilashrami 8/8 – – 1/1 3/3
Simon Roberts 8/8 – 2/2 – –
Keith Weed 8/8 4/4 2/2 1/1 –
Highlights
71%
Colleagues who told us they are
happy at work
Strategy
Capital Markets Day held in
Februaryto launch Next Level
Sainsbury’s strategy
“A” rating
Awarded “A” rating for our Climate
Change CPD submission for tenth
consecutive year
Our Board
What we bring to the Board
The Board benefits from a wide range of backgrounds and strengths.
The diagram below provides an overview of the number of Board
members with specific skills, experience and knowledge. Read more
onpages 68 to 70.
Board skills matrix at 24 April 2024
Corporate Transactions 5
Sustainability 7
E-commerce/Technology 8
Operations/ General Retailing Experience 6
Risk Management/ Internal Audit 9
Remuneration 6
Finance/Accounting/Audit 5
Financial Services 4
HR/People 7
Current or recent CEO Experience 4
Brand/Marketing 5
Digital/Online 3
Strategic Development and
Implementation
9
As at 2 March 2024 As at 4 March 2023
5
4
6
3
8
1
8
1
7
2
7
2
4
1
2
0-3
years
4-6
years
7-9
years
3
0
4
0-3
years
4-6
years
7-9
years
Read more on pagew 18 to 21 Read more on page 15Read more on pages 10 to 14
Board composition
Board tenure
(Non-Executive Directors
and Chair)
Board gender diversity
Men
Women
Board ethnic diversity
White
Ethnically Diverse
Board balance
Non-Executive Directors
Executive Directors
68 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
J Sainsbury plc – Board of Directors 2024/25
Martin Scicluna
Chair
C
N
Appointed to the Board: 1 November 2018.
Martin joined the Board as Chair Designate and
Non-Executive Director on 1November 2018.
Hewas appointed Chair of the Board on
10March2019.
Skills and experience: Martin brings a wealth
of experience from over 30 years’ service as an
executive and non-executive board director at a
wide range of companies. Previous roles include
Chairman of RSA Insurance Group plc, Chairman
of Great Portland Estates plc, Senior Independent
Director and Chair of the Audit Committee of
Worldpay Inc., and Non-Executive Director and
Chair of the Audit Committee of Lloyds Banking
Group plc. He was a partner at Deloitte LLP for
26years, serving as Chairmanfrom 1995 to 2007,
where his clientsincluded Dixons, WH Smith,
Alliance Unichem and Cadbury.
External appointments: None.
Specific contributions to the Company’s
long-term success: Martin has extensive
experience as a Chair. Hebrings valuable
knowledge and skills in developing strategy and
evaluating business opportunities, along with an
understanding ofthe financial services sector
and how it operates. As Chair, Martin has a deep
understanding of governance and what is needed
to lead an effective Board.
Independent: Upon appointment.
Key to Committee members
A
Audit Committee
C
Corporate Responsibility and
SustainabilityCommittee
N
Nomination and Governance Committee
R
Remuneration Committee
Denotes Chair of Committee
Simon Roberts
Chief Executive
C
Appointed to the Board: 1 June 2020.
Simonwas appointed as Chief Executive on
1June 2020, having joined Sainsbury’s and the
Operating Board in July 2017 as Retail & Operations
Director, with responsibility for Stores, Central
Operations and Logistics.
Skills and experience: Simon has worked in
retail for over 35 years, having started at Marks
and Spencer and joined Sainsbury’s from Boots,
where he was Executive Vice President of
Walgreens Boots Alliance and President of
BootsUK and Ireland.
External appointments: President of IGD,
Member of the Government’s Retail Sector
Council, and an Advisory Board Member of
Diversity in Retail.
Specific contributions to the Company’s
long-term success: Simon is leading
Sainsbury’s plan to become First choice for food.
Under Simon’s stewardship, Sainsbury’s has
launched its Plan for Better, which is integrated
into our strategy and includes a bold commitment
to become net zero across our own operations by
2035. Simon has led significant investments into
colleague pay, most recently leading the industry
in paying the Living Wage across the whole
country. Simon is the Operating Board Sponsor
for Inclusion and is a dedicated, determined and
enthusiastic champion for our customers and
colleagues and for inclusion and diversity across
our company.
Independent: No.
Bláthnaid Bergin
Chief Financial Officer
Appointed to the Board: 5 March 2023.
Bláthnaid was appointed as Chief Financial
Officer on 5 March 2023, having joined Sainsbury’s
in 2019 as Group Director of Finance before
becoming Commercial and Retail Finance
Director in 2021.
Skills and experience: Prior to joining
Sainsbury’s, Bláthnaid held senior finance
leadership roles at Aviva and RSA. She is a
qualified Chartered Accountant and spent
mostof her career at GE in various finance
rolesworking across Europe, Asia and Australia.
Bláthnaid was previously Non-Executive Director,
Chair of the Audit Committee and Senior
Independent Director for Artemis Alpha
Investment Trust.
External appointments: None.
Specific contributions to the Company’s
long-term success: Bláthnaid is a highly
respected leader with a strong record of financial
leadership. Over the last five years at Sainsbury’s,
she has supported the development and delivery
of our strategy. Bláthnaid has extensive
international and finance experience gained
during previous and current executive and
non-executive positions.
Independent: No.
J Sainsbury plc Annual Report and Financial Statements 2024 69
Strategic Report Governance Report Financial Statements
Key to Committee members
A
Audit Committee
C
Corporate Responsibility and
SustainabilityCommittee
N
Nomination and Governance Committee
R
Remuneration Committee
Denotes Chair of Committee
Jo Bertram
Non-Executive Director
C
N
Appointed to the Board: 7 July 2022.
Skills and experience: Jo is a highly
talentedstrategic business leader with
significant experience leading transformation
and change. Prior to becoming Managing
Director, Business & Wholesale at Virgin Media
O2, Jo held senior Director and Strategy roles at
O2. Between 2013and 2017, she held the position
of Regional General Manager, Northern Europe at
Uber. Jo has previously worked at McKinsey and
Accenture and holds an MBA from INSEAD.
External appointments: Managing Director,
Business & Wholesale at Virgin Media O2.
Specific contributions to the Company’s
long-term success: Jo has worked in growing
hi-tech sectors, which benefits our customers as
we explore new ways to use digital solutions to
make shopping easy andconvenient.
Independent: Yes.
Brian Cassin
Non-Executive Director
A
N
Appointed to the Board: 1 April 2016.
Brianjoined the Board on 1 April 2016 and
became the Senior Independent Director on
7July 2022.
Skills and experience: Brian brings relevant
experience of running a FTSE 100 group with
knowledge of big data and analytics, both areas
of key importance to Sainsbury’s. As Chief
Executive Officer of Experian plc, Brian brings
strong leadership experience and a substantial
background in operating within a regulated
environment. He joined Experian plc as Chief
Financial Officer in April 2012, a post he held until
his appointment as Chief Executive Officer in
July2014. Prior to this, Brian spent his career in
investment banking at Greenhill & Co, where he
was Managing Director and Partner. Brian has
also held various roles at Baring Brothers
International and at the London Stock Exchange.
External appointments: Chief Executive
Officer of Experian plc.
Specific contributions to the Company’s
long-term success: Brian’s current experience
as a Chief Executive and his work in the financial
and technology sectors provide valuable
industryinsight.
Independent: Yes.
Jo Harlow
Non-Executive Director
C
N
R
Appointed to the Board: 11 September 2017.
Jo joined the Board on 11 September 2017 and
became Chair of the Remuneration Committee
inJuly 2022.
Skills and experience: Jo brings a wealth of
experience in consumer-facing businesses and
the telecoms and technology industries, both in
the UK and internationally. She was Corporate
Vice President of the Phones Business Unit at
Microsoft Corporation and, before that, was
Executive Vice President of Smart Devices at
Nokia, following a number of senior management
roles at Nokia from 2003. Prior to that, Jo held
marketing, sales and management roles at
Reebok International Limited from 1992 to 2003
and at Procter & Gamble from 1984 to 1992. Jo
was previously a Non-Executive Director and
Chair of the Remuneration Committee of
InterContinental Hotels Group plc.
External appointments: Non-Executive
Director and Chair of the Remuneration
Committee of Halma plc, Non-Executive Director
and member of the Remuneration Committee
and Nominations Committee atCentrica plc,
andDirector of Chapter ZeroLimited.
Specific contributions to the Company’s
long-term success: Jo has broad experience
from executive and non-executive roles andshe
has helped the business deliver and evolve its
sustainability strategy. She also brings current
external remuneration committee experience.
Independent: Yes.
70 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Key to Committee members
A
Audit Committee
C
Corporate Responsibility and
SustainabilityCommittee
N
Nomination and Governance Committee
R
Remuneration Committee
Denotes Chair of Committee
J Sainsbury plc – Board of Directors 2024/25 continued
Adrian Hennah
Non-Executive Director
A
N
R
Appointed to the Board: 1 April 2021.
Skills and experience: Adrian has significant
financial and strategic expertise from leading
theperformance and strategy of many large
companies. He started his career working in audit
and consultancy with PwC and Stadtsparkasse
Köln, the German regional bank. Adrian spent
18years in Chief Financial Officer roles at three
FTSE 100 companies. Hewas Chief Financial
Officer at Reckitt Benckiser (RB) for seven years
and held the same position at Smith & Nephew
and Invensys. Prior to this, he spent 18 years at
GlaxoSmithKline, working in both finance and
operations. He was also previously Non-Executive
Director and Chair of the Audit Committee
atRELX.
External appointments: Non-Executive
Director of Oxford Nanopore Technologies plc,
aNon-Executive Director of Unilever plc,
anexternal member (NED) of the Finance
Committee (Board) of Oxford University Press
and a Trustee of Our Future Health.
Specific contributions to the Company’s
long-term success: Adrian brings extensive
financial and leadership experience to
Sainsbury’s gained from Chief Financial Officer
positions held in some of the UK’s largest
companies, notably at RB, which produces
leading hygiene, health and nutritional brands.
Independent: Yes.
Key to Committee members
A
Audit Committee
C
Corporate Responsibility and
SustainabilityCommittee
N
Nomination and Governance Committee
R
Remuneration Committee
Denotes Chair of Committee
Tanuj Kapilashrami
Non-Executive Director
N
R
Appointed to the Board: 1 July 2020.
Skills and experience: Tanuj is an international
banker with significant experience in transformation,
talent and change management, both in the UK
and globally. She is the Chief Strategy and Talent
Officer of Standard Chartered Bank, where she
leads the strategy, HR, corporate affairs, brand
and marketing, property and supply chain teams
and in turn is responsible for how the Standard
Chartered Bank develops, executes and
communicates its strategy. She joined Standard
Chartered in 2017 and has been the Bank’s CHRO
from 2018 to 2024. Prior to this, Tanuj built her
career in banking over 17 years in keyglobal and
regional HR leadership roles across multiple
markets withinHSBC. She has also previously
served as a Director of Financial Services Skills
Commission Limited.
Tanuj is a recognised thought-leader on the
future of work and has been featured by leading
global media on a range of topics, including
culture, leadership, inclusion and skills.
External appointments: Chief Strategy and
Talent Officer at Standard Chartered Bank,
Associate Non-Executive Director of the Board of
NHS England, member of the Asia House Board of
Trustees, and on the Board of Autumn, an
integrated digital wealth, health and lifestyle
solutions start-up.
Specific contributions to the Company’s
long-term success: Tanuj is a valuable member
of the Board as the business continues to
adaptand support its colleagues in a rapidly
changing marketplace.
Independent: Yes.
Keith Weed CBE
Non-Executive Director
A
C
N
Appointed to the Board: 1 July 2020.
Keith joined the Board on 1 July 2020 and became
Chair of the Corporate Responsibility and
Sustainability Committee on 7July 2022.
Skills and experience: Keith is an exceptionally
capable marketing and digital leader. He has
championed new ways of integrating sustainability
into business and building brands with purpose.
Keith was awarded a CBE for services to the
advertising and marketing industry in the 2021
New Years Honours List. He has a strong business
background, having spent 36 years at Unilever plc,
most recently as Chief Marketing and
Communications Officer, which included leading
the company’s ground-breaking sustainability
programme globally. Whilst at Unilever, Keith led
different parts of the business, during which time
he worked closely with Sainsbury’s and other
retailers. He has strong international experience
and knowledge, havingrun international
businesses both in the UK and overseas.
External appointments: Non-Executive
Director of WPP plc, Trustee Director of Business
in the Community, Trustee Director of The
Leverhulme Trust and President of The Royal
Horticultural Society. He is also a trustee of
Grange Park Opera.
Specific contributions to the Company’s
long-term success: Keith plays an important
role in Sainsbury’s plan to become First choice for
food and deliveringon our Plan for Better. He has
an excellent understanding of both sustainability
and digital, and the ways that technology is
transforming businesses.
Independent: Yes.
J Sainsbury plc Annual Report and Financial Statements 2024 71
Strategic Report Governance Report Financial Statements
J Sainsbury plc – Operating Board 2024/25
Simon Roberts
Chief Executive
See page 68
Bláthnaid Bergin
Chief Financial Officer
See page 68
Graham Biggart
Chief Transformation & General Merchandise Commercial Officer
Date of appointment: March 2022.
Skills and experience: As Chief Transformation & General Merchandise Commercial Officer, Graham is
responsible for our strategy and the delivery of our major change programmes across our business,
inaddition to our Supply Chain, Logistics & Fulfilment, and Central Business Services. Heisalso accountable
for the commercial performance of our General Merchandise and Clothing businesses; including Argos,
Habitat and Tu. Graham is the Operating Board Sponsor for Ethnicity. He joined Sainsbury’s in 2015 and has
led a number of different areas of the business in that time, across commercial, operations and channels,
including as Commercial Director for Fresh Food & Foodservice and as Commercial Operations Director
covering Range, Space, Price & Formats in Food, General Merchandise and Clothing, as well as the
Sainsbury’s Local and Argos Republic of Ireland businesses. Prior to Sainsbury’s, Graham worked at
McKinsey & Company, and before that at Brunswick Group. Graham is a Non-Executive Director and
Chairofthe Risk & Audit Committee of GS1 UK.
Tim Fallowfield OBE
Company Secretary and Corporate Services Director
Date of appointment: September 2004.
Skills and experience: Tim joined Sainsbury’s in 2001 as Company Secretary, having previously held
the position of Company Secretary and General Counsel at Exel plc, the global logistics company, now
part of DHL. Tim is a qualified solicitor and began his career at the international law firm, Clifford
Chance. In addition to his role as Company Secretary, he is responsible for the Corporate Services
Division, comprising Legal Services, Data Governance and Information Security, Safety and Insurance,
and Shareholder Services. He also chairs the Group Safety Committee and the Data Governance
Committee. Tim is the Operating Board Sponsor for Caring Responsibility and Hidden and Visible
Physical Disability. Tim was Chairman of the Disability Confident Business Leaders Group, between
2016 and 2023, which works with government in shaping the disability employment agenda and in
raising awareness of the benefits of employing disabled people. He was awarded an OBE for services to
disability awareness in the 2020 New Year Honours List. Tim is a member of the Trustee Board of Save
the Children and chairs their Audit and Risk Committee. He is a Non-Executive Director of the
Government Legal Department and Chair of the Sainsbury’s Archive.
Rhian Bartlett
Chief Food Commercial Director
Date of appointment: November 2020.
Skills and experience: Rhian joined the Operating Board in November 2020, having returned
toSainsbury’s in 2019 as Director of Fresh Food. She is responsible for delivering the commercial
performance of Sainsbury’s food business and brands. Rhian is also the Operating Board Sponsor
forGender. She has over 20 years’ experience in the retail industry and has held a variety of senior
commercial roles, including Customer and Digital Director at Screwfix and Director of UK Trading at
eBay. Rhian’s previous roles at Sainsbury’s include Business Unit Director Fresh Foods and Head of
Online Merchandising.
Rhian is a Non-Executive Director of Speedy Hire Plc and is a Trustee of GroceryAid.
72 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Operating Board changes
After five years as an Operating Board member, Jim Brown retired as CEO, Sainsbury’s Bank in March 2024.
Following Paula Nickolds’ departure from the Operating Board in February 2024, Graham Biggart’s role was expanded to Chief Transformation &
General Merchandise Commercial Officer, combining the leadership of transformation and commercial performance of Argos and the Group’s
General Merchandise and Clothing Business.
After 22 years of service, Tim Fallowfield has confirmed his intention to retire from Sainsbury’s in July 2024.
Clodagh Moriarty
Chief Retail and Technology Officer
Date of appointment: June 2018.
Skills and experience: Clodagh joined the Operating Board in 2018 and was appointed as Chief Retail
and Technology Officer in March 2023, combining the leadership of Technology with the Group’s Digital
and Retail teams. She is responsible for all stores and their operations, as well as Sainsbury’s digital
offer and strategy, ensuring customers experience an integrated and seamless shopping experience
across Sainsbury’s, Argos, Tu, Sainsbury’s Bank and Nectar. Clodagh’s previous roles in Sainsbury’s
include Retail and Digital Director and Chief Digital Officer. Clodagh is the Operating Board Sponsor for
Wellbeing, ensuring we uphold our colleague mental health and wellbeing commitments across the
business. Clodagh joined Sainsbury’s as Head of Strategy, following nine years at Bain & Company and,
during her time with us, has had numerous leadership roles across commercial and channels. She is a
Non-Executive Director and member of the Remuneration and Nomination and Governance
Committees of Taylor Wimpeyplc.
Prerana Issar
Chief People Officer
Date of appointment: May 2023.
Skills and experience: Prerana joined the Operating Board in May 2023. She is responsible for human
resources and our people services across the business. Prior to joining Sainsbury’s, Prerana was the
NHS’s first Chief People Officer and supported the 1.2 million people who work for the NHS to deliver
critical care for patients, including through the COVID-19 pandemic, the most challenging period of the
NHS’s history. Before that, Prerana worked at the UnitedNations World Food Programme as Director of
Public-Private Partnerships and Chief HR Officer. She is focused on HR delivering commercial impact,
having started her career at Unilever plc, where she spent 15 years and finishing her time there as Vice
President of HR for Global Food. Prerana is a trustee on the Marie Curie Board of Trustees.
J Sainsbury plc – Operating Board 2024/25 continued
Mark Given
Chief Marketing Officer
Date of appointment: June 2020.
Skills and experience: Mark has significant experience in customer insight, brand communication
and digital marketing. Mark joined Sainsbury’s in 2012, becoming Marketing Director in 2017. He was
appointed Chief Marketing Officer in August 2019 and has responsibility for Marketing & Loyalty across
the Sainsbury’s, Argos, Tu clothing and Habitat brands. Mark has also been responsible for the Nectar
Loyalty coalition and the Nectar360 Retail Media business since 2018. In 2021, Mark assumed
responsibility for all Corporate Responsibility and Sustainability activity, including delivery of our Plan
for Better targets. Mark is the Operating Board Sponsor for Neurodiversity. Prior to joining Sainsbury’s,
Mark built his digital skills leading the Priority programme at O2, where he was Head of Sponsorship.
Before this, Mark worked with key brands at Heineken UK where he was Brand Director. He began his
career at Procter & Gamble UK before working across Europe ona variety of brands. Mark is currently
aCouncil Member of the Incorporated Society of British Advertisers and a Fellow of the Marketing
Society. He is also a trustee on the Sainsbury’s Archive Charitable Trust board.
J Sainsbury plc Annual Report and Financial Statements 2024 73
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Board leadership and Company purpose
Our new purpose of “We make good food joyful, accessible and
affordable for everyone, every day” underlines our commitment
to keep food firmly at the heart of what we do, whilst also
reflecting the unique role we play for our customers and the
communities we serve.
Role of the Board
The Board is the principal decision-making body in the Company. It is
collectively responsible for promoting the long-term success of the business
for the benefit of its shareholders, achieving this through the creation and
delivery of sustainable shareholder value. The Board also carefully considers
its wider stakeholders, including customers, colleagues and suppliers, when
making decisions.
More information on the Board’s engagement with
its stakeholders can be found on pages 22 to 29
The Board is responsible for setting the strategy of the business and
overseeing its implementation by management. It is committed to
delivering on each of the Group’s strategic priorities, which are aligned with
the Group’s purpose and values. It ensures effective corporate governance,
succession planning and stakeholder engagement. The Board is also
responsible for ensuring that effective internal controls and risk
management systems are in place.
Colleague engagement is critical to the Board, and it monitors culture
through the Make It Better Together panels, colleague listening and the
outputs of colleague engagement surveys. The Board and senior
leaderssetthe tone from the top and lead by example on the Group’s
valuedbehaviours.
Further information on colleagues and culture
can be found on pages 18 to 21
The Board has formally delegated certain governance responsibilities to its
Board Committees and the Operating Board, as outlined below. During the
year, the Board reviewed the delegated responsibilities and Terms of
Reference of each of the Board Committees.
Further information can
be found on page 84
Operating Board
Matters not specifically reserved for the Board have been delegated to
theOperating Board, chaired by Simon Roberts. The Operating Board is
responsible for the day-to-day operation of the business and the execution
of our strategy, ensuring that this is done in an ethical and sustainable
manner. During the year, the Operating Board delivered progress against
ourkey performance measures across each of the five strategic pillars.
Each Operating Board Director has a range of responsibilities,
as detailed in their biographies on pages 71 to 72
Sainsbury’s Bank Board
Sainsbury’s Bank plc Board membership comprises an independent Chair,
four Non-Executive Directors, all of whom are independent, together with
the Bank’s Chief Executive Officer and Chief Financial Officer. The Bank’s
Chief Executive Officer is supported by the Sainsbury’s Bank Executive
Committee and is responsible for the day-to-day management of the
business and executing its strategy. The Bank’s Chief Executive Officer
meets regularly with the Chief Financial Officer, bringing the Bank’s
priorities and perspective to the wider business.
Summary of matters reserved for
the Board
The Board has adopted a formal schedule of matters reserved for its
attention, detailing matters that are considered of significance to
the Group owing to their strategic, financial or reputational
importance. The schedule of matters reserved for the Board is
reviewed on an annual basis and approved by the Board. Below
isasummary of Matters Reserved for the Board:
• Group strategy, operating plans, long-term plans and budget
• Changes to corporate and capital structure
• Major acquisitions, mergers, joint ventures and disposals
• Significant capital expenditure and borrowing
• Material contracts
• Risk management and internal control
• Changes to the pension scheme
• Financial reporting and disclosures
• Review of remuneration policies and share schemes
• Dividend policy and payment
The Matters Reserved for the Board can be found on our website at
www.about.sainsburys.co.uk.
Evolution of our governance
framework
In February 2024, we announced our Next Level Sainsbury’s
strategy. Translating our updated strategy into delivering the
strategic outcomes will require our existing governance framework
to evolve. A new decision-making structure, below the Operating
Board, has been implemented and will be effective for 2024/25.
Thenew structure is directly aligned to the strategic outcomes,
with clear accountability and ownership of deliverables.
We’re going to build
onwhat has driven our
success since 2020.
Simon Roberts
Chief Executive
74 J Sainsbury plc Annual Report and Financial Statements 2024
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Board Operating Board
Board Committees
The Board Committees support the Board in specific areas of its
responsibilities, as outlined below. The Committee Chairs provide regular
updates to the Board on Committee meetings and activities.
Corporate Responsibility and Sustainability Committee
• Reviews the Plan for Better strategy, monitoring progress against
keyenvironmental and social sustainability targets and metrics
• Undertakes horizon scanning of future social and environmental
sustainability matters
• Monitors business engagement on sustainability and corporate
responsibility matters
More information can be found on page 89
Nomination and Governance Committee
• Reviews the Board’s size, structure and composition, including the
recommendation of new appointments to the Board
• Monitors balance of skills, knowledge, experience, independence
anddiversity of the Board and its Committees to ensure that they
remainappropriate
• Oversight of succession planning and development plans of the Board
and senior management
• Reviews the Board’s governance framework, including the Group’s
compliance with applicable laws and regulations
• Oversight of annual performance evaluation of the effectiveness
ofthe Board and its Committees
• Monitors compliance against the UK Corporate Governance Code
More information can be found on page 85
Remuneration Committee
• Recommends and reviews the Remuneration Policy, ensuring that it
promotes the delivery of our strategy and the long-term sustainable
success of the business
• Approves remuneration and benefits for the Chair, Executive
Directors and Operating Board Directors
• Approves remuneration principles throughout the business
More information can be found on page 99
The Terms of Reference for these Committees can be
found on our website at www.about.sainsburys.co.uk.
Audit Committee
• Reviews and monitors integrity of financial information prior to
publication, ensuring that the Annual Report as a whole is fair,
balanced and understandable
• Oversees systems of internal control and risk management
• Approves internal and external audit processes
• Maintains relationship with auditors
• Carries out in-depth reviews of specific risks, ensuring that risks
areappropriately identified, managed and mitigated
More information can be found on page 92
Operating Board Committees
The Operating Board Committees support the work of the Operating
Boardthrough delegated powers, as outlined below. Members of senior
management provide regular updates from these Committee meetings
tothe Operating Board.
Business Performance Review
• Monitors and reviews implementation of the Group’s plans to meet
budget targets, as set out by the Operating Board
• Approves in-year capital expenditure
• Monitors business performance with regards to customers, the
market, product proposition and perceptions of our brand
• Monitors and reviews colleague engagement
Group Data Governance Committee
• Oversees programmes that deliver compliance with Data Protection,
Data Security and Payment Card Industry data security standards
• Oversees effective information security and risk management
throughout the business
• Provides assurance, with the Group CISO and Director of Data
Governance, to the Operating Board, Audit Committee and Board
Group Safety Committee
• Reviews the safety culture and the robustness of safety management
systems throughout the business, including food safety, online
safety and colleague security
• Oversees standards for management and monitoring of colleague
and customer safety
• Provides assurance, with the Director of Safety and Insurance,
totheOperating Board, Audit Committee and Board
• Reviews the Group’s safety performance and potential safety risks
within the business
Plan for Better Steering Committee
• Leads operational execution of our Plan for Better strategy
• Oversees Plan for Better activities in relation to this strategy to
ensure delivery
Customer, Commercial and Channels Forum
• Leads the development and execution of our customer, commercial
and channel plans against our strategy
• Manages the in-year operating performance of the retail business
Board leadership and Company purpose continued
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Key areas of focus for theBoard
Our Board and Committee
meetings were held in person and
remotely during the year, enabling
agile and effective decision-making.
The Chair also held regular calls
between meetings with the
Non-Executive Directors. Members
of the Operating Board, management
teams and other colleagues attended
Board meetings to enable improved
Board dialogue, review performance,
discuss progress and agree key
prioritiesfor the short, medium
and longer term.
Key activities of the Board
The Board has a detailed programme of activities which is agreed
by the Chair, in conjunction with the Chief Executive and Company
Secretary, covering operational and financial performance,
strategy and transformation planning, risk, governance, culture
and stakeholder matters. This enables consideration and decision-
making which is appropriate for the business, our stakeholders and
the markets in which we operate.
Further information on how the Board has taken the respective views
of its key stakeholders into account during Board discussions is
provided in our s.172 statement
A typical Board meeting will comprise the following elements:
• Performance reports including Chief Executive overview, Chief
Financial Officer review and operational performance reports
• Deep dive reports into areas of particular strategic importance to
evaluate progress, provide insight and, where necessary, decide
on appropriate action
• Verbal Committee updates from the Chairs of our Board
Committees, including the key discussion points and particular
matters to bring to the Board’s attention
• Feedback from shareholder meetings
• Updates from our Make It Better Together panel, with further
context provided by the Non-Executive Directors who attended
that particular session
• Legal, risk and governance updates, including approval of the
revised governance framework, approval of the Modern Slavery
Statement and updates and review of material litigation
The table on the following pages sets out the key topics that the
Board reviewed, discussed and debated during the year. Board
reviewed, discussed and debated during the year.
Matters considered
Strategy
Outcome
• Discussed progress against the strategic plan and the impact of the cost
of living crisis and inflationary pressures on our customers, colleagues
and suppliers
• Monitored progress against culture, behaviours, diversity, equity and
inclusion strategy which supports the long-term planning and future
direction of the Group
• Approved key decisions and outcomes required to finalise the updated
strategy and purpose announced in February 2024
• Reviewed the Operating Board’s investment choices and ways of
simplifying the Group’s operating model
• Held deep dive discussions on the Group’s strategic and
transformationprogrammes
• Discussed and created relevant action plans for long-term
strategicchallenges
• Committed to working with suppliers over the longer term, enabling
suppliers to invest in their business and build resilience
• Concluded a strategic review of the financial services division
More information can be found on pages 10 to 14
Benefits and consideration
• Having a clear, strategic direction for the short, medium and long term
and understanding our stakeholder expectations is vital for the execution
of our strategic priorities
• Staying connected to our stakeholders has enabled the Board to make
deliberate decisions on value investment, colleague pay and ensuring the
longevity of our supply chain
• The decisions taken have helped to deliver strong results in the short
term, but will also enable the Group’s longer term goals
• Focus on a multi-year purpose-led organisation will create multiple
opportunities for commercial and social growth
Stakeholders considered
• Customers
• Suppliers
• Colleagues
• Communities
• Shareholders
• Regulators
Link to KPIs
• Grocery market share performance
• Customer satisfaction score
• Colleague engagement score
• Plan for Better commitment
• Retail free cash flow
• Return on capital employed
• Retail operating cost to sales
• Underlying profit before tax
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
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Matters considered
Chief Executive Report and
FinancialUpdates
Outcome
• The Chief Executive and Chief Financial Officer provided an overview
ofthe operational and financial performance of the business at
eachmeeting
• Periodic updates on sales, profit, cash flow, stakeholders and progress
against KPIs
More information can be found on page 4
Benefits and consideration
• The Board has delegated authority to the Chief Executive for the
day-to-day management of the business
• Operational and financial updates provide oversight of the business,
andthe impact actions may have on stakeholders
Stakeholders considered
• Customers
• Colleagues
• Shareholders
• Suppliers
• Communities
Link to KPIs
• Grocery market share performance
• Colleague engagement score
• Retail free cash flow
• Retail operating cost to sales
• Customer satisfaction score
• Plan for Better commitment
• Return on capital employed
• Underlying profit before tax
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
Strategy update:
“NextLevel Sainsbury’s”
Against a backdrop of continued change in the retail
industry and increasing importance of environmental
and social considerations, the Board reviewed the
Company’s strategy at a number of meetings during the
year. Dedicated strategy days were also held in July and
October 2023.
Focus areas
The Board discussed the short and long-term goals and
the choices that the business would need to make to
achieve them. The main discussion themes included:
• Medium and longer-term competitor, customer and
market trends and the implications for the business
• Identifying the appropriate strategic priorities and
short, medium-and long-term choices required
• Challenges to achieving strategic priorities and
whereimprovements would need to be made across
the business, including key investment and
cost-saving priorities
• Cultural change needed for growth
Outcomes
• Updated purpose, strategic outcomes and
commitments
• Colleague engagement plan developed to ensure
awareness and understanding of the new purpose
and strategy
• Capital Markets Day held in February 2024 to
announce the new purpose, strategy and commitments
Next steps
• The Board will receive regular updates on the strategic
outcomes at every Board meeting
• Deep dive updates will be presented at the Strategy
Review days in July and October 2024
We are a food first,
people first business.
Simon Roberts
Chief Executive
Board leadership and Company purpose continued
Key areas of focus for theBoard continued
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Matters considered
Review of financial position, going
concern and the viability of the Group
Progress against the long-term plan
and budget
Review of balance sheet and
leveragetargets
Review of funding and liquidity plans
Outcome
• Refreshed capital allocation framework and review of shareholder returns
and dividend policy
• Management of Group financing activities, including debt refinancing
and pension plans
More information can be found on page 46
Benefits and consideration
• Board oversight supports the strategic direction and long-term viability
and ensures that future liabilities can be met
Stakeholders considered
• Customers
• Colleagues
• Shareholders
• Suppliers
• Communities
Link to KPIs
• Group market share performance
• Retail free cash flow
• Retail operating cost to sales
• Return on capital employed
• Underlying profit before tax
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
Matters considered
Risk management framework
Updates on principal and
emergingrisks
Risks, including principal risks as
appropriate, are also discussed through
the other matters considered
Outcome
• Maintained responsibility for the identification and management of risks
to ensure the successful operation of the business
• Identified and monitored principal and emerging risks, including
economic and political uncertainty, supply chain security and raw
material availability
• Reviewed Audit Committee discussions and decisions to monitor internal
controls, stress testing and risk mitigation across the business
More information can be found on page 53
Benefits and consideration
• The Board reviews the most significant or principal risks facing the Group
• Strengthening the risk and internal control environment is fundamental
to our governance framework
Stakeholders considered
• Customers
• Colleagues
• Shareholders
• Suppliers
• Communities
Link to KPIs
• Grocery market share performance
• Colleague engagement score
• Retail free cash flow
• Retail operating cost to sales
• Customer satisfaction score
• Plan for Better commitment
• Return on capital employed
• Underlying profit before tax
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
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Matters considered
Culture, diversity and inclusion
Talent, succession and development
Outcome
• Committed to further investment into colleague pay for our retail
colleagues and other enhancements to colleague benefits
• Maintained focus on culture and development as a critical enabler of our
longer-term success
• Focused on succession planning across pivotal roles within the business,
including the change in structure of the Operating Board
• Building leadership capability to develop and grow diverse talent and
strengthen future pipelines through tailored development programmes
• Supported the Operating Board in the launch of our new purpose to
further embed a positive, forward-thinking culture whilst improving
business outcomes
• Received regular updates on colleague engagement reviewing colleague
feedback from listening groups, the Make It Better Together panel and
the We’re Listening survey
More information can be found on page 18
Benefits and consideration
• Understanding what allows the Board to make effective decisions to
ensure our culture is fit for purpose
• Supporting colleagues with leading pay and benefits is a key part of our
strategy to drive outstanding service
Stakeholders considered
• Colleagues
Link to KPIs
• Colleague engagement score
• Plan for Better commitment
Link to strategy
• First choice for food
Focusing on culture
A healthy corporate culture is
onein which Sainsbury’s has a
purpose, values and strategy
thatare respected by its
stakeholders, and an operating
environment that encourages
employees to make a positive
difference for stakeholders ‘doing
the right thing’.
Aligning with purpose, strategy and values
Our culture comes to life through our three values, Own It, Make It
Better and Be Human, which remain unchanged. These values
underpin our purpose and have become a vital part of our culture,
supporting our growth and success across the Group. They ensure
that all of our colleagues understand what is most important to us –
understanding our customers and their needs, working as a team in a
respectful and supportive way, and showing that when we add up all
the small things we do, we can make a big difference to the issues
customers, colleagues, communities and wider society care about.
Monitoring culture
The business has a framework of policies and practices in place
which allow the Board and its Committees to monitor and measure
culture. These include updates on the outcomes of the We’re
Listening survey benchmarked against peers, interactions with the
Make It Better Together panel and regular updates on a broad range
of risk and business integrity matters, including fraud, compliance,
bribery, corruption and modern slavery, and standard supplier
protocols and procedures. Collectively, these updates provide the
Board with broad insights into day-to-day operations, the practical
execution of strategy and the culture context in which our
colleagues work.
Our cultural metrics:
79%
of colleagues who told us
they are able to be
themselves at work
71%
of colleagues who told us
they were happy at work
74%
of colleagues who told us
they were treated
respectfully at work
67%
of colleagues who told
usthey have good
opportunities to learn
andgrow
Board leadership and Company purpose continued
Key areas of focus for theBoard continued
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Matters considered
Oversight of our Plan for Better strategy
by the Corporate Responsibility and
Sustainability Committee
Outcome
• Renewed partnership with Fairtrade to deliver living wage to banana
workers, three years ahead of the IHD industry commitment
• Continued price investment making good food affordable for everyone
• Approved the Group’s Science Based Targets initiative submission and net
zero transition planning
• Launch of our Smart Charge: new ultra-rapid service to build confidence
in public EV charging
More information can be found on page 15
Benefits and consideration
• Our commitment to our customers, colleagues and the communities we
serve are reflected in our Plan for Better strategy which underpins our
four strategic outcomes
• Building the resilience of our business and changing the way we work
with partners and suppliers for people and planet
Stakeholders considered
• Customers
• Colleagues
• Shareholders
• Suppliers
• Communities
• NGOs
Link to KPIs
• Grocery market share performance
• Plan for Better commitment
• Colleague engagement
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
Matters considered
Investor relations, investor views
andkey market updates
Outcome
• Understanding of investors’ strategic and performance expectations
ofSainsbury’s
• Visibility of market conditions, share price performance and
futureoutlook
• Feedback on investor meetings held during the year
• Updated investors on Next Level Sainsbury’s strategy
• Announcement of share buyback programme
More information can be found on page 25
Benefits and consideration
• Ensures shareholder sentiment is understood and considered when
making decisions
Stakeholders considered
• Shareholders
Link to KPIs
• Grocery market share performance
• Retail free cash flow
• Retail operating cost to sales
• Customer satisfaction score
• Plan for Better commitment
• Return on capital employed
• Underlying profit before tax
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
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Matters considered
Governance matters
Outcome
• Updates from the Chairs of the Committees
• Review of audit and governance reform processes
• Discussed the results of the Board effectiveness review and progress
against actions
• Legal and governance updates, including material litigation and
ModernSlavery
• Review and approval of statutory reporting and shareholder
documentation
• Ensured continued compliance with the UK Corporate Governance Code
2018, as outlined on page 66
More information can be found on page 66 to 121
Benefits and consideration
• An important part of the Board’s role is the oversight of the Group’s
activities, ensuring that the Group is properly governed with the
requiredresources
Stakeholders considered
• Colleagues
• Shareholders
Link to KPIs
• Colleague engagement score
• Customer satisfaction score
• Plan for Better commitment
Link to strategy
• First choice for food
• Loyalty everyone loves
• More Argos, more often
• Save and invest to win
Board leadership and Company purpose continued
Key areas of focus for theBoard continued
Matters considered
Safety updates focusing on people
andfood safety
Outcome
• Review of major safety incidents and the safety strategic plan, including
updates on trends and the Group’s safety culture
More information can be found on page 19
Benefits and consideration
• The Board places significant importance on looking after the safety of
colleagues, customers and anyone else impacted by our business
Stakeholders considered
• Customers
• Colleagues
• Suppliers
Link to KPIs
• Colleague engagement score
• Customer satisfaction score
• Plan for Better commitment
Link to strategy
• First choice for food
• More Argos, more often
• Save and invest to win
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Composition, succession and evaluation
Director development
Induction
We have a comprehensive and tailored induction programme in place for
Directors when they join the Board to ensure their smooth transition and
enable them to gain an understanding of all major aspects of the business.
This includes an introduction to our purpose, vision, strategy, culture and
values, alongside our governance framework, sustainability strategy and
the opportunities and challenges facing the sector.
When joining the Board, a new Non-Executive Director typically meets
individually with each Board and Operating Board member, with senior
leadership from key areas of the business to gain an insight into their
respective areas of responsibility, and with key advisers. The Company
The Directors’ induction process
1
Understanding the business
2
Understanding the
sector and environment
3
Meeting the Sainsbury’s internal
team and advisers
4
Visiting Group operations
• Business strategy, purpose and vision
• Overview of each business area and its
opportunities
• Operating plans, current KPIs and targets
• Key business relationships
• Board and governance procedures, including
Directors’ duties
• Board effectiveness reviews and actions
• Matters relevant to the Board Committees
theyjoin
• Recent Board and Committee papers
andminutes
• Key people and succession plans
• Remuneration and reward across the business
• Finance, Treasury and Tax overviews
• Risk profile and approach
• Internal audit, risk and internal controls
• The market and
competitors
• Customer trends
• Consumer and
regulatory environment,
including Market Abuse
Regulations
• Brand perception
andreputation
• Analyst and investor
perspectives
• Key stakeholders’ views
• Directors
• Committee Chairs
• Company Secretary and
Corporate Services Director
• Members of the Operating Board
• Senior leadership across
thebusiness
• Members of the external
auditteam
• Remuneration consultants
• Brokers
• Store visits
• Distribution centres
• Store support centre
Secretary and Corporate Services Director briefs new Directors on Company
policies, Board and Committee procedures, and core governance practice,
which includes Directors’ duties and Market Abuse Regulations. They also
receive induction materials, including recent Board and Committee papers
and minutes, strategy papers, investor presentations, Matters Reserved for
the Board and the Board Committees’ Terms of Reference. New Directors
visit stores, depots and other business locations to help them gain a broader
understanding of the business. Director inductions are ongoing processes
over a number of years, during which they will cover the areas in the
tablebelow.
Continuing professional development and training
Non-Executive Directors continue to learn about the business by meeting
with senior leadership, colleagues, suppliers and other key stakeholders. All
of the Non-Executive Directors continue to engage with different aspects of
the business to support their ongoing development.
The Board believes that good decision-making is enabled by a deep
understanding of the Group’s operations and people. During the course
ofthe year, Directors receive training and presentations to keep their
knowledge current and enhance their experience. To ensure the Board
updates and refreshes its skills and knowledge, we have a programme
tosupport Directors’ training and development requirements in
relationtogovernance, investor expectations and regulatory impacts.
Thisprogrammeincludes regular presentations from management on
relevant governance matters.
The Board strategy reviews took place in July and October and included
updates from our advisers on medium and longer-term competitor,
customer and market trends, the impact of current economic and political
situations, and views within the supermarket and general merchandise
sectors. These updates were a key part of the Board’s strategy discussion
process and enabled the Board to identify the appropriate strategic
priorities, the challenges to achieving these priorities and the cultural
change needed for growth. Further information on the Next Level
Sainsbury’s strategy can be found on pages 10 to 14.
The programme of activities for the Board includes store visits and dinners
with external attendees, including key stakeholders. This builds the
Directors’ understanding and knowledge of the wider business and the
macro environment in which the Group operates.
The Audit and Remuneration Committees received updates on relevant
accounting and remuneration developments, trends and changing
disclosure requirements from management. The Corporate Responsibility
and Sustainability Committee received stakeholder and regulatory updates
on ESG matters from management. More information can be found on pages
89, 92 and 99.
The Board and Committees received annual updates on compliance with
theMarket Abuse Regulation, the Modern Slavery Act, Task Force on
Climate-related Financial Disclosures, the 2018 Corporate Governance
Codeand Directors’ responsibilities under Section 172 of the Companies Act.
In addition, the Board will receive training on key topics which are relevant
to the implementation of strategy and changing regulation. Key training
and development activities for 2023/24 are detailed on the next page.
Directors have access to advice from the Company Secretary and
independent professional advice is available at the Company’s expense,
ifnecessary, in relation to fulfilling their duties and responsibilities.
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2023/24 training and development activities
• Internal Controls programme updates at every Audit
Committeemeeting
• Updates on the proposed UK Corporate Governance and
Auditreforms
• An overview of the NIST Cybersecurity Framework and examples
of the Group’s compliance with the framework
• Sustainability updates, including an update from Dame Sara
Thornton on Modern Slavery evolving risks and key areas of
focus for 2024/25
• Presentation from external advisers on:
– The findings of an investor perception study conducted by
anexternal party
– Sell-side perspective on UK grocery; and
– Transformation opportunities and challenges facing
retailersglobally
Board evaluation
In line with best practice, the Board’s effectiveness is reviewed on an annual
basis through a formal performance evaluation, including an assessment of
the Board and its Committees. An external evaluator conducts the review
every third year, and, in the two intervening years, this is carried out by the
Company Secretary and Corporate Services Director to ensure continuity
over the three-year cycle. The last external evaluation was carried out by
Clare Chalmers, an experienced independent provider of board effectiveness
reviews, from November 2022 to March 2023.
This year’s internal evaluation was conducted from December 2023 to
March2024 and was led by the Company Secretary and Corporate Services
Director, who met with each Director on an individual basis to carry out the
evaluation. The review explored the key areas of focus set out below and
themes that arose for action in the 2022/23 external evaluation.
The process was designed to assess the strengths of the Board and to raise
challenges and opportunities for improvement. The meeting agenda was
sent to each attendee before their individual meeting. Their discussions
remained confidential and no views were attributed to any individual in
thefinal report.
The key areas of focus included: the effectiveness, role and priorities of the
Board and its Committees with particular reference to the development of
the new purpose and strategy; the Board’s composition, skills, diversity,
culture and succession planning; the leadership of the Board and the
business; oversight of financial performance; decision-making and risk
management; stakeholder engagement; talent management; and the
Board’s focus on ESG. In addition, the Directors were asked to give their
views on key focus areas for the Board in 2024/25. Each Director was given
the opportunity to raise their own additional points.
Following the individual discussions, the Company Secretary and Corporate
Services Director discussed the conclusions (including any feedback with
individual Directors) with the Chair and then presented a final written report
to the Nomination and Governance Committee. A meeting was held with
theBoard to discuss the findings and agree the key actions. Each of the
Committee Chairs received specific feedback on the effectiveness of the
relevant Committee for their consideration.
Findings of the 2023/24 review
The report identified a number of strengths of the Board including:
• The Board continues to be effective, operating a collaborative approached
to the development of the updated strategy
• The Board has open discussions before major decisions are taken, and the
pace and progress of decision-making has been appropriate, with robust
iteration between meetings to maintain momentum
• The external input provided by key advisers was well received by
theBoard
• The Chair is a highly effective leader and has developed strong
relationships and trust with the Non-Executive Directors
• The Executive Directors keep the Board well informed of key issues
arising, provide strong leadership
• The Non-Executive Directors are highly engaged and provide a good level
of challenge and support to management
The review identified some opportunities for the Board, including the
following key priorities:
• Board focus on strategy: updates on strategic outcomes to be provided at
each meeting of the Board with scheduled deep dives, including updates
against key milestones, incorporated into the forward agenda
• Colleague engagement: Non-Executive Directors to meet with
high-potential colleagues, ideally in a store environment
• Skills and experience of the Board and Committees: skills matrix
tobereviewed and top five skills identified
The Board considered all of the recommendations contained in the report.
The Board has developed an action plan which will be reviewed on a regular
basis by the Nomination and Governance Committee and also identified
development areas for the Board, which are detailed on page 83. The Board
reviews progress against the agreed actions regularly during the year.
AnyCommittee-specific findings and action points will be overseen by
eachCommittee Chair, with consideration of the overall Board findings
which are deemed relevant to the Committee’s work.
In accordance with the 2018 Corporate Governance Code, the findings of
thereview of the Chair were shared with the Senior Independent Director
respectively. The Senior Independent Director met with the Chair to review
this feedback. The review concluded that the Board was well led by the Chair
and the Directors were very satisfied with the Chair’s current performance.
Board evaluation cycle
A combination of Board
evaluation and Director
appraisal
Progress and actions
implemented during
2023/24
Agreed actions for
2024/25 and beyond
Year 2
Internally
facilitated review
Year 3
Internally
facilitated review
Year 1
Independent
and externally
facilitated review
Composition, succession and evaluation continued
J Sainsbury plc Annual Report and Financial Statements 2024 83
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Key areas of focus from 2022/23 review Progress and actions implemented during 2023/24
Board focus on strategy
Continued focus on the Group’s financial services strategy by undertaking a
review of Sainsbury’s Bank.
A strategic review of the Group’s financial services division was completed
during the year, concluding in a decision to carry out a phased withdrawal
from the core Bank business.
Continued professional development
Continue to use third-party experts to both upskill Directors and to challenge
and enhance discussions.
Third-party views were included at various points during the strategy
preparation, the strategy days and at the Corporate Responsibility and
Sustainability Committee. Positive feedback was received from the Directors
on the relevance and quality of these presentations.
Performance
Incorporate regular updates on operational efficiency, cost savings
andproductivity.
The Board received regular updates on these topics as part of the update on
the Save to Invest strategic priority.
Colleague engagement
Provide greater visibility of high-potential senior management below
Operating Board.
The Board were provided with regular updates from the Operating Board
and key members of their teams during the year. This has been identified as
an area of continued focus for 2024/25.
84 J Sainsbury plc Annual Report and Financial Statements 2024
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Division of responsibilities
How the Board operates
The Board and its Committees have a forward programme of meetings to ensure that
sufficient time is allocated to each key area and the Board’s time is used effectively.
There is flexibility for items to be added to each agenda, which enables the Board to
focus on key matters relating to the business at the right time.
Our Board comprises the Chair, two Executive Directors and six independent Non-Executive Directors. Our Board members’ responsibilities
are listed below and more information on their specific contributions can be found in their biographies on pages 68 to 70.
Chair
Martin Scicluna
• Leading the Board and ensuring its effectiveness in all aspects
ofits role
• Promoting the highest standards of corporate governance
• Ensuring that the Board is aware of the views of shareholders
andotherstakeholders
• Promoting a culture of openness and debate in the boardroom and
constructive relations between Executive and Non-Executive Directors
Independent Non-Executive Directors
Jo Bertram
Jo Harlow
Adrian Hennah
Tanuj Kapilashrami
Keith Weed CBE
• Bringing an external perspective, independent judgement and
objectivity to the Board’s deliberations and decision-making
• Supporting and constructively challenging the Executive Directors
and senior management, holding them to account and offering
specialist advice using their wide and varied experience
• Monitoring delivery of the agreed strategy within the risk
management framework set by the Board
Company Secretary
Tim Fallowfield OBE
(retiring with effect from 5 July 2024)
Nick Grant
(appointed with effect from 7 July 2024)
• Advising and assisting the Board and the Chair, particularly in
relation to governance, Board evaluations, induction, training
andformulating the agenda for Board meetings
• Ensuring that Board procedures and the governance framework
areeffective
• Ensuring the Board receives accurate, timely and clear information
and is consulted on all matters important to it
Chief Executive
Simon Roberts
• Leading the day-to-day management of the business and
executing the strategy agreed by the Board
• Proposing strategies, business plans and policies to the Board
• Ensuring effective implementation of the Board’s decisions
• Leading, motivating and monitoring performance of the
Company’s senior management
• Creating a framework of strategy, values, culture, performance
management and objectives to ensure the successful delivery of
results for the business
• Maintaining an effective framework of internal controls and
riskmanagement
Chief Financial Officer
Bláthnaid Bergin
• Supporting the Chief Executive in developing and
implementingstrategy
• Overseeing the day-to-day financial activities and the financial
performance of the business
• Together with the Chief Executive, ensuring that financial policies
and practices set by the Board are adopted at all levels of the business
• Oversight of key financial functions, including Pensions, Tax, Treasury
and Internal Controls
Senior Independent Director
Brian Cassin
• Acting as a sounding board for the Chair and as an intermediary for
the other Directors when necessary
• Being available to meet with shareholders and representative bodies
asrequired
• Leading the annual appraisal and review of the performance of
theChair
During the year, the Chair and Non-Executive Directors met without the
Executive Directors being present. The Chair held regular and informal calls
between Board meetings with the Non-Executive Directors to consider their
views and to enable thorough preparation for Board discussions. In addition,
the Senior Independent Director held discussions with the Non-Executive
Directors without the Executive Directors or the Chair being present.
Directors were kept informed of the key discussions and decisions made at
each of the four principal Committees – Audit, Nomination and Governance,
Remuneration, and Corporate Responsibility and Sustainability. The Chair of
each Committee provided a detailed summary at the Board meeting
following the relevant Committee meeting.
In the rare event that a Director is unable to attend a Board meeting,
theChair will meet with the relevant Director in advance, so that their
comments and inputs can be considered. Following the meeting, the
Chairwill provide an update to them on the outcomes of the discussions.
The table on page 67 shows the attendance of Directors at scheduled
Boardmeetings. The Board held eight scheduled meetings during the year,
together with additional unscheduled meetings which were well attended
by all Directors.
J Sainsbury plc Annual Report and Financial Statements 2024 85
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Nomination and Governance Committee Report
Principal role and responsibilities
The Nomination and Governance Committee is responsible for:
• Reviewing the structure, size and composition of the Board
andits Committees, taking into account skills, knowledge,
experience and diversity and making recommendations to
theBoard for any changes
• Formulating plans for succession at Board and senior
management levels, taking into account the challenges and
opportunities facing the business and the skills and expertise
needed to ensure the long-term success of the Company
• Reviewing diversity, equity and inclusion across the business
• Reviewing and approving any changes to the Board’s governance
framework, including monitoring compliance with applicable
legal, regulatory and listing requirements
• Assessing the Company’s compliance with the 2018 UK Corporate
Governance Code
• Oversight of the Board and Committee evaluation process,
including review of progress against identified actions
• Conducting an effectiveness review of Non-Executive Director
time commitments, independence and the Directors’ conflicts
ofinterests
The Committee’s Terms of Reference, which are reviewed annually, are
available on the Company’s website www.about.sainsburys.co.uk.
Key actions from 2023/24
• Reviewed progress against the Board evaluation action plan
• Completed the annual evaluation of the Board and its
Committees, identifying actions for implementation in 2024/25
• Reviewed and approved the Directors’ register of interests
• Recommended to the Board that all of the Directors stand for
re-election at the AGM
• Reviewed and approved talent and succession planning for
Operating Board and senior management
• Approved the revised Board Diversity policy
• Received updates on the revised 2024 UK Corporate
GovernanceCode
Priorities for next year
• Continued oversight of the business’s diversity, equity and
inclusion strategy
• Implementation of actions arising from the Board evaluation
in2023/24
• Review of talent and succession planning for senior management
• Review of governance framework to align with 2024 UK Corporate
Governance Code
Dear Shareholder
On behalf of the Board, I am pleased to present the Nomination and
Governance Committee’s report for 2023/24, which describes the
Committee’s role and responsibilities, as well as our activities and areas
offocus during the year. The development and execution of our long term
strategic objectives, embedding of our purpose and culture and promotion
of the interests of our stakeholders are all dependent upon effective
leadership at both Board and executive level. The Committee plays a
significant role in ensuring the Board is sufficiently diverse and has the
appropriate balance of skills, knowledge, experience, and background to
provide the breadth, depth, diversity of thinking and perspective needed
tosupport our strategy and deliver our purpose.
The Committee has a key role in supporting the Board with succession
planning, reviewing Board composition and promoting diversity, equity and
inclusion. We seek to balance the composition and tenure of the Board and
that of its Committees, and to refresh them over time. This enables the
Board to benefit from the experience of longer-serving Directors and the
fresh perspectives and insights from newer appointees.
To support the Board succession planning process, a skills matrix is regularly
reviewed to ensure the Board and its Committees have and maintain the
skills required to deliver the strategy and objectives in the longer term. This
also identifies the skills and experience that may potentially be lost with a
retiring Non-Executive Director. The matrix shown on page 67 demonstrates
the broad diversity and experience of the Board.
The Committee also received comprehensive updates during the year on
talent and succession planning and the revised people strategy, which is
aligned to the implementation of our Next Level Sainsbury’s strategy.
The Board continues to make good progress against its diversity, equity and
inclusion strategy, and we are fully compliant with the requirements of the
Parker Review on ethnic diversity and the diversity targets outlined in the
Hampton-Alexander Review. I am proud of the continued progress we have
made to reach gender balance across our senior leadership; four of our nine
Board Directors and 50 per cent of our Operating Board members are
women. During the year, the Committee reviewed the changes to the Listing
Rules regarding diversity and we have increased our disclosures on ethnic
and gender diversity amongst our employees in this year’s Annual Report in
accordance with the new requirements. I am pleased to confirm
fullcompliance.
In March 2023, the Committee’s role was extended to governance matters,
including the annual Board evaluation and oversight of the Governance
framework. I am pleased to report that the Board and its Committees have
been found to be effective and any identified actions for improvement will
be implemented in 2024/25.
Martin Scicluna
Chair
86 J Sainsbury plc Annual Report and Financial Statements 2024
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The Committee has followed the above procedure for all recent
appointments to the Board.
Identify
The Committee discusses the overall skill sets of the
Board and Operating Board to agree a detailed job
specification, skill set and preferred attributes for the
appointee. A thorough review of potential candidates
is undertaken, resulting in a diverse long list of
external and internal candidates from a broad range
of backgrounds. The Committee will then shortlist a
number of candidates.
Interview
The Chair and several of the Directors will meet with
the shortlisted candidates who confirmed their
interest in the role. Following the interviews, the
Nomination and Governance Committee members
will meet to discuss feedback.
Select
The Committee will discuss and approve a final
selection of candidates. Once the final candidate is
identified, the Committee will recommend to the
Board that the individual be appointed to the Board.
Appoint
The Board will review the Committee’s
recommendation to appoint the individual
totheBoard.
Time commitment and conflicts ofinterest
Prior to appointment, each prospective Non-Executive Director confirms
that they will have sufficient time available to be able to discharge their
responsibilities effectively and that they have no conflicts of interest.
Thisisdiscussed by the Board before any appointment is made.
In addition, the Board reviews and approves requests by Directors wishing
to undertake new external responsibilities or directorships, considering both
the time commitments involved and any potential conflicts. The conflicts of
interest register is reviewed annually to ensure it is up to date and that there
are no new conflicts to consider. No changes were recorded during the year
that would impact the independence of any of the Directors.
The Board supports Executive Directors having a non-executive directorship
role as part of their continuing development, provided that they have sufficient
time to balance their commitments to the business with any external role.
Subject to Board approval, each Executive Director may hold one
Non-Executive Director position. Whilst recognising the benefits of
Non-Executive Directors having varied and broad experiences, the Board
keeps in mind investor guidance and reviews the commitments of each
Director annually.
Throughout the year, all Directors have demonstrated high levels of
availability and responsiveness for additional meetings and discussions
where these have been required. The Board remains confident that
individual members continue to devote sufficient time to undertake their
responsibilities effectively.
Board effectiveness
The Board and senior management set the tone from the top and lead by
example through effective management and good stewardship.
Independence
The Non-Executive Directors provide a strong independent element to the
Board and a solid foundation for good corporate governance, fulfilling the
vital role of corporate accountability. The Committee formally reviews the
independence of each of our Non-Executive Directors at least annually. The
Committee is of the opinion that each of the current Non-Executive Directors
continues to be independent in character and judgement in line with the
definition set out in the Code. In assessing each Director’s independence,
the Committee concluded that each provides objective challenge, strategic
guidance and holds management to account.
Committee governance
The Committee consists of the Chair of the Board and the six Non-Executive
Directors, all of whom are independent. The Chair of the Board is also the
Chair of the Committee, and the Company Secretary and Corporate Services
Director or their nominee acts as the Secretary of the Committee.
The Chief Executive, Chief Financial Officer and Deputy Company Secretary
attend meetings by invitation.
The Committee held one scheduled meeting in the year and one scheduled
meeting immediately following year-end. Attendance at the scheduled
Nomination and Governance Committee meetings can be found on page 67.
Succession planning
Talent development
The Committee plays an important role in overseeing the development
ofadiverse pipeline for succession to senior management roles across
immediate, short and longer-term timescales. Succession planning at
executive and senior management level continues to be a priority and
throughout the year the Committee monitored the development of future
business leaders and the available pool of talent within the Group to
strengthen our diverse management pipeline. This is essential to mitigating
people risk, ensuring a continuous level of quality in management and that
we have the required capability to deliver. This review includes progress
against the strengthening of role profiles and development plans for
high-potential colleagues.
During the year, we announced changes to our Operating Board following
the departure of Paula Nickolds in February 2024 and the retirement of Jim
Brown in March 2024. Tim Fallowfield, our Corporate Services Director and
Company Secretary, has confirmed his intention to retire after the AGM in
2024. The decision was taken to create a smaller Operating Board, with a
simpler structure for the leadership team. Further information on the
changes to the Operating Board can be found on page 72.
We recognise the importance of developing our people, and the talent
pipeline within our business continues to be a key focus for the Committee.
Our senior leadership population is a source of future Operating Board
talent, with six members of our Operating Board, Rhian Bartlett, Bláthnaid
Bergin, Graham Biggart, Tim Fallowfield, Mark Given and Clodagh Moriarty
progressing through this route.
Our Leadership Acceleration Programme, Leading Together and Leading
Steps Up programmes are key investments we continue to make into
developing our senior leadership.
Appointments to the Board
The Nomination and Governance Committee has a formal, rigorous and
transparent procedure for the appointment of new Directors to the Board.
When the need to appoint a Director is identified, for instance when a
Director is approaching the end of their ninth year on the Board, the
Committee reviews the experience, skills and knowledge required, taking
into account the Board’s skills matrix, existing composition and the relevant
experience and understanding of our stakeholder groups. We engage
executive search consultants to develop a diverse list of possible candidates
who meet the desired specification. Suitable candidates are then interviewed
by Committee members. The process is led by the Chair of the Board, who
receives support from the Company Secretary and Corporate Services
Director and the Directors as appropriate.
Careful consideration is given to ensure that proposed appointees have
enough time available to devote to the role and that the balance of skills,
knowledge and experience on the Board with regard to experience and
understanding of our stakeholder groups is maintained.
When the Nomination and Governance Committee has identified a suitable
candidate, it makes a recommendation to the Board, enabling the Board to
make the final decision.
Nomination and Governance Committee Report continued
J Sainsbury plc Annual Report and Financial Statements 2024 87
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Annual election and re-election
Annually, the Committee considers and recommends to the Board the
re-election of Directors by shareholders at the AGM. This is supported by
each Director’s individual assessment undertaken as part of the annual
Board evaluation process. The Committee concluded that there were no
reasons identified to prevent any Director from being recommended for
re-election at the 2024 AGM.
Board evaluation
The Committee oversees the Board evaluation process. During the year,
theCommittee reviewed the progress of the actions identified through
the2022/23 Board evaluation and reviewed the proposed approach to the
2023/24 evaluation of the Board, Committees and Directors, considering the
key themes and focus of the review. An internal review of the Committee’s
effectiveness was conducted during the year and it found that the
Committee continued to be effective. Full details of the Board evaluation
areon pages 82 to 83.
Diversity, equity and inclusion
The Board and Committee continue to promote the importance of diversity,
equity and inclusion across the business. We are committed to being a truly
inclusive retailer where every single one of our colleagues is treated fairly
and with respect and can fulfil their potential. We want our customers to
feel welcome when they shop with us. We embrace and encourage diversity,
inclusion and equity and aim to reflect the diverse communities we serve.
Simon Roberts and the Operating Board provide clear and committed
leadership and accountability of our inclusion agenda, with members of the
Operating Board acting as sponsors across wellbeing, diversity and inclusion
and our Colleague Networks. The governance of diversity, equity and
inclusion is a regular part of the Operating Board agenda to ensure ongoing
progress and focus. Further information on our Colleague Networks can be
found on page 20.
To ensure sustained improvement, we continue to look at focused initiatives,
culture and accountability through aspirational targets. In 2021, we set
stretching targets to take us to 2024, covering more of our talent pipeline
and Black representation specifically. We set a target of 50 per cent female,
12 per cent Ethnically Diverse and 3 per cent Black representation at senior
management level
a)
. Importantly, these targets form part of our long-term
incentives for management. We report on our progress against these targets
twice a year and further information is available on our website www.about.
sainsburys.co.uk/sustainability/better-for- everyone/diversity-and-inclusion.
We will be setting our new gender and ethnicity targets to further increase
diverse representation during 2024.
The Board receives regular updates on our inclusion initiatives and the
Board, Corporate Responsibility and Sustainability Committee and
Nomination and Governance Committee receive detailed presentations
throughout the year on our inclusion priorities and the progress we are
making. The Remuneration Committee also reviewed and approved the
Ethnicity and Gender Pay Report which can be found on our website
www.about.sainsburys.co.uk/ making-a-difference/gender-pay-gap.
Board diversity policy
We promote diversity on our Board and believe there is good balance
amongst our Executive and Non-Executive Directors, with extensive,
wide-ranging experience of retail and other consumer-facing businesses
and varying length of service. Our Non-Executive Directors have other highly
relevant skills derived from serving in a range of major executive and
non-executive positions throughout their careers and a blend of cognitive,
personal strengths and backgrounds.
We are keen to ensure that Board membership reflects diversity in its
broadest sense, our colleague base and the communities in which we serve.
The Board’s approach to its own diversity is as follows:
Board diversity objectives
The Board aims to maintain a level of at least 40 per cent female representation
on the Board and senior management
1
. It is recognised that there may be
periods of change on the Board when this number may be smaller while
the Board is refreshed. However, it is the Board’s longer-term intention to
maintain this balance.
The Board supports the recommendations set out in the Parker Review and
intends to maintain at least one Director who identifies as ethnically diverse.
Four of our nine Board Directors are women (44 per cent) and one identifies
as ethnically diverse. In making its recommendations to the Board, the
Committee has due regard to the 2018 Corporate Governance Code and
otherbest practice and will consider the balance of skills, experience,
independence and knowledge of the Board, its diversity in the broadest
sense, including gender and ethnicity, how the Board works together as
ateam and other factors relevant to its effectiveness.
The Board continues to review the development of the pipeline of both
ethnically diverse and female senior management within the business.
Fourof the eight members of our Operating Board are women and one
member identifies as ethnically diverse. More information on the Group’s
diversity and inclusion strategy can be found on pages 19 to 21.
The Board supports and encourages initiatives that strengthen the pipeline
of talent in the Company including:
• A comprehensive talent management review is presented and discussed
by the Board
• Highly personalised plans and initiatives are developed for high-potential
colleagues to broaden their skill sets and experience to prepare them for
future senior roles; for example, through boardroom exposure, and
non-executive and trustee roles outside the business
• Senior leadership mentoring schemes sponsored by Board and Operating
Board members
Monitoring and reporting
The Nomination and Governance Committee is responsible for ensuring that
the Board has the right balance of skills, experience and knowledge and
there is a diverse pipeline for succession for key leadership positions in the
Group in the longer term. In accordance with the Committee’s Terms of
Reference, the Committee regularly reviews Board composition, succession
planning, talent development and the broader aspects of diversity.
a) The definition of ‘senior management’ in the 2018 Corporate
Governance Code should be the Executive Committee or the first layer
of management below Board level, including the Company Secretary.
However, with such a large workforce, we believe including our top
230senior leadership in the scope of our targets ensures that we are
focused on improving diversity in all of our most significant leadership
positions and developing our pipeline of talent. Our top 230 lead large
teams and are critical role models in the organisation, playing a vital
role in shaping the inclusive culture that we are working hard to create.
We want all of our colleagues to see visible and diverse leaders in every
part of the business.
Board Diversity targets
The Board is committed to promoting the importance of diversity,
equity and inclusion across our business. As at 2 March 2024 (the
reference date), the Company has complied with the Board diversity
targets detailed in Listing Rule 9.8.6R(9), specifically:
• At least 40 per cent of the Board are women
• At least one of the senior Board positions (Chair, Chief Executive,
Senior Independent Director or Chief Financial Officer) is a woman
• At least one member of the Board is from a minority
ethnicbackground
There have been no changes to the Board between the reference
date and the date on which this Annual Report is approved.
88 J Sainsbury plc Annual Report and Financial Statements 2024
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Diversity, equity and inclusion continued
Reporting table on sex representation
Number of
Board Members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, CEO, SID, CFO)
Number
in executive
management
a
)
Percentage
of executive
management
Men 5 56% 3 4 50%
Women 4 44% 1 4 50%
Not specified/ prefer not to say 0 0 0 0 0
a) Executive management means the Operating Board.
Reporting table on ethnicity representation
Number of
Board Members
Percentage
of the Board
Number of senior
positions on the Board
(Chair, CEO, SID, CFO)
Number
in executive
management
a)
Percentage
of executive
management
White British (or other White including
minority-white groups) 7 7 7.8 4 8 88.9
Mixed/Multiple Ethnic Groups 0 0 0 0 0
Asian/Asian British 1 11.1 0 1 11.1
Black/African/Caribbean/Black British 0 0 0 0 0
Other Ethnic Groups, including Arab 0 0 0 0 0
Not specified/ prefer not to say 1 11.1 0 0 0
a) Executive management means the Operating Board.
Our diversity data contained in the above tables was self-reported by the Board and Operating Board during onboarding and/or through our internal human
resource management system.
We encourage all colleagues to self-report information such as gender, gender identity, ethnicity, age, sexual orientation and disability, whilst also including
a ‘prefer not to say’ option.
Nomination and Governance Committee Report continued
J Sainsbury plc Annual Report and Financial Statements 2024 89
Strategic Report Governance Report Financial Statements
Corporate Responsibility and Sustainability Committee Report
Dear Shareholder
It has been a busy year
fortheCommittee as we
continueto deliver against
oursustainability agenda.
AsaCommittee, we are
passionate in overseeing the
implementation of our Plan
forBetter strategy across the
Group aligned to our purpose,
strategy and valued behaviours.
I am delighted that we are taking our plan to the next level, playing a leading
role in creating a more sustainable food system in the UK to make good food
available for everyone.
We launched Plan for Better in 2021, focusing on three key pillars: Better for
You, Better for the Planet, and Better for Everyone. This strategy provides the
Committee with a clear set of focus areas which we prioritise for action.
The Committee oversees the governance of our sustainability plan, focusing
on environmental and social strategy, as well as stakeholder engagement
with our customers, colleagues, suppliers, shareholders, communities and
government. We firmly believe that we have a responsibility to operate and
promote sustainable business practices with all of our stakeholders. Regular
engagement with our stakeholders develops our understanding of key issues
and is pivotal to the Committee’s decision-making. Further information on
how we have engaged with key stakeholders can be found on pages 22 to 29.
During the year we reviewed progress against our targets, ensuring that they are
robust to address the social and environmental challenges facing the world, and
made good progress on integrating Plan for Better into our strategic outcomes.
Our efforts to reduce greenhouse gas (GHG) emissions across the value
chainwere recognised by the Science Based Targets initiative (SBTi), who
approved our accelerated Scope 1, 2 and 3 targets. We were also awarded an
A rating for our Climate Change CDP submission, the only UK food retailer to
have achieved this for ten consecutive years. We continue to decrease the
GHG emissions in our operations, with 51.7 per cent reduction versus our
baseline, and made good progress in our Scope 3 emissions, with six per cent
of emissions now having SBTi 1.5
o
C net zero targets approved.
Plastic reduction is a primary sustainability concern for our customers and
this year we continued to work with our suppliers to reduce the plastic used
in our packaging. We have landed several market firsts, including our new
plastic-free mushroom punnets and the removal of plastic hangers from our
Tu clothing baby range, all contributing to an overall relative decrease of
2.8per cent year-on-year (12.9 per cent relative reduction from our baseline).
Through our Community and Partnership strategy, now in its second year,
we continue to help improve access to food and tackle food poverty, with
£36 million raised for good causes this year. We continue to work in
partnership with Neighbourly to ensure no good food goes to waste, which
has supported the redistribution of 13.5 million meals to those in need this
year. Overall, we increased the surplus food redistributed to communities
by57.8 per cent year-on-year.
We are committed to working together with our suppliers to build strength
intheir businesses, benefitting not just our supply chain but ultimately, the
resilience of the UK food system. To enable this, we have moved increasingly
to offering longer term contracts with our key suppliers, providing them
with longer term security to plan and invest in their businesses. We are also
working in collaboration with many of our suppliers on new and emerging
methods of production and with new technologies, allowing us to develop
Principal role and responsibilities
The Committee is responsible for:
• Overseeing the sustainability strategy, ensuring it is aligned with
the Company’s purpose, strategy, culture, vision and values
• Ensuring that the sustainability strategy is fully integrated into
every aspect of our business and overseeing updates and
progress against our targets and commitments
• Monitoring the Company’s progress and performance against the
Group’s sustainability strategy, including its related targets
• Providing support and guidance to management on
sustainability matters, as appropriate
• Monitoring the business’s engagement with stakeholders
including customers, colleagues, suppliers, the community,
shareholders and government on sustainability and corporate
responsibility matters
• Receiving updates on the Group’s engagement on sustainability
matters with external stakeholders, non-Governmental
organisations and other interested parties
• Monitoring external developments on sustainability
• Reviewing proposals for the funding of community programmes
and charity partnerships
• Approving the Committee report on its activities and any
sustainability content in the Company’s Annual Report and any
standalone Sustainability Report
• Recommending the approval of the Company’s Modern Slavery
Statement to the Board
The Committee’s Terms of Reference, which are reviewed annually, are
available on the Company’s website www.about.sainsburys.co.uk.
Key activities in 2023/24
• Reviewed customers’ perceptions across the Plan for Better pillars
• Approved the year-end results and reporting for 2022/23
• Received updates on key sustainability matters
• Discussed the Health year-end results and agreed an evolved
approach for 2023/24
• Reviewed food waste targets, noting key challenges to reporting
• Approved the general merchandise plan to deliver Plan for
Bettertargets
• Approved the Group’s SBTi submission and net zero
Transitionplanning
• Reviewed the Plan for Better targets, including the key risks and
dependencies to deliver
• Approved changes to the Committee’s Terms of Reference
better surety of supply, while helping us towards achieving our Planfor
Better targets.
I am confident in the progress we’ve made on Plan for Better; however,
weacknowledge fully the scale of the challenge that lies ahead. We are
committed to delivering against our plan and our stretching targets because
not only is it critical to the success of our strategy, it is critical to protecting
and preserving the planet for future generations. We look forward to sharing
more on our achievements in the coming year.
Keith Weed
Chair, Corporate Responsibility and Sustainability Committee
90 J Sainsbury plc Annual Report and Financial Statements 2024
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Committee governance
The Committee consists of the Chair of the Board, three Non-Executive
Directors and the Chief Executive. The Committee is chaired by Keith Weed,
and the Company Secretary and Corporate Services Director or his nominee
acts as the Secretary of the Committee.
Other attendees include: Chief Marketing Officer, Director of Corporate
Affairs, Director of Corporate Responsibility and Sustainability and the
Senior Assistant Company Secretary.
Complementing the Committee’s role, the Audit Committee is responsible
for overseeing the assurance of our Plan for Better commitments and the
Remuneration Committee for monitoring and approving sustainability-
linked performance metrics and the alignment of senior executives’
individual objectives with sustainability goals. As shown below, cross-
Committee representation provides a link between all the Board
Committees and enables collaboration.
The Committee held two scheduled meetings in the year. Attendance at the
Corporate Responsibility and Sustainability Committee meetings can be
found on page 67.
Further information on the Group’s Corporate Responsibility and
Sustainability agenda can be found on pages 15 to 17 and in our Plan for
Better Report, available at www.about.sainsburys.co.uk
Priorities for next year
• Continued focus on embedding Plan for Better into all aspects
ofthe Next Level Sainsbury’s strategy
• Future reporting, regulations and disclosure readiness, including
TNFD, UK Sustainability Disclosure Standards and IFRS ISSB
• Community and charitable partnerships
• Climate transition planning
• Supplier engagement, including visits to key suppliers
• Evolve our approach in ‘Healthy and sustainable diets’ whilst
influencing the system through sector advocacy.
• Accelerate our strategic approach to food waste, to deliver
end-to-end opportunities
• Evolve our approach on plastic and take a leading role to drive
action in the sector
• Develop our approach to protecting and regenerating nature,
including responding to emerging frameworks such as TNFD
• Redevelop commitments for our diversity, equity and
inclusionstrategy
• Develop roadmaps for each of our human rights commitments
Corporate Responsibility and Sustainability Committee Report
continued
J Sainsbury plc Board
Oversight of the sustainability strategy.
Chair: Martin Scicluna, Chair
Operating Board
Defines the business-wide strategy, adapting to new regulatory
requirements and trends. Reviews cross-value progress and
signs off major investments.
Chair: Simon Roberts, Chief Executive
Plan for Better Steering Committee
b)
Leads operational execution of our sustainability strategy,
Planfor Better, by overseeing activity, ensuring delivery
ofperformance.
Chair: Mark Given, Chief Marketing Officer
Remuneration
Committee
Reviews remuneration targets
aligned to the sustainability
strategy
a)
Chair: Jo Harlow, Non-
Executive Director
Audit Committee
Reviews risks and confidence in
disclosures aligned to our
sustainability strategy
a)
Chair: Adrian Hennah,
Non-Executive Director
Corporate Responsibility and Sustainability
Committee
Reviews the sustainability strategy, ensuring it is aligned with
the Company’s purpose, strategy, culture, vision and values. It
also monitors the business’s engagement with stakeholders
including customers, colleagues, suppliers, the community,
shareholders and government on sustainability and corporate
responsibility matters.
Chair: Keith Weed, Non-Executive Director
a) Remit of Committee in relation to the sustainability strategy. For full details on the Committees, please read the Remuneration Committee Report on page 99and the
AuditCommittee Report on page 92.
b) Membership consists of Directors from across the business, with additional Director representation from Audit, Finance and Strategy attending the Committee twice a year
toreview Corporate Risk Updates, including TCFD recommendations.
J Sainsbury plc Annual Report and Financial Statements 2024 91
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Plan for Better
Sustainability is integrated into the Group’s overall strategy and is key to
delivering our Next Level Sainsbury’s strategy. The Committee’s role is to
provide oversight and challenge on any material sustainability matters
identified, advising and making recommendations to the Board where
appropriate. The Committee is satisfied that good progress continues to be
made in understanding and managing the impact of climate-related risks
and opportunities across the business. Further information can be found on
pages 15 to 17.
The Committee reviewed Plan for Better 2022/23 results which included the
performance, targets and priorities.
The Committee approved the plan to commercially integrate Plan for Better
into the General Merchandise operations, including priority areas – plastic
reduction, Scope 3 carbon emissions, championing human rights and
becoming nature positive – and targets. The Committee expressed their
support for this plan and the requirement to accelerate progress, while
acknowledging risks and challenges.
Deep dives into material issues support the Committee in overseeing and
challenging management in the delivery of our sustainability targets. The
Committee also receives regular updates on key stakeholders and how this
aligns to our sustainability agenda.
Material sustainability matters
During the year, the Committee received deep dive presentations on a
number of key issues:
• The Group’s progress against our health targets and the wider context,
including lack of impact seen by HFSS legislation, cost of living impact on
consumer choices translating into a decrease in healthy and sustainable
choices in shopping baskets, and lack of alignment across the industry on
a definition of health resulting in different approaches being adopted by
retailers. The Committee also discussed opportunities for further action
• The latest insight into consumer knowledge, perceptions and attitudes
towards ESG matters, which included the evolution over recent years,
impact of the current inflationary environment and priorities for action.
This presentation included visibility of plans to communicate Plan for
Better activity to customers
• An update on the renewed partnership with Fairtrade to deliver living wage
to banana workers, three years ahead of the IHD industry commitment
• An overview of the Group’s approach to water, including our plans to be
water neutral and our approach beyond our own operations
• A presentation from Dame Sara Thornton on Modern Slavery evolving
risks and Sainsbury’s partnership with Nottingham Human Rights Lab
• An overview of H1 milestones achieved and key actions to drive progress
in H2
• An update on Food Waste reporting and the roadmap for accelerated
action on redistribution
• The Group’s approach to SBTi submission and Climate Zero
Transitionplanning
Stakeholder engagement
The Committee considers the impact of the Plan for Better strategy on
ourkey stakeholders, including customers, colleagues, the community,
suppliers, shareholders and government. At each Committee meeting,
members discussed our engagement across these stakeholder groups,
withdeep dives of individual groups at each meeting.
The Committee was updated on the latest investor feedback on ESG themes
and the company’s ESG communication activities. The Committee was
updated on next steps for our investor ESG communications strategy.
The Committee reviewed our engagement with suppliers. The feedback we
received from suppliers via the Advantage Suppliers Survey and Groceries
Code Adjudicator report helped set out our future direction. More
information on suppliers can be found on page 26.
Further information on stakeholder engagement can be found on pages 22
to 29.
92 J Sainsbury plc Annual Report and Financial Statements 2024
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Audit Committee Report
Dear Shareholder
I am pleased to present the
Committee’s report for the
year ended 2 March 2024. This
report is intended to provide
shareholders with an insight
into key areas considered
bythe Committee, together
with how the Committee has
discharged its responsibilities
during the year.
The Committee plays an important role in ensuring the integrity of the
financial reporting, the internal control environment and risk management
processes. This has included ensuring that the financial reporting is aligned
with latest requirements and guidance from regulators, that it is fair,
balanced and understandable and that all matters disclosed and reported
upon meet the needs of our stakeholders. During the year, the Committee
has focused on its fundamental priorities, which include the evolution of the
Group’s systems of internal control, the quality and effectiveness of the
external and internal audit processes and we have considered a variety of
matters aligned with the Group’s principal risks.
Cyber security is an area that requires ongoing attention and vigilance, and
the Committee receives updates from the Group Chief Information Security
Officer and Director of Data Governance at every meeting. The Committee
continuously reviews the maturity of the Group’s cyber security using the
National Institute of Standards and Technology framework, considering the
nature of potential threats, areas of vulnerability, implemented mitigations
and residual risks. Activities in 2023/24 included an Operating Board
simulation exercise, penetration tests on our key websites and systems, as
well as internal training for key functions where processes could be improved.
The Group also announced an increase in investment in technology as part of
its next three-year plan; and this investment includes a high focus on security
and resilience. The Group engages a variety of third-party cyber security firms
for these tests and to work with the internal IT team on exercises. Cyber
security will continue to receive attention this year.
In addition, a key area of focus for the Committee has been the internal
controls programme, including a strong focus on IT general controls. I am
pleased to report that positive steps have been taken to strengthen the
Group’s internal controls and good progress has been made in this area,
including improved documentation of our control environment and the
strengthening of some elements of internal controls.
The Committee also received regular updates in relation to Sainsbury’s
Bank, which operates its own audit and risk committees governed by
specific banking regulations. The Director of Group Finance attends the
Sainsbury’s Bank Audit Committee meetings, ensuring that knowledge is
shared for mutual benefit.
In January 2024, we received a letter from the Financial Reporting Council’s
(FRC) Corporate Reporting Review Team regarding the FRC’s review of the
Group’s 2022/23 Annual Report and Financial Statements and 2023/24
interim results, seeking information in respect of one specific aspect of the
financial statements. The letter also contained further observations about
the Group’s Annual Report and Financial Statements for consideration over
future reporting. Further information on our response can be found on page
94. The Committee and management welcome the FRC’s drive for
continuous improvement in the quality of reporting and responded by
providing the FRC with clarifications and indicating enhancements to
disclosures, which have been reflected in this Annual Report, where
appropriate. The FRC subsequently confirmed that the Group had provided
satisfactory explanations which had enabled them to close their enquiries
into the 2022/23 Annual Report and 2023/24 interim results.
In last year’s report, we shared our plan for the external audit tender and
details of the full process and timeline are set out on page 95. Over the
course of the tender, members of the Audit Committee met with each of the
firms several times, while members of management spent time meeting the
audit teams and getting a sense of their capabilities, as well as briefing
them on the Group. One area of particular focus was data and technology.
As our audit processes become more reliant on data and systems, we
needed to make sure the chosen firm’s capabilities and investment plans
inthat space matched our ambitions. The Committee recommended
PricewaterhouseCoopers (PwC) as the best fit for the Group based on the
experience of the engagement team and the opportunities arising from the
use of digital tools and techniques in the audit approach. Subject to approval
at the 2025 AGM, PwC will be appointed as the Group’s auditor for the year
ending 28 February 2026. Ernst & Young (EY), who have been the Company’s
auditor since July 2015, will continue in the role until that time, and will
therefore undertake the Group audit for the year ending 1 March 2025 as well
as the year just ended.
Through the annual Board evaluation process (pages 82 to 83), the Board has
confirmed the effectiveness of this Committee in its role of supporting the
Board in compliance with its duties. Looking ahead to 2024/25, the
Committee will remain focused on the Group’s reporting, internal control
and risk management processes.
I would also like to thank my Committee colleagues, Brian Cassin and
KeithWeed, and all the members of management who attend, report to
andsupport the Audit Committee, for their energy and focus in enabling
usto discharge our responsibilities effectively.
Adrian Hennah
Chair, Audit Committee
J Sainsbury plc Annual Report and Financial Statements 2024 93
Strategic Report Governance Report Financial Statements
Priorities for next year
• Adoption of the FRC’s Audit Committees and the External Audit:
Minimum Standard
• Cyber security
• Internal control evolution
• Preparation for the transition of the external auditor
Committee governance
The members of the Committee are all independent Non-Executive Directors
who, together, have experience and skills relevant to the retail sector. The
Board has determined that Adrian Hennah has recent and relevant financial
experience, and each member of the Committee has extensive general
business and management experience. The different and complementary
skills each member brings to the Committee have helped ensure robust and
productive discussions with management and the external auditor. The
Committee members’ expertise and experience is set out in each of their
biographies on pages 69 and 70. All our Non-Executive Directors have an
open invitation to attend Committee meetings and are particularly
encouraged to attend those that consider the full-year and interim results.
The Committee is also well supported by the Director of Internal Audit, Risk
and Resilience and the Internal Audit team; they play an important role and
their work is respected throughout the business.
Regular attendees at Committee meetings include the Chair of the Board,
the Chief Executive, Chief Financial Officer, Director of Internal Audit, Risk
and Resilience, Director of Group Finance, Company Secretary and Corporate
Services Director, Deputy Company Secretary, the Chief Information Officer,
the Chief Information Security Officer, representatives of Sainsbury’s Bank
and the external auditor.
The Committee held four scheduled meetings in the year. Details of
attendance at scheduled Audit Committee meetings can be found on page
67. Each Committee meeting followed a distinct agenda to reflect the
financial reporting cycle and particular matters for the Committee’s
consideration.
The Committee has a periodic and structured forward-looking planner.
Thisis designed to ensure that responsibilities are discharged in full
duringthe year and that regulatory developments continue to be brought
tothe Committee’s attention. Meeting content is regularly reviewed with
management and the external auditors, evolving to support appropriate
discussion. An update is provided to the Board following each meeting.
Committee meetings are generally scheduled close to Board meetings to
facilitate effective and timely reporting. Committee members regularly hold
private sessions following each meeting with each of the Director of Internal
Audit, Risk and Resilience and the external auditor to provide an additional
opportunity for open dialogue and feedback without management present.
The Committee Chair also meets with the Chief Financial Officer, Director of
Internal Audit, Risk and Resilience and external auditor on an ad hoc basis
and prior to each Committee meeting.
In addition to its key areas of discussion, the Committee received regular
updates from management in relation to: key financial controls; ESG metrics
assurance and reporting; general controls; treasury; capital structure;
internal audit; and compliance. The Committee also received regular
updates in relation to Sainsbury’s Bank which operates its own audit and
risk committees governed by specific banking regulations.
Principal role and responsibilities
The primary role of the Committee is to ensure the integrity of
thefinancial reporting and auditing processes and monitor the
effectiveness of the Group’s internal control and risk management
systems. This includes:
• Monitoring the effectiveness of the financial statements of the
Company, discussing formal announcements relating to the
Company’s financial performance and any significant issues
andany significant judgements contained in them
• Reviewing the Group’s financial statements and the material
financial reporting judgements contained in them
• Advising the Board on whether the Committee believes that this
Annual Report and the financial statements contained within it,
when taken as a whole, are fair, balanced and understandable,
and provide the information necessary for shareholders to assess
the Group’s position and performance, business model
andstrategy
• Reviewing and monitoring the external auditor’s independence
and objectivity and the effectiveness of the audit process, taking
into consideration relevant UK professional regulatory requirements
• Developing and implementing a policy on the level, amount and
pre-approval of non-audit services provided by the externalauditor
• Advising the Board on the appointment, reappointment and
removal of the external auditor and the remuneration and terms
of engagement of the external auditor
• Monitoring the effectiveness of the Group’s internal control and
risk management systems, including whistleblowing and
fraudcontrols
• Reviewing the scope, activities and results of the Internal
Auditfunction
• Reviewing the Committee’s Terms of Reference, carrying out
anannual performance evaluation exercise and noting the
satisfactory operation of the Committee
• Reporting to the Board on how it has discharged its operations
The Committee’s Terms of Reference are available on the Company’s
website www.about.sainsburys.co.uk
Key actions from 2023/24
• Financial reporting, including the processes in place to ensure
the Annual Report and Financial Statements are fair, balanced
and understandable
• Review of cyber security and the IT control environment,
incorporating deep dives on, and continued monitoring of,
cyberrisk
• Assessment of Environmental, Social and Governance (ESG)
metrics and assurance
• Considered management’s assessment of the status of ongoing
regulatory investigations and litigations
• The continued evolution of our risk management framework
• Completed a review of the FRC 'Audit Committee and the
External Audit: Minimum Standard', noting that the majority
ofprovisions are already met by the Group
• Conducted a competitive tender for our external auditor
• Continued to monitor the government’s proposals on audit and
corporate governance reforms and our response
94 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
The Committee advised the Board that the Annual Report and Financial
Statements are fair, balanced and understandable, and that the Directors
have provided the necessary information for our shareholders to assess the
Company’s prospects, business model and strategy.
Risk management and internal controls, and principal risks
and uncertainties
The risk management process reviews the principal risks and
uncertainties, and emerging risks and opportunities, facing the
Group and compares these to the assumptions, scenarios, and
actions used and addressed in the Group’s corporate plans
The Committee reviewed the Group’s risk register, principal and emerging
risks and mitigation strategies, with particular discussion around prioritised
risks and risk movements. A robust assessment of the Group’s principal risks
was performed and the risks were fully refreshed to ensure that they align
to the Next Level Sainsbury’s strategy. Detailed scenario analysis work to
stress test liquidity was performed as part of the viability scenario modelling.
For further information on the Group’s risk management framework,
seepages53 to 61
Reports from the Audit and Risk Committees of Sainsbury’s Bank,
including risk and compliance reporting processes
Sainsbury’s Bank plc is a subsidiary of the Company, with an independent
Board responsible for setting the Bank’s strategy, risk appetite and annual
business plan. It has an independent Chair and four Non-Executive Directors,
all of which are independent. The Bank’s Chief Executive Officer and Chief
Financial Officer also sit on the Bank’s Board. The Bank’s Chief Executive
Officer, supported by the Bank’s Executive Committee, is responsible for
day-to-day management of the business.
The Chairs of the Bank’s Audit and Risk Committees, the Bank’s Chief
Executive Officer, the Bank’s Chief Financial Officer and the Bank’s Chief Risk
Officer attended meetings of the Committee and provided updates on
critical accounting judgements and estimates, important operating and
regulatory matters, operational resilience and capability, the control
framework and environment, and key risks. During the year, this included
updates on the impacts of the Group’s announcement 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. There is
regular communication between Sainsbury’s Internal Audit function and its
equivalent within the Bank.
See Significant financial and reporting matters on page 97
Key financial controls and IT general controls
The Committee considered the effectiveness of key financial control
programmes and monitored the control environment, and implementation
of recommendations to further enhance the Group’s financial reporting
systems. The Internal Controls over Financial Reporting (ICFR) programme
was established in 2020/21 to design, implement and embed a framework to
both improve the Group’s internal control framework and to comply with
expected enhancements to corporate governance for UK listed companies.
Sponsored by the Chief Executive and Chief Financial Officer, the Committee
received regular updates on the progress made towards the implementation
of the ICFR framework, including key milestones achieved and feedback
from third-party reviews, with regular updates on the IT General Controls
workstream. In addition, the Committee monitored the implementation of
management actions to remediate issues identified and make improvements.
Further information on our internal controls framework is on page 98
Financial reporting
The integrity of the financial statements and formal
announcements relating to financial performance
The Committee reviewed the Annual Report, the Preliminary and
InterimResults, and supporting information to assist in these reviews.
Significant financial and reporting matters
The Committee ensures that the Group’s accounting policies are applied
correctly, including implementing accounting standards, and applies
judgements effectively. During the year, the Committee reviewed items
relating to pensions, tax, going concern and viability, and the impact of the
Group’s strategic review of its Financial Services division.
In January 2024, Sainsbury’s received a letter from the FRC’s Corporate
Reporting Review Team in relation to its regular review and assessment of the
quality of corporate reporting in the UK. The letter focused on the Group cash
flow statement for the period ended 16 September 2023, and in particular the
classification of bond redemption payments associated with the Highbury and
Dragon property transaction as an investing cash flow. The Committee reviewed
the FRC’s findings, and the Company’s response to the FRC to provide additional
information in relation to the classification of the pre-funded cash flows which
formed part of the Highbury and Dragon property transaction.
The FRC’s review was based solely on the 2023 Annual Report and Financial
Statements and interim results for the 28-week period ended 16 September
2023, and therefore did not benefit from prior discussion with the Company
on the underlying detail. Sainsbury’s responded to the FRC and proposed
additions to future disclosures, following which the review was closed.
Enhanced disclosures have been included in the 2024 financial statements
within note 2.6.
More information can be found in Significant
financial and reporting matterson page 97
Treasury funding and liquidity
The Committee assessed the business’s secured and unsecured borrowing
facilities and their appropriateness in tenure and amount to Group requirements.
Assumptions and qualifications in support of the viability and
going concern statements
The Committee assessed the financial projections over three years, which
continues to be an appropriate timeframe for the Statement of Viability as
approved by the Board.
More information can be found in the Statement of Viability on page 62 and the
Significant financial and reporting matters on page 97
Assessment of whether the Annual Report is fair, balanced
andunderstandable
One of the Committee’s key roles is to advise the Board that it is satisfied
thatthe Annual Report and Financial Statements are fair, balanced and
understandable (see page 123) and provide the information necessary for
shareholders to assess the Company’s position, performance, business model
and strategy. In doing so, the Committee ensures that management disclosures
reflect the supporting detail, and/or challenges management to explain and
justify their interpretation and, if necessary, re-present their position. The
external auditor supports this process, in the course of its statutory audit, by
auditing the accounting records of the Company against agreed accounting
practices, relevant laws and regulations. In addition, theCommittee:
• Reviewed the processes and controls that underpin the Annual
Report preparation including confirmation that the reporting team
and senior management were fully aware of the requirements and
their responsibilities
• Received a draft of the Report and provided feedback on it,
highlighting any areas that required further clarity. The draft Report
was amended to incorporate any feedback ahead of final approval
• Was provided with a list of the key matters included in the Annual
Report, highlighting both positive and negative influences
• Reviewed and discussed the key factors considered in determining
whether the Report is fair, balanced and understandable
Audit Committee Report continued
J Sainsbury plc Annual Report and Financial Statements 2024 95
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The Committee conducted an audit effectiveness review. The review
included the distribution of questionnaires to those Directors and managers
in the business directly involved in the audit. The questionnaires sought
feedback on their experience with the external auditor, considering areas
such as the knowledge and experience of the audit team, audit strategy and
planning, and the quality of communication. Management collated the
responses and reported back to the Board.
As a result of the review, it was determined that EY maintained good
working relationships and had demonstrated strong technical
understanding, including within the Tax and Pensions specialist teams.
Previously identified improvements had been implemented and
opportunities for further improvements in the planning process were
positively discussed between EY and Sainsbury’s management during
theaudit debrief, with steps being taken on both sides to drive further
improvements to the process going forward. The review enabled the
Committee to conclude that EY has continued to provide a high quality
audit, which it conducted with great rigour and constructive challenge,
including questioning key accounting issues, and exercising professional
scepticism in its challenge of management’s assumptions, judgements
andassertions, particularly over the Group’s review of impairment.
TheCommittee concluded that EY remained effective, objective and
independent in their role as external auditor.
The Committee has confirmed compliance with the provisions of the
Statutory Audit Services Order 2014.
Recommendation of the reappointment of EY as auditor
The Committee has recommended to the Board the reappointment of EY
asauditor for the 2024/25 financial year. A resolution to this effect will be
tabled at the 2024 AGM.
Tender of external auditor
In accordance with current regulations that require an audit tender every
ten years, the Committee held a competitive tender process for the statutory
audit for the financial year ending 28 February 2026.
The Committee approved the tender participants, process, timetable and
assessment criteria. The tender was open to all audit firms; however, only
two firms, including the incumbent auditor, EY, agreed to participate in the
tender. As a first phase, the participants were provided access to a data
room which contained information to enable the participants to gain a
better understanding of how the Group is structured and operates. This
information was supplemented by meetings with senior management.
Thisprocess ran in parallel with each firm conducting an audit independence
assessment for the purpose of year ended 28 February 2026. The second
phase of the process included discussions as to how the firms would
structure their audit at an operational level and work with our management
team. The Committee then reviewed the written proposals and met with the
participants who were assessed against a range of criteria, including how
the participants responded in their proposal to the scale and complexity
ofthe Group, the strength and depth of the engagement team and the
opportunities arising from the use of digital tools and techniques in the
audit approach.
On 22 February 2024, it was announced that the Board had approved the
appointment of PwC as statutory auditor for the year ending 28 February
2026. The appointment is subject to the approval by shareholders at the
Annual General Meeting in July 2025. A plan will be put in place during
2024/25 to enable a smooth transition. Going forward, the Committee
anticipates that the audit will be put out to tender at least every ten years.
External audit
Scope of the external audit plan and fee proposal
The Committee reviewed EY's overall work plan, and, through regular
communication, advised EY of any specific matters which the Committee
was considering from previous audits and current operations. The
Committee approved EY's remuneration and terms of engagement.
Independence and objectivity
The independence and objectivity of the external audit function is a
fundamental safeguard to the interests of the Company’s shareholders.
In line with regulation, the previous EY audit partner rotated off the audit at
the end of the 2020/21 audit. The Committee approved the appointment of
Colin Brown as the new EY partner for 2021/22 in April 2021.
Non-audit services and fees
The Committee has overseen the Company’s policy which restricts the
engagement of EY in relation to non-audit services. The intention is to ensure
that the provision of such services does not impact on the external auditor’s
independence and objectivity. It identifies certain types of engagement that
the external auditor shall not undertake, including internal audit and actuarial
services relating to the preparation of accounting estimates for the financial
statements. It requires that individual engagements above a certain fee level
may only be undertaken with pre-approval from the Committee or, if urgent,
from the Chair of the Committee and ratified at the subsequent meeting of
the Committee. It recognises that there are some types of work where a
detailed knowledge of the Company’s business is advantageous. The policy
is designed to ensure that the auditor is only appointed to provide a non-audit
service where it is considered to be the most suitable supplier of that service.
The Committee received a report on the non-audit services provided. The
annual aggregate of non-audit fees is capped at 70 per cent of the annual
average of the audit fees for the business for the preceding three-year period.
The audit fees for the year in respect of the Group and subsidiaries were
£3.7million. A breakdown of the fees is provided in note 9.4 of the consolidated
financial statements on page 153. Total non-audit fees were nil.
Effectiveness and quality of external audit
The Committee considers the effectiveness of the external auditor on an
ongoing basis during the year, including its independence, objectivity,
appropriate mindset and professional scepticism. The Committee has
regard to the:
• Experience and expertise of the external auditor
• Quality of their direct communication with, and support to,
theCommittee
• Content, insights and value of their reports
• Fulfilment of the agreed external audit plan
• Robustness and perceptiveness of the external auditor in their
handling of key accounting and audit judgements
• Interaction between management and the external auditor,
including ensuring that management dedicates sufficient time to
the audit process
• Provision of non-audit services
• Evaluation of the effectiveness of the external auditor
• Other relevant UK professional and regulatory requirements
96 J Sainsbury plc Annual Report and Financial Statements 2024
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GSCOP requires that the business delivers an Annual Compliance Report to
the Competition and Markets Authority as approved by the Chair of the
Audit Committee, and that a summary must be included in the Annual
Report and Financial Statements. This is set out below.
Summary Annual Compliance Report
Sainsbury’s GSCOP compliance framework is based on a collaborative
relationship with the Groceries Code Adjudicator (GCA), clear policies and
procedures, mandatory training and regular monitoring and reporting of
compliance. Sainsbury’s also has specific internal resource who provide all
relevant colleagues with day-to-day advice and guidance.
We continue to engage positively with the GCA on GSCOP matters and work
collaboratively to address any concerns and improve our processes through
our regular catch ups. We also proactively contact the GCA for clarification
and guidance.
Throughout the year, inflationary pressures, global supply chain challenges
and the changing pattern of inflation have impacted the management of
cost prices. Our approach continues to be driven by close analysis of
inflation, commodity prices and by a commitment to delivering value for our
customers. Sainsbury’s Buying and Supply Chain teams have worked closely
with suppliers to minimise the impact on customers. In particular, we work
collaboratively with suppliers when responding to Cost Price Increase (CPI)
requests and cost price decreases. Our approach aligns to the GCA’s 7 Golden
Rules for CPIs and these Rules are included in mandatory GSCOP training.
During the year, the mandatory training programme was also extended to
ensure the 7 Golden Rules principles covered cost price decreases.
During the year, we communicated with suppliers on various matters. In
particular, we re-communicated the CCO’s independence, as part of the
changes in the CCO role, re-committed to maintaining supplier
confidentiality whenever requested and re-emphasised that suppliers
should not hesitate to contact the CCO if they feel they have been adversely
impacted after raising a GSCOP concern.
This is in support of the GCA re-confirming to suppliers that they should not
experience retribution or retaliation as a result of raising a concern to
theCCO.
Relevant policies are reviewed and updated on at least an annual basis and
are made available to colleagues. This is supported by Sainsbury’s GSCOP
training, which is compulsory for colleagues who are part of the Buying
Team and for colleagues who are directly or indirectly involved in decisions
that impact GSCOP. As a result, over 1,700 colleagues completed appropriate
training during the year. GSCOP training is reviewed and refreshed annually
to ensure it remains current. There are defined consequences for training
non-compliance.
Regular meetings are held between the CCO, Legal, Internal Audit and the
Commercial Planning team to identify and assess emerging risk areas and
an established compliance monitoring programme is embedded within the
business. The Operating Board and Audit Committee are updated four times
a year on GSCOP matters.
Twenty-one potential breaches were reported in 2023/24 (31 in 2022/32). Of
the 21 potential breaches of GSCOP, 19 were in scope of the Code, two were
deemed to be outside of the Code and two were withdrawn by the supplier.
Ten breaches were raised directly to the CCO and 11 were raised within
ourTrading Division and, where required, were escalated to the CCO using
standard escalation procedures. Nineteen potential breaches reported in
theyear were resolved in the year, and two potential breaches are ongoing
at the date of this report. The majority of complaints raised directly to the
CCO related to delists.
Two were pursued as a formal Article 11 Dispute but, for one of these, a
formal response has been provided noting that the supply agreement does
not fall within the scope of the Market Investigation Order. None have been
referred to the GCA for arbitration. Causes of potential breaches are
reviewed to identify areas for improvement.
Internal Audit
Director of Internal Audit, Risk and Resilience
The Director of Internal Audit, Risk and Resilience reports to the Committee
Chair and has direct access to all members of the Committee. The purpose,
authority and responsibility of Internal Audit are defined in the Internal
Audit Charter, which the Committee reviews annually.
Management’s responsiveness to Internal Audit’s findings
andrecommendations
Internal Audit plays an integral role in our governance structure and
provides regular reports to the Committee on the effectiveness of
governance, systems and processes and controls across the Group.
TheCommittee was provided with updates on Internal Audit’s findings,
keyagreed actions and the status of all actions at each meeting.
Internal Audit Plan
Internal Audit’s activity is primarily driven by the Internal Audit Plan, which
is agreed each half-year, ensuring it reflects the key risks the Group faces,
the governance frameworks, management structures and operations.
Thescope of the Internal Audit Plan and subsequent amendments were
reviewed by the Committee.
Effectiveness of the Internal Audit function
In line with the Internal Audit Charter, Committee terms of reference, and
the recommendations of the Institute of Internal Auditors, the Committee
conducts an annual assessment of the effectiveness of Internal Audit, in
2023/24 the Audit Committee reviewed Internal Audit resources, its work
programme and results. The Director of Internal Audit, Risk and Resilience
provides an annual overview of Internal Audit’s performance to the Audit
Committee including key performance indicators and stakeholder feedback.
Areas for improvement and actions required are highlighted and are used to
assist in reviewing the effectiveness of Internal Audit. The Committee
concluded that Internal Audit continued to be effective.
Other
Audit Committee’s effectiveness
The Committee was evaluated this year as part of the Board evaluation
process and the Committee was rated highly overall. See pages 82 and 83 for
further details. The review found the Committee to be strong, robust and
challenging, with good coverage of financial and other skills. The evaluation
suggested some areas for improvement, which will be incorporated into the
2024/25 forward agenda. Overall, the Committee was found to be effective.
Significant issues raised through the whistleblowing process
The Committee received updates at each meeting on any significant
whistleblowing matters. The Committee Chair receives earlier notification
ofmatters that may develop into a significant incident. No issues arose that
required the Committee to be updated ahead of a scheduled meeting.
All issues were escalated to the relevant manager for investigation. Internal
Audit reviewed the effectiveness of the whistleblowing process during the
year. Actions to further improve the process will be implemented in the next
financial year.
Data governance and information security
Updates on the data governance and information security programme were
provided at each meeting of the Committee during the year, including
updates on strategic risks, third-party assurance, cyber security, the plan for
legacy assets, access controls and security.
Ongoing material litigation
The Committee is appraised on all material litigation and potential impacts
on financial reporting disclosures. These are also provided to the Board.
Compliance with the Groceries Supply Code
ofPractice(GSCOP)
GSCOP sets out how large retailers should manage certain aspects of their
relationship with grocery suppliers. Each retailer to which it applies has to
appoint a Code Compliance Officer (CCO) whose duties include hearing disputes
between suppliers and the retailer. Sainsbury’s had appointed the Director of
Internal Audit, Risk and Resilience as its CCO. Following her departure in
September 2023, the Director of Group Legal Services was appointed as the CCO.
Audit Committee Report continued
J Sainsbury plc Annual Report and Financial Statements 2024 97
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Significant financial reporting matters and judgements
The areas of focus and actions taken by the Committee in relation to the 2024 Annual Report are outlined below. The Committee was satisfied in each case
with the accounting and disclosure in the financial statements.
Areas of focus Actions taken
Presentation of financial statements
The Group uses Alternative Performance Measures (APMs) and includes
additional disclosures, including reconciliations to statutory measures.
See pages 199 to 203
See note 5, Non-underlying items, on pages 149 to 150
The Committee considers it important to take account of both the
statutory measures and the APMs when reviewing these
financialstatements.
In particular, items excluded from underlying results were reviewed by
the Committee and it is satisfied that the presentation of these items is
clear, applied consistently across years and that the level of disclosure is
appropriate. The net non-underlying charge this year was £(424) million
(2023: net charge of £(363) million). Excluded items are detailed on pages
149 to 150. The most significant items relate to the Group's announcement
of a phased withdrawal from the core Banking business which resulted in
the recognition of impairments of non-financial assets and other
restructuring costs, and the continuation of restructuring programmes
announced in November 2020.
The Committee gave particular attention to ensure the Group’s APMs are
not presented in ways that give them greater prominence than amounts
stemming from the financial statements; that specific, tailored
explanations for the inclusion of individual APMs are provided; and that
APMs are reconciled to the most directly reconcilable line items.
Pensions accounting
The Group’s balance sheet shows a pension surplus of £690 million, which
comprises £6,702 million of assets, and £(6,012) million of liabilities. This
compares to a net surplus in the prior year of £989 million.
See note 34, Retirement benefit obligations, on pages 183 to 188
The Committee reviewed a summary of the actuarial assumptions used
in arriving at the valuation for the defined benefit pension scheme and
was satisfied that they are reasonable.
In particular, the Committee reviewed the financial impact of discount,
inflation and mortality rates and related sensitivities.
Going concern and viability
Going concern and viability projections are produced bi-annually and
monitored regularly.
See Statement of Viability on page 62
The Committee undertook a detailed review of the financial liquidity of
the business over the formal viability assessment period of three years,
and made further enquiries beyond this timeframe, taking into account
cash flows, current levels of debt and the availability of future finance.
The viability assessment was discussed by the Committee in March 2024
and scenarios to be stress-tested through the business’s corporate plan
were agreed. The outcomes of scenarios, stress-tests and further
enquiries were discussed and concluded in April 2024.
Sainsbury’s Bank reporting and charges arising from
the strategic review of the Financial Services business
During the year, the Group announced a phased withdrawal from its core
Banking business such that financial services offered in the future will be
provided by dedicated financial services providers through a distributed
model. This represented an indicator of impairment and accordingly a full
impairment review was undertaken on the Bank’s non-financial assets, as
well as the Group’s goodwill in relation to the Bank. Furthermore, the
requirement for certain provisions and impacts on effective interests has also
needed to be assessed.
The review resulted in impairment and other restructuring costs of £273 million
treated as non-underlying costs as detailed in note 5, Non-underlying items
on pages 149 to 150.
Separate to the announced phased withdrawal above, the Bank disposed of its
mortgage portfolio during the year.
In addition, the Bank’s impairment provisioning for customer loans is a
significant risk and is subject to complex IFRS 9 accounting requirements.
The Committee receives updates on the key agenda items discussed at
the Bank’s Audit Committees. These include accounting judgements and
estimates and important operating and regulatory matters such as
liquidity, cash flows, capital adequacy and risk management processes.
The Committee reviewed summary reports produced by management
setting out the outcomes of the impairment assessment as well as the
other costs triggered by the strategic decision over the future of the
Banking business.
The Committee challenged the assumptions used in the impairment
reviews and the recognition and timing of other costs and provisions, the
consistent application of accounting methodology, and the treatment of
these charges as non-underlying items. The Committee were satisfied
with the outcomes of the impairment reviews and recognition of other
costs and provisions as well as the classification as non-underlying.
The Committee also reviewed the impact of the announced phased
withdrawal on the Group's going concern and viability assessments, and
were satisfied that these did not impact the conclusions reached.
The Committee also reviewed the accounting treatment for the disposal
of the mortgage portfolio, and the accounting judgements and estimates
applied to the impairment of loans to Bank customers.
98 J Sainsbury plc Annual Report and Financial Statements 2024
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Areas of focus Actions taken
Climate change disclosures
With the impacts of climate change being felt around the world, we
understand the important leadership role we can play to help reduce the
impact of the food system on the climate. Consideration has been given to the
impact of both physical and transition climate change risks, and how these
impact the financial statements.
See pages 30 to 43 for our Task Force on Climate-related Financial Disclosures
The Committee challenged and reviewed the Task Force on Climate-
related Financial Disclosures, in particular the qualitative and
quantitative scenario analysis performed, our transition plan, and
cross-industry metrics.
The Committee are satisfied that appropriate consideration and
disclosure has been given to the impacts of Climate Change on the
Group’s financial statements.
Contingent liabilities
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.
See note 37, Contingent Liabilities, on page 190 for further details
The Committee further considered management’s assessment of the
status of ongoing regulatory investigations and litigation.
Areas of focus Actions taken
Asset acquisition
The Group purchased Supermarket Income REIT’s beneficial interest in a
commercial property investment pool, in which the Group already held a
beneficial interest, during the year.
See note 2.6, Asset Acquisition, on page 139
The Committee reviewed the accounting treatment applied to the
transaction, including the assessment as to whether the assets and
liabilities acquired in the transaction constituted a business under IFRS 3
Business Combinations. The Committee reviewed the significant
judgement applied when considering the classification of the pre-funded
cash flows which formed part of the total consideration within the Group's
cash flow statement. The Committee were satisfied with the accounting
treatment and the disclosures made in the financial statements.
Internal controls framework
The internal controls framework encompasses controls relating to financial
reporting, preparation of consolidated Group accounts, operations,
compliance, risk management and Sainsbury’s interests in joint ventures.
The Audit Committee reviews the effectiveness of internal controls on an
ongoing basis and monitors any remedial action required. An overview of
key elements of the control framework is set out below.
Our control environment
• The Board discusses and approves the Company’s strategy, plans,
objectives, budget and the risks to achieving them
• Group-wide policies covering delegations of authority, anti-bribery
andcorruption and key compliance requirements such as keeping
information safe and HR policies set clear parameters for colleagues
• Management regularly reviews risks to achieving objectives, with
mitigating controls identified and actions taken
Controls embedded in the business
• Policies, procedures and controls are embedded within
businessprocesses
• Specific teams, such as Central Retail and Technical Operations, support
the design and implementation of specific controls across the business
• Training programmes are provided to support implementation and
compliance with key policies, processes and controls
Significant financial reporting matters and judgements continued
Monitoring and oversight
• Compliance with policies, standards and controls is monitored and
evaluated in finance, accounting, treasury, information security and
safety management
• The Business Performance Review forum provides oversight and approval
of capital spend
• The Capital Returns forum monitors the outcome of capital spend
• Quarterly commercial reviews by Executive Directors of financial and
operational performance cover all business areas
• Oversight and governance committees have delegated responsibility for
monitoring key risk areas such as the Data Governance, Group Safety, and
Treasury Committees
Our assurance framework
• Operating Board members certify annually that the corporate risk map
accurately reflects their view of key risks across the business, that they
are responsible for managing risks relevant to their division and that
internal controls exist to provide reasonable, but not absolute, assurance
that the risks in their areas of responsibility are appropriately identified,
evaluated and managed
• The Board and the Committee review any significant fraudulent activity
and whistleblowing by colleagues, suppliers or other parties, including
alleged incidents of bribery, and actions being taken to remedy any
control weaknesses
• Reports from management are presented to the Operating Board and
Audit Committee on how we manage material risks
• Management and the Audit Committee review the scope and results of
the work of Internal Audit across the Company and of the implementation
of their recommendations
• The Committee reviews the scope and results of the work of the external
auditor and any significant issues arising
Audit Committee Report continued
J Sainsbury plc Annual Report and Financial Statements 2024 99
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Annual Statement from the Remuneration Committee Chair
Dear Shareholder
As we move from our Food First
strategy to our Next Level
Sainsbury’s strategy, the role
of the Remuneration
Committee is to ensure that
executive remuneration is
aligned to the performance
achieved over the last three
years and supports the
delivery of our future
objectives.
In 2021, we set ourselves stretching targets, measured through eight key
performance indicators. We are very proud of what we have achieved,
particularly in light of the significant economic challenges that have
presented themselves during the life of the plan. We’ve grown grocery
volume market share, won more loyal customers, become consistently
morecompetitive on price and led the market on customer service, while
also delivering strong financial results and investing in colleagues.
In 2023/24 we delivered underlying profit before tax of £701 million, as well
as strong retail free cash flow generation of £639 million, both above the top
end of our guidance range. The proposed full-year dividend of 13.1 pence
continues the strong returns to shareholders over recent years.
The Remuneration Committee seeks to take a measured and responsible
approach to executive pay, considering the specific circumstances and the
perspectives of all our stakeholders. When making its decisions this year,
ithas carefully considered the external environment, the results delivered
and executive pay in the context of wider workforce investments.
In January 2024 we were the first full choice supermarket to announce we
would be paying colleagues £12 (£13.15 in London), continuing to be in line
with the Real Living Wage. This was our biggest ever single investment in
colleague pay – £200 million – bringing the three year total investment to
over £500 million. Our wage bill is our biggest operating cost but we are
committed to investing in our people first, in the knowledge that our strong
performance would not be possible without our colleagues’ engagement and
customer focus.
In February 2024, we presented our new purpose and the next phase of our
strategy to shareholders and committed to a progressive dividend policy
and a share buyback programme of £200 million in 2024/25. Our Next Level
Sainsbury’s strategy will see us going faster and further than ever before,
aswe continue to put good food at the heart of all that we do. During the
course of the year the Committee reviewed our incentive arrangements to
ensure they support the delivery of the strategy over the next three years.
2023/24 remuneration
• Chief Executive received a four per cent pay increase, below the
ten per cent increase that retail hourly-paid colleagues received
over the year
• Reflecting strong financial performance and delivery of strategic
scorecard measures, the annual bonus paid out at 100 per cent of
maximum for Simon Roberts and 98 per cent of maximum for
Bláthnaid Bergin
• The long-term incentive plan launched in 2021 to drive the Food
First strategy – the 2021 Win in Food incentive plan – vested in
2024 at 70 per cent of maximum as a result of delivery against
the eight key performance indicators
2024/25 remuneration
• Continued investment in colleagues – £200 million pay investment
in retail hourly-paid colleagues. Pay rates continuing to be in
linewith the Real Living Wage, alongside a competitive
benefitspackage
• Executive Directors receive a four per cent pay increase, below
the over nine per cent increase for retail hourly paid colleagues
• The Committee reviewed the long-term incentive plan and
updated the targets to ensure it is aligned to our new purpose
and the next phase of our strategy
• The 2024 Next Level incentive plan measures performance over
the next three years against our eight performance commitments
(with 70 per cent subject to financial performance and 30 per
cent subject to strategic indicators)
Principal role and responsibilities
• Determining and agreeing with the Board a transparent
Remuneration Policy which supports the Company’s strategy
and promotes long-term sustainable success
• Setting the Remuneration Policy and individual remuneration
arrangements for the Chair, Executive Directors and Operating
Board Directors
• Reviewing and noting remuneration trends and reward policies
applying to all colleagues, considering alignment to culture and
taking these into account when determining executive pay
• Approving the service agreements of each Executive Director,
including termination arrangements
• Considering the achievement of the performance conditions
under annual and long-term incentive arrangements
The Committee’s Terms of Reference are available on the Company’s
website www.about.sainsburys.co.uk.
100 J Sainsbury plc Annual Report and Financial Statements 2024
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Colleague pay and engagement
The Remuneration Committee’s remit includes oversight of pay
arrangements across the Group and we have always considered broader
colleague pay when making executive pay decisions. All Remuneration
Committee meetings start with an update on recent reward changes and
initiatives for our colleagues and an overview on feedback from colleagues
via different communication channels. In addition, the Non-Executive
Directors spend time visiting stores and participating in colleague listening
so they can hear colleagues’ own perspective on pay at first hand.
The Chair and I meet at least once a year with colleagues specifically to give
more insight into the structure of our executive remuneration package and
hear their views.
From 3 March 2024, our base rates of pay for our national Sainsbury’s and
Argos Retail, Travel Money and LFC colleagues, increased by over nine per
cent to £12 per hour, and by 10 per cent to £13.15 per hour for our London
colleagues. This £200 million investment in colleague pay is the largest
single investment we have made and the new rates remain in line with the
Real Living Wage and well ahead of the government’s National Living Wage
of £11.44.
We introduced free food for colleagues in stores, depots, LFCs and Contact
Centres during the cost of living crisis and this continues to be valued by our
colleagues. We have continued to build on our competitive benefits package.
In July 2023, we introduced free sanitary products in all sites and stores. In
addition to our financial wellbeing support (which includes a salary advance
product, loans and debt consolidation support), we launched a colleague
savings scheme in January 2024. Building on our enhancements to colleague
discount over the last two years, colleague discount on Sainsbury’s
purchases now increases from 10 per cent to 15 per cent every Friday and
Saturday. This provides additional certainty to colleagues and makes their
weekly shop moreaffordable.
As last year, we have also targeted investment in pay towards our front-line
managers. For the last three years, we have applied different standard
percentage increases depending on grade. In 2024, the pay review pot
forfront-line managers is five per cent and for senior management
fourpercent.
The Committee continues to review the Company’s progress in closing
itsgender and ethnicity pay gaps. We are moving closer towards gender
balance in our business with improved representation for women at senior
leadership level and a higher percentage of men year-on-year in our hourly
paid roles. Our mean gender pay gap is 8.4 per cent (down from 8.5 per cent
last year), with a small increase to the median pay gap to 6.7 per cent (from
6.3 per cent), but both remain well below the UK average. Our ethnicity pay
gap remains negative and the mean has changed from -1.6 per cent to
-2.9per cent.
Customers and community
Our colleagues play a vital role in delivering great customer service leading
to more people choosing Sainsbury’s more often. We continue to focus on
delivering great value for our customers, investing £780 million in price over
the last three years. During the year we also expanded our Aldi Price Match
to cover over 600 products and Nectar Prices have enabled customers to
access great value and make significant savings on their weekly shop.
Sainsbury’s has a strong community presence across the UK and this year
we have raised £36 million for good causes across all of our programmes.
Our partnership with Neighbourly has allowed us to redistribute over
13.5million meals to those in need and we have donated £11.4 million to
tackle food poverty through our Nourish the Nation programme. We aim
tosupport local communities through our Community Grant scheme
andhave committed over £1 million to local causes this year.
Executive remuneration in 2023/24
The Committee carefully assesses performance against a framework to
ensure that incentive outcomes are aligned to the underlying performance
of the business and the experience of shareholders.
The Committee is satisfied that the total remuneration for Executive
Directors in respect of 2023/24 reflects performance over the period,
considering the prevailing market and economic conditions and the
strongprogress that has been made against the Food First strategy.
Annual bonus
Profit accounts for 50 per cent of the overall bonus, with 20 per cent based on
retail free cash flow and 30 per cent based on a strategic scorecard. Reflecting
our strong performance during 2023/24, we exceeded our profit and retail free
cash flow targets, resulting in an outturn of 100 per cent of the maximum.
The 30 per cent of the bonus based on a strategic scorecard is made up of
customer metrics, colleague metrics and individual strategic objectives.
TheCommittee considered performance across all elements in order to
determine the outturn. We have delivered strongly for customers,
demonstrated by growth in customer satisfaction scores. Colleague
engagement scores increased further against a high base, and we made
further progress towards our stretching gender and ethnicity targets. The
Committee has agreed that both the customer element and the colleague
element should pay out at ten per cent (each out of a possible ten per cent).
The Committee reviewed Simon Roberts’ and Bláthnaid Bergin’s performances
against their individual strategic objectives and determined that both had
delivered their objectives.
Under Simon Roberts’ leadership, Sainsbury’s has made great progress in
delivering the Food First strategy as well as developing the Next Level
Sainsbury's strategy, including operating model changes that will deliver
further cost savings. The Committee agreed he had delivered his objectives
fully and determined a payout of ten per cent (out of a possible ten per cent)
forSimon Roberts.
During Bláthnaid Bergin’s first year as Chief Financial Officer, she has led the
finance collaboration with the business to develop the Next Level Sainsbury’s
strategy, including delivery of returns to shareholders through the progressive
dividend policy and share buyback programme. The Committee agreed she
had a strong year and determined a pay out of eight per cent (out of a possible
ten per cent) for Bláthnaid Bergin.
This results in an overall bonus of 100 per cent of the maximum for Simon
Roberts and 98 per cent of maximum for Bláthnaid Bergin.
Long-term incentive plan – 2021 Win in Food
The 2021 Win in Food plan was aligned to the delivery of our Food First strategy
and the eight key metrics that we used to track our progress. Because our senior
leaders are integral to the delivery of the strategy, we made enhanced awards to
c.230 colleagues who usually participate in the long-term incentive plan, as well
as extending the eligible population to include a further 1,200 leaders (reverting
to the standard eligibility for the 2022 and 2023 awards). Over the past three
years, this award has galvanised our senior leaders behind the execution of our
strategy, particularly those participating in the long-term incentive plan for the
first time. This has had a material impact demonstrated by the strength of
business performance over the period.
Annual Statement from the Remuneration Committee Chair
continued
J Sainsbury plc Annual Report and Financial Statements 2024 101
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For Executive Directors, 80 per cent of the plan was based on the four key
financial measures (retail free cash flow, ROCE, EPS and cost savings). The
remaining 20 per cent of the plan was subject to key strategic indicators
(market share, customer, colleague and Plan for Better). This award vested
at70 per cent of maximum.
This outturn is a result of strong retail free cash flow performance above the
stretch target and ROCE, EPS and cost savings being part way through the
performance range. Market share also outperformed the stretch target, with
customer, colleague and Plan for Better part way through the performance
range. The Committee had to make a performance assessment for the
plastic and Scope 3 emissions due to market changes which impacted the
targets and the assessment. Further detail is set out on pages 107 and 108.
Bláthnaid Bergin’s 2021 award was granted prior to her appointment to
theBoard and reflected her previous role. The plan structure that applied
forcolleagues at this grade was based on comparable objectives, but
withdifferent weightings to metrics. Bláthnaid Bergin’s award vested
at75per cent of maximum in line with other participants.
2024/25 remuneration
When determining the pay review for Directors this year, the Committee
again paid significant regard to the pay of the broader workforce and senior
management. It awarded Simon Roberts and Bláthnaid Bergin a four per cent
pay increase effective May 2024, taking their base salaries to £979,524 and
£676,000 respectively. This is below the over nine per cent increase awarded
to retail hourly-paid colleagues and in line with the pay increase awarded to
other senior management roles.
Following the launch of our updated Next Level Sainsbury’s strategy, we
reviewed our incentive arrangement and determined the current long-term
incentive plan structure drives the delivery of our future strategy and
performance objectives. Following the success of the 2021 Win in Food
incentive plan where, as outlined above, participants received enhanced
awards and a broader population were included, we are proposing the same
approach for 2024 only. Senior leaders play a vital role in leading colleagues
across the business and delivering the next phase of our strategy and we
want them fully aligned and incentivised to deliver our plans.
As outlined in February 2024 at the Capital Market’s Day, our eight key
performance indicators remain the same and these will continue to be
usedto track the successful execution of the updated strategy. Therefore,
the performance metrics will remain consistent with those currently used,
butwe have reviewed the weightings and targets to provide appropriate
emphasis on key objectives and to drive performance delivery. We recently
engaged our major shareholders and investor bodies in respect of the
approach for 2024/25 and the Remuneration Committee and I are grateful
for their engagement and valuable feedback which was considered before
finalising our proposals.
The total weighting on the strategic indicators (market share, customer
satisfaction, colleague engagement and Plan for Better) has been increased
from 20 per cent to 30 per cent to recognise the importance of these areas in
achieving our long-term strategic ambitions. To ensure that each of the four
areas of focus have a sufficiently material weighting each has increased
from five per cent to 7.5 per cent. The four financial metrics (EPS, cost
savings, retail free cash flow and ROCE) will each have a weighting of
17.5percent.
In relation to the element linked to Plan for Better, the metrics have been
simplified. Given the ongoing challenge across the market to get an agreed
methodology to measure Scope 3 emissions, the 2024 long-term incentive
plan will be linked to carbon Scope 1 targets only. The Scope 1 targets reflect
a rephasing of our Scope 1 reduction initiatives over the next three years.
Weare still committed to our ambition to achieve net zero in our own
operations by 2035. Investors are reminded that since January 2022, the
Company has purchased all its electricity from renewable sources, which
means our Scope 2 emissions are reported externally as zero. While we have
simplified the ESG metric for long-term incentive purposes, the Committee
recognises the breadth of our Plan for Better ambitions that are at the
coreof our new purpose. We are playing a leading role in creating a more
sustainable food system in the UK to make good food available for everyone
and the Committee will keep under review how these objectives are
reflected in our incentive arrangements.
The award level for the Chief Executive in 2024 will remain at 250 per cent of
salary in line with the current shareholder-approved remuneration policy.
Consistent with the approach taken for the enhanced 2021 award, the
Committee has decided to make a modest increase to the Chief Financial
Officer’s award level from 225 per cent to 250 per cent of salary in 2024 only.
This award recognises the importance of Bláthnaid's contribution to the
successful delivery of our updated strategy over the next three years.
Closing remarks
In 2023, in line with UK reporting regulations, our Remuneration Policy was
put to a binding vote at the AGM and we thank shareholders for their support
in delivering a 99.12 per cent vote in favour.
Over the next two pages there are summaries of the approach to remuneration
in 2023/24 and 2024/25. We hope that the disclosure provided in this report
provides clear insight into the Committee’s decisions and we look forward to
receiving your support at the AGM.
The Remuneration Committee is committed to rewarding our Executive
Directors for acting in the interest of all our stakeholders, including our
shareholders, and for delivering results that are aligned with our Company’s
purpose, strategy and values.
Jo Harlow
Chair, Remuneration Committee
102 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Pay element 2023/24 decisions
Salary
Four per cent increase for
Executive Directors
(below that of colleagues)
• Chief Executive, Simon Roberts – £941,850 and Chief Financial Officer, Bláthnaid Bergin – £650,000
• A four per cent salary increase was awarded to Simon Roberts from 28 May 2023, which was below the ten per cent
increase for retail hourly-paid colleagues, and in line with the pay review for senior management
• Bláthnaid Bergin commenced her role as CFO on 5 March 2023 on a salary of £650,000 and was not eligible for a
salaryincrease
Annual bonus
Award of 100 per cent of
maximum for CEO and
98 per cent of maximum for CFO
• The 2023/24 bonus outturn was 100 per cent of the maximum for Simon Roberts and 98 per cent of the maximum for
Bláthnaid Bergin
• The profit element paid out at 50 per cent (out of 50 per cent)
• The retail free cash flow element paid out at 20 per cent (out of 20 per cent)
• The Committee determined an outturn of ten per cent for the customer and colleague metrics (each out of ten per
cent). Simon Roberts’ individual annual objectives paid out at ten per cent (out of ten per cent), resulting in an overall
strategic scorecard outturn of 30 per cent (out of 30 per cent). Bláthnaid Bergin’s individual annual objectives paid out
at eight per cent (out of ten per cent), resulting in an overall strategic scorecard outturn of 28 per cent (out of 30 per cent)
• Further details of the bonus measures and outturn can be found on pages 106 and 107
Long-Term Incentive Plan
(LTIP): 2021 Win in Food
Vesting at 70 per cent of
maximum
• Financial metrics (each with a 20 per cent weighting): maximum payout under the retail free cash flow element,
withROCE, EPS and cost reduction all part way through the range
• Strategic indicators (each with a five per cent weighting): maximum payout under the market share element,
withcustomer, colleague and Plan for Better paying out midway through the range
• This results in a vesting multiplier of 2.8x (out of a maximum of 4.0) or 70 per cent of maximum
• Further detail on the outcomes is set out on pages 107 and 108
Total remuneration for 2023/24
Summary of 2023/24 remuneration decisions
Maximum opportunity
Actual % of maximum
Retail free cash flow Market share
ROCE Customer
EPS Colleague
Cost reduction Plan for Better
20%
20%
20%
12%
20%
10%
20%
13%
5%
5%
5%
3%
5%
4% 3%
5%
Salary
Benefits
Pension
Annual bonus LTIP
Maximum opportunity
CEO bonus outturn
Actual % of maximum
Profit
Retail free cash flow
Strategic scorecard
50%
50%
20%
20%
30%
30%
2023/24
2022/23
£0 £1,000
£70
£67
£19
£17
£2,000
£3,000
£000s £000s
£4,000
£5,000 £6,000
£933
£899
£2,054
£1,700
£1,836 Total £4,912
£2,534 Total £5,217
2023/24
£0 £500
£49
£19
£1,000 £1,500
£2,000
£2,500 £3,000
£650 £1,147 £518
Chief Financial Officer – Bláthnaid BerginChief Executive – Simon Roberts
Total £2,383
J Sainsbury plc Annual Report and Financial Statements 2024 103
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Summary of remuneration for 2024/25
Pay element Executive Directors Other colleague groups
Salary • Chief Executive, Simon Roberts – £979,524 effective 26 May
2024 (four per cent salary increase)
• Chief Financial Officer, Bláthnaid Bergin – £676,000 effective
26 May 2024 (four per cent salary increase)
• Over nine per cent increase for retail hourly-paid colleagues
• Five per cent for front-line managers, reducing to
fourpercent for senior management
Benefits • Includes colleague discount, life assurance (six times salary),
company car cash allowance (or car), private medical cover and
long-term disability insurance
• All colleagues are eligible for colleague discount and life
assurance (six times salary if in pension plan or one times
if not in a pension or in an auto-enrolled scheme)
• Eligibility for other benefits is dependent on grade
Retirement benefits • Pension and/or cash supplement totalling 7.5 per cent of salary • Participation in a pension plan is offered to all colleagues
on a contributory basis, with the Company contribution
varying by grade
• Retail hourly-paid colleagues and front-line managers are
offered a matching scheme up to 7.5 per cent of salary
Annual bonus • Performance is based on profit (50 per cent), retail free cash
flow (20 per cent) and strategic scorecard (30 per cent)
• Bonus paid 50 per cent in cash after the year-end and
50percent deferred into shares for two years
• Maximum opportunity of up to 250 per cent of salary
perannum. For 2024/25:
– Simon Roberts – 220 per cent of salary
– Bláthnaid Bergin – 180 per cent of salary
• Retail and central management and central colleagues are
eligible for an annual bonus and maximum opportunity
varies by grade
• Annual bonus based on profit, retail free cash flow and
personal performance
• For more senior grades part paid in cash, and part in
shares deferred for two years
LTIP: 2024
Next Level incentive plan
• Awards are subject to a three-year performance period
followed by a two-year retention period for Executive Directors
• The performance metrics remain unchanged and are fully
aligned to our Next Level Sainsbury’s strategy
• Small rebalancing of weightings towards strategic indicators
reflecting importance
• Maximum award of up to 250 per cent of salary per annum
• For 2024 awards:
– Simon Roberts – 250 per cent of salary
– Bláthnaid Bergin – 250 per cent of salary
• Top 230 managers usually participate in this plan
• Extended to a further 1,100 managers for 2024 only
• Maximum award varies by grade
Measure Weighting Threshold Maximum
Underlying basic EPS
a)
17.5% 21.3p 28.3p
Cumulative cost savings 17.5% £800m £1,100m
Cumulative retail free cash flow
a)
17.5% £1,500m £1,800m
ROCE
a)
17.5% 8.0% 11.0%
Strategic indicators 30% Based on market share, customer satisfaction, colleague
engagement and Plan for Better. Further details set out
onpages 109 and 110
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203
Shareholding guidelines • In-employment guidelines: Chief Executive – three times
salary; Chief Financial Officer – two times salary
• Post-employment guidelines: Executive Directors are required
to hold shares equivalent to their in-employment guideline for
two years post departure. This requirement applies only to
shares acquired from Company incentive plans
• In-employment guidelines apply to Operating Board
Directors only
Recovery provisions • The Executive Directors’ incentive arrangements are subject to
malus and clawback
• Malus provisions apply for all senior leaders who are
eligible for our LTIP
104 J Sainsbury plc Annual Report and Financial Statements 2024
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Our reward objectives
Our objective is to have a fair, equitable and competitive total reward package that encourages colleagues to deliver against our purpose and strategy, drives
profitable sales and provides opportunities for colleagues to share in Sainsbury’s success.
Executive remuneration principles
The above reward objective applies to our senior executive population as well. The Committee believes it is important that a significant portion of the
Executive Directors’ package is performance-related, delivered in shares and that the performance conditions applying to incentive arrangements support
the delivery of the Company’s strategy and long-term shareholder value.
The Remuneration Policy for our senior executives is therefore based on the following principles:
Linking executive pay to our business strategy
The Committee carefully considers the performance metrics incorporated into the annual bonus and long-term incentive plan to ensure they support our
strategic priorities. The annual bonus is linked to key financial and individual strategic objectives, while the long-term incentive plan rewards for delivery
against our key strategic objectives and therefore includes all eight of the performance commitments that we use to track our success. Delivery of these
commitments would support long-term sustainable performance and value creation for our shareholders.
Key considerations
When reviewing the Remuneration Policy for Executive Directors and determining the approach to pay, in line with the Code, the Committee gives
consideration to the following:
• Simplicity and transparency: The Remuneration Policy has been designed to incentivise senior executives to achieve clearly defined financial,
operational and strategic objectives. The Committee reviews performance metrics and targets each year to ensure that they continue to be clear
andaligned to the delivery of the strategy
• Alignment to our purpose, values and culture: Sainsbury’s has a clear purpose and strong value set resulting in a unique culture which plays an
essential role in achieving our strategy. Our culture is underpinned by our Purpose (our core reason for being); our Valued Behaviours (what we want
from our people); and being a great place to work (encouraging colleagues to want to be their best). The Committee ensures our pay practices drive
the right behaviours in line with our values and culture
• Risk mitigation: The Committee reviews and sets performance targets each year to ensure that they drive the right behaviours and are appropriately
stretching without encouraging unnecessary risks. Under the annual bonus and LTIP the Committee has the ability to adjust incentive outcomes to
ensure that they are reflective of the underlying financial and non-financial performance of the participants and the Company. The Committee
believes that this discretion is an important feature and mitigates the risk of unwarranted vesting outcomes. In addition, in the event that certain risk
events come to light the Committee may operate recovery provisions on all incentive awards
• Potential outcomes: When setting, and subsequently implementing, the policy for senior executives, the Committee considers our business goals,
theretail market and competitors, the potential and actual outcome and cost to the Company, stakeholder views and best practice. The Committee
believes it is important to exercise sound judgement at all stages during the process to ensure that executive pay levels appropriately reflect
performance and are aligned with the interests of shareholders
Fair pay for colleagues
When considering remuneration arrangements for Executive Directors, the Committee takes into account the pay and conditions of colleagues at all
levelsthroughout the Company. Remuneration Committee meetings start with an update on any reward changes and initiatives for colleagues across the
business, particularly investment decisions for our hourly-paid colleagues, as well as relevant external updates such as changes to competitor pay rates.
TheCommittee also reviews information on internal measures, including colleague listening, engagement surveys, details of our gender and ethnicity pay
gaps and the ratio of Chief Executive remuneration to the remuneration of our colleagues, and considers how these compare externally.
Sainsbury’s employs over 148,000 colleagues who work hard to deliver for our customers. The Committee recognises that our colleagues are the cornerstone
of our business and essential to the overall success of our plans. The remuneration objectives for our colleagues follow the same principles as the policy for
the Executive Directors. Pay and benefits reflect the nature and contribution of the role and take into account levels of pay in comparable roles in the market.
Remuneration in context
Linked to
ourpurpose and
business strategy
Aligned to our values
and culture
Encourages the
right behaviours to
deliver long-term
sustainable growth
Secures high calibre
leaders
Enables share
ownership
J Sainsbury plc Annual Report and Financial Statements 2024 105
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Reward and benefits
• All colleagues are entitled to base salary, pension and a range
ofbenefits
• Managers participate in annual bonus plans which are aligned under
a common set of principles
• Senior executives also participate in our Long-Term Incentive Plan.
In 2024, this plan will be extended to an additional 1,100 colleagues
including store managers of our biggest stores
• We offer colleague discount in Sainsbury’s, Argos, Tu and Habitat
and during 2023/24 colleagues saved over £69 million – around £430
on average
• In 2023/24, we continued to evolve our colleague discount offer, by
enhancing Sainsbury’s discount from ten to 15 per cent every Friday
and Saturday, enabling colleagues to plan their spending and access
higher discount for their weekly shop
Recognition, development and wellbeing
• Being a place where colleagues love to work is crucial to the success
of our business and we recognise colleagues who go the extra mile
and bring our values to life through love it, our colleague
recognitionscheme
• During 2023/24 we issued over 300,000 recognition rewards worth
over £3.4 million as well as giving additional gifts of appreciation
with a value of £1 million
• We want to support colleagues in their career goals. During 2023/24
we reviewed and updated a number of development programmes
including one to support retail colleagues who want to take their
first steps into front-line management and leadership roles
• Our Wellbeing agenda is sponsored by Clodagh Moriarty, our
ChiefRetailand Technology Officer, demonstrating the importance
of our colleagues’ mental and physical wellbeing. We offer a
rangeofsupport mechanisms, including an Employee
AssistanceProgramme
Pensions and life assurance
• Participation in a pension plan is offered to all colleagues on a
contributory basis, with the Company contribution varying by grade
• Retail hourly-paid colleagues are offered a matching scheme up to
7.5 per cent of salary
• We have c. 101,000 colleagues in our pension plans
• Colleagues in our pension plans also receive six times life assurance
(one times if not in a pension or in an auto-enrolled scheme)
Share ownership
• All colleagues have the opportunity to become shareholders in the
Company through our all-employee share plans
• Around 21,000 colleagues participate in our Sharesave plans,
representing an uptake rate of 15 per cent
• Colleagues can also participate in Sainsbury’s Share Purchase Plan
(SSPP), which is our name for the partnership element of the Share
Incentive Plan
Colleague engagement
• The Board recognises the important role our colleagues play in the
success of Sainsbury’s. It takes colleague engagement and the views
of colleagues seriously. We communicate regularly with colleagues
to provide information about our strategy, our performance and on
operational matters as well as asking for feedback on how
colleagues are feeling. Further details are set out on page 24 of the
Annual Report
• Our ‘Make it better together’ groups operate at store level rolling up
to a national group (which is our Workforce Advisory Panel), which
meets with Board members on a regular basis to discuss what is on
colleagues’ minds. Whilst we do not formally consult with colleagues
on the setting of the Executive Director Remuneration Policy, the
Chair and the Remuneration Committee Chair engage with
colleagues directly to talk about the way that executive pay is set
and give colleagues the opportunity to share their views and
opinions. The last listening session covering executive pay was held
in July 2023 and the next one is in June 2024
• During the year we also introduced a new two-way discussion forum
called Let’s Talk. This provides opportunities for any colleague to
have a direct, open and honest conversation with the Chief Executive
and other members of the Operating Board. These are held every
month and streamed live
• Colleagues are able to become shareholders in the Company and can
comment on the policy in the same way as other shareholders
CEO pay ratios
• Our CEO median pay ratio is 212:1. The 25th, 50th and 75th
percentiles ranked by total remuneration are all retail hourly-paid
colleagues reflecting the size and make up of our colleague base
• The Chief Executive’s total remuneration comprises a significant
proportion of variable pay which will change each year depending
on incentive outcomes
Gender and ethnicity pay
• Our colleagues are paid according to their role not their gender
orethnicity
• Our 2023 mean gender pay gap is 8.4 per cent (reduced from 8.5 per cent
in 2022). Our median gender pay gap has increased slightly from
6.3per cent to 6.7 per cent. Like a lot of companies our gap is caused
by the fact that we have more men than women in our most senior
roles, more women than men in our hourly-paid roles, and more
men in hourly-paid specialist roles that attract premiums, such
asonline delivery drivers
• The ethnicity pay gap shows the difference in the average hourly
rate of pay of ethnically diverse colleagues compared to that of
white colleagues. Our 2023 mean ethnicity pay gap is negative and
has changed from -1.6 per cent to -2.9 per cent and our median
ethnicity pay gap from -4.0 per cent to -5.4 per cent. Location plays
akey part in explaining the gap, as a high proportion of our
ethnically diverse colleagues work in our London stores and earn
alocationpremium
• The Board is committed to improving gender and ethnically diverse
representation. Our aim is to have 50 per cent of our Operating Board
– which we have achieved from the start of the 2023/24 financial
year – and 50 per cent of our Directors and Senior Managers to be
women. We have made solid progress within our senior leadership
population, of whom 46.6 per cent are women (up from 44.2 per cent
last year). Our ethnically diverse representation within our senior
leadership population has moved from 9.3 per cent to 10.1 per cent
over the course of 2023/24
106 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Single total figure of remuneration for Executive Directors (audited information)
The table below shows a single remuneration figure for all qualifying services for the 52 weeks to 2 March 2024, together with comparative figures for the 52
weeks to 4 March 2023.
Notes
Simon Roberts
£000
Bláthnaid Bergin
£000
2023/24 2022/23 2023/24
Base salary 933 899 650
Benefits a) 19 17 19
Pension 70 67 49
Total fixed pay 1,022 983 718
Annual bonus b) 2,054 1,700 1,147
Long-term incentive plan c) 1,836 2,534 518
Total variable pay 3,890 4,234 1,665
Total 4,912 5,217 2,383
a) Benefits include a combination of cash and non-cash benefits, valued at the taxable value. For all Executive Directors, this includes a cash car allowance (£15,250), private medical cover
and taxable expenses.
b) Annual bonus relates to performance during the financial year, paid in May/June following the relevant year-end. Normally 50 per cent is paid in cash and 50 per cent in bonus shares which
vest after two years.
c) The Long-Term Incentive Plan value relates to the award vesting in April/May following the end of the relevant financial year, which is the third year of the performance period. The awards
are then subject to an additional two-year retention period for Executive Directors. Bláthnaid Bergin’s 2023/24 LTIP vesting relates to an award granted prior to her appointment as an
Executive Director in March 2023, so is not subject to the two-year retention period. In the interests of transparency the full value has been included in the single figure table. The LTIP
figures include accrued dividend equivalent shares over the performance period. The 2023/24 values are based on the average share price over the fourth quarter for 2023/24 of £2.785.
The2023/24 values shown above include the share price growth of the original award of: +£66k for Simon Roberts and +£19k for Bláthnaid Bergin. The 2022/23 LTIP figure has also been
updated from the fourth quarter average share price to the actual share price on the vesting date of 28 April 2023 (£2.764).
Base salary (audited information)
2023 Salary
Simon Roberts (effective 28 May 2023) £941,850
Bláthnaid Bergin (effective from appointment 5 March 2023) £650,000
Pension
Simon Roberts receives 7.5 per cent of salary in lieu of pension plan participation. Bláthnaid Bergin receives a pension and cash supplement totalling 7.5 per cent
ofsalary. This is in line with the majority of the wider workforce.
Benefits
For 2023/24, benefits for Executive Directors included the provision of company car benefits, private medical cover, long-term disability insurance,
lifeassurance and colleague discount.
Annual bonus for 2023/24 (audited information)
For 2023/24 the maximum annual bonus award opportunity for the Chief Executive was 220 per cent of base salary and for the Chief Financial Officer the maximum
opportunity was 180 per cent of base salary. Normally 50 per cent of any bonus is paid in cash and 50 per cent is paid in shares which are deferred for two years.
The performance measures for 2023/24 were profit (50 per cent), retail free cash flow (20 per cent) and a strategic scorecard (30 per cent comprising colleague,
customer and individual objectives each being ten per cent).
After the end of the financial year the Remuneration Committee undertook a review of performance to determine annual bonus outcomes for Simon Roberts
and Bláthnaid Bergin. As detailed below, the Committee identified that a bonus was payable to the Executive Directors. As in prior years the Remuneration
Committee has sought to take a measured and rounded approach to performance assessment when determining incentive outcomes to ensure that they are
fair and proportionate.
The following table summarises the final outcomes for the Executive Directors.
Outcome Simon Roberts Outcome Bláthnaid Bergin
(% of overall maximum) £000 (% of overall maximum) £000
Profit 50% 1,027 50% 585
Retail free cash flow 20% 411 20% 234
Strategic scorecard 30% 616 28% 328
Total 100% 2,054 98% 1,147
Profit performance
The table below sets out the threshold, target and stretch profit targets and the actual profit outcome.
Threshold
(20% payable)
£m
Target
(50% payable)
£m
Stretch
(100% payable)
£m
b)
Outcome
£m
Profit
a)
619 648 700 701
a) Underlying profit before tax. This measure is defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
b) The Committee revised upwards the top end of the range due to changes in market conditions and external guidance.
Annual Report on Remuneration
J Sainsbury plc Annual Report and Financial Statements 2024 107
Strategic Report Governance Report Financial Statements
Retail free cash flow
The table below sets out the threshold, target and stretch retail free cash flow targets and the actual outcome.
Threshold
(0% payable)
£m
Target
(50% payable)
£m
Stretch
(100% payable)
£m
Outcome
£m
Retail free cash flow
a)
450 500 550 639
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
Strategic scorecard
The strategic scorecard (30 per cent of the overall bonus) consists of customer, colleague and individual objectives, equally weighted.
The table below sets out a summary of the achievements of the Executive Directors in relation to these objectives as assessed by the Remuneration
Committee. The Committee has determined an award of 30 per cent out of a possible 30 per cent for Simon Roberts and 28 per cent out of possible 30 per cent
for Bláthnaid Bergin.
Shared objectives Outturn
Customer Delivered strongly for Sainsbury’s and Argos customers, demonstrated by significant gains in our overall customer
satisfaction scores. Sainsbury's customer satisfaction is 7.5 percentage points ahead of the average of other
full-choice competitors
Continued focus on delivering value for our customers, investing £220 million in 2023/24. Nectar Prices rolled out to
over 7,000 products, saving customers £12 on an average £80 shop, and Aldi Price Match applies to over 600 products.
Value perception has improved and is now the strongest it has been in six years
10% (out of 10%)
Colleague Material increase in colleague engagement by 300 bps from an already strong baseline, with new high for inclusion
score in our annual colleague feedback survey. Continue to make good progress against our gender and ethnically
diverse representation at senior levels (see page 108), named a ‘The Times’ Top 50 Employer for Gender Equality for the
second year and now have a 50:50 gender split on the Operating Board
10% (out of 10%)
Simon Roberts Bláthnaid Bergin
Director-specific Led the development of the Next Level strategy with
the Operating Board, focused on improving value
creation and driving shareholder returns over next
three years. Next Level strategy communicated to
shareholders in February 2024
Completed delivery of the Food First strategy, with
record market share gains and volume growth over
the last year
Delivered operating model changes which reduced
structural costs by a further c. £350 million against a
challenging macroeconomic backdrop, and completed
the review of Financial Services
Extensive finance collaboration with the business to
develop the Next Level Sainsbury’s strategy, including
delivery of shareholder returns through the progressive
dividend policy and share buyback programme
Led the review of the future operating model for
FinancialServices
Delivered phase 2 of the finance outsourcing
programmeand made good progress in embedding
anewControls Framework
Simon Roberts:
10% (out of 10%)
Bláthnaid Bergin:
8% (out of 10%)
2021 Win in Food incentive plan (2021/22 to 2023/24 performance period) (audited information)
The 2021 Long-Term Incentive Plan is known as the 2021 Win in Food incentive plan. This plan was launched following Simon Roberts’ appointment as
ChiefExecutive in 2020 and our Food First strategy update.
Awards are granted under the Long-Term Incentive Plan approved by shareholders in 2016. A core award of shares is granted, calculated as a percentage
ofsalary and scaled according to level of seniority. Vesting of the core award is dependent on performance against specific targets tested at the end of a
three-year performance period. The core awards can grow up to four times at stretch levels of performance. For Executive Directors, any vested award is
subject to a two-year retention period.
The 2021 Win in Food award was subject to the eight key performance indicators that we use to measure our success against our 2021 Food First strategy.
ForExecutive Directors, the four financial metrics (retail free cash flow, ROCE, EPS and cost savings), were weighted at 20 per cent each, The four strategic
indicators (market share, customer, colleague and Plan for Better) were weighted at five per cent each. In addition, a performance gateway had to be achieved
before any element could vest.
In terms of the financial metrics, there was strong retail free cash flow performance above the stretch target and ROCE, EPS and cost savings were part
waythrough the performance range. Market share also outperformed the stretch target, with customer, colleague and Plan for Better part way through
theperformance range.
For the colleague metric, the Committee reviewed the colleague engagement score (which had increased over the three years) and the improvement in
representation against the aspirational 2024 targets set (see table on page 108) and determined an overall colleague outcome of 80 per cent of max or 0.16x
ofthe total multiplier.
For Plan for Better, the Scope 1 and 2, Scope 3 and plastics elements are each weighted at 1.67 per cent of the total award (a combined total of five per cent).
The Scope 1 and 2 targets were met in full and since January 2022 we have purchased all electricity from renewable sources, meaning we report our Scope 2
emissions as zero. With the ongoing challenges across the market to get an agreed methodology to measure Scope 3 emissions, it was not possible to assess
Scope 3 as originally intended. Therefore, the Committee considered a number of factors and data points to determine an appropriate outturn. While we have
made progress in this area and retained our ‘A’ rating for CDP climate for the tenth consecutive year, there is still more to do and so the Committee
determined an outcome of 45 per cent of max.
108 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
2021 Win in Food incentive plan (2021/22 to 2023/24 performance period) (audited information) continued
As disclosed last year, it was necessary to adjust the approach to assessing plastic reduction. As a result of branded suppliers choosing to move to using
recycled plastics, we no longer track performance against the targets originally set in 2021. Therefore, in line with the approach for the 2023 awards, the
Committee assessed performance against own brand reduction targets. The Committee was satisfied that the amended assessment is in line with the
principles of the original targets and that they were no easier to achieve. On this basis it determined an outturn of 32 per cent of max.
This results in an overall outturn under the Plan for Better element of 60 per cent of max or 0.12x of the total multiplier.
Taking account of all eight metrics, this results in a performance multiplier of 2.8x (out of a possible 4.0) i.e. 70 per cent of the maximum for the 2021 award.
The Committee reviewed the outcome of the awards in the context of performance and determined that it was appropriate.
The table below sets out the extent to which each performance measure was achieved for the Chief Executive.
Metric Weighting Sub-metric
Threshold target
(1.0 x core award)
Maximum target
(4.0 x core award) Outcome Multiplier achieved
Cumulative retail free cash flow
a)
20% £1,000m £1,500m £1,787m 0.80
ROCE
a)
20% 6.75% 9.75% 8.28% 0.50
EPS
a)
20% 19.8p 26.5p 22.1p 0.41
Cost reduction 20% 80bps 280bps 182bps 0.51
Market share 5% 10.85% 11.24% 11.53% 0.20
Customer 5% Sainsbury’s 300bps 900bps 590bps 0.14
Argos 210bps 510bps 540bps
Colleague 5% Engagement Maintain eSAT score Met 0.16
Representation See below Partially met
Plan for Better 5% See below Partially met 0.12
Performance Gateway The Remuneration Committee must be satisfied that the Company’s
underlying performance over the period justifies the level of vesting
Achieved
Total 2.8x
(out of a maximum of 4.0x)
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
Colleague Representation Targets
Target – senior leadership
positions (top 230 leaders) Outcome
Target – senior management positions
(1,200 leaders beneath senior leadership) Outcome
Female 50% 46.6% 43% 40.7%
Ethnically Diverse 12% 10.1% 12% 10.6%
Black 3% 3.2% 3% 1.2%
Plan for Better Targets
Threshold Stretch Outcome
Scope 1 and 2 – GHG emissions 761,991 tC02e 705,870 tC02e 458,973 tC02e
Scope 3 – GHG emissions 24,503,081 tC02e 23,996,773 tC02e See text above
Own brand plastic packaging reduction 59,363 tonnes 48,887 tonnes 58,379 tonnes
The 2021 award granted to Bláthnaid Bergin was in respect of her previous role prior to her appointment to the Board. This award has been included in the
Directors’ Remuneration Report in the interests of transparency. For participants at this level, while the metrics and targets were broadly comparable to the
approach for Executive Directors, the weightings were different. This award vested at 3.0x (out of a possible 4.0) i.e. 75 per cent of maximum and will be
released in April 2024 consistent with the other below Board participants.
Recovery provisions
The Remuneration Committee may operate recovery provisions (malus and clawback) on all incentive awards. The Committee may reduce or cancel an
unvested award, or impose further conditions on an unvested award in the event of material mis-statement of financial results, serious reputational damage,
serious misconduct, fraud, or other cases of extreme failure where the Committee considers such adjustment to be warranted.
In addition, in the circumstances outlined above, the Committee may clawback incentives, by requiring an Executive Director to make a repayment in
relation to bonus payments and share awards. This provision would apply for up to two years following the end of the relevant performance period.
No recovery provisions were applied during the last financial year.
Annual Report on Remuneration continued
J Sainsbury plc Annual Report and Financial Statements 2024 109
Strategic Report Governance Report Financial Statements
Shareholding guidelines (audited information)
The Executive Directors are required to build up a specified level of
shareholding in the Company. This is to create greater alignment of the
Directors’ interests with those of shareholders, in line with the objectives
of the Remuneration Policy.
The guidelines in the 2023 Directors’ Remuneration Policy require the
Chief Executive to have a holding of three times salary and other
Executive Directors to hold shares with a value of two times salary.
Executive Directors are required to hold all vested share awards (net of
tax) until the guideline has been met. In addition to shares held, Bonus
Share Awards and LTIP awards where the performance period has ended,
as well as dividend equivalents accruing on LTIP awards once the
performance period has ended, count towards the guideline (on a net of
tax basis).
Simon Roberts was appointed in 2020 and has met his guideline.
Bláthnaid Bergin was appointed at the start of 2023/24 financial year and
holds 1.1x salary, as at the end of the financial year.
Post-departure, Executive Directors will be expected to maintain a
shareholding equal to their guideline (or actual shareholding if lower) for
two years post-employment irrespective of the reason for leaving. This
requirement will apply to shares acquired from Company incentive plans.
Remuneration in 2024/25
Base salary
When considering salaries the Committee takes account of a number of
factors, with particular focus on the general level of salary increases
awarded throughout the Company. Where relevant, the Committee also
considers external market data on salary and total remuneration but the
Committee applies judgement when considering such data.
For 2024/25 Simon Roberts and Bláthnaid Bergin will receive a four per cent
salary increase. This is below the over nine per cent award to retail
hourly-paid colleagues and in line with senior management.
2024 Salary
(effective 26 May 2024)
Simon Roberts £979,524
Bláthnaid Bergin £676,000
Pension
Simon Roberts receives 7.5 per cent of salary in lieu of pension plan
participation. Bláthnaid Bergin receives a pension and cash supplement
totalling 7.5 per cent. This is in line with the majority of the wider workforce.
Benefits
Benefits for Executive Directors in 2024/25 are unchanged and will include
the provision of company car benefits, private medical cover, long-term
disability insurance, life assurance and colleague discount.
Annual bonus
The annual bonus for 2024/25 will operate on the same basis as 2023/24.
It will be based 50 per cent on profit, 20 per cent on retail free cash flow and
30 per cent on strategic objectives (equally weighted between customer,
colleague and individual objectives). The colleague element will include
colleague engagement and improvement of our gender and ethnically
diverse representation at senior levels.
The maximum annual bonus award opportunity for the Chief Executive is
220 per cent of base salary and for the Chief Financial Officer is 180 per cent
of base salary. 50 per cent will be paid in cash and 50 per cent in shares
deferred for two years.
The profit and retail free cash flow targets are set against the Company’s
expected performance and are subject to a rigorous process of challenge
before the proposals are considered by the Board. The targets are set
considering external forecasts and stretching performance in excess of
internal forecasts is required for a maximum payout. The strategic
objectives ensure that management continues to focus on operational
priorities which contribute to the achievement of Group performance over the
short and long term.
The Board is of the opinion that any performance targets for the current year
annual bonus are commercially sensitive as the Company operates in a highly
competitive, consumer-facing sector. The disclosure of targets would provide
competitors with insights into the Company’s strategic aims, budgeting and
growth projections. However, in line with previous years, the Company will
retrospectively disclose the targets in next year’s Annual Report.
2024 Next Level incentive plan
During the year, we reviewed our incentive arrangements and determined
the current long-term incentive plan structure supports the delivery of our
strategy. As outlined in our February 2024 strategy update, our eight
performance commitments are broadly consistent with those set for the
Food First strategy and used in the Win in Food incentive plan. Therefore,
the same eight metrics will be included in the 2024 Next Level incentive
Plan. However, we reviewed the weightings and targets to ensure
appropriate emphasis and to drive performance delivery of the updated
strategy. We consulted shareholders regarding our proposals and considered
their feedback before finalising our approach.
The total weighting on the strategic indicators (market share, customer
satisfaction, colleague engagement and Plan for Better) has been increased
from 20 per cent to 30 per cent to recognise the importance of these areas in
achieving our long-term strategic ambitions. To ensure that each of the four
areas of focus have a sufficiently material weighting each has increased
from five per cent to 7.5 per cent. The four financial metrics (EPS, cost savings,
retail free cash flow and ROCE) will each have a weighting of 17.5 per cent.
The Committee has set stretching targets against these measures for the
2024 awards as shown overleaf.
For 2024, the Plan for Better metric has been simplified and will focus solely
on Scope 1 emissions. Our Scope 2 emissions are reported as zero and, given
the ongoing challenge across the market to establish an agreed methodology
to measure Scope 3, we will not be including a Scope 3 metric. We will,
however, keep this under review. While we have simplified the ESG metric
forlong-term incentive purposes, the Committee recognises the breadth
ofthe Plan for Better ambitions that are at the core of our new purpose.
0
250
500
750
1,000
1,250
1,500
1,750
Shareholding guidelines
Simon Roberts Bláthnaid Bergin
Share awards
Shareholding
Guideline
4.2 x salary
1.1 x salary
Number of shares (000)
110 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Annual Report on Remuneration continued
2024 Next Level incentive plan continued
The award level for the Chief Executive will be unchanged for 2024. Simon Roberts will receive a maximum award of 250 per cent of salary. For the reasons
outlined in the Remuneration Committee Chair’s letter, in 2024 Bláthnaid Bergin will receive a maximum award of 250 per cent of salary.
The Next Level incentive plan is subject to a two-year retention period following the end of the three-year performance period. This will result in awards
toExecutive Directors being released after a five-year period.
Weighting Threshold 25% of element vests Maximum 100% of element vests
Financial metrics
Underlying basic EPS
a)
17.5% 21.3p 28.3p
Cumulative cost savings 1 7.5% £800m £1,100m
Cumulative retail free cash flow
a)
17.5% £1,500m £1,800m
ROCE
a)
17.5% 8.0% 11.0%
Strategic indicators
Market share
b)
7.5% Targets are commercially sensitive but we will disclose targets at the end of the performance period
Customer satisfaction 7.5% 0bps improvement against Company CSAT score 200bps improvement against Company CSAT score
Colleague engagement 7.5% -200 bps vs strong 2023 score +300 bps vs strong 2023 score
Plan for Better – Scope 1 7.5% 433,733 tC02e absolute GHG emissions 354,872 tC02e absolute GHG emissions
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
b) From 2024/25 the Group’s provider of market share data has been changed from Nielsen to Kantar. This will be reflected in the market share targets for all in flight awards with the
Committee ensuring that the revised targets are of comparable stretch to the original targets.
In line with previous grants, the Remuneration Committee must be satisfied that the Company’s underlying performance over the period justifies the level of
vesting; vesting will be reduced if this is not the case. When making this judgement the Committee has scope to consider such factors as it deems relevant.
The Committee believes that this discretion is an important feature of the Long-Term Incentive Plan arrangement and mitigates the risk of unwarranted
vesting outcomes. This performance gateway assessment applies to all outstanding LTIP awards.
2024 Next Level Incentive Plan performance measures
(definitions for other awards can be found in the relevant Annual Report)
EPS
• EPS directly reflects returns generated for shareholders
• Underlying basic EPS is underlying profit after tax attributable to the
equity holders of the parent, divided by the weighted average number
of ordinary shares in issue during the year
Cumulative cost savings
• Cumulative cost savings represents cost reductions over the
performance period as a result of identified initiatives. This is a key
long-term measure which is fundamental to delivering returns to
shareholders
Cumulative retail free cash flow
• Retail free cash flow measures the total flow of cash in and out of the
business as well as providing an assessment of underlying profitability
• Retail free cash flow for these purposes is net cash generated from
retail operations, after cash capital expenditure but before strategic
capital expenditure and exceptional cash flows to and from Financial
Services. It includes payments of lease obligations and cash flows from
joint ventures and associates. It is measured on a cumulative basis
over the three-year performance period
Return on capital employed (ROCE)
• ROCE represents the total capital that the Group has utilised in order to
generate profits. Management use this to assess the performance of
the business
• It is defined as return divided by average capital employed where:
• Return is defined as 52-week rolling underlying profit before interest
and tax
• Capital employed is defined as Group net assets excluding pension
deficit/surplus, less net debt
• The average is calculated on a 14-point basis – the prior year closing
capital employed, the current year closing capital employed, and 12
intra-year periods, as this more closely aligns to the recognition of
amounts in the income statement
Market share
• Sainsbury’s market share (volume) based on Kantar panel data
Customer
• Based on Company CSAT (excluding Bank and Tu)
Colleague
• Colleague engagement is measured using our annual We’re Listening
survey
Plan for Better
• Absolute, market-based, Scope 1 GHG emissions, which includes our
direct emissions from heating, refrigerant gas and owned delivery
vehicles/logistics fuel
More information can be found in the Alternative Performance Measures
section of the Annual Report on pages 199 to 203.
J Sainsbury plc Annual Report and Financial Statements 2024 111
Strategic Report Governance Report Financial Statements
Non-Executive Director remuneration
Single total figure of remuneration for Non-Executive Directors (audited information)
The table below shows a single remuneration figure for all qualifying services for the 52 weeks to 2 March 2024 for each Non-Executive Director, together with
comparative figures for the 52 weeks to 4 March 2023.
2023/24 2022/23
Fees
a)
£000
Benefits
b)
£000
Total
£000
Fees
a)
£000
Benefits
b)
£000
Total
£000
Martin Scicluna 512 1 513 493 0 493
Jo Bertram
c)
73 0 73 47 1 48
Brian Cassin 93 0 93 83 0 83
Jo Harlow 93 1 94 89 0 89
Adrian Hennah 93 0 93 90 0 90
Tanuj Kapilashrami 73 0 73 70 0 70
Keith Weed
d)
93 13 106 83 0 83
a) Paid in relation to the year. Fees were set 29 May 2022 and 28 May 2023.
b) The benefits for the Non-Executive Directors relate to the reimbursement of travelling expenses to Board meetings held at the Company’s registered office.
c) Jo Bertram joined the Board on 7 July 2022 and the figures quoted for 2022/23 relate to the period from her appointment to 4 March 2023.
d) Keith Weed’s expenses relate to a four year period.
In 2023 the Chair and Non-Executive Directors’ fees were reviewed and an
increase of four per cent was approved in line with senior management
colleagues. The Chair fee increased to £516,914 and the base fee for
Non-Executive Directors increased to £73,466. Senior Independent Director
and Committee Chair fees increased from £19,500 to £20,280. The new fee
levels were effective from 28 May 2023.
Non-Executive Directors receive a base annual cash fee; additional fees are
paid to the Senior Independent Director and to the Chairs of the Audit,
Remuneration and Corporate Responsibility and Sustainability Committees.
The Chair and Non-Executive Directors receive no benefits other than a
colleague discount card and reasonable business travel expenses.
Chair and Non-Executive Director fees for 2024/25
In 2024 the Chair and Non-Executive Directors’ fees were reviewed and an
increase of four per cent was approved in line with senior management
colleagues. The following table sets out the fee levels which are effective
from 26 May 2024.
Fees effective from 26 May 2024
Chair £5 37,591
Base fee £76,405
Senior Independent Director fee (additional) £21,091
Chair of Remuneration Committee fee (additional) £21,091
Chair of Audit Committee fee (additional) £21,091
Chair of Corporate Responsibility and Sustainability
Committee fee (additional) £21,091
Non-Executive Directors’ shareholdings and share interests
The beneficial interest of the Non-Executive Directors, in the shares of the
Company are shown below.
Ordinary shares
a)
4 March 2023 2 March 2024 24 April 2024
Martin Scicluna 15,000 15,000 15,000
Jo Bertram 8,000 8,000 8,000
Brian Cassin 25,000 25,000 25,000
Jo Harlow 8,000 8,000 8,000
Adrian Hennah 15,000 15,000 15,000
Tanuj Kapilashrami 10,500 10,500 10,500
Keith Weed 2,446 2,446 2,446
a) Ordinary shares are beneficial holdings which include the Directors’ personal holdings
and those of their spouses and minor children.
Pay in the wider organisation
Chief Executive pay ratio
The following table provides pay ratio data in respect of the Chief Executive’s
total remuneration (as shown in the single figure table on page 106
compared to the remuneration of the 25th, 50th and 75th percentile of UK
colleagues). All three of these colleagues are retail hourly-paid colleagues,
with the 50th percentile and the 75th percentile colleague earning additional
premiums such as unsociable hours premium and bakers’ premium.
The Chief Executive’s total remuneration comprises a significant proportion
of variable pay which will change each year depending on incentive
outcomes. The decline in the CEO pay ratio year-on-year is driven by the
investment in retail hourly-paid colleagues.
Financial year Method
25th percentile
pay ratio
(lower quartile)
50th percentile
pay ratio
(median)
75th percentile
pay ratio
(upper
quartile)
2019/20 Option B
a)
173:1 173:1 153:1
2020/21
b)
Option B
a)
122:1 122:1 107:1
2021/22 Option B
a)
202:1 183:1 178:1
2022/23 Option B
a)
247:1 229:1 218:1
2023/24 Option B
a)
227:1 212:1 202:1
a) Option B as defined in the regulations.
b) Change in Chief Executive impacted single figure and resulting pay ratio.
The colleagues used to calculate the pay ratios were identified using our
2023 gender pay gap data. In line with the regulations, our 2023 gender pay
gap data identifies employees using a snapshot date of 5 April 2023. This
method has been chosen as it makes use of our gender pay data, which
provided a readily available and robust dataset.
A full-time equivalent total pay figure was calculated for each of these
colleagues using the single figure methodology. The approach includes base
salaries, pension contributions and any relevant pay premiums. To ensure
these three colleagues were a suitable representative of their quartile, the
total pay figures calculated were compared against a sample of colleagues
either side of the three identified colleagues.
112 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Annual Report on Remuneration continued
Pay in the wider organisation continued
Chief Executive pay ratio continued
The following table provides base salary and total remuneration information in respect of the 25th, 50th and 75th percentile colleagues, on a full-time
equivalent basis.
Financial year Remuneration Chief Executive
25th percentile pay ratio
(lower quartile)
50th percentile pay ratio
(median)
75th percentile pay ratio
(upper quartile)
2023/24 Base salary £933,000 £21,021 £22,454 £23,569
Total remuneration £4,912,000 £21,685 £23,160 £24,282
The Remuneration Committee considers pay ratios as one of many reference points when reviewing executive remuneration and considers that the median
pay ratio for 2023/24 is consistent with the pay, reward and progression policies for the Company. Due to the nature of the role of the Chief Executive, the
Committee believes that it is important for a significant portion of the Chief Executive’s remuneration package to be performance-related and aligned to the
long-term, sustainable success of the Company. As a result, the Chief Executive’s single figure fluctuates each year depending on the Company’s performance
and the outturns of the incentive plans and this will impact the pay ratio reported in any single year.
Percentage change in Executive and Non-Executive Director remuneration
The table below shows the percentage change in the salary, benefits and bonus of Executive and Non-Executive Directors compared with the percentage
change in the average of each of those components of pay for all our colleagues, over the past four years.
Percentage change in remuneration
from 2019/20 – 2020/21
Percentage change in remuneration
from 2020/21 – 2021/22
Percentage change in remuneration
from 2021/22 – 2022/23
Percentage change in remuneration
from 2022/23 – 2023/24
Salary
% change
Benefits
% change
Bonus
% change
Salary
% change
Benefits
% change
Bonus
% change
Salary
% change
Benefits
% change
Bonus
% change
Salary
% change
Benefits
% change
Bonus
% change
Simon Roberts N/A N/A N/A 0.0% 42.7% N/A 2.7% -29.2% 1.5% 3.9% 12.4% 20.8%
Bláthnaid Bergin
a)
N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A
Martin Scicluna 1.1% 0.0% N/A 0.0% 0.0% N/A 2.7% 0% N/A 3.9% N/A N/A
Jo Bertram
b)
N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.9% -100% N/A
Brian Cassin
c)
1.1% 0.0% N/A 0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% 0.0% N/A
Jo Harlow
c)
2.8% -100% N/A 0.0% 0.0% N/A 7.2% 0.0% N/A 4.9% N/A N/A
Adrian Hennah
c)
N/A N/A N/A N/A N/A N/A 18.4% -100% N/A 3.7% 0.0% N/A
Tanuj Kapilashrami N/A N/A N/A 0.0% 0.0% N/A 2.9% 0.0% N/A 3.9% 0.0% N/A
Keith Weed
c)
N/A N/A N/A 0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% N/A N/A
All colleagues
d)
4.0% -15.3% 308.1% -1.2% -21.9% 5.2% 7.6% -6.6% -5.4% 15.3% 0.8% 30.2%
a) Bláthnaid Bergin was appointed to the Board on 5 March 2023 so there is no year-on-year comparison.
b) Jo Bertram joined the Board on 7 May 2022. Jo’s 2022/23 fee has been annualised to provide a more meaningful comparison for 2023/24.
c) Year-on-year changes in Non-Executive Director fee levels will be impacted by responsibility and Committee membership changes during the year.
d) All colleague figures relate to averages based on number of full-time equivalent colleagues. These comparisons will be materially impacted by the grade mix of colleagues.
J Sainsbury plc Annual Report and Financial Statements 2024 113
Strategic Report Governance Report Financial Statements
Relative importance of spend on pay
The table below illustrates the year-on-year change in total colleague pay (being the aggregate staff costs as set out in note 9 to the financial statements)
and distributions to shareholders (being declared dividends).
Colleague pay Distribution to shareholders
2022/23
£m
2023/24
£m % change
2022/23
£m
2023/24
£m % change
3,578 3,879 8.4% 319 306 -4.1%
Performance and Chief Executive remuneration
The graph shows the TSR performance of an investment of £100 in J Sainsbury plc shares over the last ten years compared with an equivalent investment in
the FTSE 100 Index. The FTSE 100 Index has been selected to provide an established and broad-based index. The graph also includes data for the FTSE All-Share
Food & Drug Retailers Index. The Company is a constituent of both indices. The table details the total remuneration for the Chief Executive over this period.
TSR performance since March 2014
Chief Executive 2014/15
a)
2015/16 2016/17 2017/18 2018/19 2019/20 2020/21
b)
2021/22 2022/23 2023/24
Single figure
remuneration (£000)
S Roberts — — — — — — 1,325 3,599 5,217 4,912
M Coupe 1,507 2,802 2,354 3,630 3,569 2,999 1,447 — — —
J King 405 — — — — — — — — —
Bonus/Bonus Shares/
Deferred Share Award
award as a percentage
of maximum
S Roberts — — — — — — 0% 87% 86% 100%
M Coupe 26% 78% 35% 57% 56% 22% 0% — — —
J King 0% — — — — — — — — —
LTIP vesting
percentage of
maximum
S Roberts — — — — — — 60% 70% 7 7.5% 70%
M Coupe 0% 0% 22.5% 42.5% 55% 65% 60% — — —
J King 0% — — — — — — — — —
a) For 2014/15, Justin King’s figures relate to the time he was Chief Executive Officer and, consistent with the single figure table, the figures for Mike Coupe relate to the whole of 2014/15; he
was Chief Executive Officer from 9 July 2014.
b) For 2020/21, Simon Robert’s figures relate to the time he was Chief Executive Officer during 2020/21 and, consistent with the single figure table, the figures for Mike Coupe relate to the time
up until his departure on 2 July 2020.
Governance – the Remuneration Committee
Committee membership
The Remuneration Committee during the year comprised of Jo Harlow (Chair), Tanuj Kapilashrami and Adrian Hennah. All members of the Committee are
independent Non-Executive Directors.
Tim Fallowfield, Company Secretary and Corporate Services Director, acts as secretary to the Committee. Martin Scicluna, Simon Roberts, Prerana Issar
(ChiefPeople Officer, since appointment in May 2023) and previously Angie Risley (Group HR Director until she left the Operating Board in May 2023), the
Director of Reward and the Director of Group Finance are invited to attend Committee meetings either fully or partially. The Committee considers their views
when reviewing the remuneration of the Executive Directors and Operating Board Directors. Individuals who attend Remuneration Committee meetings are
not present when their own remuneration is being determined.
The Committee typically holds four scheduled meetings a year and meets more often as required. The Committee has a calendar of standard items within its
remit and in addition it held in-depth discussions on specific topics during the year. In 2023/24 there were five unscheduled meetings, regarding changes to
the Operating Board and the incentive review. The Committee complies with relevant regulations and considers the Code and best practice when determining
pay and policy.
Sainsbury’s
200
150
100
50
0
Mar-14 Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24
FTSE 100
FTSE All-Share Food & Drug Retailers
114 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Annual Report on Remuneration continued
Governance – the Remuneration Committee continued
Advisers to the Remuneration Committee
The Committee is authorised by the Board to appoint external advisers if it considers this beneficial. Over the course of the year, the Committee was
supported by its appointed advisers, Deloitte LLP (Deloitte).
Deloitte were reappointed by the Committee as advisers in 2013 following a competitive tender. Deloitte are members of the Remuneration Consulting Group
and, as such, operate under the Code of Conduct in relation to executive remuneration consulting in the UK. During the year, the Committee reviewed the
advice provided by Deloitte and has confirmed that it has been objective and independent. The Committee has also determined that the Deloitte partner who
provides remuneration advice to the Committee does not have any connections with the Company that may impact their independence. The Committee has
reviewed the potential for conflicts of interest and judged that there were appropriate safeguards against such conflicts.
During the year Deloitte provided advice to the Committee on a range of topics including remuneration trends, corporate governance, incentive plan design
and incentive plan rules. Their consultants attended all of the Committee meetings. In relation to their advice, Deloitte received fees of £89,400 (fees are
based on hours spent). During the year, Deloitte provided the Company with unrelated advice and consultancy in respect of information technology,
operating models, data analytics and taxation.
Statement of voting at general meeting
The table below sets out the votes on the Annual Report on Remuneration and the Directors’ Remuneration Policy at the 2023 AGM. The Committee is keen to
hear the views of all shareholders and continually reviews the Remuneration Policy and its implementation.
Votes for Votes against Votes abstained
Remuneration Report (2023 vote) 98.84%
1,757 million
1.16%
21 million
—
21 million
Remuneration Policy (2023 vote) 99.12%
1,782 million
0.88%
16 million
—
0.2 million
Directors’ contracts
Executive Directors have rolling contracts which are terminable on 12 months’ notice by either party. Non-Executive Directors are appointed for an initial
three-year period, which may be extended for a further term by mutual consent. The initial appointments and any subsequent reappointments are subject to
annual election or re-election by shareholders. Non-Executive Directors’ appointments may be terminated at any time by giving three months' written notice
by either party; six months in the case of the Non-Executive Chair.
Executive Directors’ shareholdings and share interests (audited information)
The table below sets out details of the Executive Directors’ shareholdings and a summary of their outstanding share awards at the end of the 2023/24
financial year. Further details of the movements of the Executive Directors’ share awards are set out on page 117.
Ordinary shares
a)
Scheme interests
b)
5 March 2023 2 March 2024 24 April 2024
Bonus Share
Awards
c)
LTIP awards
with
performance
period
completed
d)
LTIP awards
with
performance
period
outstanding
e)
SAYE
Simon Roberts 608,965 726,455 726,455 674,969 954,156 2,664,880 1,833
Bláthnaid Bergin 0 160,370 160,370 161,317 79,155 931,118 0
a) Ordinary shares are beneficial holdings which include the Directors’ personal holdings and those of their spouses and minor children. They also include the beneficial interests in shares
which are held in trust under the Sainsbury’s Share Purchase Plan.
b) Long-Term Incentive awards are structured as nil-cost options.
c) Relates to 2022 and 2023 Bonus Share Awards.
d) Relates to 2020 Future Builder awards. Notional dividends are added for LTIP awards where the performance period has ended.
e) Relates to 2021 Win in Food award, 2022 Leaders’ Share Award and 2023 Leaders’ Share Award (maximum) where the performance period has not ended. As noted above, following the
year-end, the 2021 Win in Food award will vest at 70 per cent of maximum.
Note: The Executive Directors are potential beneficiaries of the Company’s Employee Benefit Trust, which is used to satisfy awards under the Company’s employee share plans, and they are
therefore treated as interested in the 30.1 million shares (2023: 37.3 million) held by the Trustees.
J Sainsbury plc Annual Report and Financial Statements 2024 115
Strategic Report Governance Report Financial Statements
Share awards made during the financial year (audited information)
The following share awards were made to Executive Directors during the year.
Scheme
Basis of award
(maximum) Face value
Percentage vesting at
threshold
performance Number of shares
Performance period
end date
Simon Roberts
2023 Leaders’ Share
Award
a)
250% of salary £2,354,625
25% of each
element 862,500 28 February 2026
Bonus Share Award
b)
93.9% of salary £850,035 N/A 311,368 N/A
Bláthnaid Bergin
2023 Leaders’ Share
Award
a)
225% of salary £1,462,500
25% of each
element 535,714 28 February 2026
Bonus Share Award
b)
Relates to previous
role prior to Board
appointment
£2 17,6 25 N/A 79,716 N/A
a) The performance conditions applying to 2023 Leaders’ Share Award are set out later in this section. The basis of award shows the maximum value. The award was made on 2 June 2023
andthe number of shares has been calculated using the average share price between 26 May and 1 June 2023 of £2.730. Subject to performance, the award will vest in May 2026 and
willbereleased after a further two-year retention period. The award is structured as a nil-cost option with an exercise period of up to six years from grant.
b) The Bonus Share Award was made on 2 June 2023 based on performance over the 2022/23 financial year. The award was made at 86 per cent of the maximum level (maximum of 220 per cent
of salary for Simon Roberts). Bláthnaid Bergin’s award was made based on her eligibility prior to becoming an Executive Director. The number of shares has been calculated using the
average share price between 26 May and 1 June 2023 of £2.730. No further performance conditions apply. The Bonus Share Awards will be released in March/April 2025.
Unvested Long-Term Incentive Plan awards
The targets for Long-Term Incentive Plan awards granted in 2022 and 2023 are set out in the tables over the next two pages.
2022 Leaders’ Share Award
(2022/23 to 2024/25 performance period) Weighting
Threshold
(1.0x core award)
Maximum
(4.0x core award)
Cumulative retail free cash flow
a)
20% £1,250m £1,650m
ROCE
a)
20% 6.75% 9.75%
Underlying basic EPS
a)
20% 19.8p 26.5p
Cost reduction
b)
20% 80bps improvement 280bps improvement
Strategic indicators 20%
(equally weighted)
• Market share – targets are commercially sensitive but we intend to provide full
disclosure of targets at the end of the performance period
• Customer satisfaction – improvement of 0 to 200 bps in Sainsbury’s score and 300
to 500 bps in Argos
c)
• Colleague – progress against our existing 2024 representation targets (see page 108)
and assessment of further representation improvements in 2025. Maintain
colleague engagement scores
• Plan for Better – progress against our Scope 1 and Scope 3 and plastic reduction
targets (see below)
d)
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
b) Improvement assessed against 2019/20 results due to the COVID-19 impact on 2020/21 and 2021/22.
c) From 2023 we are using a new combined Sainsbury’s and Argos customer satisfaction measure. Therefore, the Committee will need to consider the potential impact of these measurement
changes on outstanding awards.
d) Our Scope 2 GHG emissions are reported as zero as we use 100 per cent renewable electricity and therefore this is not included in the LTIP. In relation to Scope 3, as with the 2021 Win In
Food incentive plan, the Committee will consider a number of factors and data points to determine an appropriate outturn.
Plan for Better targets Baseline Threshold Stretch
Scope 1 – GHG emissions 554,936 (tCO
2
e) 18/19 FY 382,403 345,258
Scope 3 – GHG emissions 26,663,081 (tCO
2
e) 18/19 FY 23,783,081 23,108,004
Plastic – Own Brand Food & General Merchandise & Clothing –
tonnes of plastic packaging
69,839 Own Brand Food 2018 CY/
GM&C 2020 CY 55,871 41,903
116 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Annual Report on Remuneration continued
Unvested Long-Term Incentive Plan awards continued
2023 Leaders’ Share Award
(2023/24 to 2025/26 performance period) Weighting
Threshold
(25% of element vests)
Maximum
(100% of element vest)
Cumulative retail free cash flow
a)
20% £1,350m £1,650m
ROCE
a)
20% 7.0 % 10.0%
Underlying basic EPS
a)
20% 20.0p 2 7.0p
Cumulative cost savings 20% £750m £1,250m
Strategic indicators 20%
(equally weighted)
• Market share – targets are commercially sensitive but we intend to
provide full disclosure of targets at the end of the performance period
• Customer satisfaction – improvement of 0 to 200 bps in Company
CSAT score
• Colleague – range of -1 to -4 vs strong 2022 score
• Plan for Better – progress against our Scope 1 and Scope 3 and plastic
reduction targets (see below)
a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 199 to 203.
Plan for Better targets Baseline Threshold Stretch
Scope 1 – Absolute GHG emissions within our own operations 554,936 (tCO
2
e) 18/19 FY 354,971 308,539
Scope 3 – GHG emissions – suppliers with SBTi 1.5
o
C net zero target approved Less than 2% of emissions
22/23FY 50% 80%
Plastic – Own Brand Food, General Merchandise & Clothing –
tonnes of plastic packaging
69,839 Own Brand Food 2018 CY/
GM&C 2020 CY 52,379 34,920
J Sainsbury plc Annual Report and Financial Statements 2024 117
Strategic Report Governance Report Financial Statements
Details of the Executive Directors’ share awards and movements
The table below shows the conditional awards granted and exercised under each of the Company’s share plans.
Name Award Date of award
Share price
at grant (£)
Original share
options
awarded
Options
lapsed
Total share
options Dividends
d)
Options
exercised
during the
year
Remaining
share
options
Share price on
exercise
(£)
Date of
exercise
Notional
gain
on exercise
(£000)
e)
Simon
Roberts
Lon g -Ter m
Incentive
Plan
a)
09/05/2019
(Part 2) 2.194 256,092 76,828 179,264 37,0 65 216,329 0 2.835 05/05/2023 613
07/05/2020
(Part 1) 1.991 512,580 115,331 397,249 79,827 0 477,076 — — —
07/05/2020
(Part 2) 1.991 512,584 115,332 397, 252 79,828 0 47 7,08 0 — — —
04/06/2021 2.670 819,288 0 819,288 0 0 819,288 — — —
01/06/2022 2.303 983,092 0 983,092 0 0 983,092 — — —
02/06/2023 2.730 862,500 0 862,500 0 0 862,500 — — —
Bonus Share
Award
b)
01/06/2022 2.303 363,601 0 363,601 0 0 363,601 — — —
02/06/2023 2.730 311,368 0 311,368 0 0 311,368 — — —
Sharesave
c)
10/12/2019 N/A 3,040 — 3,040 — 3,040 0 2.764 28/04/2023 4
14/12/2020 N/A 1,833 — 1,833 — — 1,833 — — —
Total 4,625,978 307,491 4,318,487 196,720 219,369 4,295,838 617
Bláthnaid
Bergin
Lon g -Ter m
Incentive
Plan
a)
09/05/2019
(Part 2) 2.194 76,352 22,906 53,446 11,048 64,494 0 2.835 05/05/2023 183
07/05/2020
(Part 1) 1.991 85,052 19,137 65,915 10,141 76,056 0 2.835 05/05/2023 216
07/05/2020
(Part 2) 1.991 85,052 19,137 65,915 13,240 0 79,155 — — —
04/06/2021 2.670 215,640 0 215,640 0 0 215,640 — — —
01/06/2022 2.303 179,764 0 179,764 0 0 179,764 — — —
02/06/2023 2.730 535,714 0 535,714 0 0 535,714 — — —
Bonus Share
Award
b)
07/05/2021 2.413 70,331 0 70,331 7,1 90 7 7,52 1 0 2.835 05/05/2023 220
01/06/2022 2.303 81,601 0 81,601 0 0 81,601 — — —
02/06/2023 2.730 79,716 0 79,716 0 0 79,716 — — —
Conditional
Share Award
f)
07/05/2020 1.991 85,054 0 85,054 0 85,054 0 2.835 05/05/2023 241
Total 1,494,276 61,180 1,433,096 41,619 303,125 1,171,590 860
a) The LTIP share figures relate to the maximum that could be achieved for awards.
b) Bonus Share Awards are after the application of performance conditions. Simon Roberts waived his 2020/21 bonus and therefore no Bonus Shares were awarded.
c) Sharesave is an all-employee share option plan and has no performance conditions as per HMRC Regulations. The option price for the Sharesave schemes shown were: 2019 – £1.610 and
2020 – £1.610.
d) Dividends includes notional dividends accrued on LTIPs where the performance period has finished.
e) This is the notional gain on the date of exercise had all shares been sold.
f) Bláthnaid Bergin was awarded a Conditional Share Award in May 2020 prior to appointment as an Executive Director. No performance conditions applied to this award.
118 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
Additional statutory information
Additional statutory information required by the Accounts Regulations can be found below:
Directors’ interests The beneficial interests of the Directors and their connected persons in the shares of the Company are shown on pages 111
and 114. During the year, no Director had any material interest in any contract of significance to the Group’s business.
Directors’ indemnities The Company maintains a Directors’ and Officers’ liability insurance policy which provides appropriate cover for legal
action brought against its Directors. The Company has also executed deeds of indemnity for each of its Directors, to the
extent permitted by law and the Company’s Articles of Association. These indemnities were in force throughout the
financial year and as at the date of this report.
Qualifying third-party indemnity provisions (as defined by section 234 of the Companies Act 2006) are in force, to the
extent permitted by law, for the benefit of the Directors in relation to certain losses and liabilities incurred in connection
with the execution of their powers, duties and responsibilities.
Research and development In the ordinary course of business, the Company regularly develops new products and services. See page 12 to 14 for
moreinformation.
Employment policies The Company values the different perspectives, experiences and abilities of all our colleagues. We ensure that those living
with a disability or long-term health condition are fully and fairly considered for employment with the Company through
well-developed policies for the equal treatment of all. We have a workplace adjustments process in place for our colleagues
who find themselves with a disability or long-term health condition; workplace adjustments can be made at any point
during a colleague’s employment with us. We are committed to providing equal opportunities for all colleagues and
applicants through recruitment, training, development and promotion. Further information can be found on pages 18 to 21.
Health and safety The health and safety of our colleagues and customers is an essential part of our business operations. See page 19 for
more information.
Colleague engagement Details on how we engage with our colleagues can be found on page 24.
Political donations The Company made no political donations in 2023/24 (2022/23: £nil).
Post balance sheet events There were no material events after the balance sheet date requiring disclosure.
Financial risk management and
financial instruments
Notes 28 and 29 on pages 167 to 177 disclose details relating to financial risk management and financial instruments.
Disclosure of information to the
auditor
Each Director has confirmed that, so far as each Director is aware, there is no relevant audit information of which the
auditor is unaware. Each Director has taken all steps that they ought to have taken as a Director in order to make
themselves aware of any relevant audit information and to establish that the auditor is aware of that information.
Forfurther information, please see the Statement of Directors’ responsibilities on page 123.
Dividends Details of the payment of the final dividend can be found on page 156.
Ordinary shares Details of the changes to the ordinary issued share capital during the year are shown on page 165. As at 19 April 2024,
2,377,776,903 ordinary shares of 28
4
/
7
pence have been issued, are fully paid up and are listed on the London Stock Exchange.
Share capital Except as described below in relation to the Company’s employee share plans, there are no restrictions on the voting
rights attaching to the Company’s ordinary shares or the transfer of securities in the Company; no person holds securities
in the Company carrying special rights with regard to control of the Company; and the Company is not aware of any
agreements between holders of securities that may result in restrictions in the transfer of securities or voting rights.
Further details of the rights, restrictions and obligations attaching to the share capital of the Company, including voting
rights, are contained in the Company’s Articles of Association. The Articles of Association may only be changed with the
agreement of shareholders.
Shares acquired for the Company’s employee share plans by the trustees rank pari passu with shares in issue and have
nospecial rights. Where, under the Company’s All Employee Share Ownership Plan, participants are beneficial owners
ofthe shares but the trust is the registered owner, the voting rights are normally exercised by the trustee of the plan
atthe direction of the participants. All shares held by the J Sainsbury Employee Share Ownership Trust are held on an
unallocated basis. As such, the trustee waives their rights to vote and to receive dividends on these shares. Total dividends
waived by the trustee during the financial year amounted to £3,839,821.99. Some of the Company’s employee share plans
include restrictions on the transfer of shares while the shares are held within the plan.
At the Annual General Meeting held in July 2023, the Company was authorised by shareholders to purchase its own shares
within certain limits and as permitted by the Articles of Association. The Company made no purchases of its own shares
during the financial year.
Change of control All of the Company’s employee share plans contain provisions relating to a change of control. On a change of control, options
and awards granted to employees under the Company’s share plans may vest and become exercisable, subject to the
satisfaction of any applicable performance conditions at that time.
A number of the Company’s financing arrangements contain change of control clauses under which lenders may cancel
their commitments and declare all outstanding amounts immediately due and payable. There are no other significant
agreements that would take effect, alter or terminate upon a change of control following a takeover bid.
J Sainsbury plc Annual Report and Financial Statements 2024 119
Strategic Report Governance Report Financial Statements
Major interests in shares
As at 2 March 2024, the Company had been notified by the following
investors of their interests in 3 per cent or more of the Company’s shares.
These interests were notified to the Company pursuant to DTR5 of the
Disclosure Guidance and Transparency Rules:
Date notified
Number of
ordinary shares
% of voting
rights
a)
Qatar Holdings LLC 5 May 2021 335,446,132 14.99
VESA Equity Investment
S.à r.l. 4 March 2022 2 34,8 87, 36 3 10.07
BlackRock, Inc. 28 December 2023 149,530,300 6.29
Schroders plc 31 March 2021 116,161,658 5.22
Bestway Group UK Limited 13 October 2023 118,273,900 4.99
Pzena Investment
Management, Inc 29 January 2021 104,292,488 4.69
a) Percentages shown are as a percentage of the Company’s issued share capital when the
Company was notified of the change in holding.
As at 22 April 2024, no further changes had been notified.
Directors’ Report
The Directors’ Report comprises pages 1 to 121 of this Annual Report and
Financial Statements. The following information required by Rule 9.8.4R of
the UK Listing Rules (LR) is also incorporated into the Directors’ Report:
Information requirement Location within Annual Report
Interest capitalised See note 14 of the
consolidated financial
statements
Publication of unaudited financial information See note 28
Details of any long-term incentive plans See Remuneration Report,
Remuneration Policy and
note 35
Shareholder waiver of dividends See note 27
Shareholder waiver of future dividends See note 27
Other information requirements set out in LR 9.8.4R are not applicable to
theCompany.
Streamlined Energy and Carbon Reporting – 2023/2024
Annual Overview
J Sainsbury plc has been tracking and publicly disclosing its carbon dioxide
and other greenhouse gas (GHG) emissions since 2005. Our emissions
measurements are accompanied by a series of ambitious targets approved
by the Science Based Targets initiative. By 2030, Sainsbury’s commits to
reducing Scope 1 and 2 emissions by 68 per cent and reducing absolute
Scope 3 (energy/ industrial/ transport) emissions from purchased goods and
services, upstream transportation and distribution and use of sold products
by 50.4 per cent. This target aligns with the aim of limiting global warming
to 1.5°C, as outlined in the Paris Agreement.
Methodology
Sainsbury’s has conducted emission calculations and reporting aligning
with the GHG Protocol Corporate Accounting and Reporting Standard
(revised edition), utilising emission factors from the UK Government’s GHG
Conversion Factors for Company Reporting 2023. We are also separately
evaluating the performance of Sainsbury’s, Argos, and Habitat emissions,
inaddition to assessing the overall Group performance. Our emissions
reporting encompasses all mandatory sources as outlined by the Companies
Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013. The
reporting period spans the financial year 2023/24, consistent with the
timeframe covered by the Annual Report and Financial Statements.
The scope of this GHG inventory covers the UK and Ireland. GHG inventory
boundaries are established utilising the operational control approach.
Scope1 emissions include stationary combustion, mobile combustion, and
refrigerants. Scope 2 emissions are reported using both the location-based
method and the market-based method. Scope 2 emissions comprise
purchased electricity, on-site renewable energy (solar and wind), and
PowerPurchase agreements with wind farms. Purchased electricity
includes consumption from corporate contracts, non-operational sites
whichare vacant and contracts with other suppliers whereby the landlords
are not reporting on electricity consumption themselves. For all corporate
contract electricity and gas consumption, half-hourly data was used where
possible, to increase the overall accuracy.
In 2023/24, 100 per cent of electricity is sourced from renewable sources
(acombination of energy sourced directly from on-site solar and wind,
Power Purchase agreements with UK wind farms, as well as certificate-
backed renewable electricity from the UK, Northern Ireland, and the
Republic of Ireland).
The following report compares Scope 1 and 2 Greenhouse gas emissions
for2023/24 and 2022/23.
UK and Global Annual Energy and Carbon
Sainsbury's Group Total Carbon Figures and Intensities
The following report compares Scope 1 and Scope 2 Greenhouse gas
emissions for 2023/24 and 2022/23.
Sainsbury’s Group Total Carbon Figures and Intensities
GHG emissions (tCO
2
e) – location-based emission source 2023/24 2022/23
Scope 1 458,972.65 461,692.37
Scope 2 247,14 2.5 4 2 34, 397.43
Total (tCO
2
e)
a)
706,115.19 696,089.80
S1 and 2 Intensity measurement (tCO
2
e/’000 sq. ft.) 25.09 25.23
GHG emissions (tCO
2
e) – market-based emission source 2023/24 2022/23
Scope 1 458,972.65 461,692.37
Scope 2 — —
Total (tCO
2
e)
a)
458,972.65 461.692.37
S1 and 2 Intensity measurement (tCO
2
e/’000 sq. ft.) 16.3 17.0 8
a) This data has been subject to assurance this year and last year by ERM Certification
andVerification Services Limited, in accordance with the International Standard on
Assurance Engagements ISAE 3000 (Revised) ‘Assurance Engagements other than
Auditsor Reviews of Historical Financial Information’ issued by the International
Auditing and Standards Board.
b) 2022/23 electricity data has been updated this year to include improved data available
for the last period of the year.
120 J Sainsbury plc Annual Report and Financial Statements 2024
Strategic Report Governance Report Financial Statements
The table below represents Sainsbury’s energy use and associated GHG emissions from electricity and fuel in the UK for the reporting years 2022/23 and
2023/24 in line with UK Government Streamlined Energy and Carbon Reporting requirements.
Sainsbury’s breakdown
UK locations
Energy consumption kWh Location-based (tCO
2
e) Market-based (tCO
2
e)
Emission source 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24
Combustion of fuel and
operationoffacilities (Scope 1) 1,419,488,269.53 1,37 7,579,244.63 399,009.45 403,057.23 399,009.45 403,057.23
Electricity, heat, steam and cooling
purchased for own use (Scope 2) 1,168,052,581.00 1,156,234,413.08 221,101.17 233,869.42 — —
Total 2,587,540,850.53 2,533,813,657.71 620,110.62 636,926.65 399,009.45 403,057.23
Argos and Habitat Breakdown
UK locations
Energy consumption kWh Location-based (tCO
2
e) Market-based (tCO
2
e)
Emission source 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24
Combustion of fuel and operation of
facilities (Scope 1) 267,876,532.86 238,394,880.35 62,491.85 55,847.67 62,491.85 55,8 47.67
Electricity, heat, steam and cooling
purchased for own use (Scope 2) 59,229,411.91 60,767,536.10 11,416.63 12,583.46 — —
Total 327,105,944.77 299,162,416.45 73,908.48 68,431.13 62,491.85 55,847.67
Global locations (excludes UK)
Energy consumption kWh Location-based (tCO
2
e) Market-based (tCO
2
e)
Emission source 2022/23 2023/24 2022/23 2023/24 2022/23 2023/24
Combustion of fuel and operation of
facilities (Scope 1) 1,046,760.04 371,070.12 191.08 67.75 191.08 67.7 5
Electricity, heat, steam and cooling
purchased for own use (Scope 2) 5,404,344.85 2,176,894.96 1,879.63 689.66 — —
Total 6,451,104.89 2,547,965.08 2,070.71 757.41 191.08 67.7 5
Dual emissions reporting
Overall emissions have been presented to reflect both location and market-based methodologies, affecting both Scope 1 and Scope 2 emissions.
Scope 1: All Scope 1 emissions have been calculated using UK Government’s GHG Conversion Factors for Company Reporting 2023 for all sources.
Scope 2: All Scope 2 Location based emissions have been calculated using UK Government’s GHG Conversion Factors for Company Reporting 2023.
Market-based electricity is covered by either a Power Purchase agreement with UK wind farms, certificate-backed renewable electricity or falls within
on-siterenewable generation from wind and solar energy.
Energy efficiency statement
During 2023/24, Sainsbury’s has demonstrated its commitment to reducing the energy consumption of its operations by implementing the following energy
efficiency initiatives:
Electricity consumption
We are in our 13th year of Project Graphite, a dedicated programme focused on reducing carbon, energy consumption and costs. capital was allocated to the
following initiatives during the year:
• The installation of additional on-site solar PV on new and existing stores and a continued programme of optimising existing solar PV systems.
• A number of energy efficiency projects have taken place including:
– Heating and ventilation optimisation and Voltage Optimisation,
– The installation of ‘Air Doors’ to mitigate air infiltration
– Trialling the next generation of LED lighting.
– We continue our programme of Engineering Innovation, reviewing and trialling the latest technology to support in achieving net zero by 2035.
We continue to deliver the most efficient new stores through the installation of highly efficient Zero Carbon technology.
Additional statutory information continued
J Sainsbury plc Annual Report and Financial Statements 2024 121
Strategic Report Governance Report Financial Statements
Refrigeration
We continue to replace refrigeration systems that use HFC refrigerant gas with more efficient alternatives that use natural refrigerants – CO
2
, along with
installing fridge doors.
Natural Gas
We continue to remove natural gas heating, installing Refrigeration Integrated Heating and Cooling (RIHC) systems, which takes the residual heat generated
by the refrigeration units and uses this for space heating around the store to meet the heating demand. This removes the need to use fossil fuels as the
systems will use electricity instead of gas.
Delivery vehicles
To further support our transition from diesel to a zero-carbon fleet, we have been building on our previous R&D projects, which mapped out the transition of
our grocery online delivery fleet to EV by 2035. We are working with manufacturers to test electric vehicles within our fleet, investing in EV infrastructure in
our London Nine Elms store as a test bed for these trials. We have also rolled out a new routing system which has resulted in significant mileage reductions
compared to previous routing algorithms.
Logistics:
We have seen a reduction in fuel usage, in part due to the purchase of new fleet which is more fuel efficient. We have also increased our driver training programme.
Tim Fallowfield OBE
Company Secretary and Corporate Services Director
24 April 2024
Strategic Report Governance Report Financial Statements
122 J Sainsbury plc Annual Report and Financial Statements 2024
123 Statement of Directors’ Responsibilities
124 Independent Auditor’s Report to the Members of J Sainsbury plc
Consolidated Financial Statements
132 Consolidated income statement
133 Consolidated statement of comprehensive income/(loss)
134 Consolidated balance sheet
135 Consolidated statement of changes inequity
136 Consolidated cash flow statement
137 Notes to the consolidated financial statements
Company Financial Statements
194 Company balance sheet
195 Company statement of changes in equity
196 Notes to the Company financial statements
Additional information
199 Alternative performance measures (APMs)
204 Additional shareholder information
206 Glossary
Financial Statements
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 123
Statement of Directors’ Responsibilities
The Directors are responsible for preparing the Annual Report and Financial
Statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have prepared the Group
financial statements in accordance with UK-adopted international
accounting standards and the Company financial statements in accordance
with United Kingdom Generally Accepted Accounting Practice, comprising
FRS 101 ‘Reduced Disclosure Framework’ (United Kingdom Accounting
Standards and applicable law).
Under Company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair view of
the state of affairs of the Group and the Company and of the profit or loss of
the Group for that period. In preparing the financial statements, the
Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable
andprudent;
• state whether applicable UK-adopted international accounting standards,
international financial reporting standards and UK Accounting standards
comprising FRS 101, have been followed by the Group and Company,
respectively, subject to any material departures disclosed and explained
in the financial statements; and
• prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Group and the Company will continue
in business.
The Directors are responsible for keeping adequate accounting records that
are sufficient to show and explain the Group’s and the Company’s
transactions and disclose with reasonable accuracy at any time the financial
position of the Company and the Group and enable them to ensure that the
financial statements and the Directors’ Remuneration Report comply with
the Companies Act 2006. They are also responsible for safeguarding the
assets of the Company and the Group and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
Each of the Directors, whose names and functions are listed in the
Governance Report, confirms that, to the best of their knowledge:
• the financial statements, which have been prepared in accordance with
the relevant financial reporting framework give a true and fair view of
theassets, liabilities, financial position and profit of the Group and
Company; and
• the Strategic Report contained in the Annual Report and Financial
Statements include a fair review of the development and performance of
the business and the position of the Group, together with a description of
the emerging and principal risks and uncertainties that it faces; and
• the Annual Report and Financial Statements, taken as a whole, are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the Group’s position and performance, business
model and strategy.
By order of the Board
Tim Fallowfield OBE
Company Secretary and Corporate Services Director
24 April 2024
Strategic Report Governance Report Financial Statements
124 J Sainsbury plc Annual Report and Financial Statements 2024
Independent Auditor’s Report
to the Members of J Sainsbury plc
Opinion
In our opinion:
• J Sainsbury plc’s Group financial statements and Parent Company
financial statements (the “financial statements”) give a true and fair view
of the state of the Group’s and of the Parent Company’s affairs as at
2March 2024 and of the Group’s profit for the 52 week period then ended;
• the Group financial statements have been properly prepared in
accordance with UK adopted international accounting standards;
• the Parent Company financial statements have been properly prepared
inaccordance with United Kingdom Generally Accepted Accounting
Practice; and
• the financial statements have been prepared in accordance with the
requirements of the Companies Act 2006.
We have audited the financial statements of J Sainsbury plc (the “Parent
Company”) and its subsidiaries (the “Group”) for the 52 week period ended
2March 2024 which comprise:
Group Parent company
Consolidated balance sheet as at 2
March 2024
Balance sheet as at 2 March 2024
Consolidated income statement for
the period then ended
Statement of changes in equity for the
period then ended
Consolidated statement of
comprehensive income for the
period then ended
Related notes 1 to 8 to the financial
statements including material
accounting policy information
Consolidated statement of changes
in equity for the period then ended
Consolidated statement of cash
flows for the period then ended
Related notes 1 to 39 to the financial
statements, (except for the sections
marked as “unaudited” in Note 28)
including material accounting
policy information
The financial reporting framework that has been applied in the preparation
of the Group financial statements is applicable law and UK adopted
international accounting standards. The financial reporting framework that
has been applied in the preparation of the Parent Company financial
statements is applicable law and United Kingdom Accounting Standards,
including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).
Basis for opinion
We conducted our audit in accordance with International Standards on
Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
Independence
We are independent of the Group and Parent Company in accordance with
the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to
listed public interest entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
The non-audit services prohibited by the FRC’s Ethical Standard were not
provided to the Group or the Parent Company and we remain independent
ofthe Group and the Parent Company in conducting the audit.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’
use of the going concern basis of accounting in the preparation of the
financial statements is appropriate. Our evaluation of the directors’
assessment of the Group and Parent Company’s ability to continue to
adoptthe going concern basis of accounting included:
• Confirming our understanding of the directors’ going concern
assessmentprocess.
• Assessing the adequacy of the going concern assessment to 24 April 2025
and considering the existence of any significant events or conditions
beyond this period.
• Verifying going concern model inputs against board-approved forecasts.
• Reviewing borrowing facility documentation to confirm availability to the
Group through the going concern period and verifying that management
had appropriately identified and assessed financial covenant compliance.
• Assessing management’s forecasting process and the consistency of the
assessment with information obtained from other areas of the audit, such
as accounting estimates.
• Testing the assessment, including forecast liquidity under base and
downside scenarios, for clerical accuracy.
• Assessing whether assumptions made (such as future costs including the
impact of inflation and forecast margin) were reasonable with reference
to information obtained elsewhere in the audit and, in the case of
downside scenarios, appropriately severe in light of the Group’s relevant
principal risks and uncertainties and whether climate risk may materially
impact the going concern assessment.
• Additional consideration was given to the impact of the phased withdrawal
from the core banking business, considering the downside scenarios
modelled by management including potentially adverse impacts of
customer behaviour as well as the timing of repayment of external
funding, as part of the assessment of the Group’s liquidity forecasting.
• Challenging the amount and timing of identified mitigating actions
available to respond to a ‘severe but plausible’ downside scenario, and
whether those actions are feasible and within the Group’s control.
• Performing independent sensitivity analysis on assumptions to assess
the impact on headroom.
• Performing reverse stress testing in order to identify and understand
which factors and how severe the downside scenarios would have to be to
result in the Group utilising all liquidity or breaching a financial covenant
during the going concern period.
• Assessing the appropriateness of going concern disclosures.
Our key observations
In management’s base case and downside scenarios, there is significant
headroom without taking into consideration the benefit of any
identifiedmitigations.
Based on the work we have performed, we have not identified any material
uncertainties relating to events or conditions that, individually or collectively,
may cast significant doubt on the Group and Parent Company’s ability to
continue as a going concern for the period to 24 April 2025.
In relation to the Group and Parent Company’s reporting on how they have
applied the UK Corporate Governance Code, we have nothing material to add
or draw attention to in relation to the directors’ statement in the financial
statements about whether the directors considered it appropriate to adopt
the going concern basis of accounting.
Our responsibilities and the responsibilities of the directors with respect to
going concern are described in the relevant sections of this report. However,
because not all future events or conditions can be predicted, this statement
is not a guarantee as to the Group’s ability to continue as a going concern.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 125
Overview of our audit approach
Audit scope • We performed an audit of the complete financial
information of 15 components and audit
procedures on specific balances for a further
10components.
• The components where we performed full or
specific audit procedures accounted for 96% of
Profit before tax, 100% of Revenue and 96% of
Total assets.
Key audit matters • Accounting and reporting for the group’s phased
withdrawal from the core banking business
• Supplier arrangements
• Aspects of revenue recognition
• Measurement of provision for impairment of
loans and advances to financial services
customers
• Valuation of defined benefit pension
schemeassets
• IT environment
Materiality • Overall Group materiality of £35million which
represents 5.0% of Profit before tax, adjusted for
non-recurring items.
An overview of the scope of the Parent Company
andGroupaudits
Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our
allocation of performance materiality determine our audit scope for each
component within the Group. Taken together, this enables us to form an
opinion on the consolidated financial statements. We take into account size,
risk profile, the organisation of the Group and effectiveness of group-wide
controls, changes in the business environment, the potential impact of
climate change and other factors such as recent Internal audit results when
assessing the level of work to be performed at each component.
In assessing the risk of material misstatement to the Group financial
statements, and to ensure we had adequate quantitative coverage of
significant accounts in the financial statements, of the 98 reporting
components of the Group, we selected 25 components covering entities
within the UK, which represent the principal business units within the Group.
Of the 25 components selected, we performed an audit of the complete
financial information of 15 components (“full scope components”) which
were selected based on their size or risk characteristics. For the remaining 10
components (“specific scope components”), we performed audit procedures
on specific accounts within that component that we considered had the
potential for the greatest impact on the significant accounts in the financial
statements either because of the size of these accounts or their risk profile.
The table below shows the coverage obtained from the work performed by
our audit teams. Scoping changes from the prior year are not significant;
Number of
components
Group Profit before
Tax
a)
%
Group Revenue
%
Total assets
%
2023/24 2022/23 2023/24 2022/23 2023/24 2022/23
Full scope 15 69% 73% 99% 99% 77% 84%
Specific scope 10 27% 24% 1% 1% 19% 15%
Full and specific
scope coverage 25 96% 97% 100% 100% 96% 99%
Remaining
components 73 4% 3% 0% 0% 4% 1%
Total reporting
components 98 100% 100% 100% 100% 100% 100%
a) as measured on an absolute basis.
The audit scope of these specific scope components may not have included
testing of all significant accounts of the component but will have
contributed to the coverage of significant accounts tested for the Group.
Of the remaining 73 components that together represent 4% of the Group’s
Profit before tax as measured on an absolute basis, none are individually
greater than 2% of the Group’s Profit before tax on an absolute basis. For
these components, we performed other procedures, including analytical
review, testing of consolidation journals and intercompany eliminations to
respond to any potential risks of material misstatement to the Group
financial statements.
Involvement with component teams
In establishing our overall approach to the Group audit, we determined the
type of work that needed to be undertaken at each of the components by us,
as the primary audit engagement team, or by component auditors from
other EY global network firms operating under our instruction. Of the 15 full
scope components, audit procedures were performed on 12 of these directly
by the primary audit team and on 3 by EY component teams in Edinburgh
and London. For the 10 specific scope components, work was performed by
the primary audit team on 4 components and on 6 components by EY
component teams in Edinburgh and London. For the full and specific scope
components where the work was performed by component auditors, we
determined the appropriate level of involvement to enable us to determine
that sufficient audit evidence had been obtained as a basis for our opinion
on the Group as a whole.
During the current year’s audit cycle, the Senior Statutory Auditor visited
Edinburgh to discuss and direct the audit approach of the component team,
meet with members of local management and attend planning meetings
with a particular focus on the impact of the strategic review of the Financial
Services division on the component audit approach. The Primary team,
based in London, met regularly with the London component team
throughout the year end audit. Virtual visits were also performed to
Edinburgh at the year end, using video technology and our virtual audit
software, meeting with members of local management, attending closing
meetings, reviewing relevant working papers, including in response to the
risk areas for which component teams perform procedures, including
supplier arrangements, aspects of revenue recognition, the strategic review
of the Financial Services division and the measurement of the provision for
impairment of loans and advances to customers. The primary team
interacted regularly with the component teams where appropriate during
various stages of the audit, reviewed relevant working papers, retaining
those that were considered key, and were responsible for the scope and
direction of the audit process. This, together with the additional procedures
performed at Group level, gave us appropriate evidence for our opinion on
the Group financial statements.
Climate change
Stakeholders are increasingly interested in how climate change will impact
JSainsbury plc. The Group has determined that the most significant future
impacts from climate change on its operations will be from physical risks,
such as extreme weather events including heat events, drought and
flooding, together with transition risks including regulation and changes in
consumer preferences. These are explained on pages 30 to 43 in the required
Task Force On Climate Related Financial Disclosures and on pages 53 to 61
inthe principal risks and uncertainties. The Group has also explained their
climate commitments as part of the Plan for Better strategy on pages 15 to
17. All of these disclosures form part of the “Other information,” rather than
the audited financial statements. Our procedures on these unaudited
disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge
obtained in the course of the audit or otherwise appear to be materially
misstated, in line with our responsibilities on “Other information”.
In planning and performing our audit we assessed the potential impacts of
climate change on the Group’s business and any consequential material
impact on its financial statements.
Strategic Report Governance Report Financial Statements
126 J Sainsbury plc Annual Report and Financial Statements 2024
Independent Auditor’s Report
to the Members of J Sainsbury plc continued
Climate change continued
As explained in Note 2 of the consolidated financial statements, the Group
has considered the impact of physical and transitional climate change risks
on estimates made in the financial statements. The Group has concluded
that the impact is not material to the financial statement estimates. These
disclosures also explain where policy, technology and market responses to
climate change risks are still developing, and where the degree of certainty
of these changes means that they cannot be taken into account when
determining asset and liability valuations under the requirements of UK
adopted International Accounting Standards. In Notes 3, 4, 17, 25 and 34 to
the financial statements, narrative explanations of the impact of reasonably
possible changes in key assumptions have been provided.
Our audit effort in considering the impact of climate change on the financial
statements was focused on evaluating management’s assessment of the
impact of climate risk, physical and transitional, their climate commitments,
the effects of material climate risks disclosed on pages 33 and 34 and
whether these have been appropriately reflected in the valuation of assets
and liabilities, the useful economic lives of property, plant and equipment
and the cashflow forecasts used in the assessment of impairment of
non-financial assets in accordance with UK adopted international
accounting standards. As part of this evaluation, we performed our own
riskassessment, supported by our climate change internal specialists, to
determine the risks of material misstatement in the financial statements
from climate change which needed to be considered in our audit.
We also challenged the directors’ considerations of climate change risks in
their assessment of going concern and viability and associated disclosures.
Where considerations of climate change were relevant to our assessment of
going concern, these are described above.
Based on our work we have not identified the impact of climate change on the
financial statements to be a key audit matter or to impact a key audit matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment,
were of most significance in our audit of the financial statements of the
current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) that we identified. These
matters included those which had the greatest effect on: the overall audit
strategy, the allocation of resources in the audit; and directing the efforts of
the engagement team. These matters were addressed in the context of our
audit of the financial statements as a whole, and in our opinion thereon, and
we do not provide a separate opinion on these matters.
Risk
Accounting and reporting for the Group’s phased withdrawal from
the core banking business
Refer to the Audit Committee Report (page 92), Notes 4 (page 147), 5 (page 149),
17 (page 160) and 28 (page 167) of the Consolidated Financial Statements
The Group announced the completion of a strategic review of the Bank,
which will result in a phased withdrawal from the core banking business,
with products that continue to be offered being provided by dedicated
financial services providers through a distributed model.
A significant change in strategy triggers a number of accounting risks which
can involve complexity and significant management judgement. This gives
rise to a number of accounting and reporting risks.
We determined the risk to be most prevalent in financial statement line
items and higher risk estimates which relied on prospective financial
information or which contained direct financial impacts as a result of the
change in strategy. These included:
(a) The appropriateness and completeness of £17 million provisions for
onerouscontracts;
(b) The appropriateness of the £212 million full impairment of fixed and
intangible assets, including the goodwill previously recognised in
theconsolidated financial statements;
(c) The appropriateness of the £21 million reduction in interest income
revenue recognised at the effective interest rate (EIR) where there is
significant judgement involved in forecasting customer behaviour and
estimating the future expected cash flows. EIR adjustments are
sensitive to judgements about the expected behavioural lives and
future yields ofthe product portfolios to which they relate; and
(d) Classification, measurement and disclosure considerations under
IFRS5, IFRS 7 and IFRS 9.
We consider there to be significant judgement required by management
inmaking these accounting considerations.
Our response to the risk
• We assessed the design effectiveness of key controls across the processes
relevant to the Group’s evaluation of accounting impacts from the change
in strategy.
• We evaluated the revised forecasts underpinning the Group’s change
instrategy. This involved consideration of the significant impacts of
either a sale of financial instrument portfolios or a managed wind-down
of these portfolios. This involved an assessment of the Group’s use of
specialists to forecast these scenarios, involvement of independent
specialists and subject matter experts to challenge and validate the
reasonableness of these scenarios, and an assessment of the accounting
impact of these scenarios.
• We challenged the appropriateness and completeness of provisions for
onerous contracts and other related exposures by:
i Scrutinising the calculations, input data and assumptions used by
management in computing the provisions;
ii Assessing the completeness of the provisions by examining significant
contracts and a sample of lower value contracts and recalculated the
expected onerous contract provision; and
iii Reviewing internal papers presented to the Group and Bank Operating
Boards and communications issued by the Bank to assess whether
additional liabilities existed at the balance sheet date.
• We validated the impairment of fixed and intangible assets by:
i Inspecting the impairment tests performed by management and
confirming that these indicated a full impairment was appropriate;
ii Inspecting management’s cashflow forecasts and validating the
appropriateness of assumptions and calculations used to derive
theseforecasts;
iii Considering the sensitivity of the impairment to reasonable
movements in key assumptions; and
iv Performing a stand-back analysis to identify whether the forecasts
that supported a full impairment were consistent in all material
respects with other areas of forecasting, including the going
concernassessment.
• We validated the adjustment recorded to EIR interest income (shown
through the revenue line in the Consolidated Income Statement) by:
i Reviewing the methodology to assess whether all key variables were
appropriately considered and were being accounted for in accordance
with the applicable accounting standards;
ii Comparing judgements to: (a) observable recent customer behaviour,
and (b) product pricing models;
iii Evaluating the reasonableness of future cashflows as a result of the
impact of the decision to undertake a phased withdrawal from the core
banking business; and
iv Testing for indications of management bias through: (a) comparison of
customer behaviour to observable market data; (b) review of judgements
made by management for consistency with prior periods where
appropriate; (c) performing sensitivity analysis over the impact of
alternative behavioural lives and challenging the current behavioural
lives used; and (d) challenging model alignment adjustments
(“true-ups”) for appropriateness using our knowledge and experience
across the industry, including assessing the appropriateness of the data,
scenarios and calculations used in determining the true-up applied.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 127
• We considered and evaluated the appropriate classification,
measurement and disclosure of material items within the financial
statements through:
i Reviewing papers prepared by management and expected timelines
for key milestones of the strategic review as presented to the Board
prior to the announcement to set an expectation for the status at the
balance sheet date and the impact of financial statement reporting;
ii Enquiring of key management personnel at the Group and the Bank,
tounderstand the specific circumstances and status relating to the
strategic review as at the balance sheet date and obtaining supporting
evidence to corroborate management’s conclusions; and
iii Assessing the adequacy of the financial statement disclosures in
respect of the above accounting impacts. This included disclosures
which required additional judgement as a result of the change in
strategy, including the assessment under IFRS 5 as to whether any
assets and liabilities should be classified as ‘held for sale’ at the
balance sheet date, the classification and measurement of financial
instruments under IFRS 9 and the reporting of fair value disclosures.
Key observations communicated to the Audit Committee
We concluded that the accounting impacts for the Group’s phased
withdrawal from the core banking business were appropriately reported in
the consolidated financial statements and the disclosures in the financial
statements are appropriate.
Risk
Supplier arrangements
Refer to the accounting policy in Note 3.2 (page 140) and disclosure within
Note 8 (page 152) of the Consolidated Financial Statements
The Group, through its Retail divisions, receives material discounts and
incentives, fixed amounts (including promotions and utilisation of specific
space), volume-based rebates and marketing and advertising income from
suppliers, collectively referred to as supplier arrangements. The terms of
agreements with suppliers can be complex and varied. In addition, there can
be performance conditions or promotional periods that span the Group’s
reporting date.
Amounts recognised as deductions to Cost of sales for the period ended
2March 2024 were £481million (2022/2023: £383million), with related
balance sheet entries recognised in inventory, current trade receivables
andcurrent trade payables.
Accounting for rebate arrangements with suppliers requires judgement and
estimation in determining the extent to which deal terms have been met,
especially those spanning the Group’s reporting date, impacting cut-off.
High deal volumes are recorded just prior to the Group’s reporting date
which raises the risk that fixed amounts may be misstated. High levels of
manual intervention within the marketing and advertising and discounts
and incentives categories raise the risk of an error occurring in the
calculation of income, either accidentally or purposefully through
management override of controls.
In the current year our risk has been focused on those arrangements which
had not been settled at the year end and where there is judgement in
determining whether the Group has met its performance conditions.
Our response to the risk
We performed procedures over supplier arrangements at both the
Sainsbury’s Supermarkets Limited and Argos Limited components.
• We walked through and assessed the design effectiveness of the key
controls in place within the supplier arrangements process.
• We selected a sample of suppliers across the categories of supplier
arrangements, to whom we sent confirmations across certain ‘deal’
typesto confirm key deal input terms. Where we did not receive a
response from the supplier, we performed alternative procedures,
including obtaining evidence of initiation (such as authorised deal forms)
and if settled, settlement of the arrangement.
• We tested the existence and valuation of balance sheet amounts
recognised in accounts receivable or as an offset to accounts payable by
reviewing post-period end settlement. We also performed a ‘look-back’
analysis of prior period balance sheet amounts to check that these
amounts were appropriately recovered.
• We tested the settlement of a sample of supplier arrangements
recognised in the income statement, which included settlement in cash
or by offset to accounts payable.
• Using data extracted from the accounting system, we analysed the
correlation between the Income Statement and Balance Sheet accounts
related to Supplier Arrangements. We also tested the appropriateness of
journal entries and manual adjustments, meeting a pre-defined criteria,
to corroborating evidence such as third party invoices.
• We tested cut-off for deals recorded pre and post period end by obtaining
the supplier agreement to validate that the deal was recorded in the
correct period.
• We assessed the adequacy of the financial statements disclosures in
respect of supplier arrangements and their compliance with accounting
standards including the completeness and accuracy of amounts disclosed.
Key observations communicated to the Audit Committee
Supplier arrangement amounts are appropriately recognised in the income
statement and balance sheet and the disclosures in the financial statements
are appropriate.
Risk
Aspects of revenue recognition
Refer to the accounting policy in Note 3.1 (page 139), disclosure within Note 4.2
(page 148) and Note 6 (page 151) of the Consolidated Financial Statements
Revenue recognised, including the effects of manual adjustments, for the
period ended 2 March 2024 totalled £32,700million (2022/2023: £31,491million).
There are a number of areas within revenue which require management to
exercise accounting judgement in recording manual adjustments where the
recognition of revenue does not directly correspond to cash receipts. Such
adjustments primarily include commission-based arrangements, deferral of
revenue relating to Nectar points and accounting for coupons and vouchers.
There is a risk that these adjustments are not complete and accurate for the
period ended 2 March 2024 and that accounting judgements taken are
inappropriate, particularly in respect of deferral of revenue. The opportunity
exists through management override of controls, such as the posting of
manual journals, to misstate revenue in the period.
The risk has remained the same in the current year as there continues to be
a focus on business performance.
Our response to the risk
We performed procedures over adjustments to revenue at the Sainsbury’s
Supermarkets Ltd, Nectar 360 Ltd and Argos Ltd components.
• We gained an understanding of and documented the key processes used
to record revenue transactions by performing walkthroughs and
assessing the design effectiveness of key controls.
• We tested the appropriateness of the Group’s revenue recognition policy
by comparing to the criteria set out in IFRS 15 Revenue from contracts
with customers.
• We performed journal analysis to identify manual sales journals that did
not result in cash receipts (including coupons and vouchers), obtaining
supporting evidence of collection and settlement to verify revenue was
recognised correctly.
Strategic Report Governance Report Financial Statements
128 J Sainsbury plc Annual Report and Financial Statements 2024
Independent Auditor’s Report
to the Members of J Sainsbury plc continued
Our response to the risk continued
• In relation to the calculation of deferred revenue for Nectar points, we
examined and critically assessed input data which included:
– Obtaining details of points balances earned and redeemed for the
period ended 2 March 2024 and agreeing a sample of points in issue
toNectar partner confirmations;
– Challenging and analysing management’s accounting judgements in
respect of breakage (the proportion of points which are unlikely to ever
be redeemed); and
– Recalculating the fair value per point, applied to the number of points
in circulation to determine the amount of deferred revenue at
2March2024.
• Using data extracted from the accounting system, we tested the
appropriateness of manual journal entries, meeting pre-defined criteria
and impacting revenue, as well as other adjustments (consolidation
journals) made in the preparation of the financial statements.
• We completed detailed analytical review procedures to understand if
there had been significant or unusual activity in the period, including
assessing changes in the number of and nature of manual adjustments
toverify completeness.
Key observations communicated to the Audit Committee
Revenue has been correctly recognised in accordance with IFRS 15. We did
not identify any exceptions in our testing of the manual entries.
Risk
Measurement of provision for impairment of loans and advances
to financial services customers
Refer to the Audit Committee Report (page 92); Accounting policy in Note
3.8 (page 143); and Notes 4 (page 147), 21 (page 163) and 28 (page 167) of the
Consolidated Financial Statements
Non-current loans and advances to customers (2023/2024: £1,525million;
2022/2023: £1,959million)
Impairment of non-current loans and advances (2023/2024: £58million
2022/2023: £51million)
Current loans and advances to customers (2023/2024: £3,227million;
2022/2023: £3,573million)
Impairment of current loans and advances (2023/2024: £177million;
2022/2023: £189million)
Customer receivables comprise unsecured personal loans, credit cards,
mortgages (Sainsbury’s Bank) and store cards (Argos Financial Services).
Credit provisions represent management’s best estimate of impairment and
significant judgements and estimates are made in determining the timing
and measurement of expected credit loss (“ECL”). The key judgements and
estimates in respect of the timing and measurement of ECL include:
(a) The accounting interpretations and modelling assumptions used to build
the models that calculate ECL;
(b) Input and assumptions used to estimate the impact of the multiple
economic scenarios (“MES”);
(c) Allocation of assets to stage 1, 2 or 3 using criteria in accordance with
IFRS 9 Financial instruments;
(d) Completeness and valuation of post model adjustments (“PMAs”); and
(e) Accuracy and adequacy of the financial statement disclosures.
We consider the risk related to the ECL provisions continues to be
heightened as a result of ongoing economic uncertainty. The accuracy of
underlying data upon which the ECL is calculated is also a key factor in the
overall estimate.
Our response to the risk
We performed procedures over ECL for Sainsbury’s Bank plc and Argos
Financial Services entities.
• We assessed the design effectiveness of key controls across the processes
relevant to the impairment provision calculation, involving EY specialists
to assist us in performing our procedures where appropriate. This
included consideration of model governance, data accuracy and
completeness, multiple economic scenarios, and the allocation of assets
into stage 1, 2 and 3.
• We reviewed the minutes of the Model and Risk Committees where inputs,
assumptions and adjustments to the ECL were discussed and approved.
• We tested the data used in the ECL calculation by independently
reconciling a sample of data feeding the models to source systems and
underlying documentation where applicable.
• We considered the assumptions, inputs and formulas used across the
entire population of ECL models. This included assessing the appropriateness
of model design and the formulae used, considering alternative
modelling techniques and recalculating the Probability of Default, Loss
Given Default and Exposure at Default for a sample of the models.
• With the support of our internal modelling specialists, we performed
testing over models implemented during the year to validate that they
were functioning as intended.
• We tested the assumptions and inputs used in the ECL models with the
support of our internal modelling and economic specialists. In particular,
we challenged the correlation and impact of the macroeconomic factors
to the ECL and independently recalculated critical components of the ECL.
In addition, we assessed the base and alternative economic scenarios,
including challenging probability weights and comparing to other
scenarios from a variety of external sources, as well as EY internally
developed forecasts.
• We challenged the criteria used to allocate an asset to stage 1, 2 and 3 in
accordance with IFRS 9 and substantively reperformed in full the staging
calculation to ensure that assets in stages 1, 2, and 3 were allocated to the
appropriate stage.
• We challenged PMAs for appropriateness and completeness using our
knowledge and experience across the industry. We performed testing
over material PMAs together with our internal modelling specialists. We
undertook analysis and benchmarking to assess whether sufficient
consideration was given to the uncertainty arising as a result of
inflationary and interest rate pressures on borrowers, which may not be
captured in modelled outputs given limitations over historic data.
• We performed stand-back analysis through industry benchmarking to
peers and other available sources of information to help assess the
appropriateness of the ECL provision overall.
• We assessed the adequacy and appropriateness of disclosures for
compliance with the accounting standards.
Key observations communicated to the Audit Committee
We are satisfied that provisions for the impairment of loans and advances to
customers were reasonable and recognised in accordance with the
applicable reporting framework based on our procedures performed.
Risk
Valuation of the defined benefit pension scheme assets
Refer to the Audit Committee Report (page 92); Accounting policy in Note
3.19 (page 146); and Notes 4 (page 147) and 34 (page 183) of the Consolidated
Financial Statements.
Retirement benefit surplus (2023/2024: £690million; 2022/2023: £989million)
Fair value of plan assets (2023/2024: £6,702 million; 2022/2023: £6,934million)
Present value of funded and unfunded obligations (2023/2024: £6,012 million;
2022/2023: £5,945million)
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 129
The valuation of the liabilities of the pension scheme is subject to the
following significant assumptions which are determined by an external firm
of pension actuaries:
a) Discount rate;
b) Inflation;
c) Future pension increases; and
d) Mortality.
Given the quantum of the defined benefit pension obligation, a movement
in the actuarial assumptions could result in a material difference in its value.
In addition, unquoted asset pools (2023/2024: £2,876million; 2022/2023:
£3,488million) of the defined benefit pension scheme contain certain assets
which are harder to value, increasing the risk of incorrect valuation.
The risks associated with the pension scheme remain elevated as a result of
the economic environment, which has led to greater volatility in the liability
assumptions and additional uncertainty over the valuation of pension
assets, which drives the surplus calculation. This risk remains unchanged
from the prior year.
Our response to the risk
Our audit procedures covered the Sainsbury’s Pension Scheme which has
two sections: the Sainsbury’s Section and the Argos Section.
• We gained an understanding of and documented the process used to
record pension balances by performing a walkthrough and assessing the
design effectiveness of key controls.
• With the support of EY pension actuaries we considered the
appropriateness of the key assumptions supporting the valuation of the
scheme liabilities, being the discount rate, inflation, future pension
increases and mortality. We developed an independent range of
reasonable assumptions upon which to assess those used by the Group
and its external actuarial experts.
• We assessed the impact on pension liabilities of changes in financial,
demographic and mortality assumptions and whether these were in line
with our expectations. We also tested the completeness and accuracy of
member data on which these assumptions are based.
• With respect to certain unquoted pension assets we obtained independent
confirmations from the respective fund managers for the assets held. In
conjunction with EY valuation specialists we independently valued a
sample of assets and compared these to management’s valuations,
critically assessing management’s valuation methodology.
• Where valuation adjustments had been made by management for changes
in relevant market indices and to reflect cash received or paid between
the dates of the fund managers’ net asset value statements and the end
of the Group’s accounting period, we, in conjunction with EY valuation
specialists, tested that the relevant assumptions used were appropriate.
• We evaluated the competence, capabilities and objectivity of
management’s external actuaries involved in the determination of the
actuarial assumptions.
• We assessed the adequacy of the financial statements disclosures in
respect of the defined benefit pension schemes and their compliance
with accounting standards including the appropriateness of the key
assumptions and sensitivities disclosed.
Key observations communicated to the Audit Committee
The assumptions used to value the defined benefit obligation are within an
acceptable range. Our testing of the valuation of the pension assets,
including certain harder to value assets, has not identified any misstatements.
Risk
IT environment
The IT systems across the Group are complex and there are varying levels of
integration between them. The systems are vital to the ongoing operations
of the business and to the integrity of the financial reporting process.
During the current year we continued to report deficiencies in certain IT
controls. These deficiencies related to IT systems that are part of the Group’s
control framework over financial reporting and required us to perform
incremental procedures.
This risk remains unchanged from the prior year.
Our response to the risk
• Together with our IT specialists, we held discussions with management to
understand the IT environment and walked through the key financial
processes to understand where IT systems were integral to the Group’s
controls over financial reporting. From this we identified which IT
systems to include in scope for our detailed IT testing.
• We assessed the IT general controls environment for the key systems
impacting the accurate recording of transactions and the presentation of
the financial statements.
• We designed our IT audit procedures to assess the IT environment,
including an assessment of controls over changes made to the systems
and controls over appropriate access to the systems.
• Where we found that adequate IT general controls were not in place, we
performed incremental substantive audit procedures in response to the
deficiencies identified for the systems within the scope of our audit.
Key observations communicated to the Audit Committee
We completed additional substantive testing in order to mitigate the risk of
material misstatement due to limitations in the IT general control
environment and did not identify issues from this testing.
In the prior year, our auditor’s report included a key audit matter in relation
to the Carrying value of non-current assets – store impairment. In the
current year, this was not a key audit matter given the improvement in
macroeconomic conditions impacting the performance of the retail store
portfolio including the impact of interest rate and inflation rate forecasts
onthe Group’s discount rate.
Our application of materiality
We apply the concept of materiality in planning and performing the audit,
inevaluating the effect of identified misstatements on the audit and in
forming our audit opinion.
Materiality
The magnitude of an omission or misstatement that, individually or in
theaggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. Materiality provides a
basis for determining the nature and extent of our audit procedures.
We determined materiality for the Group to be £35million (2022/2023:
£34million), which is 5.0% (2022/2023: 4.8%) of Profit before tax, adjusted
for non-recurring items. We believe that Profit before tax, adjusted for
non-recurring items provides us with the most relevant performance
measure as it adjusts for the effects of items which do not relate to the
ongoing trading of the Group.
We determined materiality for the Parent Company to be £136million
(2022/2023: £126million), which is 2% (2022/2023: 2%) of net assets. For our
testing of Parent Company balances that are consolidated into the Group
financial statements, an allocation of Group performance materiality was used.
Starting basis
Adjustments
Materiality
• Profit before tax: £277 million
• Adjust for non-recurring items:
£419 million
• These items are one-off in nature
• Total £696 million materiality basis
• Materiality of £35m (5.0% of
materaility basis)
Strategic Report Governance Report Financial Statements
130 J Sainsbury plc Annual Report and Financial Statements 2024
Independent Auditor’s Report
to the Members of J Sainsbury plc continued
During the course of our audit, we reassessed initial materiality and no
change to the planned materiality was needed from our original assessment
at planning.
Performance materiality
The application of materiality at the individual account or balance level.
Itis set at an amount to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements
exceeds materiality.
On the basis of our risk assessments, together with our assessment of the
Group’s overall control environment, our judgement was that performance
materiality was 50% (2022/2023: 50%) of our planning materiality, rounded
to £17million (2022/2023: £17million). We have set performance materiality
at this percentage to reduce to an appropriately low level the probability
that the aggregate of uncorrected and undetected misstatements
exceedsmateriality.
Audit work at component locations for the purpose of obtaining audit
coverage over significant financial statement accounts is undertaken based
on a percentage of total performance materiality. The performance materiality
set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of
misstatement at that component. In the current year, the range of performance
materiality allocated to components was £3.4million to £15.3million
(2022/2023: £3.4million to £15.0million).
Reporting threshold
An amount below which identified misstatements are considered as being
clearly trivial.
We agreed with the Audit Committee that we would report to them all
uncorrected audit differences in excess of £1.7million (2022/2023: £1.7million),
which is set at 5% of planning materiality, as well as differences below that
threshold that, in our view, warranted reporting on qualitative grounds.
We evaluate any uncorrected misstatements against both the quantitative
measures of materiality discussed above and in light of other relevant
qualitative considerations in forming our opinion.
Other information
The other information comprises the information included in the annual
report set out on pages 1 to 121 and 199 to 205, other than the financial
statements and our auditor’s report thereon. The directors are responsible
for the other information contained within the annual report.
Our opinion on the financial statements does not cover the other
information and, except to the extent otherwise explicitly stated in this
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial
statements or our knowledge obtained in the course of the audit or
otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to
determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed,
we conclude that there is a material misstatement of the other information,
we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the
Companies Act 2006
In our opinion, the part of the directors’ remuneration report to be audited
has been properly prepared in accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the strategic report and the directors’ report for
the financial year for which the financial statements are prepared is
consistent with the financial statements; and
• the strategic report and the directors’ report have been prepared in
accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the
Parent Company and its environment obtained in the course of the audit,
wehave not identified material misstatements in the strategic report or the
directors’ report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company,
or returns adequate for our audit have not been received from branches
not visited by us; or
• the Parent Company financial statements and the part of the Directors’
Remuneration Report to be audited are not in agreement with the
accounting records and returns; or
• certain disclosures of directors’ remuneration specified by law are not
made; or
• we have not received all the information and explanations we require for
our audit.
Corporate Governance Statement
We have reviewed the directors’ statement in relation to going concern,
longer-term viability and that part of the Corporate Governance Statement
relating to the Group and Company’s compliance with the provisions of the
UK Corporate Governance Code specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that
each of the following elements of the Corporate Governance Statement is
materially consistent with the financial statements or our knowledge
obtained during the audit:
• Directors’ statement with regards to the appropriateness of adopting the
going concern basis of accounting and any material uncertainties
identified set out on page 63;
• Directors’ explanation as to their assessment of the company’s prospects,
the period this assessment covers and why the period is appropriate set
out on page 62;
• Directors’ statement on whether they have a reasonable expectation that
the Group will be able to continue in operation and meets its liabilities set
out on page 63;
• Directors’ statement on fair, balanced and understandable set out on
page 123;
• Board’s confirmation that it has carried out a robust assessment of the
emerging and principal risks set out on page 53;
• The section of the annual report that describes the review of
effectiveness of risk management and internal control systems set out on
page 94; and;
• The section describing the work of the audit committee set out on page 93
Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out
on page 123, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and
for such internal control as the directors determine is necessary to enable
the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for
assessing the Group and Parent Company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the directors either
intend to liquidate the Group or the Parent Company or to cease operations,
or have no realistic alternative but to do so.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 131
Auditor’s responsibilities for the audit of the financial
statements
Our objectives are to obtain reasonable assurance about whether the
financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always
detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
Explanation as to what extent the audit was considered capable
ofdetecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws
and regulations. We design procedures in line with our responsibilities,
outlined above, to detect irregularities, including fraud. The risk of not
detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery or intentional misrepresentations,
orthrough collusion. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below.
However, the primary responsibility for the prevention and detection of
fraud rests with both those charged with governance of the Company
andmanagement.
• We obtained an understanding of the legal and regulatory frameworks that
are applicable to the Group and determined that the most significant are:
– Those that relate to the form and content of the financial statements,
such as UK adopted international accounting standards, the UK
Companies Act 2006, the UK Corporate Governance Code;
– Those that relate to the Bank, such as the regulations, license
conditions and supervisory requirements of the Prudential Regulation
Authority (“PRA”) and the Financial Conduct Authority (“FCA”); and
– Industry-related such as compliance with the requirements of the
Groceries Supply Code of Practice.
• We understood how J Sainsbury plc is complying with those frameworks by
making enquiries of management, Internal audit and those responsible for
legal and compliance procedures. We corroborated our enquiries through
our review of board minutes and papers provided to the Audit Committee
and attendance at all meetings of the Audit Committee, as well as
consideration of the results of our audit procedures across the Group.
Weassessed the susceptibility of the Group’s financial statements to
material misstatement, including how fraud might occur by making an
assessment of the key fraud risks to the Group and the manner in which
such risks may manifest themselves in practice, based on our previous
knowledge of the Group as well as an assessment of the current
businessenvironment.
• Based on this understanding we designed our audit procedures to
identify non-compliance with such laws and regulations. Where the risk
was considered to be higher, we performed audit procedures to address
each identified risk of material misstatement. These procedures included
those referred to in the “Accounting and reporting for the Group’s phased
withdrawal from the core banking business”, “Supplier arrangements”
and “Aspects of revenue recognition” key audit matters section above.
These procedures included testing manual journals and were designed to
provide reasonable assurance that the financial statements were free
ofmaterial fraud or error. We evaluated the design and operational
effectiveness of controls put in place to address the risks identified,
orthat otherwise prevent, deter and detect fraud. We also considered
performance targets and their influence on efforts made by management
to manage earnings.
• The Group has disclosed in Note 37 that employment tribunal claims have
been received in respect of current and former Sainsbury’s store
colleagues alleging their work is of equal value to that of colleagues
working in Sainsbury’s distribution centre and differences in pay and
other terms are not objectively justifiable. We inspected documentation
prepared by management, the in-house legal counsel and management’s
external legal advisors. We also discussed the nature of the claim and the
basis for the disclosure presented in Note 37 with management, the
external legal advisors and members of the Audit Committee.
A further description of our responsibilities for the audit of the financial
statements is located on the Financial Reporting Council’s website
at https://www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Other matters we are required to address
• Following the recommendation from the audit committee we were
appointed by the Company on 8 July 2015 to audit the financial
statements for the 52 weeks ended 12 March 2016 and subsequent
financial periods.
• The period of total uninterrupted engagement including previous
renewals and reappointments is 9 years, covering the years ending
12March 2016 to 2 March 2024.
• The audit opinion is consistent with the additional report to the
auditcommittee.
Use of our report
This report is made solely to the Company’s members, as a body, in
accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditor’s
report and for no other purpose. To the fullest extent permitted by law, we
do not accept or assume responsibility to anyone other than the Company
and the Company’s members as a body, for our audit work, for this report,
orfor the opinions we have formed.
Colin Brown
(Senior statutory auditor)
for and on behalf of Ernst & Young LLP, Statutory Auditor
London
24 April 2024
Strategic Report Governance Report Financial Statements
132 J Sainsbury plc Annual Report and Financial Statements 2024
Consolidated income statement
52 weeks to 2 March 2024
52 weeks to 4 March 2023
Non-Non-
underlyingunderlying
items items
Underlying(Note 5)TotalUnderlying (Note 5)Total
Note£m£m£m£m£m£m
Revenue
6
32 ,7 21
(2 1)
32 ,700
3 1 ,4 91
—
3 1 ,4 91
Cost of sales
(3 0,1 2 7)
(1 39)
(30,266)
(28,9 96)
(4 1 3)
(2 9,4 0 9)
Impairment loss on financial assets
(9 8)
—
(9 8)
(78)
—
(78)
Gross profit/(loss)
2 ,4 9 6
(16 0)
2, 336
2,4 1 7
(41 3)
2,0 04
Administrative expenses
(1, 5 53)
(3 09)
(1,8 62)
(1 ,4 8 0)
(35)
(1,51 5)
Other income
52
6
58
35
38
73
Operating profit/(loss)
995
(4 6 3)
532
97 2
(4 10)
562
Finance income
10
30
51
81
18
56
74
Finance costs
10
(3 24)
(1 2)
(3 36)
(30 0)
(9)
(3 09)
Profit/(loss) before tax
701
(4 24)
277
69 0
(3 63)
327
Income tax (expense)/credit
11
(1 85)
45
(140)
(15 7)
37
(12 0)
Profit/(loss) for the financial year
516
(3 7 9)
137
533
(32 6)
207
pence
pence
pence
pence
Earnings per share
12
Basic earnings
2 2.1
5.9
23 .0
9.0
Diluted earnings
2 1 .6
5.7
2 2.7
8.8
The notes on pages 137 to 193 form an integral part of these financial statements.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 133
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
1 37
207
Items that will not be subsequently reclassified to the income statement
Remeasurement on defined benefit pension schemes
34
(3 89)
(1,39 8)
Movements on financial assets at fair value through other comprehensive income
1
1
Cash flow hedges fair value movements – inventory hedges
30
(67)
1 23
Current tax relating to items not reclassified
10
25
Deferred tax relating to items not reclassified
11
17 7
322
(26 8)
(92 7)
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
30
(82)
(3 0)
Items reclassified from cash flow hedge reserve
30
4
(18)
Deferred tax on items that may be reclassified
11
17
14
(6 4)
(30)
Total other comprehensive loss for the year (net of tax)
(33 2)
(957)
Total comprehensive loss for the year
(195)
(7 50)
The notes on pages 137 to 193 form an integral part of these financial statements.
Strategic Report Governance Report Financial Statements
134 J Sainsbury plc Annual Report and Financial Statements 2024
Consolidated balance sheet
2 March 2024
4 March 2023
Note
£m
£m
Non-current assets
Property, plant and equipment
14
9, 2 82
8,201
Right-of-use assets
15
4,296
5,345
Intangible assets
16
806
1 ,0 24
Investments in joint ventures and associates
2
2
Financial assets at fair value through other comprehensive income
18
761
515
Trade and other receivables
20
108
56
Amounts due from Financial Services customers and other banks
21
1 ,4 6 7
1,908
Derivative financial assets
30
68
217
Net retirement benefit surplus
34
690
989
1 7, 4 8 0
18 ,257
Current assets
Inventories
19
1 ,927
1,899
Trade and other receivables
20
582
627
Amounts due from Financial Services customers and other banks
21
3 ,05 0
3,4 8 4
Financial assets at fair value through other comprehensive income
18
17
494
Derivative financial assets
30
8
70
Cash and cash equivalents
31
1,987
1,319
7,571
7,893
Assets held for sale
22
10
8
7, 5 8 1
7, 9 0 1
Total assets
2 5,06 1
2 6,1 58
Current liabilities
Trade and other payables
23
(5,0 91)
(4 , 83 7)
Amounts due to Financial Services customers and other deposits
24
(5,5 15)
(4 ,8 8 0)
Borrowings
33
(65)
(5 3)
Lease liabilities
15
(51 5)
(1 ,53 3)
Derivative financial liabilities
30
(2 8)
(1 6)
Taxes payable
(12 5)
(1 55)
Provisions
25
(11 3)
(14 0)
(1 1 ,4 5 2)
(11 ,614)
Net current liabilities
(3,8 7 1)
(3 ,71 3)
Non-current liabilities
Trade and other payables
23
(1 1)
—
Amounts due to Financial Services customers and other deposits
24
(206)
(1,0 66)
Borrowings
33
(1, 1 30)
(6 03)
Lease liabilities
15
(4 ,8 3 9)
(4 ,9 56)
Derivative financial liabilities
30
(5 9)
(5 8)
Deferred income tax liability
11
(32 9)
(4 76)
Provisions
25
(167)
(1 32)
(6, 74 1)
(7, 2 9 1)
Total liabilities
(1 8,1 93)
(1 8,9 05)
Net assets
6,86 8
7, 2 5 3
Equity
Called up share capital
26
678
672
Share premium
1 ,4 3 0
1 ,4 1 8
Merger reserve
568
568
Capital redemption and other reserves
27
955
954
Retained earnings
3,2 37
3,641
Total equity shareholders' funds
6,86 8
7, 2 5 3
The notes on pages 137 to 193 form an integral part of these financial statements.
Approved by the Board of Directors on 24 April 2024, and are signed on its behalf by:
Simon Roberts Bláthnaid Bergin
Chief Executive Chief Financial Officer
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 135
Consolidated statement of changes in equity
Capital
Share redemption
Called up premium Merger and other RetainedTotal
share capitalaccountreservereserves earningsequity
Note
£m
£m
£m
£m
£m
£m
At 5 March 2023
672
1 ,41 8
568
954
3,6 41
7, 2 5 3
Profit for the financial year
—
—
—
—
1 37
137
Other comprehensive loss
27
—
—
—
(14 7)
(38 9)
(5 36)
Tax relating to other comprehensive loss
—
—
—
99
105
20 4
Total comprehensive loss
—
—
—
(4 8)
(147)
(19 5)
Cash flow hedges losses transferred to inventory
27, 3 0
—
—
—
32
—
32
Transactions with owners:
Dividends
13
—
—
—
—
(30 6)
(306)
Share-based payment
35
—
—
—
—
87
87
Purchase of own shares
27
—
—
—
(1 8)
—
(1 8)
Allotted in respect of share option schemes
26, 27
6
12
—
35
(38)
15
At 2 March 2024
678
1 ,4 30
568
955
3, 23 7
6, 868
Capital
Share redemption
Called up premium Merger and otherRetainedTotal
share capitalaccountreserve reserves earningsequity
Note
£m
£m
£m
£m
£m
£m
At 6 March 2022
668
1 ,4 0 6
56 8
1 ,021
4 ,760
8 ,4 2 3
Profit for the financial year
—
—
—
—
2 07
207
Other comprehensive income/(loss)
27
—
—
—
80
(1,3 98)
(1,3 18)
Tax relating to other comprehensive income/(loss)
—
—
—
14
347
3 61
Total comprehensive income/(loss)
—
—
—
94
(844)
(750)
Cash flow hedges losses transferred to inventory
27, 30
—
—
—
(1 3 9)
—
(1 39)
Transactions with owners:
Dividends
13
—
—
—
—
(3 19)
(319)
Share-based payment
35
—
—
—
—
58
58
Purchase of own shares
27
—
—
—
(4 5)
—
(4 5)
Allotted in respect of share option schemes
26, 27
4
12
—
23
(26)
13
Other adjustments
—
—
—
—
5
5
Tax on items charged to equity
—
—
—
—
7
7
At 4 March 2023
67 2
1 ,4 1 8
568
95 4
3,6 41
7, 2 5 3
The notes on pages 137 to 193 form an integral part of these financial statements.
Strategic Report Governance Report Financial Statements
136 J Sainsbury plc Annual Report and Financial Statements 2024
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
32 7
Net finance costs
10
255
2 35
Operating profit
532
562
Depreciation
14,15
989
1,036
Amortisation
16
189
172
Net impairment loss on non-financial assets
14,15,16
2 35
315
Profit on sale of non-current assets and early termination of leases
(2)
(1 5)
Non-underlying fair value movements
5
46
29
Share-based payments expense
35
89
59
Defined benefit scheme expense/(income)
34
7
(2)
Cash contributions to defined benefit scheme
34
(4 4)
(4 4)
Operating cash flows before changes in working capital
2 ,04 1
2,1 1 2
Decrease/(increase) in inventories
5
(105)
Decrease in financial assets at fair value through other comprehensive income
(1 35)
(2 07)
(Increase)/decrease in trade and other receivables
(5)
53
Decrease/(increase) in amounts due from Financial Services customers and other deposits
459
(2 31)
Increase in trade and other payables
2 14
28 0
(Decrease)/increase in amounts due to Financial Services customers and other deposits
(22 5)
6 87
Increase in provisions
8
—
Cash generated from operations
2, 362
2,589
Interest paid
(336)
(316)
Corporation tax paid
(6 1)
(10 3)
Net cash generated from operating activities
1,965
2 ,170
Cash flows from investing activities
Purchase of property, plant and equipment
(1 , 38 1)
(52 5)
Initial direct costs on new leases
(6)
(16)
Purchase of intangible assets
(1 78)
(2 1 3)
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 ,01 5)
(7 09)
Cash flows from financing activities
Proceeds from issuance of ordinary shares
15
13
Proceeds from borrowings
33
57 5
—
Repayment of borrowings
(4 1)
(95)
Purchase of own shares
(18)
(45)
Capital repayment of lease obligations
(507)
(514)
Dividends paid on ordinary shares
13
(306)
(31 9)
Net cash used in financing activities
(2 82)
(96 0)
Net increase in cash and cash equivalents
668
501
Opening cash and cash equivalents
1, 319
818
Closing cash and cash equivalents
31
1 ,987
1,319
The notes on pages 137 to 193 form an integral part of these financial statements.
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 ,60 4 million and £(724) million respectively.
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J Sainsbury plc Annual Report and Financial Statements 2024 137
Notes to the consolidated financial statements
1 General information
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.
Within these consolidated financial statements, ‘2024’ refers to the 52 weeks to 2 March 2024, or as at 2 March 2024; and ‘2023’ refers to the 52 weeks to
4 March 2023, or as at 4 March 2023.
The Group’s principal activities are Food, General Merchandise and Clothing retailing and Financial Services.
2 Basis of preparation and consolidation
2.1 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 12 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.
Climate change considerations
In preparing the Group’s financial statements, consideration has been given to the impact of both physical and transition climate change risks, as described
within the Task Force on Climate-related Financial Disclosures section on page 30, and how these impact the financial statements. The Group has
implemented processes to identify, assess and manage these risks, including scenario analysis and stress testing to understand the potential financial
impact on the Group’s operations and assets. Consideration has also been given to the potential impact of policy, technology and market changes that are
being developed in response to climate change, and their interdependence on each other. While it is not believed that these climate change risks have a
material impact on the Group’s financial statements, it is recognised that the uncertainty and complexity of these issues may make it challenging to fully
capture their potential impact. The ongoing assessment of these risks will be included in future financial statements as they become clearer, taking into
account the requirements of UK-adopted international accounting standards. Monitoring and assessment of the regulatory environment and any new
standards that may be developed in the future will continue. Further narrative disclosure has been provided in the following notes:
Note
– Going concern
2.2
– Property, plant and equipment
3.5
– Significant judgements and estimates
4
– Impairment of non-financial assets
17.1
– Provisions
25.1
– Retirement benefit obligations
34.5
The policy, technology and market changes in response to climate change are still developing, and these are interdependent upon each other, and consequently
the financial statements cannot capture all possible future outcomes as these are not yet known. The degree of certainty of these changes may also mean
that they cannot be taken into account when determining asset and liability valuations and the timing of future cash flows under the requirements of UK
adopted international accounting standards.
2.2 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 on
page 63 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.
Strategic Report Governance Report Financial Statements
138 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
2 Basis of preparation and consolidation continued
2.2 Going concern continued
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 as described in the Strategic Report
on page 63. 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.
2.3 Basis of consolidation
a) Subsidiaries
Subsidiaries are all entities, including structured entities (see below) over which the Group has control. This is when the Group is exposed to, or has rights to,
variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The results of subsidiaries
are included in the income statement from the date of acquisition or, in the case of disposals, up to the effective date of disposal. Intercompany transactions
and balances between Group companies are eliminated upon consolidation.
Sainsbury’s Thistle Scottish Limited Partnership and Nectar 360 Services LLP are partnerships which are fully consolidated into these Group financial
statements. The Group has taken advantage of the exemption conferred by Regulation 7 of the Partnerships (Accounts) Regulations 2008 and has therefore
not appended the accounts of these qualifying partnerships to these financial statements.
b) Joint ventures and associates
Investments in joint arrangements are classified as joint ventures whereby the joint controlling parties have rights to the net assets of the arrangement.
Associates are entities over which the Group has significant influence but not control.
Investments in joint ventures and associates are carried in the Group balance sheet at historical cost plus post-acquisition changes in the Group’s share of net
assets of the entity, less any provision for impairment. Where the Group transacts with a joint venture or associate, profits and losses are eliminated to the
extent of the Group’s interest in the joint venture or associate.
Joint ventures with a different year-end date to the Group are reported to include the results up to 29 February, the nearest month-end to the Group’s
year-end. Adjustments are made for the effects of significant transactions or events that occurred between 29 February and the Group’s balance sheet date.
c) Business combinations
Business combinations are accounted for using the acquisition method where any excess of the purchase consideration over the fair value of the assets,
liabilities and contingent liabilities acquired and the resulting deferred tax thereon is recognised as goodwill which is then reviewed annually for impairment.
Acquisition related costs are expensed.
Where relevant and in particular in property related acquisitions, the optional ‘concentration test’ and ‘substantive process test’ set out within IFRS 3 Business
Combinations are considered to assess whether assets and liabilities acquired in a transaction constitute a business as opposed to an asset acquisition.
d) Asset acquisitions
Where the value of assets in a target, such as investment property, represents substantially all of the fair value of the gross assets acquired, the transaction
is accounted for as an asset acquisition.
e) Foreign currencies
Foreign operations
The Group has operations in Asia that source and purchase certain general merchandise and clothing inventory. In addition, the Group had a trading entity in
Ireland during the financial year. On consolidation, assets and liabilities of foreign operations are translated into pound sterling at year-end exchange rates.
The results of foreign operations are translated into pound sterling at average rates of exchange for the year. Exchange differences arising are recognised in
the Group statement of comprehensive income/(loss) and are included in the Group’s translation reserve.
Foreign currency transactions
Transactions denominated in foreign currencies are translated at the exchange rate at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at the exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 139
2 Basis of preparation and consolidation continued
2.4 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.
2.5 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 5. Other APMs are detailed in notes A1, A2, A3 and A4 of this report, which include 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.
2.6 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 within the Annual Report.
3 Material accounting policies
3.1 Revenue
Revenue arises from the sale of goods and services in the course of the Group’s ordinary activities, net of returns, related discounts and excluding Value
Added Tax (VAT) and, in the case of Financial Services, interest receivable, fees and commissions. Revenue is recognised when the Group has a contract
with a customer and a performance obligation has been satisfied, at the transaction price allocated to that performance obligation.
a) Retail sales
Sale of goods
Revenue from the sale of goods is recognised at point of sale or, where later, upon collection by, or delivery to, the customer as this is the point in which
control has passed. Where consideration has been received in advance of the performance obligation being satisfied, a contract liability is recognised.
Other revenue items
Other revenue items comprise income from commissions and wholesale revenue made directly to third-party customers.
Commission revenue relates to the sale of third-party products where it has been determined that the Group is acting as an agent. Sales commission from
third parties is recognised when the related goods or services are sold.
Strategic Report Governance Report Financial Statements
140 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
3 Material accounting policies continued
3 Revenue continued
b) Nectar points
The issuance of Nectar points creates a separate performance obligation and therefore a portion of the transaction price is allocated to the loyalty
programme using the relative standalone selling price of points issued, and the corresponding revenue deferred. The fair value of the points awarded is
determined with reference to the value per point to a customer and considers expected redemption rates (breakage) and the money off that each point
entitles a customer to. The deferral is treated as a deduction from revenue and recognised as a contract liability within deferred income. The revenue
deferred is subsequently recognised when the Nectar points are redeemed by the customer.
c) Financial Services
Financial Services revenue consists of interest, fees and commission income from the provision of retail banking and insurance-related activities.
Interest income
Interest income is recognised in the income statement for all instruments measured at amortised cost using the effective interest method.
The effective interest rate of a financial asset is calculated on initial recognition and is applied to the gross carrying amount of the asset. For financial
assets that have become credit-impaired subsequent to initial recognition, interest income is calculated by applying the effective interest rate to the
amortised cost of the financial asset net of impairment. If the asset is no longer credit impaired, then the calculation of interest income reverts to the
gross basis. In calculating the effective interest rate of a financial instrument the Group takes into account all amounts that are integral to the yield
of a financial instrument as well as incremental transaction costs.
Fees and commission income
Fees and commissions that are not integral to the effective interest rate calculation relate primarily to certain credit card and storecard fees, ATM interchange
fees, insurance introduction commission and warranty commission receivable. These are recognised in the income statement on an accruals basis as
performance obligations are satisfied. Where in the case of insurance commissions the income comprises an initial commission and profit share, both
are recognised on completion of the service to the extent reliably measurable. Where there is a risk of potential claw back, an appropriate element of the
commission receivable is deferred and amortised over the clawback period.
Income from the sale of travel money, representing the difference between the cost price and the selling price, is recognised when the sale to the customer
takes place.
3.2 Cost of sales
Cost of sales consists of all costs that are directly attributable to the point of sale including warehouse, transportation costs and all the costs of operating
retail outlets. In the case of Financial Services, cost of sales includes interest expense on operating activities, calculated using the effective interest method.
Supplier incentives, rebates and discounts, collectively known as ‘supplier arrangements’, represent a material deduction to cost of sales and directly affect
the Group’s reported margin.
Income from supplier arrangements is recognised when earned by the Group when all obligations per the terms of the contract have been satisfied. Any
supplier arrangements which are linked to inventory purchases are included within the cost of the related inventory, and therefore recognised within cost of
sales once the inventory is sold. Unpaid amounts relating to supplier arrangements are recognised within trade and other receivables, unless there is a legal
right of offset, in which case it is recognised within trade and other payables. Amounts which have been invoiced at the balance sheet date are categorised as
supplier arrangements due and those not yet invoiced are categorised as accrued supplier arrangements.
3.3 Finance income and costs
Finance income and costs, excluding those arising from Financial Services, are recognised in the income statement for financial assets and liabilities
measured at amortised cost using the effective interest method.
For Financial Services, finance income and finance costs are recognised in revenue and cost of sales.
Fair value remeasurements relate to net fair value movements on derivative financial instruments not designated in a hedging relationship.
3.4 Taxation
a) Current tax
Current tax is accounted for on the basis of tax laws enacted or substantively enacted at the balance sheet date. Current tax is charged or credited to the
income statement, except when it relates to items charged to equity or other comprehensive income.
b) Deferred tax
Deferred tax is accounted for on the basis of temporary differences arising from differences between the tax base and accounting base of assets
and liabilities.
Deferred tax is recognised for all temporary differences, except to the extent where it arises from the initial recognition of an asset or a liability in a
transaction that is not a business combination and, at the time of transaction, affects neither accounting profit nor taxable profit. It is determined using tax
rates (and laws) that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the related deferred income tax
asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised.
Deferred tax is charged or credited to the income statement, except when it relates to items charged or credited directly to equity or other comprehensive income.
Deferred tax is provided on temporary differences associated with investments in subsidiaries, branches, and joint ventures except where the Group is able
to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 141
3 Material accounting policies continued
3.5 Property, plant and equipment
a) Land and buildings
Land and buildings are held at historical cost less accumulated depreciation and, where appropriate, any provision for impairment as determined in
accordance with note 3.8. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition for
intended use, including any directly attributable internal payroll-related costs for employees who are associated with projects in order to bring the assets
into use.
b) Fixtures and equipment
Fixtures, equipment and vehicles are held at cost less accumulated depreciation and, where appropriate, any provision for impairment as determined in accordance
with note 3.8. Cost includes the original purchase price of the asset and the costs attributable to bringing the asset to its working condition and its intended use,
including any directly attributable internal payroll-related costs for employees who are associated with projects in order to bring the assets into use.
c) Work in progress
Capital work in progress is held at cost less any provision for impairment.
d) Depreciation
Depreciation is calculated to write down the cost of the assets to their residual values, on a straight-line basis over their useful economic life, using the
following rates:
• Freehold buildings and leasehold improvements 50 years, or the lease term if shorter
• Fixtures, equipment and vehicles three to 15 years
• Freehold land not depreciated
Capital work in progress (which excludes land) is not depreciated prior to being available for its intended commercial use.
e) Disposals and retirement
The gain or loss on disposal or retirement of an asset is determined by comparing proceeds less any associated costs of disposal with the asset’s carrying
amount and is recognised within operating profit.
f) Climate change impacts
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each reporting period. This includes consideration over
climate change-related risks which may impact the useful lives or residual values of the Group’s assets, such as the impact of flood risks on store and
non-store assets, changes in regulations related to carbon emissions and any anticipated replacement of existing assets with new technologies.
g) Capitalisation of interest
Borrowing costs that are directly attributable to the acquisition or construction of qualifying assets are capitalised to the cost of the asset, gross of tax relief.
3.6 Leases
a) Group as lessee
The Group’s lease portfolio is principally comprised of property leases of land and buildings in relation to stores, distribution centres and support offices,
but also includes other assets such as motor vehicles. The leases have varying terms and often include break clauses or options to renew beyond the
non-cancellable periods.
The Group presents additions to lease liabilities and right-of-use assets in line with the disclosure requirements of IFRS 16 Leases. In doing so, additions to
right-of-use assets and lease liabilities in note 15 include the net impact of new leases, terminations, modifications, and reassessments.
Right-of-use assets
Right-of-use assets are recognised at the commencement date of the lease, when the underlying asset is available for use. The cost of right-of-use assets
comprises the amount of lease liabilities recognised, any initial direct costs incurred, lease payments made at or before the commencement date and less
any lease incentives received. Right-of-use assets are subsequently measured at cost, less any accumulated depreciation and impairment losses, and
adjusted for any subsequent modifications which include terminations and reassessments which all represent a remeasurement of lease liabilities.
The recognised right-of-use assets are depreciated on a straight-line basis over the shorter of the estimated useful life and the lease term.
Lease liabilities
Lease liabilities are recognised at the commencement date of the lease and are measured at the present value of lease payments to be made over the lease
term, discounted using the incremental borrowing rate (IBR) at the lease commencement date if the interest rate implicit in the lease is not readily determinable.
The lease payments include fixed payments and variable lease payments that depend on an index or a rate (using the relevant rate at the commencement
date of the lease), less any lease incentives receivable. The variable lease payments that do not depend on an index or a rate are recognised as an expense in
the period in which the event or condition that triggers the payment occurs. For agreements which contain both lease and non-lease components, such as
cleaning and maintenance services, the non-lease component is excluded from the lease payments used to measure the lease liabilities.
The IBRs depend on the start date and term of the lease, and are determined based on a reference (risk free) rate and adjustments to reflect the Group’s
credit risk.
The Group determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is
reasonably certain to be exercised, or any periods covered by an option to terminate the lease (a break clause), if it is reasonably certain not to be exercised.
After the commencement date of the lease, the lease liability is subsequently measured at amortised cost using the effective interest rate method. The
carrying amount of lease liabilities is remeasured when there is a change in the future lease payments due to a change in the lease term such as a
recognition of an extension or break option, a change in the fixed lease payments or a change in the assessment to purchase the underlying asset.
Strategic Report Governance Report Financial Statements
142 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
3 Material accounting policies continued
3.6 Leases continued
Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to those leases that have a lease term of 12 months or less from the commencement date and
do not contain a purchase option. It also applies the low-value asset recognition exemption to groups of underlying leases where the underlying assets leased
are considered uniformly low value. Lease payments on short-term leases and leases of low-value assets are expensed to the income statement.
b) Group as a lessor
The Group leases out owned properties and sublets leased properties under operating and finance leases. Such properties include mall units, stores and units
within stores.
Subleases
Classification is assessed with reference to the head lease right-of-use asset. This assessment considers, among other factors, whether the sublease
represents the majority of the remaining life of the head lease. The ratio of rental income to head lease rental payments is used to determine how much of
the right-of-use asset should be derecognised, or analysis of square foot leased in the headlease and sublease where appropriate. This assessment takes into
consideration whether the sublease/headlease are above or below market rate.
Finance leases
Amounts due under finance leases are recorded as a receivable at an amount equal to the net investment in the lease. This is initially calculated and
recognised using the IBR prevalent in the underlying headlease at the recognition date. Any difference between the derecognised right-of-use asset
and the newly recognised amounts due for leases under finance leases is immediately recognised in the income statement. The Group recognises
finance income over the lease term, reflecting a constant periodic rate of return on the Group’s net investment in the lease.
Operating leases
Operating lease income is recognised as earned on a straight-line basis over the lease term.
3.7 Intangible assets
a) Goodwill
Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair value of the Group’s share of the net identifiable assets of
the acquired subsidiary at the date of acquisition. At the acquisition date goodwill is allocated to the cash-generating unit (CGU) or group of CGUs within the
Retail or Financial Services segments that are expected to benefit from the combination. Goodwill is not amortised, but is tested at least annually for
impairment as set out in note 3.8.
b) Computer software
Software and licences which are capitalised include costs incurred to acquire the assets as well as any external and internal costs incurred in the
development of software. External and internal costs are external direct costs, as well as directly attributable internal payroll-related costs for employees
who are associated with projects in order to bring the assets into use. Costs associated with internally generated software are recognised as an intangible
asset only if they can be separately identified, it is probable that the asset will generate future economic benefits which exceed one year, and the cost can
be measured reliably. Software under development is not amortised, but held at cost less any impairment loss.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to which it relates. Costs associated
with maintaining computer software are recognised as an expense as incurred.
c) Cloud computing arrangements
Software as a Service (SaaS) arrangements are service contracts providing the Group with the right to access a cloud provider’s application software over the
contract period. Typically, such arrangements involve ongoing licence fees to obtain access to the cloud provider’s application software, as well as upfront
costs incurred to configure or customise the SaaS solution.
Configuration and customisation costs are capitalised in the following instances as intangible assets:
• The Group has both a contractual right to take possession of the software at any time without significant penalty, and the ability to run the software
independently of the host vendor
• The costs incurred meet the definition of and recognition criteria for an intangible asset. This includes for example the development of software code that
enhances or modifies, or creates additional capability to, existing systems controlled by Sainsbury’s
Where these conditions are not met, costs incurred to configure or customise, and the ongoing fees to obtain access to the cloud provider’s application
software, are recognised as operating expenses when the services are received.
Where the configuration or customisation of a SaaS solution is performed by the SaaS vendor, consideration is given to whether this activity is distinct from
the provision of the solution itself. This assessment considers the nature of the activities, and whether benefit can be obtained from any of the services in
isolation. Where the activity is not considered distinct, the costs are capitalised as a prepayment and amortised over the expected useful life of the solution.
d) Acquired intangible assets
Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Intangible assets with finite useful economic lives
are carried at cost less accumulated amortisation and any provision for impairment. Amortisation of acquired intangible assets is recorded within
administrative expenses.
e) Amortisation
Amortisation is calculated to write down the cost of the assets to their residual values, on a straight-line basis over their useful economic life, using the
following rates:
• Computer software five to 15 years
• Configuration and customisation costs capitalised as part of SaaS arrangements life of the SaaS arrangement
• Acquired intangible assets five to ten years
• Goodwill not amortised
Capital work in progress is not amortised prior to being available for its intended commercial use.
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3 Material accounting policies continued
3.8 Impairment
a) Non-financial assets
Property, plant and equipment (PPE), right-of-use assets, and intangible assets are assessed on an ongoing basis to determine whether there is an indication
that the net book value is no longer supportable. If any such indication exists, the recoverable amount of the asset, being the higher of its fair value less costs
to dispose and its value-in-use (VIU), is estimated in order to determine the extent of the impairment loss. Where it is not possible to estimate the recoverable
amount of an individual asset, the Group estimates the recoverable amount of the CGU to which the asset belongs.
If the recoverable amount of an asset or CGU is estimated to be less than its carrying amount, the carrying amount of the asset or CGU is impaired to its
recoverable amount.
Where there has been a change in the estimates used to determine the recoverable amount and an impairment loss subsequently reverses, the carrying
amount of the asset or CGU is increased to the revised estimate of its recoverable amount, although not to exceed the carrying amount that would have been
determined had no impairment loss been recognised. Any impairment loss or reversal of impairment is recognised in the income statement.
Goodwill is assessed annually by measuring the recoverable amount of the CGU, calculated as the higher of fair value less cost to dispose and VIU. Where the
carrying value of the CGU exceeds the recoverable amount, an impairment loss is recognised in the income statement. The impairment charge is allocated
first against goodwill and then pro rata against other assets within the CGU by reference to the carrying amount of each remaining asset in the CGU.
Impairment losses recognised for goodwill are not subsequently reversed.
Identification of a cash-generating unit
CGUs are deemed the smallest group of assets that independently generate cash inflows and are independent of the cash flows generated by other assets
and are identified within the respective reportable operating segments.
Retail
CGUs are deemed to be corporate level business units, trading stores, store pipeline development sites or in certain cases for Argos, a cluster of stores.
PPE, intangible assets and right-of-use assets are allocated to the store CGU they are associated with. For non-store assets, including depots and IT assets,
these are allocated to store CGUs where it can be done on a reasonable and consistent basis, otherwise these are allocated to the CGU corporate level to which
they relate.
Goodwill recognised on acquisition of retail chains of stores is allocated, where possible, to respective store CGUs, otherwise it is attributed to the acquired
business as a whole.
Financial Services
Cash generating units are deemed to be each respective product or product group that is capable of generating cash flows independent of other products.
Non-product assets are reviewed separately as collective CGUs with the products that they support.
b) Financial assets
Impairments on financial assets are accounted for using a three-stage forward-looking expected credit loss (ECL) approach. The Group is required to record
an allowance for ECL for all loans and other debt financial assets not held at fair value through profit or loss (FVTPL), together with loan commitments and
financial guarantee contracts.
ECLs are based on the difference between the cash flows due in accordance with the contract and all the cash flows that the Group expects to receive,
discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other
credit enhancements that are integral to the contractual terms.
For Financial Services portfolios of loans, such as credit card lending, storecard lending and personal loans, impairment provisions are calculated for groups
of assets, otherwise impairment is identified at a counterparty-specific level. The allowance is calculated by reference to the estimated probability of default
(PD), exposure at default (EAD) and loss given default (LGD).
• The probability of default represents the likelihood of a borrower defaulting within 12 months from the balance sheet date or within the expected lifetime
of the borrower
• Exposure at default represents the expected amount due from the borrower at the point of default by reference to exposure at the balance sheet date
adjusted for expected future changes including repayments and utilisation of undrawn facilities
• Loss given default represents the expected percentage loss at the point of default relative to the EAD. The estimate takes into account utilisation of any
expected collections and recoveries strategies, debt sale arrangements and collateral
3.9 Inventories
Inventories comprise goods held for resale and are valued on a standard cost or weighted average cost basis which approximates to actual cost and is carried
at the lower of cost or net realisable value.
Cost includes all direct expenditure and other appropriate attributable costs incurred in bringing inventories to their present location and condition. Net
realisable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in marketing, selling and distribution.
Provision is made for obsolete, slow-moving or damaged items where appropriate.
3.10 Trade and other receivables
Trade and other receivables are non-interest bearing and are on commercial terms. They are initially recognised at fair value and subsequently measured
at amortised cost less allowances for expected credit losses, using the simplified approach, with adjustments for factors specific to each receivable.
3.11 Loans and advances from financial services customers and other banks
Loans and advances are initially recognised at fair value and subsequently held at amortised cost, using the effective interest method, less provision
for impairment and recognised on the balance sheet when cash is advanced.
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Notes to the consolidated financial statements continued
3 Material accounting policies continued
3.12 Assets held for sale
Assets are classified as held for sale if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and
also only when the sale is highly probable within one year from the date of classification and the assets are available for sale in their present condition. Assets
held for sale are stated at the lower of the carrying amount and fair value less costs to dispose. Any amounts no longer classified as assets held for sale are
measured at the lower of its carrying amount before the asset was classified as held for sale, adjusted for any depreciation that would have been recognised
had the asset not been classified as held for sale, and its recoverable amount at the date of the subsequent decision not to sell.
3.13 Trade and other payables
Trade payables are initially recognised at fair value and subsequently measured at amortised cost. Amounts are presented net of supplier arrangements due
where there is a contractual right of offset.
3.14 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is probable that an outflow of economic
resources will be required to settle the obligation and where the amount can be reliably estimated.
Provisions are measured at management’s best estimate of the consideration required to settle the obligation at the reporting date and discounted using a
pre-tax rate that reflects current market assessments where the time value of money is deemed material. An increase in the provision due to the passage of
time is recognised as an interest expense.
Provisions for onerous contracts are recognised when the Group believes that the unavoidable costs of meeting or novating a contract exceed the economic
benefits expected to be received under it. Where assets are dedicated to the fulfilment of a contract that cannot be redirected to other parts of the Group,
an impairment charge is recognised to reduce the carrying value of the assets to £nil before recognising a separate onerous contract.
A restructuring provision is recognised when the Group has developed a detailed formal plan and has raised a valid expectation in those affected that it will
carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring
provision includes only the direct expenditures arising from the restructuring.
a) Property provisions
Where the Group no longer operates from a leased property, onerous property contract provisions are recognised for the least net cost of exiting from the
contract. The amounts provided are based on the Group’s best estimates of the likely committed outflows and site closure dates. These provisions do not
include rent in accordance with IFRS 16, however do include unavoidable costs related to the lease such as service charges and insurance.
Property provisions also include provisions for dilapidations which are recognised where the Group has the obligation to make good its leased properties,
which is when a decision to exit a lease has been made. This is the point at which a reliable estimate of the expected cost for dilapidations can be made.
These provisions are recognised based on historically settled dilapidations which form the basis of the estimated future cash outflows. Any difference
between amounts expected to be settled and the actual cash outflow is be accounted for in the period when such determination is made.
Where the Group is able to exit lease contracts before the expiry date or agree sublets, this results in the release of any associated property provisions.
Such events are subject to the agreement of landlords, therefore the Group makes no assumptions on the ability to either exit or sublet a property until
a position is agreed. Utilisation is expected to be in line with the profile of the leases to which the provisions relate.
b) Insurance provisions
Provisions are based on assumptions regarding past claims experience and assessments by an independent actuary to provide a best estimate of the most
likely or expected outcome.
c) Financial Services-related provisions
Financial Services loan commitment provisions reflect expected credit losses modelled in relation to loan commitments not yet recognised on the balance
sheet, including on credit cards and Argos store cards.
Other Financial Services-related provisions are primarily in relation to Argos Financial Services customers in respect of potential redress payable arising from
the historic sales of Payment Protection Insurance (PPI).
The eventual cost is dependent on response rates, uphold rates, complaint rates, redress costs and claim handling costs. The provision represents management’s
best estimate of future costs. These assumptions are inherently uncertain and the ultimate financial impact may differ from the amount provided.
3.15 Financial instruments
a) Financial assets
The Group classifies all of its financial assets as either amortised cost, FVOCI or FVTPL.
The Group’s non-derivative financial assets comprise:
• Cash and cash equivalents
• Trade and other receivables, excluding prepayments and accrued income
• Amounts due from Financial Services customers and other banks
• Financial assets at FVOCI
To determine their classification and measurement category, all financial assets, except equity instruments and derivatives, are required to be assessed
based on a combination of the entity’s business model for managing the assets and the instruments’ contractual cash flow characteristics.
In order for a financial asset to be classified and measured at amortised cost or FVOCI, it needs to give rise to cash flows that are ‘solely payments of principal
and interest (SPPI)’ on the principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an instrument level.
The business model assessment reflects how the Group manages the risks relating to the underlying financial assets, including whether the Group’s principal
objective is to collect the contractual cash flows arising from the instruments (amortised cost), to sell the financial instruments (FVTPL) or a combination
thereof (FVOCI) .
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3 Material accounting policies continued
3.15 Financial instruments continued
a) Financial assets continued
Financial instruments at amortised cost
Financial assets that are principally held for the collection of contractual cash flows and which pass the SPPI test are classified as amortised cost. For the
Group this includes cash, receivables and amounts due from Financial Services customers and other banks. The Group has no intention of trading these
assets. With the exception of trade receivables that do not contain a significant financing component, the Group initially measures these financial assets
at fair value plus transaction costs. Subsequently these assets are carried at amortised cost less impairment using the effective interest rate method.
Income from these financial assets is calculated on an effective interest rate basis and is recognised in the income statement.
Financial assets at fair value through other comprehensive income
Financial assets that are held for both the purpose of collecting contractual cash flows and to sell are classified as FVOCI. They are included in non-current
assets unless management intends to dispose of the investment within 12 months of the balance sheet date. Equity investments have been irrevocably
designated as FVOCI. Subsequent to initial recognition at fair value plus transaction costs, these assets are recorded at fair value at each period end with the
movements recognised in other comprehensive income until derecognition or impaired. On derecognition, the cumulative gain or loss previously recognised
in other comprehensive income reserves is recognised in the income statement for debt instruments. Gains and losses on equity instruments are never
recycled to the income statement. Dividends on financial assets at FVOCI are recognised in the income statement when the entity’s right to receive payment
is established.
Interest on financial assets at FVOCI debt instruments is recognised using the effective interest method.
Financial assets at fair value through profit and loss
The Group’s derivatives are classified as FVTPL. They are carried in the statement of financial position at fair value with net changes in fair value recognised
in the income statement.
Financial assets are derecognised when the contractual cash flows from the asset have expired or have been transferred, usually by sale, and with them
either substantially all the risks and rewards of the asset or significant risks and rewards, along with the unconditional ability to sell or pledge the asset.
b) Financial liabilities
The Group recognises all of its financial liabilities at amortised cost and all derivative financial liabilities are classified as FVTPL. Financial liabilities costs,
including premiums payable on settlement or redemption and direct issue costs, are accounted for on an accrual basis in the income statement using
the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which
they arise.
The Group’s non-derivative financial liabilities comprise:
• Borrowings
• Trade and other payables, excluding deferred income, other taxes and social security costs payable, and other accruals
• Amounts due to Financial Services customers and other banks
• Lease liabilities
Interest-bearing bank loans, overdrafts, other deposits and amounts due to Sainsbury’s Bank customers are recorded initially at fair value, which is generally
the proceeds received, net of direct issue costs. Subsequently, these liabilities are held at amortised cost using the effective interest rate method. Transaction
costs are amortised on a straight-line basis over the life of the facility they relate to.
Financial liabilities are derecognised when the obligation under the liability is discharged, cancelled, or expires.
3.16 Derivative financial instruments and hedge accounting
The Group uses derivative financial instruments to hedge its exposure to foreign exchange, interest rate and commodity risks. All derivative financial
instruments are initially measured at fair value on the contract date and are also measured at fair value at subsequent reporting dates. Where derivatives do
not qualify for hedge accounting, any changes in the fair value of the derivative financial instrument are recognised in the income statement as they arise.
To qualify for hedge accounting, the Group documents, at the inception of the hedge, the hedging risk management strategy, the relationship between the
hedging instrument and the hedged item or transaction, the nature of the risks being hedged and an assessment of the effectiveness of the hedging
relationship to ensure it is highly effective on an ongoing basis.
Where a derivative does qualify for hedge accounting, any changes in fair value are recognised depending on the nature of the hedge relationship and the
item being hedged as follows:
a) Cash flow hedges
Hedge relationships are classified as cash flow hedges where the derivative financial instruments hedge the Group’s exposure to variability in cash flows
resulting from a highly probable forecasted transaction. These include the exchange rate risk of inventory purchases denominated in foreign currency,
interest rate risk and commodity risk on purchases of power and fuel. Changes in the fair value of derivative financial instruments that are designated and
effective as hedges of future cash flows are recognised directly in other comprehensive income and the ineffective portion is recognised immediately in the
income statement. The cash flow hedge reserve therefore only contains amounts where hedge accounting applies.
If a cash flow hedge is hedging a firm commitment or forecast transaction that results in the recognition of a non-financial asset or liability, then, at the time
the asset or liability is recognised, the associated gains or losses on the derivative that had previously been recognised in other comprehensive income are
included in the initial measurement of the asset or liability. This applies to the Group’s foreign currency hedges in relation to inventory purchases.
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Notes to the consolidated financial statements continued
3 Material accounting policies continued
3.16 Derivative financial instruments and hedge accounting continued
b) Fair value hedges
The Group designates certain derivatives as fair value hedges where the derivative financial instrument hedges the change in fair value of the particular risks
inherent in recognised assets or liabilities (fair value hedges).
The Group has adopted IFRS 9 hedge accounting requirements for its fair value hedges of investment securities and its one-for-one hedge on Tier 2 Debt
issuance within Sainsbury’s Bank. The Group continues to adopt IAS 39 for its macro portfolio fair value hedges of fixed rate personal loans and up to the
point of disposal in August 2023, also residential mortgages, as it is permitted to do so under IFRS 9 and until the point that the new macro hedge accounting
standard is finalised and adopted.
Fair value hedging matches the change in fair value of designated hedged items against the corresponding change in value of the hedging derivative.
The designated hedged item can be a recognised asset or liability, a firm commitment, or an identified portion of an asset.
The effective part of any gain or loss on the hedged item adjusts the balance of the hedged item and is recognised in the income statement, offsetting the
gain or loss on the hedging derivative. Should circumstances arise where the hedge relationship subsequently proves ineffective, is early settled, or is
terminated, the adjustment to the balance of the hedged item is amortised over the remaining life of the hedged item and to the income statement.
Micro fair value hedging – IFRS 9
The Group has purchased a number of fixed rate debt investment securities and has issued fixed rate subordinated debt within Sainsbury’s Bank. These
instruments are hedged via plain vanilla interest rate swaps, with the critical economic terms of both the hedging instrument and hedged item matching.
The notional amount, fixed interest legs and maturity dates are economically matched.
Portfolio fair value hedging – IAS 39
The Group uses portfolio fair value hedging as a risk management tool for hedging interest rate risk on the personal loans and up to the point of disposal in August
2023, also the mortgage portfolio. Portfolio fair value hedging allows the designation of the whole or part of a portfolio of assets or liabilities with similar risk
exposures. The hedged item can be designated based on expected maturities to match the hedging derivative maturity. Hedge effectiveness is considered to have
been met where the change in fair value of the hedged item offsets the change in fair value of hedging instruments, within the 80 to 125 per cent ratio corridor.
3.17 Cash and cash equivalents
Cash and bank balances comprise cash in hand and at bank, deposits at central banks, investments in money market funds and deposits, and other
short-term highly liquid investments.
To be classified as cash and cash equivalents, an asset must:
• Be readily convertible into cash
• Have an insignificant risk of changes in value
• Have a maturity period of typically three months or less at acquisition
Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a component of cash and cash
equivalents for the purposes of the cash flow statement.
3.18 Cash flow statement classifications
The following cash receipts and payments are presented within the following sections of the cash flow statement:
a) Interest, dividends and taxes
Included in operating cash flows
• Interest paid on borrowings as they are held for cash management purposes.
Included in cash flows from investing activities
• Interest received on bank deposits and other financial assets as well as dividends received as they represent returns on the Group’s investments.
b) Lease payments and receipts
Included in operating cash flows
• Cash payments for the interest element of lease liabilities consistent with presentation of interest payments.
• Short-term lease payments, payments for leases of low-value assets and variable lease payments that are not included in the measurement of the
lease liabilities.
• Cash receipts in relation to sub-leases (both operating and finance leases).
Included in cash flows from financing activities
• Cash payments for the principal element of the lease liabilities are presented within financing activities.
3.19 Retirement benefit obligations
a) Defined contribution pension schemes
The Group contributions to defined contribution pension schemes are charged to the income statement as incurred. Any contributions unpaid at the balance
sheet date are included as an accrual as at that date. The Group has no further payment obligations once the contributions have been paid.
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3 Material accounting policies continued
3.19 Retirement benefit obligations continued
b) Defined benefit pension scheme (Sainsbury’s Pension Scheme)
The surplus or deficit recognised in the balance sheet for defined benefit schemes represents the difference between the fair value of the plan assets and the
present value of the defined benefit obligation at the balance sheet date. The defined benefit obligation is actuarially calculated on an annual basis using the
projected unit credit method.
Actuarial gains and losses are reported in the statement of other comprehensive income as incurred, and comprise both the effects of changes in actuarial
assumptions and experience adjustments arising because of differences between the previous actuarial assumptions and what has actually occurred.
The income statement charge consists of a financing charge, which is the net of interest cost on pension scheme liabilities and interest income on plan assets
and defined benefit pension scheme expenses.
The financing charge is determined by applying the discount rate used to measure the defined benefit obligation to the pension scheme liabilities and plan
assets at the beginning of the financial year.
IFRIC 14
Under IFRIC 14, a company is required to measure any economic benefits available to it in the form of refunds or reductions to future contributions at
the maximum amount that is consistent with the terms and conditions of the pension scheme. These are regarded as available to a company if it has an
unconditional right to realise them at some point during the life of the pension scheme or when all benefits are finally settled. Such an unconditional right
would not exist when the availability of the refund or the reduction in future contributions would be contingent upon factors beyond the company’s control.
Management is of the view that it has an unconditional right to a refund of surplus under IFRIC 14. As such no adjustment has been made for potential
additional liabilities.
In forming this conclusion management has considered whether the Group can control the run-off of the Scheme until there are no liabilities left, consistent
with IFRIC 14. For example, if the Trustee has a unilateral power to wind up the Scheme while there are liabilities remaining, then it is viewed that the Group
cannot access surplus through this route. For both sections, management have assessed that the Group can control run-off until no liabilities remain by
complying with its obligations under the Scheme rules and pensions legislation, and there will therefore be a gradual settlement of the planned liabilities
over the life of each section.
The Scheme rules list certain situations under which the Trustee can wind up the Scheme; however, whilst there is gradual settlement of the Scheme’s
liabilities, these are concluded to be within the control of the Group. As a result, it is concluded that the Trustee does not have a unilateral power to wind up
the Scheme nor augment benefits while the Scheme is ongoing.
3.20 Share-based payments
The Group provides benefits to employees (including Directors) of the Group in the form of equity-settled and cash-settled share-based payment
transactions, whereby employees render services in exchange for shares, rights over shares or the value of those shares in cash terms.
For equity-settled share-based payments, the fair value of the employee services rendered is determined by reference to the fair value of the shares awarded
or options granted, excluding the impact of any non-market vesting conditions. All share options are valued using an option pricing model (Black-Scholes).
This fair value is charged to the income statement over the vesting period of the share-based payment scheme with a corresponding increase in equity.
For cash-settled share-based payments, the fair value of the employee services rendered is determined at each balance sheet date and the charge recognised
through the income statement over the vesting period of the share-based payment scheme, with a corresponding increase in accruals.
The value of the charge is adjusted in the income statement over the remainder of the vesting period to reflect expected and actual levels of options vesting,
with the corresponding adjustments made in equity and accruals.
4 Significant judgements and estimates
The preparation of financial statements requires the use of judgements, estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from
those estimates.
Judgements and estimates are evaluated regularly and are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. Any revisions to accounting estimates are recognised in the period in which the estimate is revised.
In assessing the Group’s judgements and sources of estimation uncertainty, consideration has been given to the impact of climate change risk on these.
Aside from impairment of non-financial assets (refer to note 17) and post-employment benefits (refer to note 34), climate change risks do not have any
impacts on the Group’s judgements or sources of estimation uncertainty.
Consideration has also been given to the judgements and estimates arising from the announcement 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 will result in a phased withdrawal from the
core Banking business. Key judgements have included the classification of costs as non-underlying items (note 4.1 a)), the timing of recognition of provisions,
and the probability weighting on related cash flow projections to support such charges which assume two scenarios comprising a sale of certain financial
services products as opposed to a run down. Key estimates have included management forecasts of future performance used to determine impairments
(note 4.2 c)), and the amounts of provisions recognised (note 4.2 d)).
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Notes to the consolidated financial statements continued
4 Significant judgements and estimates continued
4.1 Significant judgements
a) Non-underlying items
In order to provide shareholders with additional insight into the year-on-year performance of the business, underlying profit measures are provided to
supplement the reported IFRS numbers and reflect how the business measures performance internally. These adjusted measures exclude items recognised
in reported profit, which, if included, could distort comparability between periods.
Determining which items are to be adjusted requires judgement, in which the Group considers items which are significant either by virtue of their size and/or
nature, or that are non-recurring in that they do not relate to the ongoing business. The same assessment is applied consistently to any reversals of prior
non-underlying items.
An analysis of non-underlying items is set out in note 5.
b) Consolidation of structured entities
A structured entity is one in which the Group does not hold the majority interest but where voting rights are not the dominant factor in determining control.
Sainsbury’s Thistle Scottish Limited Partnership (‘the Partnership’) is a structured entity in which both the Group and Pension Scheme Trustee hold an interest
where the relevant activities are the funding of the pension scheme (the Scheme).
Furthermore, a general partner wholly owned by the Group has exclusive responsibility for the management and control of the Partnership and sole authority
to exercise the Partnership’s rights including the ability to make additional contributions. As the Group can direct the Partnership’s relevant activities and
affect its returns, it has been concluded that the Group controls the Partnership, despite not having a majority interest and has therefore been consolidated.
Further information is included in note 34.1.
c) Aggregation of operating segments
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. This information is used to make optimal decisions on the allocation of resources and assess performance.
The CODM is presented information for the following operating segments:
• Retail – Food
• Retail – General Merchandise and Clothing
• Financial Services
Management have considered the economic characteristics, in particular average gross margin, similarity of products, production processes, customers, sales
methods and regulatory environment of its two Retail segments. In doing so it has been concluded that they should be aggregated into one ‘Retail’ segment
within the financial statements given the similar economic characteristics between the two. This aggregated information provides users the financial
information needed to evaluate the business and the environment in which it operates.
d) Lease terms
The inclusion of a lease extension period or lease break period in the lease term requires consideration of all relevant factors that create an economic
incentive for the Group to exercise them. For leased properties, this includes the current and expected profitability of the respective site, as well as the length
of time until the option can be exercised. Any changes to the Group’s judgement over lease terms will impact both the right-of-use asset and lease liability.
e) Classification of cash flows as part of asset acquisition
As part of the asset acquisition, as described in note 2.6, significant judgement was applied when considering the classification of the pre-funded cash flows
which formed part of the total consideration within the Group’s cash flow statement as cash flows from investing activities.
4.2 Significant estimates
a) Revenue recognition: Fair value of Nectar points
The Group estimates the fair value of points awarded under the Nectar programme by reference to the value per point to a customer, multiplied by expected
breakage assumptions. Breakage represents management’s estimate of points issued that will never be redeemed and is therefore subject to uncertainty.
Breakage is estimated by management based on the terms and conditions of membership and historical accumulation and redemption patterns. A
sensitivity analysis, showing the impact of a change in breakage estimate on the deferred points liability, is set out in note 23.3.
b) Lease liabilities: Derivation of discount rates
Lease liabilities are measured at the present value of lease payments to be made over the lease term, discounted using the incremental borrowing rate (IBR)
at the lease commencement date (for additions) or at the lease modification date (for modifications).
The IBRs depend on the start date and term of the lease, and are determined based on a number of inputs including a reference (risk free) rate and
adjustments to reflect the Group’s credit risk. The reference rates are based on UK overnight swap rates and the credit risk adjustments are based on the
prices of instruments issued by the Group and quoted credit default swaps (CDS). Note 15.1 e) includes the impact that a reasonable possible change in the IBR
would have had on the lease liability additions and modifications recognised during the year.
c) Impairments
Non-financial assets
Goodwill is required to be valued annually to assess the requirement for potential impairment. Other assets are assessed on an ongoing basis to determine
whether circumstances exist that could lead to the conclusion that the net book value of such assets is not supportable. Impairment testing is carried out in
accordance with the methodology described in note 17. Such calculations require estimation regarding the appropriate discount factors and in the case of
goodwill in particular, long-term growth prevalent in a particular market as well as short and medium-term business plans. Management draws upon
experience as well as external resources in determining these estimates.
In assessing impairment of property, plant & equipment and intangible assets, discounted cash flow methods are used as described in note 17.1. Judgement
is required in determining the appropriate discount factors as well as the short and medium-term business plans. Consistent with goodwill, the Directors
draw upon experience and external resources in determining these estimates.
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4 Significant judgements and estimates continued
4.2 Significant estimates continued
c) Impairments continued
Financial assets
Impairments on financial assets are accounted for using a three-stage forward-looking ECL approach as set out in note 28.2 e).
Measurement of ECL reflects an unbiased and probability weighted amount that is determined by evaluating a range of forward-looking macro-economic
assumptions. An external supplier provides economic forecasts which are subject to review, challenge and approval through the Bank’s governance processes.
The ECL models utilise four scenarios including a ‘base case’ scenario considered to be the most likely outcome together with an upside, downside scenario
and severe downside. The outcomes of the scenarios are set out in note 28.2 f).
d) Provisions
The Group’s provisions are based on estimates of the actual costs and timing of future cash flows, which are dependent on future events and market
conditions. Thus, there is inherently an element of estimation uncertainty within the provisions recognised. Any difference between expectations and the
actual future liability will be accounted for in the period when such determination is made.
The provisions are most sensitive to estimates of the future cash outflows. A sensitivity showing the impact that a reasonable possible change in expenditure
required to settle the present obligation is set out in note 25.2.
e) Post-employment benefits
Assets
The Sainsbury’s Pension Scheme (the Scheme) holds some private market assets as they are expected to deliver a more favourable risk/return profile than
public market equivalents. These assets are relatively illiquid (likely to be realised over approximately five years) but the Scheme holds sufficient liquid assets
(cash, gilts and other liquid securities) to be confident that it can meet its pension and collateral obligations over time.
The valuation of these assets is based on the audited accounts of the funds, where available, and net asset value statements from the investment managers
where recent accounts are not available. For many of these investments, the valuations provided are at 30 September. A roll-forward is therefore required to
be performed for these valuations, adjusting for cash received or paid and applying the changes seen in relevant liquid indices. The valuation of these assets
is sensitive to the indices used and a sensitivity to changes in these indices is set out in note 34.6.
Liabilities
The present value of post-employment benefit obligations is determined on an actuarial basis using various assumptions, including the discount rate,
inflation rate, future pension increases and mortality assumptions. Any changes in these assumptions will impact the carrying amount as well as the net
pension finance income/(cost). Key assumptions and sensitivities for post-employment benefit obligations are disclosed in note 34.7.
5 Non-underlying items
2024
2023
Restructuring Restructuring
and and
impairment Pensions Other impairment Pensions Other
5.1 5.2 5.3 Total 5.1 5.2 5.3 Total
Note £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
11
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.
5.1 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.
Strategic Report Governance Report Financial Statements
150 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
5 Non-underlying items continued
5.1 Restructuring and impairment continued
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 impairment items
2024
2023
Financial Sainsbury’s Sainsbury’s Impairment of
Services structural structural non-financial
model
integration
Total
integration
assets
Total
Note
£m
£m
£m
£m
£m
£m
Non-financial asset
– Property, plant and equipment
17
(9)
(1)
(10)
(8)
(141)
(149)
impairments
– Right-of-use assets
17
(3)
(3)
(6)
(21)
(122)
(143)
– Intangible assets
17
(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. Such amounts are reflected in provisions as set out in note 25.
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. Such amounts are reflected in provisions as set out in note 25.
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) shown in loans and advances to
customers in note 21 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.
5.2 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. More detailed analysis in note 34.2.
5.3 Other
2024
2023
Note
£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 financial year, 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 described in note 2.6, 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.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 151
6 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
7 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. As described in note 2.5 and 4.1 a), 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.
7.1 Income statement
2024
2023
Financial Financial
Retail
Services
Group
Retail
Services
Group
Note
£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
5
(424)
(363)
Profit before tax
277
327
Income tax expense
11
(140)
(120)
Profit for the financial year
137
207
7.2 Balance sheet
2024
2023
Financial Financial
Retail
Services
Group
Retail
Services
Group
£m
£m
£m
£m
£m
£m
Assets
18,288
6,771
25,059
18,925
7,2 31
26,156
Investments in joint ventures and associates
2
—
2
2
—
2
Segment assets
18,290
6,771
25,061
18,927
7,2 31
26,158
Segment liabilities
(12,171)
(6,022)
(18,193)
(12,584)
(6,321)
(18,905)
Strategic Report Governance Report Financial Statements
152 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
7 Segment reporting continued
7.3 Other segment items
2024
2023
Financial Financial
Retail
Services
Group
Retail
Services
Group
Note
£m
£m
£m
£m
£m
£m
Additions to non-current assets
Property, plant and equipment
14
1,654
1
1,655
532
2
534
Intangible assets
16
165
13
178
194
19
213
Right-of-use assets
15
435
3
438
398
—
398
Depreciation expense
Property, plant and equipment
14
538
1
539
565
1
566
Right-of-use assets
15
449
1
450
469
1
470
Amortisation expense
Intangible assets
16
159
30
189
141
31
172
Impairment of non-financial assets
17
23
174
197
301
—
301
Impairment of goodwill
17
—
38
38
14
—
14
Impairment (reversal)/loss on financial assets
(4)
102
98
2
76
78
Share-based payments
35
83
6
89
54
5
59
7.4 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.
8 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
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 153
9 Operating profit
9.1 Operating profit is stated after charging/(crediting):
2024
2023
Footnote
Note
£m
£m
Employee costs
9.2
3,879
3,578
Inventories recognised as an expense within cost of sales
26,087
25,198
Write-down of inventories
672
613
Depreciation
– Property, plant and equipment
a)
14
539
566
– Right-of-use assets
15
450
470
Amortisation
– Intangible assets
a)
16
189
172
Impairment of non-financial assets
17
197
301
Impairment of goodwill
17
38
14
Short-term lease expense
30
26
Sublet income
(46)
(48)
(Profit)/Loss on disposal
– Property, plant and equipment
(5)
(8)
– Intangible assets
—
(1)
– Lease terminations
(11)
(6)
– Amounts due from Financial Services customers
14
—
Foreign exchange loss/(gain)
12
(18)
a) Includes the unwind of acquisition adjustments as set out in note 5.3.
9.2 Employee costs
2024
2023
£m
£m
Wages and salaries, including bonus and termination benefits
3,348
3,088
Social security costs
254
240
Pension costs – defined contribution schemes
188
191
Share-based payments expense
89
59
3,879
3,578
9.3 Employee numbers
2024
2023
Average number of employees, including Directors:
‘000
‘000
Full-time
57
63
Part-time
95
99
152
162
Full-time equivalent
100
107
Details of key management compensation can be found in note 38.1 and within the Directors’ Remuneration Report on pages 99 to 117.
9.4 Auditor’s remuneration
2024
2023
Note
£m
£m
Audit of the parent company and consolidated financial statements
1.2
1.2
Audit of the Company’s subsidiaries
2.4
2.6
Audit-related assurance services, including half-year review
0.1
0.2
3.7
4.0
Non-audit services
33
—
0.1
Total fees
3.7
4.1
2023: Non-audit services relate to services provided by the Group’s auditor in relation to issuance of Sainsbury’s Bank Tier 2 Capital in September 2022.
10 Finance income and finance costs
2024
2023
Non – Non –
Underlying
underlying
Total
Underlying
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)
Strategic Report Governance Report Financial Statements
154 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
11 Taxation
11.1 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 effective tax rate of 50.5 per cent (2023: 36.7 per cent) is higher than the standard rate of corporation tax in the UK of 25 per cent as a result of the
differences set out below:
Non- 2024 Non- 2023
Underlying underlying
Total
Underlying
underlying Total
Footnote
£m
£m
£m
£m
£m
£m
Profit before tax
701
(424)
277
690
(363)
327
Income tax at UK corporation tax rate of 24.6% (2023: 19.0%):
a)
172
(104)
68
131
(69)
62
Disallowed depreciation on UK properties
36
—
36
27
—
27
Disallowed depreciation on right-of-use assets
3
—
3
3
—
3
Loss on disposal of properties
—
3
3
—
—
—
Impairment of non-financial assets
—
11
11
—
15
15
Restructuring programmes
—
3
3
—
13
13
Other
(3)
3
—
(4)
1
(3)
(Over)/under provision in prior years
(23)
—
(23)
7
(2)
5
Revaluation of deferred tax balances
—
(1)
(1)
(7)
5
(2)
Derecognition of capital losses
b)
—
40
40
—
—
—
185
(45)
140
157
(37)
120
a) The UK corporation tax rate increased from 19% to 25% with effect from 1 April 2023. A blended rate of 24.6% is used in the reconciliation above to reflect this change.
b) Following the asset acquisition detailed in note 2.6, capital gains were no longer anticipated to crystallise, giving rise to a tax charge of £40 million. The deferred tax liability held against
the property pool was also derecognised and released, resulting in an £80 million credit recognised within other comprehensive income.
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.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 155
11 Taxation continued
11.2 Income tax charged or (credited) to equity and/or other comprehensive income
2024
2023
Current tax
Deferred tax
Total
Current tax
Deferred tax
Total
£m
£m
£m
£m
£m
£m
Share based payment reserve
(3)
3
—
(3)
(4)
(7)
Actuarial reserve
(8)
(97)
(105)
(25)
(322)
(347)
Financial asset reserve
(2)
(80)
(82)
—
(14)
(14)
Cash flow hedge
—
(17)
(17)
—
—
—
(13)
(191)
(204)
(28)
(340)
(368)
The current and deferred tax in relation to the Group’s defined benefit pension scheme’s remeasurements and available-for-sale fair value movements have
been charged or credited through other comprehensive income where appropriate.
11.3 Movements in deferred tax (prior to offsetting balances in same tax jurisdiction)
Accelerated Retirement
capital Capital Fair value Rolled over benefit Share-based
allowances losses movements capital gains obligations
payments
Leases
Other
Total
£m
£m
£m
£m
£m
£m
£m
£m
£m
5 March 2023
(166)
87
(102)
(93)
(330)
32
109
(13)
(476)
Credit/(charge) to income
statement
32
(3)
4
1
(11)
6
(29)
(5)
(5)
Credit/(charge) to equity or
other comprehensive income
—
—
97
—
97
(3)
—
—
191
Revaluation adjustment to
income statement
—
—
—
—
—
—
1
—
1
Derecognition of deferred tax
asset
—
(40)
—
—
—
—
—
—
(40)
2 March 2024
(134)
44
(1)
(92)
(244)
35
81
(18)
(329)
6 March 2022
(173)
87
(133)
(93)
(640)
18
132
(4)
(806)
Credit/(charge) to income
statement
3
—
13
—
(11)
8
(20)
(5)
(12)
Credit to equity or other
comprehensive income
—
—
14
—
328
3
—
—
345
Revaluation adjustment to
income statement
4
—
4
—
(1)
2
(3)
(4)
2
Revaluation adjustment to
equity or other comprehensive
income
—
—
—
—
(6)
1
—
—
(5)
4 March 2023
(166)
87
(102)
(93)
(330)
32
109
(13)
(476)
2024
2023
£m
£m
Total deferred tax liabilities
(489)
(704)
Total deferred tax assets
160
228
Net deferred income tax liability recognised in non-current liabilities
(329)
(476)
Deferred tax assets have not been recognised in respect of capital losses of £355 million (2023: £194 million) for which their use against chargeable capital
gains is restricted. These capital losses have no date of expiry. Deferred income tax assets and liabilities are only offset where there is a legally enforceable
right of offset and relate to taxes levied by the same tax authority.
12 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 2.5, have been calculated based on earnings
before non-underlying items which are set out in note 5.
Strategic Report Governance Report Financial Statements
156 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
12 Earnings per share continued
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 have 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
Note
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
Note
£m
£m
Profit attributable to ordinary shareholders of the parent
137
207
Adjustment for non-underlying items net of tax
5
379
326
Profit attributable to ordinary shareholders of the parent – underlying
516
533
Earnings per share
Pence Pence
per share per share
Basic
5.9
9.0
Diluted
5.7
8.8
Underlying basic
22.1
23.0
Underlying diluted
21.6
22.7
13 Dividends
2024
2023
pence pence 2024 2023
per share 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
—
1 3.1
1 3.8
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.
14 Property, plant and equipment
2024
2023
Land and Fixtures and Land and Fixtures and
buildings
equipment
Total
buildings
equipment
Total
Note
£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
2.6
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
17
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
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 157
14 Property, plant and equipment continued
14.1 Interest capitalised
The capitalisation rate used to determine the amount of borrowing costs eligible for capitalisation is 6.8 per cent (2023: 6.1 per cent).
14.2 Security
2024
2023
Net book Net book
Number of value Number of value
Property, plant and equipment pledged as security for properties £bn properties £bn
Loan due 2031
48
0.9
48
0.9
Asset-backed pension contribution scheme
51
1.2
48
1.1
Other
6
0.1
6
0.1
105
2.2
102
2.1
15 Leases
15.1 Group as a lessee
a) Right-of-use assets
2024
2023
Land and Land and
buildings
Equipment
Total
buildings
Equipment
Total
Net book value
Note
£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
17
(6)
—
(6)
(142)
(1)
(143)
Depreciation expense
(353)
(97)
(450)
(375)
(95)
(470)
Derecognised as part of asset acquisition
2.6
(1,031)
—
(1,031)
—
—
—
At end of financial year
3,976
320
4,296
5,032
313
5,345
b) Lease liabilities
2024 2023
Note £m £m
At beginning of financial year
6,489
6,621
New leases and modifications
414
382
Derecognised as part of asset acquisition
2.6
(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
d) Undiscounted future rental payments not currently included within the reported lease liability
2024
2023
£m
£m
Extension options expected to not be exercised
4,498
4,781
Lease breaks expected to be exercised
400
425
Strategic Report Governance Report Financial Statements
158 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
15 Leases continued
15.1 Group as a lessee continued
e) Sensitivity to changes in discount rate
2024
Increase/(decrease) in
lease liability
£m
Increase in IBR of 3%
(160)
Decrease in IBR of 3%
170
The reference rates for IBRs, which are determined quarterly, are based on UK overnight swap rates and the credit risk adjustments are based on the prices of
instruments issued by the Group and quoted credit default swaps (CDS).
f) Lease liabilities subject to specific terms (typically occurring on an annual or five-yearly basis)
2024
2023
£m
£m
Inflation-linked rentals
2,862
2,795
Subject to rent reviews
225
241
g) Lease cash flows
2024
2023
£m
£m
Total cash outflow for leases (excludes sublet income)
(803)
(810)
15.2 Group as lessor
a) Maturity analysis of lease receivables classified as finance leases
2024
2023
£m
£m
Contractual undiscounted cash flows
Less than 1 year
10
10
1 to 5 years
21
27
More than 5 years
10
9
41
46
Lease receivable included in the balance sheet
Current
9
8
Non-current
24
27
33
35
b) Maturity analysis of lease receivables classified as operating leases
2024
2023
£m
£m
Less than 1 year
20
19
1 to 2 years
17
16
2 to 3 years
15
13
3 to 4 years
12
11
4 to 5 years
11
9
5 to 10 years
37
31
10 to 15 years
7
9
More than 15 years
11
12
Total undiscounted lease payments receivable
130
120
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 159
16 Intangible assets
Note
Computer Acquired Customer
Goodwill software brands
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
17
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
Cost
—
44
—
—
44
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
17
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
Disposal of goodwill relates to the disposal of the mortgage book as described in note 5.3.
16.1 Analysis of goodwill balances by CGU
2024
2023
£m
£m
Jacksons Stores Limited
18
18
Home Retail Group
119
119
Sainsbury's Bank plc
—
45
Nectar
147
147
Bells Stores Limited
5
5
Other
18
18
307
352
Strategic Report Governance Report Financial Statements
160 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
17 Impairment of non-financial assets
17.1 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 5.1, 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
•
Two scenarios of cash flow projection which assume a sale of
years with an assumed growth rate of 2% beyond the four-year financial services products or a run down were prepared which
forecast period: represent either end of a reasonably possible range of
–
Owned stores: extrapolated into perpetuity
outcomes that could occur and have been probability weighted
–
Leased stores: taken to lease end
in determining value in use
–
Properties identified for closure: remaining period of trading
•
Value in use has been derived from the Board-approved cash
flow projections for four years, measured with reference to the
•
Online grocery are allocated to the individual store CGUs which
assets’ remaining useful economic life that is being tested,
fulfil the online sales 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
•
Post-tax rate representing weighted average cost of capital
(WACC), subsequently grossed up to a pre-tax rate of 8.9%. (WACC), subsequently grossed up to a pre-tax rate of 14.7%
the inputs of which include a 20-year average risk-free rate for Post-tax WACC calculated using the capital asset pricing model,
•
Post-tax WACC calculated using a combination of adjusted
the UK, a UK equity risk premium, levered debt premium and risk market analysis and the actual cost of debt on Tier 2
adjustment and an average beta for the Group capital instruments
•
Discount rate is applied consistently to all individual store CGUs
•
Discount rate is applied consistently to all individual product
CGUs and the collective CGUs which support the products
and the Group of CGUs supported by Sainsbury’s or Argos stores
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.
Climate change considerations
The Group’s scenario analysis performed as part of the Task Force on Climate-related Financial Disclosures (TCFD) report (page 30) identified that the most
material climate-related risks were heat events, labour capacity, drought, flooding, regulation and changes in consumer preferences. Produce, Cotton, Coffee,
Tea, Clothing, Meat, Fish and Poultry (MFP), and Fuel were the product categories most exposed to the climate-related risks.
The most material transitional climate risk was in Fuel. As such, the Group’s review of indicators of impairment in the current year incorporated the expected
climate-related risks associated with fuel sales. The effect of reduced fuel sales on the Retail segment’s store CGUs did not represent an indicator of
impairment and therefore the Group have concluded that the expected climate-related risks associated with fuel sales do not have a material impact on the
Group’s impairment considerations at the reporting date.
Other than fuel, changes in consumer preferences in MFP was identified as the risk most vulnerable to transitional risks and modelling this risk in isolation
to 2030 in a 1.5°C scenario calculated a £350 million to £400 million loss in revenue. The Group has considered what the impact that this revenue loss
(if unmitigated) could have on the carrying value of the Group’s store assets. In doing so, a corresponding reduction in margin and therefore cash flows
have been modelled. Immaterial impairment risks were identified. As such, all other climate change-related risks do not have a material impact on the
Group’s impairment considerations.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 161
17 Impairment of non-financial assets continued
17.2 Non-financial assets
a) Impairment charges
2024
2023
Financial Financial
Retail
Services
Total
Retail
Services
Total
Note
£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
5.1
4
212
216
34
—
34
Non-restructuring programmes
5.3
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.
17.3 Goodwill
a) Impairment charges
The following impairment charges are included within the intangible assets impairment presented in note 17.2.
2024
2023
Footnote
£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 5.3, 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 5.1, 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 17.1.
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%
Footnote
£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 up to 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 5.1. 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.
Strategic Report Governance Report Financial Statements
162 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
18 Financial assets at fair value through other comprehensive income
2024
2023
Non-current Current Total Non-current Current Total
£m £m £m £m £m £m
Equity: Other Financial Assets
17
—
17
17
366
383
Debt: Financial Services-related investment securities
744
17
761
498
128
626
761
17
778
515
494
1,009
2023: Other financial assets predominantly comprised the Group’s beneficial interest in a commercial property investment pool which was derecognised
during 2024 as described in note 2.6.
19 Inventories
2024
2023
£m
£m
Gross finished goods
2,039
2,026
Inventory provision
(112)
(127)
1,927
1,899
20 Trade and other receivables
20.1 Trade and other receivables
2024
2023
Non-current
Current
Total
Non-current
Current
Total
£m
£m
£m
£m
£m
£m
Trade receivables
—
126
126
—
141
141
Other receivables
65
253
318
28
308
336
Accrued income
—
13
13
—
4
4
Prepayments
43
190
233
28
174
202
108
582
690
56
627
683
Trade and other receivables include £95 million (2023: £88 million) relating to supplier arrangements where there is no right of offset. In addition, current
other receivables include £160 million (2023: £142 million) of bank funds in the course of settlement.
20.2 Allowance for expected credit losses
The Group’s exposure to credit risk arising from its retail operations is minimal owing to the customer base being large and unrelated with the overwhelming
majority of transactions settled through cash or secure electronic means. New parties wishing to obtain credit terms with the Group are credit checked prior
to invoices being raised and credit limits are determined on an individual basis.
2024
Not 0 to 6 months 6 to 12 months Over 1 year
past due past due past due
past due
Total
£m
£m
£m
£m
£m
Gross amounts
Trade receivables
114
13
1
4
132
Other receivables
319
4
1
11
335
Gross Carrying Amount – Trade and other receivables
433
17
2
15
467
Allowance for expected credit losses
(4)
(4)
(1)
(14)
(23)
Net carrying amount
429
13
1
1
444
2023
Not 0 to 6 months 6 to 12 months Over 1 year
past due past due past due
past due
Total
£m
£m
£m
£m
£m
Gross amounts
Trade receivables
112
25
7
12
156
Other receivables
336
6
1
8
351
Gross Carrying Amount – Trade and other receivables
448
31
8
20
507
Allowance for expected credit losses
(7)
(2)
(5)
(16)
(30)
Net carrying amount
441
29
3
4
477
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 163
21 Amounts due from Financial Services customers and other banks
2024
2023
Non-current
Current
Total
Non-current
Current
Total
Note
£m
£m
£m
£m
£m
£m
Loans and advances to customers
a)
1,525
3,227
4,752
1,959
3,573
5,532
Loans and advances to banks
—
—
—
—
100
100
Allowance for expected credit losses
28.2
(58)
(177)
(235)
(51)
(189)
(240)
1,467
3,050
4,517
1,908
3,484
5,392
a) Includes impact of non-underlying effective interest rate adjustment of £21 million as set out in note 5.1 (2023: £nil). In addition, as described in note 5.3, during the year, the Group
disposed of its mortgage portfolio.
Eligible personal loans with applicable haircuts are used as collateral for the bilateral personal loans securitisation facility and the Bank of England’s Term
Funding Scheme with additional incentives for Small and Medium-sized enterprises (TFSME) and Indexed Long-term Repo (ILTR) facilities.
As at 2 March 2024, £1,436 million (2023: £494 million) of personal loans assets, including £547 million (2023: £80 million) of loans indirectly encumbered via
the Bank’s securitisation facilities, and £nil (2023: £459 million) of mortgage assets were pledged to the Bank of England facilitating funding of £600 million
(2023: £660 million) from TFSME and £5 million (2023: £nil) from the ILTR.
A further £nil (2023: £137 million) of Personal Loans assets were pledged indirectly via the Bank’s securitisation facilities generating £nil (2023: £100 million)
of funding via sale and repurchase agreements and collateral swaps.
The Bank has also pledged a covered bond of £25 million (2023: £nil) to the Bank of England facilitating £5 million of ILTR funding.
22 Assets held for sale
2024
2023
£m
£m
Opening balance
8
8
Acquisitions
63
—
Classified as held for sale in the year
15
5
No longer classified as held for sale
(10)
—
Sold in the year
(66)
(5)
Closing balance
10
8
The fair value of assets held for sale is based on independent market valuations of the assets.
Acquisitions relate to the asset acquisition described in note 2.6, of which four properties were sold to a third party during the financial year for £61 million.
The fifth and final property acquired as part of the asset acquisition was sold to a third party subsequent to the balance sheet date.
Amounts no longer classified as held for sale relate to circumstances where it is no longer considered highly probable that a sale will occur within the next
12 months. Amounts reclassified are adjusted for any depreciation or amortisation that would have been recognised had the asset not been classified as
held for sale.
23 Trade and other payables
2024
2023
Non-current
Current
Total
Non-current
Current
Total
£m
£m
£m
£m
£m
£m
Trade payables
2
3,764
3,766
—
3,361
3,361
Other payables
2
538
540
—
596
596
Accruals
6
456
462
—
538
538
Deferred income
1
333
334
—
342
342
11
5,091
5,102
—
4,837
4,837
2024
2023
Analysis of deferred income
£m
£m
Opening balance
342
352
Revenue deferred
289
340
Revenue recognised which has previously been deferred
(297)
(350)
Closing balance
334
342
£303 million (2023: £315 million) of deferred income relates to deferred Nectar points.
Strategic Report Governance Report Financial Statements
164 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
23 Trade and other payables continued
23.1 Foreign currency risk
The Group has net euro-denominated trade payables of £30 million (2023: £35 million) and US dollar-denominated trade payables of £109 million
(2023: £86 million).
23.2 Supplier financing arrangements
The Group has supply chain finance programmes in place. The programmes act as an alternative source of financing for the suppliers who have the option to
trade their invoices with funding providers in order to receive cash earlier than the invoice due dates. The payment terms offered to suppliers who are party
to the supply chain finance programmes are within standard supplier payment terms and agreed directly with the supplier.
Balances outstanding under the supplier financing arrangements are classified as trade payables, and cash flows are included in operating cash flows, since
the financing arrangements are agreed between the supplier, the funding providers and the third-party platform providers. The Group does not provide
additional credit enhancement nor obtain any working capital benefit from the arrangements.
Included in trade payables are amounts of £547 million (2023: £607 million) drawn by suppliers who are party to the supply chain finance programmes.
23.3 Sensitivity of deferred income in respect of Nectar points to breakage estimates
Key assumption
(Increase)/decrease in
deferred points liability
Sensitivity £m
Breakage estimate
1%
53
-1%
(52)
24 Amounts due to Financial Services customers and banks
2024
2023
Non-current
Current
Total
Non-current
Current
Total
£m
£m
£m
£m
£m
£m
Customer accounts
183
3,981
4,164
374
4,360
4,734
Other deposits
23
1,534
1,557
692
520
1,212
206
5,515
5,721
1,066
4,880
5,946
With the exception of fixed rate bonds, amounts due to Financial Services customers are generally repayable on demand and accrue interest at retail
deposit rates.
Other deposits of £1,557 million (2023: £1,212 million) relate to deposits from wholesale counterparties, including the Bank of England’s TFSME and ILTR
schemes, and £518 million (2023: £191 million) of deposits obtained via deposit aggregators where the ultimate depositors are retail customers.
Following the strategic decision to move to offer Financial Services products through dedicated Financial Services providers and the phased withdrawal from
the core banking business, amounts due in respect of the Bank of England’s Term Funding Scheme Small and Medium-sized enterprises (TFSME) have been
classified as current liabilities. This is in line with the terms and conditions of the Term Funding Scheme with additional incentives for SMEs, although the
latest repayment dates remain as July 2025 of £40 million, August 2025 of £385 million, and September 2025 of £175 million. It should also be noted that
subsequent to the balance sheet date, prior to the date of approval of the financial statements, the Group has repaid £100 million of the outstanding TFSME
liability as part of its normal liquidity management activity.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 165
25 Provisions
Sainsbury’s Financial
structural Services-
Property Insurance integration related Other
provisions provisions provisions provisions
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 5.1.
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 5.1.
25.1 Climate change considerations
The Group takes into account the potential impact of climate change on its legal and constructive obligations, such as regulations related to carbon
emissions, environmental liabilities and natural disasters. The Group has reviewed its provisions and concluded that no adjustments need to be made
for climate change risks, nor that any new provisions need to be recognised for climate-related matters.
25.2 Sensitivity of provisions to changes in expected cash outflows
Increase/(decrease) in provisions recognised
Sainsbury’s
structural
Property Insurance integration Other
provisions provisions provisions
provisions
Total
£m
£m
£m
£m
£m
Cash outflow
10%
12
6
5
1
24
Cash outflow
(10)%
(12)
(6)
(5)
(1)
(24)
26 Called up share capital
2024
2023
2024
2023
million
million
£m
£m
Called up share capital
Allotted and fully paid ordinary shares 28 4/7p
2,371
2,352
678
672
Movements relate to allotments of 18,274,875 shares (2023: 15,987,425 shares) in respect of share option schemes.
Strategic Report Governance Report Financial Statements
166 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
27 Capital redemption and other reserves
Currency Capital
translation Investment in Financial Cash flow Total other redemption
reserve own shares asset reserve hedge reserves reserve
£m
£m
£m
£m
£m
£m
At 5 March 2023
3
(90)
293
68
274
680
Currency translation differences
(3)
—
—
—
(3)
—
Financial assets at fair value through other comprehensive income
—
—
1
—
1
—
Transferred to carrying value of inventory
—
—
—
32
32
—
Cash flow hedges effective portion of fair value movements
—
—
—
(149)
(149)
—
Items reclassified from cash flow hedge reserve
—
—
—
4
4
—
Purchase of own shares
—
(18)
—
—
(18)
—
Allotted in respect of share schemes
—
35
—
—
35
—
Deferred tax
—
—
80
17
97
—
Current tax
—
—
2
—
2
—
At 2 March 2024
—
(73)
376
(28)
275
680
Currency Capital
translation Investment in Financial asset Cash flow Total other redemption
reserve own shares reserve hedge reserves reserve
£m
£m
£m
£m
£m
£m
At 6 March 2022
(1)
(68)
293
117
341
680
Currency translation differences
4
—
—
—
4
—
Financial assets at fair value through other comprehensive income
—
—
2
—
2
—
Transferred to carrying value of inventory
—
—
—
(139)
(139)
—
Items reclassified from financial assets at fair value through other
comprehensive income reserve
—
—
(1)
—
(1)
—
Cash flow hedges effective portion of fair value movements
—
—
—
93
93
—
Items reclassified from cash flow hedge reserve
—
—
(1)
(17)
(18)
—
Purchase of own shares
—
(45)
—
—
(45)
—
Allotted in respect of share schemes
—
23
—
—
23
—
Deferred tax
—
—
—
14
14
—
At 4 March 2023
3
(90)
293
68
274
680
27.1 Currency translation reserve
The currency translation reserve accumulates foreign exchange differences arising on the translation of net assets in foreign operations which are recognised
in Other Comprehensive Income. The cumulative amount is reclassified to retained earnings when the related investment is disposed.
27.2 Investment in own shares
Represents the cost of shares in the Company held by the Employee Share Ownership Trust (ESOT) net of directly attributable costs for the purchase of issued,
or issuance of new shares. This cost is transferred to retained earnings when shares are issued by the ESOT to employees to satisfy employee share awards.
Shares held by the ESOT
2024
2023
Market Value
Nominal Value
Number
Market Value
Nominal Value
Number
£m
£m
m
£m
£m
m
Investment in own shares
75
8.6
30.1
99
10.7
3 7.3
Maximum number of shares held during the period
105
11.8
41.3
83
10.9
38.0
During the period, the ESOT acquired 6.8 million of the Company’s ordinary shares via market purchase for cash consideration of £18 million (2023: 20.0 million
shares via market purchase for cash of £45 million). The disposal of 14.0 million (2023: 9.3 million) ordinary shares was by way of distribution to settle
outstanding employee share awards. The ESOT has waived its right to receive dividends and has agreed to abstain from exercising its right to vote.
27.3 Financial asset reserve
Represents the fair value gains and losses on financial assets at fair value through other comprehensive income.
As described in note 18, the Group derecognised its financial asset relating to its beneficial interest in a commercial property investment pool during the
financial year. On derecognition, the cumulative gain or loss previously recognised in the financial asset reserve did not result in a profit or loss in the income
statement, as gains or losses on equity instruments are never recycled to the income statement.
27.4 Cash flow hedge reserve
Represents the effective portion of gains or losses on derivatives designated and that qualify as cash flow hedges. Amounts are transferred to the balance
sheet and included within the initial cost of the asset which is being hedged, or to the income statement, as appropriate.
27.5 Capital redemption reserve
The balance arose through a return of share capital resulting in the return and cancellation of shares, by way of a B share scheme, approved at an
Extraordinary General Meeting on 12 July 2004. The final redemption date for B shares was 18 July 2007 with all transactions completed in 2007.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 167
28 Financial risk management
The principal financial risks faced by the Group relate to liquidity risk, credit risk, market risk (foreign currency risk, interest rate risk and commodity risk)
and capital risk.
Financial risk management is managed by a central treasury department in accordance with policies and guidelines which are reviewed and approved by
the Board of Directors. The risk management policies are designed to minimise potential adverse effects on the Group’s financial performance by identifying
financial exposures and setting appropriate risk limits and controls. The risk management policies also ensure sufficient liquidity is available to the Group
to meet foreseeable financial obligations and that cash assets are invested safely.
Financial risk management with respect to Financial Services is separately managed within the Financial Services’ own governance structure whereby a
holistic, end-to-end view of risk is adopted which ensures that the key risks arising from Financial Services activities are effectively identified, assessed and
controlled. The objective is to support the strategy of Financial Services by assessing and managing risks in an appropriate manner relative to the size and
complexity of the business. In respect of the decision for financial services products to be offered in the future by dedicated financial services providers
through a distributed model with a phased withdrawal from the core Banking business over time, financial risks were considered and assessed and this
will continue to be monitored and assessed as this restructuring progresses.
28.1 Liquidity risk
Liquidity risk is the risk that the Group may be unable to meet its financial obligations as they fall due.
The principal operational cash flow of the Group is largely stable and predictable reflecting the low business risk profile of the food retail sector and the cyclical profile
of the non-food retail sector. Cash flow forecasts are produced to assist management in identifying future liquidity requirements. The Group’s liquidity policy sets a
minimum funding headroom of £500 million in excess of forecast funding requirements over a rolling 12-month time horizon. The Group manages its liquidity risk by
maintaining a core of long-dated borrowings, pre-funding future cash flow commitments and holding contingent committed credit facilities.
Within Financial Services, Sainsbury’s Bank undertakes an annual Internal Liquidity Adequacy Assessment Process (ILAAP) which enables it to:
• Identify and assess its most relevant liquidity risk drivers which include its Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR) as well as cash flow
and funding ratios
• Quantify its liquidity needs under various stress scenarios
• Put in place appropriate limits and controls to mitigate liquidity risks
Through its Asset-Liability Committee (ALCO), the Bank’s asset encumbrance ratios and risk indicators for wholesale funding are also regularly monitored.
The main sources of encumbrance in the Group relate to margin requirements for derivative transactions and collateral relating to secured funding
transactions. Cash collateral is advanced and received as variation margin on derivatives transactions, whilst eligible treasury assets are pledged as collateral
for initial margin requirements on derivatives which are centrally cleared. Information regarding loans used as collateral is set out in note 21 with
encumbered assets set out below.
Encumbered assets
2024 2023
£m £m
Loans and advances to customers 1,444 1,116
Debt securities 25 —
Cash and balances with central banks 14 15
Other assets 76 64
The Group has a £1,575 million unsecured committed facility which consists of a £1,000 million Revolving Credit Facility as set out in note 33.4 and a £575 million
Term Loan maturing in March 2026 which is fully drawn.
As detailed in note 23.2, some suppliers have access to supply chain finance facilities, which allows these suppliers to benefit from the Group’s credit profile.
The total size of the facility is £1,053 million (2023: £1,054 million) across a number of banks and platforms with an amount utilised of £547 million (2023: £607 million).
The level of utilisation is dependent on the individual supplier requirements and varies significantly over time.
Maturities below are based on the contractual undiscounted cash flows or an estimate of cash flows in respect of floating interest rate liabilities.
Maturity of financial liabilities – undiscounted
2024
Less than One to Two to More than
one year two years five years
five years
Total
Footnote
£m
£m
£m
£m
£m
Non-derivative financial liabilities
a)
Secured loan: Loan due 2031
b)
(84)
(88)
(293)
(178)
(643)
Trade and other payables
(4,758)
(5)
(5)
—
(4,768)
Amounts due to Financial Services customers and banks
c)
(5,798)
(138)
(100)
—
(6,036)
Tier 2 subordinated debt
(12)
(12)
(152)
—
(176)
Term loan
(37)
(35)
(581)
—
(653)
Derivative contracts – net settled
Commodity contracts
1
—
—
—
1
Interest rate swaps in hedging relationships
b), d)
—
—
(7)
(49)
(56)
Derivative contracts – gross settled
Foreign exchange forwards – outflow
e)
(1,194)
(190)
—
—
(1,384)
Foreign exchange forwards – inflow
e)
1,168
188
—
—
1,356
Commodity contracts – outflow
(26)
(22)
(53)
(138)
(239)
Commodity contracts – inflow
27
26
64
129
246
Strategic Report Governance Report Financial Statements
168 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
28 Financial risk management continued
28.1 Liquidity risk continued
Maturity of financial liabilities – undiscounted continued
2023
Less than One to Two to More than
one year two years five years
five years
Total
Footnote
£m
£m
£m
£m
£m
Non-derivative financial liabilities
a)
Secured loan: Loan due 2031
b)
(79)
(82)
(272)
(289)
(722)
Trade and other payables
(4,495)
—
—
—
(4,495)
Amounts due to Financial Services customers and banks
c)
(5,101)
(359)
(766)
—
(6,226)
Tier 2 subordinated debt
f)
(12)
(12)
(38)
(126)
(188)
Derivative contracts – net settled
Commodity contracts
(1)
1
—
—
—
Interest rate swaps in hedging relationships
b), d)
28
13
4
4
49
Other interest rate swaps – Sainsbury's Bank
4
—
—
—
4
Derivative contracts – gross settled
Foreign exchange forwards – outflow
e)
(1,560)
(222)
—
—
(1,782)
Foreign exchange forwards – inflow
e)
1,602
220
—
—
1,822
Commodity contracts – outflow
(16)
(28)
(59)
(164)
(267)
Commodity contracts – inflow
44
58
116
200
418
a) Maturity of non-derivative financial liabilities in respect of lease liabilities is set out in note 15.1 c).
b) Cash flows relating to debt and swaps linked to inflation rates have been calculated using an RPI of 5.0 per cent for the year ended 2 March 2024, 4.9 per cent for the year ending 1 March 2025
and 3.9 per cent for future years (2023: RPI of 5.0 per cent for the year ending 4 March 2023 and 5.0 per cent for year 2024 and beyond).
c) Cash flows relating to amounts due to Sainsbury’s Bank customers and banks are calculated using contractual terms and interest rates for fixed rate instruments. Where balances are
contractually repayable on demand, behavioural assumptions are applied to estimate the interest payable on those balances. These are shown as due within one year.
d) The swap rate that matches the remaining term of the interest rate swap as at the period end date has been used to calculate the floating rate cash flows over the life of the interest rate
swaps shown above.
e) Cash flows in foreign currencies have been translated using year-end spot rates.
f) The 2023 table has been restated to include Tier 2 subordinated debt, which was incorrectly excluded from this disclosure table in the prior year.
28.2 Credit risk
a) Retail credit risk management
Counterparty credit risk is the risk of a financial loss arising from counterparty default or non-performance in respect of the Group’s holdings of cash and
cash equivalents, derivative financial assets, deposits with banks, investments in marketable securities, trade and other receivables and loans and advances
to customers.
b) Financial Services retail credit risk management
Within Financial Services, retail credit risk is the possibility of losses arising from a retail customer failing to meet their agreed repayment terms as they fall
due. The Financial Services division utilises automated scorecards to assess the creditworthiness and affordability criteria of new applicants and ongoing
behavioural characteristics of existing customers. The outcome from all scorecard models is monitored utilising a set of credit quality metrics to ensure
actual performance is in line with agreed expectations. Additional expert underwriting of credit applications is undertaken by a specialist operational team
where further consideration is appropriate.
The Retail Credit Risk Committee of Sainsbury’s Bank provides portfolio oversight control over credit strategy to maintain lending in line with the Bank
Board’s approved risk appetite, with additional oversight and control provided by the Bank’s Executive and Board Risk Committees. Internal Audit provide
additional assurance by undertaking regular reviews on the adequacy of credit risk policies and procedures.
c) Wholesale and derivative credit risk management
The Group (excluding Financial Services) sets counterparty limits for each of its banking and investment counterparties based on their credit ratings and
credit default swap pricing. The minimum long-term credit rating accepted by the Group is BBB – (Standard & Poor’s and Fitch) or Baa3 (Moody’s) or, in the
case of pound sterling liquidity funds, AAA or Aaa/MR1+ from Moody’s. In the event of a split credit rating, the lower rating applies.
Analysis of Group (including Financial Services) credit exposure
2024
2023
Counterparty
Footnote
Long-term rating
£m
£m
Cash and cash equivalents
Financial institutions – Money market funds
a)
AAA/Aaa
263
140
Financial institutions – Money market deposits
AAA/Aaa
—
50
Financial institutions – Money market deposits
AA+/Aa1 to A/A2
232
215
Deposits at central banks
AA+/Aa1
886
345
Derivative financial assets
Interest rate swaps
AA+/Aa1 to A/A2
62
99
Inflation rate swaps
AA+/Aa1 to A/A2
—
2
Foreign exchange forward contracts
AA+/Aa1 to A/A2
4
49
Commodity forward contracts
AA+/Aa1 to A/A2
1
7
a) Excludes bank balances, store cash, cash in transit and cash at ATMs.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 169
28 Financial risk management continued
28.2 Credit risk continued
Analysis of Group (including Financial Services) credit exposure continued
The Bank’s treasury portfolio is held primarily for liquidity management purposes and in the case of derivatives, for the purpose of managing market risk.
Limits are established for all counterparty and asset class exposures based on their respective credit quality and market liquidity. Consideration is also given
to geographical region and the strength of relevant sovereign credit ratings. Derivatives are subject to the same credit risk control procedures as are applied
to other wholesale market instruments and the credit risk arising from mark to market derivative valuations is mitigated by daily margin calls, posting cash
collateral to cover exposures.
d) Maximum exposure to credit risk
2024
2023
Credit exposure
£m
£m
On balance sheet items
Loans and advances to customers and other banks
4,517
5,392
Cash and balances with central banks
1,987
1,319
Derivative financial instruments (excludes level 3 instruments)
67
156
Investment securities
761
626
Other assets
444
477
Off balance sheet items
Loan commitments
6
11
7,7 82
7,981
The exposures are shown gross, before the effect of mitigation through the use of collateral agreements.
The commitments to lend do not include undrawn limits on credit cards and store cards of £7,691 million (2023: £8,674 million). These are not considered
contractual commitments but, because in practice Financial Services does not expect to withdraw these credit limits from customers, they are within the
scope of impairment provisioning.
e) Impairment of financial assets
The ECL 3 stage model is applied as follows:
• Stage 1 – Impairment allowance is calculated on financial assets that have not significantly increased in credit risk since origination, nor are credit
impaired, using the probability that a borrower will default within 12 months from the balance sheet date. Interest income is recognised on the gross
carrying value of the financial asset
• Stage 2 – Where a financial asset exhibits a significant increase in credit risk (SICR) but is not yet considered to be credit impaired, the probability of
default considered in the impairment allowance is based upon the lifetime probability of the borrower defaulting. Interest income continues to be
recognised on the gross carrying value of the financial asset
• Stage 3 – Assets considered to be credit impaired resulting from one or more events that have occurred that has resulted in a detrimental impact on the
estimated future cash flows of the asset. Stage 3 assets will continue to recognise lifetime expected impairment losses (with a 100% probability of default)
and interest income will be recognised on the net carrying amount (i.e. gross amount less impairment)
Significant increases in credit risk
The Group determines whether there has been a significant increase in credit risk by reference to quantitative thresholds, qualitative indicators and the
backstop presumption that credit risk has significantly increased if contractual payments are more than 30 days past due.
Quantitative thresholds have been determined that when the lifetime PD of an instrument as at the reporting date has increased to greater than a specified
multiple of the origination lifetime PD, a significant increase in credit risk is deemed to have occurred.
Qualitative tests are based around the Group’s credit origination policy rules for Financial Services customers. These rules are in place at account origination
in order to decline accounts that may demonstrate risk factors outside of risk appetite that are not yet reflected in PD measures. At the reporting date, if an
account satisfies any policy decline rules that it had not at the point of origination, it will be considered to have significantly increased in credit risk.
There is no probationary period applied in respect of accounts that cure from stage 2 to stage 1. Transfer criteria have been subject to extensive analysis to
ensure that they appropriately reflect the flow of accounts from origination to default so as to maximise the number of accounts that flow through the stages
and minimise accounts that jump from stage 1 to stage 3, or that fail to enter stage 3 from stage 2.
The Group has applied the low credit risk exemption in respect of its high quality treasury portfolio held for liquidity purposes. This exemption permits low
credit risk debt securities (i.e. those considered investment grade) to remain in Stage 1 without an assessment of significant increase in credit risk.
Definition of default
The Group’s definition of default is used in determining those accounts classified as stage 3 (i.e. credit impaired). The Group has chosen not to rebut the
backstop presumption prescribed by IFRS 9 that where an account is 90 days or more past its due date then default has occurred.
The Group has also defined a number of unlikely-to-pay criteria that result in an account being deemed to have defaulted. These include:
• Where operational collections activities have been exhausted on accounts that are less than 90 days past due and the account is subject to
recoveries processes
• If any forbearance has been granted on the account (see forbearance definition below)
• Where the customer is subject to insolvency proceedings
• Where the customer is deceased
Where an account no longer meets any of the default criteria, such as by bringing payments back up to date, the Group will continue to consider the account as
being in default for the probation period (24 months for Loans and Cards, and 12 months for Storecards) from the date when it last met the definition of default.
Strategic Report Governance Report Financial Statements
170 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
28 Financial risk management continued
28.2 Credit risk continued
e) Impairment of financial assets continued
Write-off
Loans and advances to customers are written off (either partially or in full) when there is no realistic prospect of recovery. This is generally the case when
the Group determines that the borrower does not have assets or sources of income that could generate sufficient cash flows to repay the amounts subject
to write-off.
Subsequent recoveries of amounts previously written off result in impairment gains recorded in the income statement.
Modified financial assets
When the contractual cash flows of a financial asset have been renegotiated or modified and the financial asset was not derecognised, its gross carrying
amount is recalculated as the present value of the modified contractual cash flows, discounted at the original effective interest rate with a gain or loss
recognised in the income statement.
Loans and advances to customers per ECL stage
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
Unsecured lending
4,154
398
207
4,759
4,312
479
203
4,994
Allowance for expected credit losses
Expected credit loss on gross balance
(46)
(50)
(139)
(235)
(45)
(51)
(144)
(240)
Undrawn commitments impairment
(10)
(4)
(1)
(15)
(12)
(7)
—
(19)
(56)
(54)
(140)
(250)
(57)
(58)
(144)
(259)
Coverage
1.3%
13.6%
67.6%
5.3%
1.3%
12.1%
70.9%
5.2%
Unsecured lending represents Sainsbury’s Bank credit cards and personal loan lending in addition to Argos storecards and monthly payment plan. The Group
has no secured lending (2023: secured lending comprised the Group’s mortgage portfolio which was sold during the year as described in note 28.2 h).
Loans and advances to customers per ECL stage – split by exposure and ECL movement
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
Gross exposure
Provided
—
—
207
207
—
—
209
209
Past due but not impaired
8
47
—
55
10
50
—
60
Neither past due nor impaired
4,146
351
—
4,497
4,835
471
—
5,306
4,154
398
207
4,759
4,845
521
209
5,575
Allowance for expected credit loss
Opening loss allowance
(57)
(58)
(144)
(259)
(46)
(54)
(122)
(222)
Transfers between stages
(12)
24
(12)
—
(11)
22
(11)
—
Additional allowance less amounts
recovered
(4)
1
(2)
(5)
(8)
(2)
8
(2)
Write-offs
1
6
69
76
—
4
35
39
Changes in credit risk during the year
16
(27)
(51)
(62)
8
(28)
(54)
(74)
Closing allowance before undrawn
commitments impairment
(56)
(54)
(140)
(250)
(57)
(58)
(144)
(259)
Undrawn commitments impairment
10
4
1
15
12
7
—
19
Closing loss allowance
(46)
(50)
(139)
(235)
(45)
(51)
(144)
(240)
Net exposure
4,108
348
68
4,524
4,800
470
65
5,355
Hedging fair value adjustment
(7)
(43)
Loans and advances to other banks
—
100
4,517
5,392
Credit quality per class of loans and advances
12 month probability of default
Probability %
High quality
<=3.02%
Satisfactory quality
>=3.03%–11.10%
Low quality
>=11.11%
Credit impaired
100%
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 171
28 Financial risk management continued
28.2 Credit risk continued
e) Impairment of financial assets continued
Credit quality – unsecured lending
2024
2023
Stage 1
Stage 2
Stage 3
Total
Stage 1
Stage 2
Stage 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
High quality
3,387
81
—
3,468
3,593
125
—
3,718
Satisfactory quality
704
186
—
890
641
215
—
856
Low quality
63
131
—
194
78
139
—
217
Credit impaired
—
—
207
207
—
—
203
203
Total
4,154
398
207
4,759
4,312
479
203
4,994
2024: The Group has no secured lending (2023: secured lending comprised the Group’s mortgage portfolio which was sold during the year as described in
note 28.2 h).
f) Sensitivity of ECL to changes in macro-economic scenarios
The ECL models utilise four scenarios including a ‘base case’ scenario considered to be the most likely outcome together with an upside, downside scenario
and severe downside. The base case has been assigned a probability weighting of 40% with the upside, downside and severe downside scenarios weighted
30%, 25% and, 5% respectively (2023: base scenario 40%; upside, downside and severe downside scenarios weighted 30%, 25%, and 5% respectively).
Key macro-economic assumptions (five-year forecast averages)
2024
Severe
Base
Upside
Downside
downside
%
%
%
%
Unemployment rate
4.4
4.0
5.5
7. 2
Consumer price growth
2.0
1.1
3.1
4.3
GDP
1.2
1.8
0.3
(0.6)
Mortgage debt as a percentage of household income
91.4
88.4
95.5
100.1
Real household disposable income
1.6
2.3
0.7
(0.2)
Probability weighting (%)
40
30
25
5
Sensitivity analysis impact on impairment of 100 per cent weighting
£(5.3) m
£(15.0) m
£17.9m
£61.8m
g) Management overlays and post-model adjustments (PMAs)
Overlays and PMAs are adjustments to ECL at either a customer or portfolio level to account for known data or model limitations and are defined consistently
with the most recent recommendations of the Taskforce on Disclosures about Expected Credit Losses (DECL). Internal governance is in place to regularly
monitor and reduce reliance such overlays through model recalibration or redevelopment.
Management overlays and PMAs include those arising from modelling specific economic uncertainties or operational adjustments due to model or data
limitations which require a permanent remodelling solution. The effects of overlays and PMAs is not significant.
h) Collateral relating to loans and advances to customers
As described in note 5.3, on 15 August 2023, Sainsbury’s Bank completed the sale and transfer of beneficial ownership of its mortgage portfolio. Mortgages
held over residential properties represented the only collateral held by the Group for retail exposures.
The market value of collateral held for impaired loans and loans past due but not impaired was £nil (2023: £17 million).
The value of collateral used in determining the LTV ratios is estimated based upon the last actual valuation, adjusted to take into account subsequent
movements in house prices.
Strategic Report Governance Report Financial Statements
172 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
28 Financial risk management continued
28.2 Credit risk continued
i) Forbearance
The Group provides support to customers who are experiencing financial difficulties. Forbearance is defined as relief granted by a lender to assist customers
in financial difficulty, through arrangements which temporarily allow the customer to pay an amount other than the contractual amounts due. These
temporary arrangements may be initiated by the customer or the Group where financial difficulty would prevent repayment within the original terms
and conditions of the contract.
The main aim of forbearance is to support customers in returning to a position where they are able to meet their contractual obligations.
The Group has well defined forbearance policies and processes. A number of forbearance options are made available to customers. These include
arrangements to repay arrears over a period of time by making payments above the contractual amount, that ensure the loan is repaid within the original
repayment term and short-term concessions, where the borrower is allowed to make reduced repayments (or in exceptional circumstances, no repayments)
on a temporary basis to assist with short-term financial hardship.
Loans and advances subject to forbearance programmes
2024
2023
Forbearance
Forbearance
Proportion Proportion
Gross As proportion covered by Gross As proportion covered by
amounts of total provision amounts of total provision
£m
%
%
£m
%
%
Unsecured
53
1.1
67.2
61
1.2
69.1
Secured
—
—
—
1
0.2
4.5
53
1.1
67.2
62
1.1
68.1
28.3 Market risk
The Group uses forward contracts to hedge foreign exchange and commodity exposures, and interest rate swap contracts to hedge interest rate exposures.
The use of financial derivatives is governed by Board-approved policies which prohibit the use of derivative financial instruments for speculative purposes.
a) Foreign currency risk
Currency risk is the risk of increased costs arising from unexpected movements in exchange rates impacting the Group’s foreign currency-denominated
supply contracts.
The Group’s currency risk policy seeks to limit the impact of fluctuating exchange rates on the Group’s income statement by requiring highly probable foreign
currency cash flows to be hedged. Highly probable foreign currency cash flows, which may be either contracted or un-contracted, are hedged on a layered
basis largely using foreign currency forward contracts.
The Group has exposure to currency risk on balances held in foreign currency-denominated bank accounts, which may arise due to short-term timing
differences on maturing hedges and underlying supplier payments.
A 10 per cent movement in exchange rates against pound sterling is considered a reasonable measure of volatility.
Impact of change in exchange rate (all other variables held constant)
2024
2023
Impact on Impact on Impact on cash
post tax cash flow Impact on post flow hedge
profits hedge reserve tax profits reserve
+/- 10%
+/- 10%
+/- 10%
+/- 10%
Group
£m
£m
£m
£m
USD/GBP
7/(8)
(88)/108
5/(6)
(110)/135
EUR/GBP
2/(3)
(33)/40
2/(3)
(32)/40
Financial Services
The Bank is exposed to foreign exchange risk through its holding of cash denominated in foreign currencies, primarily Euro and US Dollar, within its travel
money bureaux in Sainsbury’s stores and its currency dispensing ATM machines. The foreign exchange positions are hedged on a regular basis.
b) Interest rate risk
Interest rate risk is the risk of increased costs or lower income arising from unexpected movements in interest rates and inflation rates impacting the Group’s
borrowing and investment portfolios. The Group’s interest rate policy seeks to limit the impact of fluctuating interest and inflation rates by maintaining a
diversified mix of fixed rate, floating rate and variable capped rate liabilities.
Interest on financial instruments is classified as fixed rate if interest re-sets on the borrowings are less frequent than once every 12 months. Interest on
financial instruments is classified as floating rate if interest re-sets on the borrowings occur every 12 months or more frequently. Floating rate instruments
are considered variable capped rate if the nominal interest rate is subject to a cap.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 173
28 Financial risk management continued
28.3 Market risk continued
b) Interest rate risk continued
Mix of financial assets and liabilities
2024
Variable
Fixed
Floating
capped
Total
£m
£m
£m
£m
Interest bearing financial assets at fair value through other comprehensive income
—
761
—
761
Amounts due from Financial Services customers and other banks
2,167
2,350
—
4,517
Cash and cash equivalents
620
1,367
—
1,987
Borrowings
(122)
(581)
(496)
(1,199)
Amounts due to Financial Services customers and banks
(1,959)
(3,762)
—
(5,721)
Derivative effect:
Interest rate swaps
(1,120)
1,120
—
—
Inflation linked swaps
(155)
—
155
—
(569)
1,255
(341)
345
2023
Variable
Fixed
Floating
capped
Total
Footnote
£m
£m
£m
£m
Interest-bearing financial assets at fair value through other comprehensive income
a)
—
626
—
626
Amounts due from Financial Services customers and other banks
2,690
2,702
—
5,392
Cash and cash equivalents
456
863
—
1,319
Borrowings
(122)
—
(539)
(661)
Amounts due to Financial Services customers and banks
(1,477)
(4,469)
—
(5,946)
Derivative effect:
Interest rate swaps
(1,143)
1,143
—
—
Inflation-linked swaps
(490)
—
490
—
(86)
865
(49)
730
a) 2023 disclosure has been re-presented to exclude £63 million of investment securities which are classified as Cash and cash equivalents.
Cash flow sensitivity for floating rate instruments
The Group considers that a 100 basis point movement in interest rates is a reasonable measure of volatility; however, the sensitivity to such a change is not significant.
Cash flow sensitivity for variable capped rate liabilities
The Group holds £496 million of capped inflation-linked borrowings (2023: £539 million) of which £155 million (2023: £490 million) have been swapped into
fixed rate borrowings using inflation rate swaps maturing in April 2026.
The Group considers that a 100 basis point movement in the RPI rate is a reasonable measure of volatility, however, the sensitivity to such a change is not significant.
Financial Services
Interest Rate Risk in the Banking Book (IRRBB) arises from interest rate movements which impact the present value and timing of future cash flows resulting
in changes in the underlying value of a bank’s assets and liabilities and hence its economic value. Interest rates movements also affect a bank’s earnings by
altering interest-sensitive income and expenses, affecting its net interest income.
The main types of interest rate risk faced by the Bank are:
• Re-pricing gap risk: the risk arising from timing differences in the interest rate changes of bank assets and liabilities (e.g. fixed rate personal loans and
instant access savings accounts)
• Yield curve risk: the risk arising from changes in the slope and shape of the yield curve
• Basis risk: risk arising from imperfect correlation between different interest rate indices (e.g. administered rate on savings products and treasury assets
linked to SONIA)
• Prepayment risk: the risk arising from the timing of customer prepayments which differ from planning and hedging assumptions
• Pipeline risk: the risk of a customer drawing down, or not, a product at a rate which is unfavourable for the Bank
• Credit Spread Risk: the risk of adverse effects resulting from a change in credit spreads, arising via the Bank’s Treasury portfolio
Interest risk exposure is actively managed within limits that are aligned with the Bank’s risk appetite by using financial instruments such as interest rate
swaps and by taking into account natural hedges between assets and liabilities with similar repricing characteristics. Hedging strategies are implemented
and reviewed to ensure the Bank remains within its limits.
c) Commodity risk
Commodity risk is the risk of increased costs arising from unexpected movements in commodity prices impacting the Group’s own use consumption of
electricity, gas and diesel. The Group hedges own use consumption of electricity and gas with forward purchases under flexible purchasing arrangements
with its suppliers as well as power purchase agreements for electricity. The Group uses a combination of purchasing agreements and financial derivatives to
hedge fuel exposures on a layered basis using contracts for difference. See note 30 for derivative disclosures.
Strategic Report Governance Report Financial Statements
174 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
28 Financial risk management continued
28.4 Capital risk management
The Group defines capital as total equity plus net debt.
The Board’s capital objective is to maintain a strong and efficient capital base to support the Group’s strategic objectives, provide optimal returns for
shareholders and safeguard the Group’s status as a going concern. There has been no change to capital risk management policies during the year.
The Board monitors a broad range of financial metrics including return on capital employed, balance sheet gearing and fixed charge cover.
The Board can manage the Group’s capital structure by diversifying the debt portfolio, adjusting the size and timing of dividends paid to shareholders,
recycling capital through sale and leaseback transactions, issuing new shares or repurchasing shares in the open market and flexing capital expenditure.
From time to time, the ESOT may purchase shares in the Company from the open market for the purpose of satisfying awards under the Group’s employee
share plans; however, the Group does not currently operate a defined share buy-back plan.
The Revolving Credit Facility and Term Loan have a single repeating financial covenant. Part of the Group’s capital risk management is to ensure compliance
with both the financial and general covenants included within the Group’s borrowing facilities. Examples of general covenants include restrictions on the
permitted value of asset disposals and incremental indebtedness. In addition to there being no breaches in the year of financial and general covenants, there
is healthy headroom within all covenants as at 2 March 2024.
a) Financial Services capital resources (unaudited)
Regulatory capital is calculated under the Capital Requirements Regulations and Capital Requirements Directive (collectively known as CRD IV). The Bank
has obtained an individual consolidation waiver from the PRA, which allows the Bank to monitor its capital position on a consolidated basis only. As a result,
the capital position set out below is on a regulatory consolidated basis.
Regulatory capital resources under CRD IV
2024
2023
Transitional
Full impact
Transitional
Full impact
£m
£m
£m
£m
Common Equity Tier 1 (CET 1) capital:
Ordinary share capital
701
701
701
701
Allowable reserves
48
48
165
165
Regulatory adjustments
—
(1)
(144)
(167)
Tier 1 capital
749
748
722
699
Tier 2 capital (loan notes – listed)
100
100
113
113
Total capital
849
848
835
812
b) Leverage ratio (unaudited)
The leverage ratio is defined as the ratio of Tier 1 capital to adjusted assets, which is measured below on a regulatory consolidated basis. The denominator
represents the total non-risk weighted assets of the regulatory group (Bank and Home Retail Group Card Services Limited) adjusted for certain off balance
sheet exposures assets and regulatory deductions and provides a non-risk-weighted ‘backstop’ capital measure. The leverage ratio is calculated below on the
UK basis which allows central bank assets to be excluded from the leverage exposures. The Bank’s leverage ratio of 11.3% exceeds the minimum Basel
leverage ratio of 3%.
2024
2023
Transitional
Full impact
Transitional
Full impact
£m
£m
£m
£m
Components of the leverage ratio
Total assets as per published financial statements (Sainsbury’s Bank plc consolidated group)
6,816
6,816
7,2 09
7, 20 9
Movement on consolidation of subsidiary undertakings
(6)
(6)
(6)
(6)
Exposure value for derivatives and securities financing transactions
30
30
32
32
Off balance sheet exposures: unconditionally cancellable (10%)
769
769
867
867
Off balance sheet: other (100%)
1
1
2
2
Other adjustments
(77)
(78)
(242)
(265)
Central Bank claims
(886)
(886)
(331)
(331)
6,647
6,646
7,53 1
7,5 08
Tier 1 capital
749
748
722
699
Leverage ratio
11.3%
11.3%
9.6%
9.3%
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 175
29 Financial instruments
2024
2023
£m
£m
Held at amortised cost
Financial assets
Cash and cash equivalents
1,987
1,319
Trade and other receivables
444
477
Amounts due from Financial Services customers and other banks
4,517
5,392
Financial liabilities
Trade and other payables
(4,768)
(4,495)
Borrowings
(1,195)
(656)
Amounts due to Financial Services customers and banks
(5,721)
(5,946)
Lease liabilities
(5,354)
(6,489)
Held at fair value through other comprehensive income (OCI)
Financial assets
778
1,009
Held at fair value through profit or loss
Derivative financial instruments
(11)
213
(9,323)
(9,176)
29.1 Fair value estimation of amounts held at amortised cost
The fair values of financial assets and liabilities are based on prices available from the market on which the instruments are traded. Where market values are
not available, the fair values of financial assets and liabilities have been calculated by discounting expected future cash flows at prevailing interest rates.
The fair values of short-term deposits, trade receivables, other receivables, overdrafts and payables and lease liabilities are assumed to approximate to their
book values.
2024
2023
Carrying Carrying
amount
Fair value
amount
Fair value
Footnote
£m
£m
£m
£m
Financial assets
Amounts due from Financial Services customers
a)
4,517
4,381
5,392
5,340
Financial liabilities
Loans due 2031
(496)
(494)
(539)
(639)
Term loan
(581)
(575)
—
—
Tier 2 Capital due 2028
(122)
(136)
(122)
(131)
Amounts due to Financial Services customers and other banks
(5,721)
(5,733)
(5,946)
(5,954)
a) Included within a portfolio fair value hedging relationship with £2,312 million (2023: £3,033 million) of interest rate swaps
The fair value of financial assets and liabilities are within Level 2 of the fair value hierarchy, with the exception of the Tier 2 Capital, where the fair value is
calculated using prevailing market prices and is therefore Level 1.
29.2 Fair value measurements recognised in the balance sheet
The following table provides an analysis of financial instruments that are recognised at fair value, grouped into Levels 1 to 3 based on the degree to which the
fair value is observable:
• Level 1 fair value measurements are derived from quoted market prices (unadjusted) in active markets for identical assets or liabilities at the balance sheet
date. This level includes listed equity securities and debt instrument on public exchanges
• Level 2 fair value measurements are derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial instruments is determined by discounting expected cash flows at
prevailing interest rates
• Level 3 fair value measurements are derived from valuation techniques that include inputs for the asset or liability that are not based on observable market
data (unobservable inputs)
2024
2023
Level 1
Level 2
Level 3
Total
Level 1
Level 2
Level 3
Total
£m
£m
£m
£m
£m
£m
£m
£m
Financial instruments at fair value
through other comprehensive income
Other financial assets
—
17
—
17
—
383
—
383
Investment securities
761
—
—
761
626
—
—
626
Derivative financial assets
—
67
9
76
—
156
131
287
Derivative financial liabilities
—
(87)
—
(87)
—
(74)
—
(74)
Strategic Report Governance Report Financial Statements
176 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
29 Financial instruments continued
29.3 Level 3 financial assets
a) Power Purchase agreements
The Group has entered into several long-term fixed and CPI-linked price Power Purchase agreements with independent producers, and values its Power
Purchase agreements as the net present value of the estimated future usage at the contracted fixed price less the market implied forward energy price
discounted at the prevailing swap rate.
All Power Purchase agreements are physical arrangements. Arrangements designated in hedging relationships are classified as hedging instruments,
whereas those not designated in hedging relationships are not classified as hedging instruments. The credit risk exposure associated with the Power
Purchase agreements is considered immaterial.
Commodity derivative values
2024
2023
£m
£m
At beginning of financial year
131
180
Charged to income statement – cost of sales
(46)
(30)
Charged to other comprehensive income
(76)
(19)
At end of financial year
9
131
b) Sensitivity of Power Purchase agreement derivatives
The Group makes an assumption regarding expected energy output based on the historical performance and the producer’s estimate of expected electricity
output. The sensitivity of this is shown below:
2024
Change in Change in
output forward
volume pricing
+/-20.0% +/-20.0%
Sensitivities
£m
£m
Not in a hedge relationship
1/(1)
9/(9)
Designated in a cash flow hedge relationship
1/(1)
29/(29)
c) Offsetting financial instruments
Financial assets and liabilities are offset, and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognised
amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously. The legally enforceable right must not be
contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the company
or the counterparty.
The following table sets out the Group’s financial assets and financial liabilities that are subject to counterparty offsetting or a master netting agreement.
The master netting agreements regulate settlement amounts in the event a party defaults on their obligations.
Financial assets and financial liabilities subject to counterparty offsetting or a master netting agreement
2024
Cash
Gross collateral
amounts Amounts Net amounts pledged Net
recognised offset recognised (not offset) amounts
£m
£m
£m
£m
£m
Assets
Derivative financial assets
76
—
76
(10)
66
Trade and other receivables
470
(26)
444
—
444
Cash and cash equivalents
1,987
—
1,987
—
1,987
2,533
(26)
2,507
(10)
2,497
Liabilities
Derivative financial liabilities
(87)
—
(87)
56
(31)
Trade and other payables
(4,794)
26
(4,768)
—
(4,768)
(4,881)
26
(4,855)
56
(4,799)
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 177
29 Financial instruments continued
29.3 Level 3 financial assets continued
c) Offsetting financial instruments continued
Financial assets and financial liabilities subject to counterparty offsetting or a master netting agreement continued
2023
Cash
Gross collateral
amounts Amounts Net amounts pledged Net
recognised offset recognised (not offset) amounts
£m
£m
£m
£m
£m
Assets
Derivative financial assets
287
—
287
(49)
238
Trade and other receivables
624
(147)
477
—
477
Cash and cash equivalents
1,319
—
1,319
—
1,319
2,230
(147)
2,083
(49)
2,034
Liabilities
Derivative financial liabilities
(74)
—
(74)
52
(22)
Trade and other payables
(4,642)
147
(4,495)
—
(4,495)
(4,716)
147
(4,569)
52
(4,517)
The Group holds certain financial derivatives which are subject to credit support agreements. Under these agreements cash collateral is posted by one party
to the other party should the fair value of the financial derivative exceed a pre-agreed level. The Group held no collateral against these financial derivative
assets (2023: £nil).
The Financial Services segment has derivatives that are governed by the International Swaps and Derivatives Association (ISDA) and their associated credit
support annex bilateral agreements where if the fair value exceeds a pre-agreed level, cash collateral is posted. Collateral of £56 million has been pledged/
provided (2023: £49 million) against the derivatives and collateral has been received of £10 million (2023: £52 million).
The Group also operates a cash pooling arrangement and collective net overdraft facility with its main clearing bank. The Group had a net overdraft of £nil
(2023: £nil) under this facility.
30 Derivative financial instruments and hedge accounting
30.1 Effects of hedge accounting on the Group’s financial position and performance
2024
2023
Asset
Liability
Asset
Liability
Fair value
Notional
Fair value
Notional
Fair value
Notional
Fair value
Notional
£m
£m
£m
£m
£m
£m
£m
£m
Fair value hedges
Interest rate swaps
62
1,249
(56)
1,063
99
2,149
(52)
675
Cash flow hedges
Inflation rate swaps
—
—
—
155
—
490
—
—
Interest rate swaps
—
150
—
—
—
—
—
—
Foreign exchange forward contracts
4
296
(30)
1,062
49
1,049
(17)
482
Commodity contracts
1
22
(1)
24
7
21
(5)
45
Power Purchase contracts
3
14
—
—
79
15
—
—
Derivatives not in a formal hedging
relationship
Interest rate swaps
—
—
—
—
1
209
—
—
Cross-currency swaps
—
23
—
20
—
—
—
—
Foreign exchange forward contracts
—
—
—
2
—
14
—
—
Power Purchase contracts
6
11
—
—
52
11
—
—
Total
76
1,765
(87)
2,326
287
3,958
(74)
1,202
Strategic Report Governance Report Financial Statements
178 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
30 Derivative financial instruments and hedge accounting continued
30.1 Effects of hedge accounting on the Group’s financial position and performance continued
a) Cash flow hedges
There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest rate swaps, foreign exchange and
commodity forward contracts match the terms of the expected highly probable forecast transactions (i.e., notional amount and expected payment date).
The Group has established a hedge ratio of 1:1 for the hedging relationships as the underlying risk of the foreign exchange and commodity forward contracts
are identical to the hedged risk components. To test the hedge effectiveness, the Group uses the hypothetical derivative method and compares the changes
in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks.
Hedge ineffectiveness can arise from:
• Differences in the timing of the cash flows of the hedged items and the hedging instruments
• Different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments
• The counterparties’ credit risk differently impacting the fair value movements of the hedging instrument compared to the hedged items
• Changes to the forecasted cash flows of hedged items
The maturity profile and average price/rate of the hedging instruments used in the Group’s non-dynamic hedging strategies of interest rate risk were
as follows:
Maturity profile of instruments used in non-dynamic hedging strategies of interest rate risk:
2024
2023
Average Average
Notional interest Notional interest
amount received amount received
£m
%
£m
%
Less than 1 month
—
—
—
—
1 – 3 months
—
—
490
5.00%
3 months – 1 year
—
—
—
—
1 – 5 years
305
4.94%
—
—
More than 5 years
—
—
—
—
Impact of change in value of hedged items on cash flow hedge reserve
2024
2023
Cumulative Cumulative
Hedged Hedging impact in Hedged Hedging impact in
item instrument reserve item instrument reserve
£m
£m
£m
£m
£m
£m
Cash flow hedges
Foreign exchange forward contracts
67
(67)
(19)
(123)
123
9
Commodity contracts
6
(6)
—
11
(11)
2
Power Purchase agreements
76
(76)
3
19
(19)
79
There are no amounts remaining in the hedging reserve for which hedge accounting is no longer applied.
Analysis of fair value movements in cash flow hedge reserve by risk category
2024
Movements Reallocation
recognised Amounts within
Opening in OCI reclassified reserves Closing
Reclassification recognised in £m £m £m £m £m
Foreign exchange forward contracts
Inventory
9
(67)
32
7
(19)
Commodity contracts
Cost of sales
2
(6)
4
—
—
Power Purchase agreements
Cost of sales
79
(76)
—
—
3
Tax
(22)
17
—
(7)
(12)
68
(132)
36
—
(28)
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 179
30 Derivative financial instruments and hedge accounting continued
30.1 Effects of hedge accounting on the Group’s financial position and performance continued
a) Cash flow hedges continued
Analysis of fair value movements in cash flow hedge reserve by risk category continued
2023
Movements
recognised Amounts Reallocation
Opening in OCI reclassified within reserves Closing
Reclassification recognised in £m £m £m £m £m
Inflation rate swap
Finance costs
5
—
(5)
—
—
Foreign exchange forward contracts
Inventory
25
123
(139)
—
9
Commodity contracts
Cost of sales
25
(11)
(12)
—
2
Power Purchase agreements
Cost of sales
98
(19)
—
—
79
Tax
(36)
14
—
—
(22)
117
107
(156)
—
68
b) Fair value hedges
Within the Financial Services business, interest rate swaps are executed to hedge interest rate risk arising from fixed rate exposures in its retail personal loan
and retail mortgage books, and certain fixed rate treasury investment securities, which are predominantly funded by variable rate linked liabilities.
The cash flows under the hedging instruments (interest rate swap derivatives) substantially match the cash flow profile of the hedged items (personal loans,
mortgages, treasury investment securities and borrowings). The changes in fair value of the derivatives offset changes in the fair value of the hedged items
through the income statement, with any ineffective portion also being recognised in the income statement.
The main source of ineffectiveness within the micro hedge relationships relates to the floating leg valuation changes inherent within the hedging instrument
that do not exist within the hedged item. Ineffectiveness on portfolio hedges can also arise as a result of mismatch in cash flow maturities between the
hedged item and hedging instrument and basis risk between cash flows discounted using different benchmark rates.
Maturity profile of instruments used in non-dynamic hedging strategies of interest rate risk
2024
2023
Average Average
Notional fixed interest Notional fixed interest
amount rate amount rate
£m
%
£m
%
Less than 1 month
—
—
—
—
1 – 3 months
17
0.60%
125
0.73%
3 months – 1 year
231
0.70%
589
0.71%
1 – 5 years
956
3.90%
748
1.17%
More than 5 years
1,109
2.19%
1,362
3.50%
Impact of hedged items (all via interest rate swaps) on financial statements
2024
Change in fair
value for Cumulative fair value
measuring hedge adjustments included
Carrying amount ineffectiveness in carrying amount
Assets
Liabilities
Assets
Liabilities
Line item in financial statements
£m
£m
£m
£m
£m
Amounts due from Financial Services customers
2,155
—
36
(7)
—
Borrowings
—
(122)
—
—
3
2,155
(122)
36
(7)
3
2023
Change in fair
value for Cumulative fair value
measuring hedge adjustments included
Carrying amount ineffectiveness in carrying amount
Assets
Liabilities
Assets
Liabilities
Line item in financial statements
£m
£m
£m
£m
£m
Amounts due from Financial Services customers
2,615
—
(27)
(43)
—
Financial assets at FVOCI
—
—
3
—
—
Borrowings
—
(122)
5
—
3
2,615
(122)
(19)
(43)
3
Strategic Report Governance Report Financial Statements
180 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
30 Derivative financial instruments and hedge accounting continued
30.1 Effects of hedge accounting on the Group’s financial position and performance continued
b) Fair value hedges continued
Impact of the hedging instruments (all via interest rate swaps) on financial statements:
2024
Carrying amount Change in fair
value for
Notional measuring
amount Asset Liability ineffectiveness
Line item in financial statements
Hedged Item
£m £m £m £m
Derivative financial assets/liabilities
Loans
2,192
62
(56)
(41)
Derivative financial liabilities
Tier 2 capital
120
—
—
—
2,312
62
(56)
(41)
2023
Carrying amount Change in fair
value for
Notional measuring
amount Asset Liability ineffectiveness
Line item in financial statements
Hedged item
£m £m £m £m
Derivative financial assets/liabilities
Loans and mortgages
2,704
99
(52)
35
Derivative financial liabilities
Tier 2 capital
120
—
—
1
Derivative financial assets
Investment securities
—
—
—
(5)
2,824
99
(52)
31
Hedge ineffectiveness recognised in cost of sales
2024
2023
Change in value for calculating hedge ineffectiveness
£m
£m
Hedged items
36
(19)
Hedging instruments
(41)
31
(5)
12
c) Derivatives not in a hedge relationship
Some of the Group’s derivative contracts do not qualify for hedge accounting and are therefore not designated in a hedging relationship. In addition, where
gains or losses on a derivative contract economically offset the gains or losses on an underlying transaction, the derivative is not designated as being in a
hedging relationship.
The Group has entered into several long-term fixed price and CPI linked Power Purchase agreements with independent producers and certain contracts do
apply a CPI uplift to the fixed price, as detailed in note 29, of which £6 million (2023: £53 million) is not within a hedging relationship with fair value losses of
£46 million (2023: loss of £29 million) having been recognised in the income statement for these arrangements.
31 Cash and cash equivalents
31.1 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
31.2 Cash flow statement
Amounts due from Financial Services customers
Cash flows differ from the movement in the balance sheet owing mainly to fair value movements of £39 million (2023: £27 million) and proceeds of amounts
due from Financial Service customers of £446 million (2023: £nil) presented within cash flows from investing activities.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 181
32 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.
32.1 Reconciliation of opening to closing net debt
Cash Movements
Non-Cash Movements
Cash flows Net interest Other
5 March excluding (received)/ Accrued non-cash Changes in 2 March
2023 interest paid interest movements fair value 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)
Financial assets at fair value through other
comprehensive income
—
—
—
—
—
—
—
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.
Strategic Report Governance Report Financial Statements
182 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
32 Analysis of net debt continued
32.1 Reconciliation of opening to closing net debt continued
Cash Movements
Non-Cash Movements
Cash flows Net interest Other
6 March excluding (received)/ Accrued non-cash Changes in 4 March
2022 interest paid interest movements fair value 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
( 7,18
8)
552
307
(302)
(396)
—
( 7,02
7)
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)
33 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
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 183
33 Borrowings continued
33.1 Loan due 2031
The loan is secured against 48 (2023: 48) supermarket properties (note 14.2). 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.
33.2 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.
33.3 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).
33.4 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.
34 Retirement benefit obligations
34.1 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.
Sainsbury’s section
The section was closed to new employees on 31 January 2002 and closed to future accrual on 28 September 2013. There are three benefit categories: final
salary, career average and cash balance. Final salary and career average benefits are determined by service and salary. Cash balance benefits are determined
by the accrued retirement account credits.
Argos section
The section was closed to new employees in 2009 and to future accrual in January 2013. Pension benefits are based on service and final salary when leaving the Scheme.
Triennial valuation
The Trustee’s triennial valuation is used to determine the contributions required for the Scheme to pay all the benefits due, now and in the future. The Trustee
must allow for a level of prudence resulting in these assumptions placing a relatively high value on the Scheme’s liabilities. By contrast, IAS 19 ‘Employee
Benefits’ requires companies to value the liabilities on a ‘best estimate’ basis which places a lower value on the liabilities and therefore a more favourable
financial position. As such, the accounting value is different to the result obtained using the Trustee’s triennial valuation basis.
The most recent triennial valuation was as at 30 September 2021, resulting in an actuarial surplus of £130 million (comprising a surplus of £231 million in the
Sainsbury’s section and a £101 million deficit in the Argos section) on a technical provisions basis. The asset-backed contributions structure (ABC) established
by Sainsbury’s in July 2019 continues to deliver as planned.
Under the ABC structure, properties with a valuation of £1,350 million were transferred into a newly formed property holding company – Sainsbury’s Property
Holdings Limited (Propco) from the Sainsbury’s Property Scottish Partnership and other Sainsbury’s Group Companies. The Propco is a wholly owned
subsidiary of the Group and leases the transferred properties to other Group companies. Rental receipts facilitate payments of interest and capital on loan
notes issued to the Partnership, in which the Scheme holds an interest.
The Partnership is controlled by Sainsbury’s and its results are consolidated by the Group. The Scheme’s investment in the Partnership does not qualify as a
plan asset for the purposes of the Group’s consolidated financial statements and is therefore not included within the fair value of plan assets.
The value of the properties transferred to the Propco remains in the Group’s property, plant and equipment on the balance sheet, and the Group retains full
operational flexibility to extend, develop and substitute them.
The Scheme’s interest in the Partnership entitled it to annual distributions over up to 20 years initially through three payment streams:
1) Payments to the Sainsbury’s section (£15 million per year) which stopped from December 2021
2) Payments to the Argos section (£20 million per year)
3) Switching payment stream, paid to either the Sainsbury’s section or Argos section (initially £23 million per year, increasing to £33 million by 2038)
The payments to the Sainsbury’s and Argos sections (streams 1 and 2) would stop in 2030, or when the relevant section reached its funding target, if earlier.
The Sainsbury’s section reached its funding target on 31 December 2021 and so the first payment stream was permanently switched off, even though the
subsequent updating of assumptions under the 2021 triennial valuation resulted in a small deficit on this funding basis.
Strategic Report Governance Report Financial Statements
184 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
34 Retirement benefit obligations continued
34.1 Background continued
Triennial valuation continued
The switching stream (stream 3) was initially paid to the Sainsbury’s section until it reached the funding target, when it switched to the Argos section.
Payments continue until 2038 or until both sections have reached their funding targets, if earlier.
The level of property in the Propco reduces as the Scheme reaches the funding targets. The level of security was designed to reduce as the Scheme’s funding level
improves, as the risk of a Group insolvency to the Scheme reduces. Once a section reaches a specific funding target for three consecutive quarters, the level of
security that the Scheme can access reduces at the following 31 March in line with the Residual Security Amount (RSA) caps set out in the ABC framework. The
security is currently provided by properties in the ABC which are valued annually. If the value of the security is outside a corridor either side of the RSA, the Company
must top up if the value is less, or can chose to remove property from the Propco if the value is higher; however, if a default event were to occur, the Scheme would
only have rights over the security to the value of the RSA – any excess value would remain in the Propco and revert to the Company.
Unfunded pension liabilities
The unfunded pension liabilities are unwound when each employee either retires and draws their pension or the pension is taken as a lump sum on
retirement or upon leaving.
34.2 Income statement
2024
2023
Footnote
£m
£m
Excluded from underlying profit before tax:
Interest cost on pension liabilities
a)
(290)
(221)
Interest income on plan assets
341
277
Total included in finance income
51
56
Defined benefit pension scheme expenses
(7)
(6)
Settlement gains
b)
—
8
Total (excluded from underlying profit before tax)
44
58
a) Includes interest of £1 million for the unfunded pension scheme (2023: £1 million).
b) 2023: A settlement credit relating to a gain on payments made to members exiting the scheme relative to the liabilities.
34.3 Remeasurements included in other comprehensive income
2024
2023
Footnote
£m
£m
Return on plan assets, excluding amounts included in interest
(335)
(4,739)
Actuarial (losses)/gains arising from changes in
Finance assumptions
(34)
3,518
Demographic assumptions
116
38
Experience
(136)
(215)
Total actuarial (losses)/gains
a)
(54)
3,341
Total remeasurements
(389)
(1,398)
a) Includes £nil for the unfunded pension scheme (2023: £13 million).
34.4 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
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 185
34 Retirement benefit obligations continued
34.5 Investment strategy and risks associated with defined benefit pension scheme
The investment strategy of the Scheme is determined by the Trustee. The Trustee considers that its primary responsibility in respect of investments is to
ensure, for the duration of the Scheme, that funds will be available to meet the benefit payment obligations as they fall due. The Trustee continues to target
being funded on a gilts +0.5% p.a. basis, while limiting the downside risk associated with investment policy wherever possible. The investment objectives
target a 50% or better chance of being fully funded on this basis by the end of 2024 for the Argos section and the end of 2028 for the Sainsbury’s section.
In June 2023, the UK High Court (Virgin Media Limited v NTL Pension Trustees II Limited) ruled that certain historical amendments for contracted out defined
benefit schemes were invalid if they were not accompanied by the correct actuarial confirmation. The judgment is subject to appeal. The Trustee and Group
continue to monitor developments and will consider the implications if the ruling is upheld or the Government issues any new regulations in response to this issue.
Risks associated with achieving the strategy
Risk
Description
Mitigation
Investment Strategy Misalignment of the investment strategy relative to changes Using an FCA regulated investment advisor, a liability-driven
and implementation in liabilities reduces the future resources available to meet investment (LDI) framework has been adopted to generate
pension obligations. excess asset returns aligned to liabilities by largely removing
interest and inflation uncertainties.
The strategy also includes addressing sustainability, ESG and
climate risks which exist across the activities of the entities in ESG and related risks are incorporated into the Statement of
which the Scheme ultimately invests. Investment managers Investment Principles (SIP), and an annual TCFD report and
may not have appropriate policies and procedures in place to Implementation Statement are published covering risk
address ESG risks. management and goals.
Poor execution, attention to regulation or underperformance Investment managers have signed up to international ESG
in applying the strategy could lead to lower funding levels. principles and are requested to confirm that they operate in line
with the Trustee’s policies on ESG.
Investment mandates are monitored closely against portfolio
benchmarks set out in investment guidelines. The Investment
Committee will terminate consistently underperforming
mandates and reallocate capital.
Investment Liquidity
Insufficient liquidity to meet cashflow requirements to make
The Scheme adopts a collateral sufficiency framework to ensure
collateral top up requests to manage the Scheme’s derivative that sufficient liquid assets are maintained. The Investment
positions and member benefit payments. Adviser liaises with the Scheme Actuary and Pensions
Department to determine current and future cash
flow requirements.
Investment Financial losses may be incurred due to failure of Asset Managers manage credit limits for all their derivative
Counterparty counterparties or inability to roll-over derivative positions. counterparty exposures and monitor positions over derivative
roll dates.
Inflation
Scheme obligations are linked to inflation whereby a higher
The Scheme’s LDI portfolio and inflation-linked investments
long-term inflation rate leads to higher liabilities. reduce inflation risk by aligning assets movements to changes
in inflation expectations. Inflation increases are subject to
maximum caps.
Interest rate
Scheme liabilities are determined using discount rates linked to
The Scheme’s LDI portfolio reduces this risk on a funding basis.
corporate bond and gilt yields for accounting and funding Whilst the accounting basis may differ because of divergence
purposes, respectively. A decrease in yields increases liabilities. between corporate bond and gilt yields, other assets held in the
portfolio help to provide an additional hedge.
Sustainability, Investment managers do not have appropriate policies and ESG, stewardship and other related risks are incorporated into the
including ESG and procedures in place to identify such risks and opportunities. Statement of Investment Principles. The Trustee publishes an
climate A broad range of these risks exists across the activities of the annual TCFD report and an Implementation Statement which
entities in which the Scheme ultimately invests which include details how climate risks are managed. Day to day management
exposure to climate transition, a lack of diversity, equity and of ESG risks is delegated to investment managers who are
inclusion, or poor corporate governance. requested to confirm that they operate in line with the
Trustee’s policies.
A Net Zero carbon emission goal by 2050 has been adopted and
follows new climate governance and reporting standards. The
Scheme’s investment managers have signed up to the UN
Principles of Responsible Investment and have Net Zero targets.
Longevity
The Scheme pays benefits longer than expected due to
Longevity risk is monitored with the aim of achieving sufficient
members living longer than assumed. funding levels which take account of the potential for increased
life expectancy.
Since 2023, no new risks have been identified; however, some have been either combined or set out differently for presentational purposes.
Strategic Report Governance Report Financial Statements
186 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
34 Retirement benefit obligations continued
34.6 Analysis of plan assets
2024
2023
Quoted
Unquoted
Quoted
Unquoted
Footnote
£m
£m
£m
£m
Liability matching assets
3,620
1,374
3,092
1,629
Growth assets
a)
Equity
– Private
—
332
—
429
– Derivatives
b)
—
—
—
4
Alternatives
– Real Estate
—
255
—
397
– Private Debt
—
602
—
726
– Diversified Growth
—
313
—
303
Cash and Cash equivalents
206
—
354
—
3,826
2,876
3,446
3,488
a) Certain unquoted fixed interest securities, private equity and debt investments and property investments are stated at fair value. These fair values may differ from their realisable values
due to the absence of liquid markets in these investments.
b) Derivatives are stated at the aggregated net present value of future discounted cash flows of each leg of the swap.
Included within liability matching assets are Government Bonds totalling £5,192 million (2023: £4,083 million), Corporate Bonds totalling £2,052 million
(2023: £1,988 million), and Fixed income derivatives totalling £342 million (2023: £356 million), offset by repurchase agreements totalling £(2,592) million
(2023: £(1,706) million). Circa 98% of the Scheme’s corporate bonds are invested in investment grade credit. The remainder are either unrated or below
investment grade.
The Sainsbury’s Pension Scheme adopts a liability-driven investment (LDI) framework to manage its funding risk and reduce volatility by largely removing
the interest rate and inflation rate impacts of its liabilities. As a result, the value of the Scheme’s assets changes in a similar way to its liabilities, which helps
maintain its ability to pay benefits and therefore member security over the long term.
Of the above assets, £3,565 million are denominated in pound sterling and £3,137 million are denominated in overseas currencies.
The valuation of many private market assets is based on valuations provided at 30 September 2023. A roll-forward of these valuations to 2 March 2024,
adjusting for cash received or paid and applying the changes seen in relevant liquid indices, increased the valuation of illiquid assets by £47 million.
Index return from 30 September 2023 to 2 March 2024
Asset Class Returns
Global equity USD return
18.5%
Global High Yield Debt USD return
7.3%
US loans USD return
4.5%
UK REITS GBP return
9.6%
An increase/decrease of 1 per cent in the indices used would have caused a £12 million increase/decrease in the adjustment.
34.7 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.).
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 187
34 Retirement benefit obligations continued
34.7 Actuarial assumptions for measuring liabilities continued
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 Sainsbury’s
Sainsbury’s section Sainsbury’s section
section Main Executive Argos section Main Executive Argos
Scheme Scheme section Scheme Scheme 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
d) Sensitivities
The present value of the Scheme’s liabilities and the net financing charge are dependent on the discount rate. Other key assumptions are based on market
conditions or estimates of future events, including mortality rates. The carrying value of the retirement benefit obligations is impacted by changes to any
of the assumptions used.
The sensitivities are calculated using the same methodology used to calculate the retirement benefit obligation, by considering the impact for a given
change in an assumption while holding all others constant, thus meaning that interdependencies between the assumptions have not been taken into
account in the analysis. The sensitivities reflect the upper ends of a range of reasonably possible changes in principal assumptions.
Change in present value of funded obligations – Increase/(decrease) effect
Sainsbury’s
Argos
Total
£m
£m
£m
£m
£m
£m
Financial sensitivities
Discount rate
+/- 0.1%
(73)
74
(13)
13
(86)
87
Discount rate
+/- 1.0%
(666)
819
(118)
149
(784)
968
Inflation rate
+/- 0.1%
36
(44)
8
(12)
44
(56)
Inflation rate
+/- 1.0%
383
(396)
96
(92)
479
(488)
Inflation rate for future pension increases
+/- 0.1%
17
(25)
4
(7)
21
(32)
Inflation rate for future pension increases
+/- 1.0%
177
(221)
47
(53)
224
(274)
Demographic sensitivities
Life expectancy
+/- 1 year
170
(166)
24
(26)
194
(192)
Change
2
020, 2021 and 2022 weighting parameters
in CMI 2022
-10% /+ 15%
41
(33)
6
(5)
47
(38)
Strategic Report Governance Report Financial Statements
188 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
34 Retirement benefit obligations continued
34.7 Actuarial assumptions for measuring liabilities continued
e) Future benefit payments
Details of future committed payments are included in the Background section at the beginning of this note. Expected cash contributions for the next
financial year are approximately £45 million.
The duration of the Scheme’s liabilities is around 15 years for the Sainsbury’s section and 17 years for the Argos section.
Timing of benefit payments (undiscounted)
2024
2023
£m
£m
Within the next 12 months (next financial year)
254
237
Between 2 and 5 years
1,172
1,104
Between 6 and 15 years
3,910
3,779
Between 16 and 25 years
3,966
3,974
Beyond 25 years
5,106
5,345
14,408
14,439
35 Share-based payments
2024
2023
£m
£m
Share-based payment expense
89
59
The Group operates the following share schemes:
35.1 Savings-Related Share Option Scheme (Sharesave)
The Group operates a Savings-Related Share Option Scheme, which is open to all UK employees with more than three months’ continuous service.
This is an approved HMRC scheme and was established in 1980. Under Sharesave, participants remaining in the Group’s employment at the end of the
three-year (and historically also five-year) savings period are entitled to use their savings to purchase shares in the Company at a pre-stated exercise price.
Employees leaving for certain reasons can use their savings to purchase shares within six months of their leaving.
2024
2023
Weighted Weighted
Number of average Number of average
options exercise price options exercise price
million
pence
million
pence
Outstanding at beginning of financial year
59.4
177
58.3
186
Granted
16.1
213
23.7
167
Lapsed/forfeited
(7.6)
179
(14.0)
206
Exercised
(8.8)
165
(8.6)
167
Outstanding at end of financial year
59.1
188
59.4
177
Exercisable at end of financial year
13.2
170
7.1
166
Exercisable Range
161 to 260
161 to 260
Weighted average share price at date of exercise
266
258
Weighted average remaining contractual life
2.1 years
1.9 years
Options granted during the year were valued using the Black-Scholes option pricing model. No performance conditions were included in the fair
value calculations.
2024
2023
Share price at grant date
300p
226p
Exercise price
213p
167p
Expected volatility
25.2%
28.9%
Option life
3.2 years
3.2 years
Expected dividend yield
4.9%
5.6%
Risk-free interest rate
5.3%
3.0%
Fair value per option
66p
57p
The expected volatility is based on the standard deviation of the Group’s share price for the period immediately prior to the date of grant of award, over the
period identical to the vesting period of the award, adjusted for management’s view of future volatility of the share price.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 189
35 Share-based payments continued
35.2 Long-Term Incentive Plan
Under the Long-Term Incentive Plan, shares are conditionally awarded to Senior Leaders of the Company. Awards are calculated as a percentage of the
participants’ salaries and scaled according to grades.
Performance is measured at the end of the three-year performance period. If the required performance conditions, which are financial and non-financial
non-market conditions, have been met, the awards vest and the participants are able to exercise 100% of the awards received. For 2020 awards and prior,
recipients were only able to receive 50% of their awards after three years and 50% of their awards after four years. From 2021 onwards, schemes vest and
participants are able to exercise after three years. Awards will expire five years from the grant date.
For Executive Directors, awards will normally be subject to a two-year holding period following the end of the three-year performance period. Awards will
expire six years from the date of grant.
For awards granted in and before the year ended 4 March 2023, a core share award was granted which could grow by up to four times, dependent on the
level of performance. For awards granted in the year to 2 March 2024, the maximum share award is allocated, and the award will vest between 0 per cent
and 100 per cent based on performance against targets. Awards are structured as nil-cost.
Dividends will accrue on the shares that vest in the form of additional shares, except for certain colleagues who are unable to receive dividend equivalents
due to financial services regulations.
2024
2023
Million
Million
Outstanding at beginning of financial year
19.0
18.5
Conditionally awarded
21.4
9.7
Released to participants
(9.4)
( 7.4)
Lapsed
(1.7)
(1.8)
Outstanding at end of financial year
29.3
19.0
Weighted average remaining contractual life
3.1 years
0.9 years
Weighted average share price at date of exercise (release to participants)
281p
232p
No performance conditions were included in the fair value calculations.
Options granted in the year 2024
2023
Share price at grant date
273p
230p
Option life
3 years
3 years
Fair value per option
273p
230p
35.3 Nil-Cost Share Award
The nil-cost share schemes include Deferred Share Awards, Bonus Share Awards and other Conditional Awards.
The last awards made under the Deferred Share Award plan were made in 2021. All awards outstanding in 2023 were released to participants in 2024.
Senior Leaders receive a percentage of their bonus award in shares. Before 2021, bonus awards had a three-year deferral period. However, awards granted
from 2021 now have a deferral period of two years, except for certain colleagues who are subject to a deferral period due to financial services regulations.
Other conditional awards relate to the retention and recruitment of Senior Leaders as part of the wider reward strategy. Awards vest, typically between one
and three years, subject to participants remaining in employment at the vesting date.
Dividends accrue on these shares and vest in the form of additional shares released at the end of the deferral period.
2024
2023
Million
Million
Outstanding at beginning of financial year
28.1
22.9
Awarded
14.0
16.0
Released to participants in financial year
(14.0)
( 7.6)
Lapsed
(1.0)
(3.3)
Outstanding at end of financial year
27.1
28.1
Weighted average remaining contractual life of share options outstanding
1.8 years
0.7 years
Weighted average share price for options exercised
262p
245p
36 Commitments
2024
2023
£m
£m
Capital commitments contracted, but not provided for
140
159
Leases that have been signed but not yet commenced
73
101
Strategic Report Governance Report Financial Statements
190 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
37 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.
38 Related party transactions
38.1 Key management personnel
The key management personnel of the Group comprise members of the J Sainsbury plc Board of Directors and the Operating Board. The key management
personnel compensation is as follows:
2024
2023
£m
£m
Short-term employee benefits
15
15
Post-employment employee benefits
1
1
Share-based payments
8
6
24
22
Three key management personnel had credit card balances with Financial Services (2023: Five). These arose in the normal course of business and were
immaterial to the Group and the individuals. One key management personnel held saving deposit accounts with Financial Services (2023: Two). These
balances arose in the normal course of business and were immaterial to the Group and the individuals.
38.2 Joint ventures and associates
Transactions between the Group’s subsidiary undertakings, which are related parties, have been eliminated on consolidation and are accordingly not
disclosed. Related party transactions, which are at arm’s length, and balances which the Group had with its joint ventures and associates, are as follows:
2024
2023
£m
£m
Dividends and distributions received
—
1
Rental expenses paid
(8)
(6)
Year-end balances arising from transactions with joint ventures and associates are as follows:
2024
2023
£m
£m
Other payables
(1)
(2)
38.3 Retirement benefit obligations
The Group has entered into an arrangement with the Pension Scheme Trustee as part of the funding plan for the actuarial deficit in the Scheme. Full details of
this arrangement are set out in note 34 to these financial statements.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 191
39 Related undertakings
All interests are in ordinary share capital, except where otherwise indicated.
39.1 Wholly owned subsidiary undertakings
All subsidiaries have been consolidated and the Group holds a majority of the voting rights of the following 100%-owned undertakings:
Entity
Country of incorporation
Holding
Registered office address*
ARG Personal Loans Limited**
UK
Indirect
33 Holborn
Argos Business Solutions Limited
UK
Indirect
33 Holborn
Argos Card Transactions Limited
UK
Indirect
33 Holborn
Argos Distributors (Ireland) Limited
Ireland
Indirect
6th Floor, South Bank House
Argos Holdings Limited
UK
Indirect
33 Holborn
Argos Limited
UK
Indirect
33 Holborn
Argos (N.I.) Ltd
UK
Indirect
Forestside Shopping Centre
Argos Surbs Investments Limited
UK
Indirect
33 Holborn
Avenell Property Limited (formerly Avenell Property Plc)
UK
Indirect
33 Holborn
Barleygold Limited
UK
Indirect
50 Bedford Street
Bells Stores Limited
UK
Direct
33 Holborn
BLSSP (PHC 7) Limited
UK
Indirect
33 Holborn
Chad Valley Limited**
UK
Indirect
33 Holborn
Cliffrange Limited
UK
Indirect
33 Holborn
Coolidge Investments Limited
UK
Indirect
33 Holborn
Cornerford Limited
UK
Indirect
33 Holborn
Financial Recovery Services Limited
UK
Indirect
33 Holborn
First Stop Stores Limited
UK
Indirect
33 Holborn
Global (Guernsey) Limited
Guernsey
Indirect
PO Box 33, Dorey Court
Habitat Retail Limited
UK
Indirect
33 Holborn
Hobart Property Limited (formerly Hobart Property Plc)
UK
Indirect
33 Holborn
Holborn UK Investments Limited
UK
Direct
33 Holborn
Home Retail Group Limited
UK
Indirect
33 Holborn
Home Retail Group (Cyprus) Limited***
Cyprus
Indirect
5 Anastasios Leventis Street
Home Retail Group (Finance) LLP
UK
Indirect
33 Holborn
Home Retail Group (Guernsey) LP
Guernsey
Indirect
PO Box 33, Dorey Court
Home Retail Group (Jersey) Limited
Jersey
Indirect
44 Esplanade
Home Retail Group (UK) Limited
UK
Indirect
33 Holborn
Home Retail Group Card Services Limited
UK
Indirect
33 Holborn
Home Retail Group Holdings (Overseas) Limited
UK
Indirect
33 Holborn
Home Retail Group Insurance Services Limited
UK
Indirect
33 Holborn
Home Retail Group Nominees Limited
UK
Indirect
33 Holborn
Home Retail Group UK Service Company Limited
UK
Indirect
33 Holborn
Horndrift Limited
UK
Indirect
33 Holborn
J Sainsbury Common Investment Fund Limited
UK
Indirect
33 Holborn
J Sainsbury Distribution Limited
UK
Direct
33 Holborn
J Sainsbury Pension Scheme Trustees Limited
UK
Direct
33 Holborn
J Sainsbury Trustees Limited
UK
Indirect
33 Holborn
Jacksons Stores Limited
UK
Direct
33 Holborn
Jacksons Stores 2002 Limited
UK
Indirect
33 Holborn
JS Information Systems Limited
UK
Direct
33 Holborn
JS Insurance Limited
Isle of Man
Direct
Third Floor, St George's Court
JSD (London) Limited
UK
Indirect
33 Holborn
Jungle Online
UK
Indirect
33 Holborn
Jungle.com Limited
UK
Indirect
33 Holborn
Jungle.com Holdings Limited
UK
Indirect
33 Holborn
* See full address in note 39.5.
** An application has been made to strike off this company from the Companies Register.
*** Currently in liquidation.
Strategic Report Governance Report Financial Statements
192 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the consolidated financial statements continued
39 Related undertakings continued
39.1 Wholly owned subsidiary undertakings continued
Entity
Country of incorporation
Holding
Registered office address*
Nash Court (Kenton) Limited
UK
Indirect
33 Holborn
Nectar 360 Limited
UK
Indirect
33 Holborn
Nectar 360 Services LLP
UK
Indirect
33 Holborn
Nectar EMEA Limited
UK
Indirect
33 Holborn
Nectar Loyalty Holding Limited
UK
Direct
33 Holborn
Ramheath Properties Limited
UK
Direct
33 Holborn
Sainsbury Bridgeco Holdco Limited
UK
Direct
33 Holborn
Sainsbury Holdco A Limited
UK
Direct
33 Holborn
Sainsbury Holdco B Limited
UK
Direct
33 Holborn
Sainsbury Propco A Limited
UK
Indirect
33 Holborn
Sainsbury Propco B Limited
UK
Indirect
33 Holborn
Sainsbury Propco C Limited
UK
Direct
33 Holborn
Sainsbury Propco D Limited
UK
Direct
33 Holborn
Sainsbury Property Investments Limited
UK
Direct
33 Holborn
Sainsbury's Argos Asia Limited
Hong Kong
Indirect
Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia Commercial Limited
Hong Kong
Indirect
Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia Sourcing Limited
Hong Kong
Indirect
Unit 904, 9/F, Tower 2
Sainsbury's Argos Asia Technical Limited
Hong Kong
Indirect
Unit 904, 9/F, Tower 2
Sainsbury’s Argos Commercial Consulting (Shanghai) Limited
China
Indirect
26/F, Tower 1
Sainsbury's Bank plc
UK
Direct
33 Holborn
Sainsburys Corporate Director Limited
UK
Direct
33 Holborn
Sainsbury’s Corporate Healthcare Trustee Limited
UK
Indirect
33 Holborn
Sainsbury’s Corporate Secretary Limited
UK
Direct
33 Holborn
Sainsbury’s Group Holdings Limited
UK
Direct
33 Holborn
Sainsbury's Heather GP Limited
UK
Indirect
3 Lochside Avenue
Sainsbury's Intermediate Holdings Limited
UK
Direct
33 Holborn
Sainsbury's Manor GP Limited
UK
Direct
3 Lochside Avenue
Sainsbury's Manor Property Limited
UK
Direct
3 Lochside Avenue
Sainsburys (NI) Ltd
UK
Indirect
Forestside Shopping Centre
Sainsbury's Rose LP Limited
UK
Indirect
33 Holborn
Sainsbury’s SL Limited
UK
Indirect
33 Holborn
Sainsbury's Supermarkets Ltd
UK
Direct
33 Holborn
Sainsbury’s Thistle Scottish Limited Partnership
UK
Indirect
3 Lochside Avenue
Sainsbury’s Tyne Property Holdings Limited
UK
Indirect
33 Holborn
Smartcharge Limited
UK
Direct
33 Holborn
Software Warehouse Holdings Limited
UK
Indirect
33 Holborn
Stamford House Investments Limited
UK
Direct
33 Holborn
Stamford Properties One Limited
UK
Direct
33 Holborn
Stamford Properties Three Limited
UK
Direct
33 Holborn
Stamford Properties Two Limited
UK
Direct
33 Holborn
Stanhope Finance Limited
UK
Indirect
33 Holborn
Town Centre Retail (Bicester) Limited
UK
Indirect
33 Holborn
* See full addresses in note 39.5.
39.2 Associated undertakings
Entity
Footnote Country of incorporation
Interest
Holding
Registered office address
BL Sainsbury Superstores Limited
b)
UK
50%
Indirect
45 Gresham Street
British Land Superstores (Non-Securitised)
b)
UK
50%
Indirect
45 Gresham Street
Harvest 2 GP Limited
UK
50%
Indirect
100
Victoria Street
Harvest 2 Limited Partnership
UK
50%
Indirect
100
Victoria Street
Harvest 2 Selly Oak Limited
UK
50%
Indirect
100
Victoria Street
Harvest Development Management Limited
UK
50%
Indirect
100
Victoria Street
Harvest GP Limited
UK
50%
Indirect
100
Victoria Street
Hedge End Park Limited
UK
50%
Direct
33 Holborn
Pencilscreen Limited
b)
UK
50%
Indirect
45 Gresham Street
a)
a) Full addresses in note 39.5.
b) In liquidation
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 193
39 Related undertakings continued
39.3 Overseas branches
Entity
Country of incorporation
Holding
Registered office address
Sainsbury’s Argos Asia Limited – Bangladesh Liaison Office
Bangladesh
Indirect
Level 10, Simpletree Anarkali
Sainsbury’s Argos Asia Limited – India Branch Office
India
Indirect
Unit No. 1, 1st Floor, Ambience
Corporate Tower II
a)
a) Full addresses in note 39.5.
39.4 Subsidiary undertakings exempt from audit
The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit of individual accounts by virtue of section
479A of the Act:
Entity
Company registered number
Argos Holdings Limited
5860214
Argos Surbs Investments Limited
5716474
Avenell Property Limited
03817411
BLSSP (PCH 7) Limited
04104076
Cliffrange Limited
1967242
Coolidge Investments Limited
07697101
Cornerford Limited
03871316
Habitat Retail Limited
7445750
Hobart Property Limited
03978071
Home Retail Group Limited
5863533
Home Retail Group Holdings (Overseas) Limited
0872776
Home Retail Group (UK) Limited
5844516
Horndrift Limited
03871243
Nash Court (Kenton) Limited
3447714
Nectar EMEA Limited
05821446
Nectar Loyalty Holding Limited
06436907
Ramheath Properties Limited
01762921
Sainsbury Propco A Limited
05644620
Sainsbury Propco C Limited
05676364
Sainsbury Propco D Limited
05676370
Sainsbury’s Bridgeco HoldCo Limited
5644629
Sainsbury’s Group Holdings Limited
11833110
Sainsbury’s Intermediate Holdings Limited
10125892
Sainsbury’s Rose LP Limited
11837174
Sainsbury’s Manor GP Limited
SC453278
Sainsbury Property Investments Limited
02184043
Stamford Properties Three Limited
03896030
Stanhope Finance Limited
4288193
Town Centre Retail (Bicester) Limited
5564905
Sainsbury's Manor Property Limited
SC453263
39.5 Full registered office addresses
Address
Full address
3 Lochside Avenue
3 Lochside Avenue, Edinburgh, EH12 9DJ, United Kingdom
5 Anastasios Leventis Street
5 Anastasios Leventis Street, Leventis Gallery Tower, 8th Floor, 1097 Nicosia, Cyprus
Unit 904, 9/F, Tower 2
Unit 904, 9/F, Tower 2, The Quayside, 77 Hoi Bun Road, Kwun Tong, Kowloon, Hong Kong
26/F, Tower 1
26/F, Tower 1, Kerry Everbright City Phase III-Enterprise Centre, No.128, West Tian Mu Road, Shanghai
20
0070,
People’s Republic of China
33 Holborn
33 Holborn, London, EC1N 2HT, United Kingdom
44 Esplanade
44 Esplanade, St Helier, Jersey, JE4 9WG, Channel Islands
50 Bedford Street
50 Bedford Street, Belfast, BT2 7FN, United Kingdom
100
Victoria Street
100
Victoria Street, London, SW1E 5JL, United Kingdom
Forestside Shopping Centre
Forestside Shopping Centre, Upper Galwally, Belfast, BT8 6FX, United Kingdom
Level 10, Simpletree Anarkali
Level 10, Simpletree Anarkali, 89 Gulshan Avenue Plot 03, Block – CWS(A), Dhaka – 1212 Bangladesh
PO Box 33 Dorey Court
PO Box 33, Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 4AT
Third Floor, St George’s Court
Third Floor, St George’s Court, Upper Church Street, Douglas, IM1 1EE, Isle of Man
6th Floor, South Bank House
6th Floor, South Bank House, Barrow Street, Dublin 4, D04 TR29, Ireland
Unit No. 1, 1st Floor, Ambience Corporate Tower II
Unit No. 1, 1st Floor, Ambience Corporate Tower II, Ambience Island, NH-8, Gurgaon – 122011, Haryana, India
45 Gresham Street
45 Gresham Street, Gresham Street, London, EC2V 7BG
Strategic Report Governance Report Financial Statements
194 J Sainsbury plc Annual Report and Financial Statements 2024
Company balance sheet
2 March 2024 4 March 2023
Note £m £m
Non-current assets
Investments in subsidiaries, joint ventures and associates C2 7,2 96 7,678
Trade and other receivables C3 847 72
Derivative financial assets 1 —
8,144 7,75 0
Current assets
Trade and other receivables C3 70 1,192
Derivative financial assets 2 2
Cash and cash equivalents 510 299
582 1,493
Total assets 8,726 9,243
Current liabilities
Trade and other payables C4 (1,295) (2,919)
Borrowings C6 (5) —
Derivative financial liabilities — (2)
Taxes payable (10) (3)
(1,310) (2,924)
Net current liabilities (728) (1,431)
Non-current liabilities
Borrowings C6 (572) —
Derivative financial liabilities (1) —
Deferred income tax liability C5 (19) (16)
Provisions (1) (1)
(593) (17)
Total liabilities (1,903) (2,941)
Net assets 6,823 6,302
Equity
Called up share capital C7 678 672
Share premium 1,430 1,418
Merger reserve 568 568
Capital redemption and other reserves C7 681 682
Retained earnings 3,466 2,962
Total equity 6,823 6,302
The profit after tax for the Company for the financial year was £725 million (2023: profit after tax of £152 million). The notes on pages 196 to 198 form an
integral part of these financial statements.
The financial statements were approved by the Board of Directors on 24 April 2024, and are signed on its behalf by:
Simon Roberts Bláthnaid Bergin
Chief Executive Chief Financial Officer
Company registered number: 00185647
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 195
Company statement of changes in equity
Called up
share capital
Share
premium
account
Merger
reserve
Capital
redemption
and other
reserve
Retained
earnings
Total
equity
Note £m £m £m £m £m £m
At 5 March 2023 672 1,418 568 682 2,962 6,302
Profit for the year — — — — 725 725
Tax relating to other comprehensive income — — — (1) — (1)
Total comprehensive income — — — (1) 725 724
Transactions with owners:
Dividends — — — — (306) (306)
Allotted in respect of share option schemes C7 6 12 — — 85 103
At 2 March 2024 678 1,430 568 681 3,466 6,823
At 6 March 2022 668 1,406 568 682 3,071 6,395
Profit for the year — — — — 152 152
Total comprehensive income — — — — 152 152
Transactions with owners:
Dividends — — — — (319) (319)
Allotted in respect of share option schemes C7 4 12 — — 58 74
At 4 March 2023 672 1,418 568 682 2,962 6,302
The notes on pages 196 to 198 form an integral part of these financial statements.
Strategic Report Governance Report Financial Statements
196 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the Company financial statements
C1 Basis of preparation and accounting policies
C1.1 Basis of preparation
The Company financial statements are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The financial year comprises
the 52 weeks to 2 March 2024 (2023: 52 weeks to 4 March 2023).
The financial statements have been prepared on the going concern basis under the historical cost convention, except for derivative financial instruments and
financial assets at fair value through other comprehensive income that have been measured at fair value.
The Company meets the definition of a qualifying entity under FRS 100 issued by the Financial Reporting Council. Accordingly, the financial statements have
been prepared in accordance with FRS 101 ‘Reduced Disclosure Framework’ and in accordance with the Companies Act 2006 as applicable to companies using
FRS 101. As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions available under that standard in relation to:
• a cash flow statement
• certain related-party transactions including those with subsidiaries
• the effects of new but not yet effective accounting standards
• certain disclosures in respect of financial instruments
• share-based payments
• certain comparatives as otherwise required by IFRS
• disclosures related to capital management
The basis for the above exemptions is because equivalent disclosures are included in the consolidated financial statements in which the entity
isconsolidated.
C1.2 Accounting policies
Material accounting policies, which have been applied consistently, are the same as those set out in note 3 to the consolidated financial statements except as
noted below in respect of those which are Company specific.
a) Investments in subsidiaries, joint ventures and associates
Investments in subsidiaries, joint ventures and associates are carried at cost less any impairment loss in the financial statements of the Company.
At each financial year, the Company assesses the carrying amounts of its investments to determine whether there is any indication of impairment. Where
such an indication exists, the Company makes an estimate of the recoverable amount based on the greater of the fair value less cost to dispose, or value-in-
use calculations. Where a value-in-use calculation is used, discounted cash flows have been derived from Board-approved cash flow projections for four years
and then extrapolated into perpetuity.
If the recoverable amount of the investment is less than its carrying amount, the investment is written down to its recoverable amount. Any impairment loss
is immediately recognised in the income statement.
b) Trade and other receivables
Receivables are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate method, less provision for impairment.
Receivable balances with other Group entities are reviewed for potential impairment based on the ability of the counterparty to meet its obligations. This is
assessed by considering the net asset position of the entity and whether the amounts owed to the Company are covered. Where this is not the case, the
estimated future cashflows of the counterparty are considered in line with the methodology detailed in note C2.
c) Trade and other payables
Payables are recognised initially at fair value, and subsequently at amortised cost using the effective interest rate method.
d) Deferred tax
Deferred tax is provided on temporary differences associated with investments in subsidiaries, branches and joint ventures except where the Company
isable to control the timing of the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeablefuture.
e) Share-based payments
The grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital
contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as
anincrease to investment in subsidiary undertakings, with a corresponding credit to equity.
C1.3 Significant estimate
Assessment of impairment of investments in subsidiaries
In carrying out value-in-use calculations to assess impairment, these require estimation relating to the appropriate discount factors and long-term growth as
well as short and medium-term business plans. Management draws upon experience as well as external resources in making these judgements.
A sensitivity analysis is also performed to determine if there is sufficient headroom such that a reasonably possible change to key assumptions would not
result in any impairment.
In respect of Sainsbury’s Bank plc, the announcement 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 will result in a phased withdrawal from the core Banking business is an indicator of
impairment. A conclusion has been reached that the Company’s investment is impaired and significant estimates have been made by management of future
profitability and the associated costs to undertake the restructuring. Further information is set out in note C2.
C1.4 Income statement
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act 2006 and not presented an income statement nor a
statement of comprehensive income for the Company alone.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 197
C2 Investments in subsidiaries, joint ventures and associates
2024 2023
£m £m
Subsidiaries
At the beginning of the financial year 7,67 7 7,667
Additions 88 60
Impairment (470) —
Other a) — (50)
At the end of the financial year 7,2 95 7,677
Joint ventures and associates 1 1
7,296 7,678
a) In the prior year, other movements relates to a dividend of £50 million paid by Sainsbury’s Bank plc to J Sainsbury plc.
Rates used in value-in-use calculations
2024 2023
Pre-tax discount rate 9%–15% 9%–15%
Long-term growth rate – weighted average used 2% 2%
The Company considers significant restructuring within its subsidiaries as well as the relationship between its market capitalisation and the carrying value of
its investments, when reviewing for indicators of impairment.
Owing to the restructuring of the Group’s financial services offering which is underway and described further in note 5 to the consolidated financial
statements, this has been identified as an indicator of impairment of the Company’s investment in Sainsbury’s Bank plc. In addition, at 2 March 2024, the
market capitalisation of the Group was significantly below the carrying value of the net assets of the Company, which primarily consists of investments in
subsidiaries, indicating potential impairment. Accordingly, an impairment test over the investment in other subsidiaries has also been performed.
Where value-in-use calculations have been used to estimate the recoverable amounts of the investments, sensitivity analysis has been performed. Other
than for Sainsbury’s Bank plc which is described further below, the analysis indicates that there is sufficient headroom such that a reasonably possible
change to key assumptions would not result in any impairment in any of the Company’s investments in subsidiaries.
In respect of Sainsbury’s Bank plc, value-in-use has been derived from the Board-approved cash flow projections for four years, together with estimated
restructuring charges over that period, with an assumed growth rate of up to 2% beyond the four-year forecast period, depending on product line, with a
probability weighted assessment of differing outcomes in respect of how the restructuring will be undertaken. The probability weighting was applied to cash
flow projections which assume two scenarios, one comprising a sale of certain portfolios and the other a run down of certain portfolios over time. The pre-tax
discount rate used of 14.7 per cent was derived from the Bank’s weighted average cost of capital. Following the assessment, the Company has determined
that the recoverable amount of its investment in Sainsbury’s Bank plc is £350 million and as a result has recognised an impairment charge of £470 million.
The calculation is sensitive to management’s forecast of future performance over the restructuring period, deemed to be up to four years, including
non-underlying costs expected to be incurred, as well as the discount rate applied to these cash flows.
Sensitivity
2024
(Increase)/
decrease in
impairment
charge
£m
Discount rate 2% (36)
Discount rate -2% 45
Estimate of forecast cashflows 10% 8
Estimate of forecast cashflows -10% (8)
In accordance with IAS 36, this impairment may be subject to reversal if in future periods there is a change in the estimates used to determine the
investment’s recoverable amount.
C3 Trade and other receivables
2024 2023
Non-current Current Total Non-current Current Total
£m £m £m £m £m £m
Amounts owed by Group companies 847 70 917 68 1,191 1,259
Prepayments and accrued income — — — 4 1 5
847 70 917 72 1,192 1,264
Strategic Report Governance Report Financial Statements
198 J Sainsbury plc Annual Report and Financial Statements 2024
Notes to the Company financial statements continued
C4 Trade and other payables
2024 2023
Non-current Current Total Non-current Current Total
£m £m £m £m £m £m
Amounts owed to Group entities — 1,292 1,292 — 2,916 2,916
Other payables — 3 3 — 3 3
— 1,295 1,295 — 2,919 2,919
C5 Taxation
Deferred income tax liability
Capital
losses
Rolled over
capital gains Total
£m £m £m
At 5 March 2023 16 (32) (16)
Rate change adjustment to income statement (3) — (3)
At 2 March 2024 13 (32) (19)
At 4 March 2023 and 5 March 2022 16 (32) (16)
C6 Borrowings
2024 2023
Current Non-current Total Current Non-current Total
£m £m £m £m £m £m
Term loan due 2026 6 575 581 — — —
Transaction costs (1) (3) (4) — — —
5 572 577 — — —
Refer to note 33 of the Group financial statements for further detail.
C7 Share capital and reserves
C7.1 Share capital
2024
million
2023
million
2024
£m
2023
£m
Called up share capital
Allotted and fully paid ordinary shares 28 4/7p 2,371 2,352 678 672
Movements relate to allotments in respect of share option schemes as set out in note 26 to the Group financial statements.
C7.2 Capital redemption and other reserves
Other
reserves
£m
Capital
redemption
reserve
£m
Total capital
redemption
and other
reserves
£m
At 5 March 2023 2 680 682
Tax relating to other comprehensive income (1) — (1)
At 2 March 2024 1 680 681
The other reserve represents the fair value gains and losses on the financial assets at fair value through other comprehensive income.
The capital redemption reserve arose through a return of share capital resulting in the redemption and cancellation of shares, by way of a B share scheme,
approved at an Extraordinary General Meeting on 12 July 2004. The final redemption date for B shares was 18 July 2007 with all transactions completed in 2007.
C8 Contingent liabilities
Through the normal course of business, the Company has issued guarantees covering various commitments of its subsidiaries. The Company has also
provided a guarantee to the Bank of England in respect of any borrowings by Sainsbury’s Bank plc under the terms of the Sterling Monetary Framework.
Noliability has been recognised in the Company’s accounts for this guarantee as it is considered remote that the guarantee will be called on. Note 39.4
oftheGroup financial statements sets out details on subsidiary undertakings exempt from audit.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 199
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 7.1 966 926
Retail sales 6 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 5 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 12 to the financial statements.
Strategic Report Governance Report Financial Statements
200 J Sainsbury plc Annual Report and Financial Statements 2024
Alternative performance measures (APMs) continued
A1 Income statement measures continued
A1.2 Profit continued
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 7.1 966 926
Add: Retail underlying depreciation and amortisation A2.1 1,112 1,134
Retail underlying EBITDA 2,078 2,060
Retail sales 6 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 10 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 5 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.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 201
A2 Cash flows and borrowings continued
A2.1 Retail cash flows (Closest IFRS equivalent: Group cash flows) continued
Reconciliation
2024 2023
Retail
Financial
Services Group Retail
Financial
Services Group
Note £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
– Acquisitions
related c) 61 — 61 — — —
Proceeds on 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.
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202 J Sainsbury plc Annual Report and Financial Statements 2024
Alternative performance measures (APMs) continued
A2 Cash flows and borrowings continued
A2.1 Retail cash flows (Closest IFRS equivalent: Group cash flows) continued
Reconciliation continued
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 and 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 32 to the financial statements.
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J Sainsbury plc Annual Report and Financial Statements 2024 203
A3 Borrowings continued
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 32 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 32.
2024 2023
Note £m £m
Return (Group underlying operating profit) 7.1 995 972
£m £m
Group net assets Balance sheet 6,868 7, 253
Less: Pension surplus Balance sheet (690) (989)
Deferred tax on pension surplus 11.3 244 330
Less: Net debt 32 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 7.1 995 972
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 10 30 18
Underlying finance costs 10 (324) (300)
Fixed charges (801) (796)
Fixed charge cover 2.7x 2.7x
Strategic Report Governance Report Financial Statements
204 J Sainsbury plc Annual Report and Financial Statements 2024
Additional shareholder information
Financial calendar
Ex-dividend date of final dividend 6 June 2024
Record date of final dividend 7 June 2024
Q1 trading statement 2 July 2024
Annual General Meeting 4 July 2024
Payment date of final dividend 12 July 2024
Interim (half-year) results announcement 7 November 2024
Q3 trading statement January 2025
a)
Preliminary (full-year) results announcement April 2025
a)
a) Provisional dates
Shareholders
Shareholder information as at 2 March 2024.
2024 2023
Number of shareholders 96,196 100,490
Number of shares in issue 2,370,612,927 2,352,338,052
Annual General Meeting (AGM)
The AGM will be held at 33 Holborn, London, EC1N 2HT at 11.00am on
Thursday, 4 July 2024 with facilities to attend virtually. The Notice of
Meeting and proxy card for the meeting are enclosed with this report and
further details will be available at www.about.sainsburys.co.uk.
Registrars
For information about the AGM, shareholdings and dividends, or to report
changes to personal details, shareholders should contact: Equiniti
Aspect House
Spencer Road Lancing BN99 6DA
Telephone: 0333 207 6557* (from UK) or +44 (0) 333 207 6557* (outside UK)
* Lines are open 8.30am to 5.30pm (UK time), Monday to Friday (excluding public holidays
in England and Wales).
Shareholders with speech or hearing difficulties can also contact
Equinitiusing Relay UK. More information can be found by visiting
www.relayuk.bt.com. Please remember to tell Equiniti if you change
yourresidential address or bank details, or if there is any other change
toyour account information.
You can view and manage your shareholding online at www.shareview.co.uk.
You will require your 11-digit Shareholder Reference Number to log in; this
can be found on your share certificate and dividend confirmation.
Dividends
To receive dividends and any other money payable to you in connection with
your J Sainsbury plc ordinary shares, you will need to provide your bank or
building society account details. Payments will be made directly to your
nominated account by direct credit. Please visit www.shareview.co.uk
forfurther details.
Dividend Reinvestment Plan (DRIP)
Sainsbury’s offers a DRIP, which is a simple way to buy additional
Sainsbury’s shares. Shareholders can reinvest their cash dividends in the
Company’s shares bought in the market through a specially arranged share
dealing service. No new shares are allotted under this DRIP and approximately
22,000 shareholders participate in it. Full details of the DRIP and its charges,
together with mandate forms, are available from Equiniti. Alternatively, you
can elect to join the DRIP by registering at www.shareview.co.uk.
Shareholder communications website
More information about J Sainsbury plc, including the latest results and
reports, can be found on our website at www.about.sainsburys.co.uk.
Aswell as providing share price data and financial history, the site also
provides information on management, our business strategy and corporate
governance. It also contains information for investors, our sustainability
report, regulatory and news releases, and current issues.
Electronic shareholder communications
The Company encourages all shareholders to receive their shareholder
communications electronically to reduce our impact on the environment
and has set up a facility for shareholders to do so. The service allows you to:
• View the Annual Report and Financial Statements on the day it is published
• Receive electronic notification of the availability of future shareholder
information (you must register your email address for this service)
• Check the balance and current value of your shareholding and view your
dividend history
• Submit your vote online prior to a general meeting
To register, visit www.shareview.co.uk. You will need your 11-digit Shareholder
Reference Number, which can be found on your share certificate and dividend
confirmation. For each shareholder registration, a donation will be made to the
Woodland Trust, the UK’s leading woodland conservation charity.
Share dealing services
To buy or sell your J Sainsbury plc ordinary shares, please visit your
stockbroker or your bank who will usually be able to assist you. Alternatively,
you may consider using Equiniti. Equiniti offers a telephone and online
facility, which gives shareholders the opportunity to trade at a known price.
The telephone service is available from 8.00am to 4.30pm, Monday to Friday,
excluding bank holidays, on 03456 037 037. The online share dealing service
gives shareholders the option to submit instructions to trade online and more
information can be found by visiting www.shareview.co.uk.
ShareGift
If you have a small number of shares which would cost more for you to sell
than they are worth, you may wish to consider donating them to the charity
ShareGift (Registered Charity 1052686) which specialises in accepting such
shares as donations. The relevant stock transfer form may be obtained from
Equiniti. There are no implications for Capital Gains Tax purposes (no gain or
loss) on gifts of shares to charity. If you are a UK taxpayer, it is also possible
to obtain income tax relief. Further information about ShareGift may be
obtained by calling 020 7930 3737, emailing help@sharegift.org or by visiting
www.sharegift.org.
Strategic Report Governance Report Financial Statements
J Sainsbury plc Annual Report and Financial Statements 2024 205
Shareholder security
Investment scams are designed to look like genuine investments and
fraudsters use persuasive, high pressure tactics to scam investors.
Spot the warning signs
Have you been:
• Contacted out of the blue and told the investment is safe;
• Called repeatedly; or
• Told the offer is only available for a limited time?
Report a scam
Report any suspected investment scams to the FCA at
www.fca.org.uk/consumers/report-scam-us or call
the FCA Consumer Helpline on 0800 111 6768.
Avoid investment fraud
• Reject cold calls
• Check the FCA Warning List of firms and individuals who the FCA know
are operating without their authorisation
• Get impartial advice
If you have lost any money to investment fraud, you should report it to
Action Fraud on 0300 123 2040 or at www.actionfraud.police.uk.
Findoutmore at www.fca.org.uk/scamsmart.
To understand how Sainsbury’s processes shareholder data, please visit
www.about.sainsburys.co.uk/site-services/privacy-policy.
ProSearch
Sainsbury’s has instructed ProSearch, a specialist tracing company, to
identify and communicate with shareholders who may be owed dividends or
shares in Sainsbury’s. If you have received a communication from ProSearch
and think you may be due dividends or shares in Sainsbury’s, please contact
ProSearch directly for more information. You can call them on 0371 384
2735* or visit www.prosearchassets.com.
* Lines are open 9.00am to 5.00pm Monday to Friday (excluding UK public holidays).
American Depository Receipts (ADRs)
The Company has a sponsored Level 1 ADR programme for which the
BankofNew York Mellon acts as depository. The ADRs are traded on the
over-the-counter (OTC) market in the US under the symbol JSAIY, where
oneADR is equal to four ordinary shares. All enquiries relating to ADRs
should be addressed to:
Bank of New York
Mellon Shareholder Correspondence PO Box 505000
Louisville
KY 40233-5000
Toll Free Telephone number for US domestic callers: 1-888-269-2377
International callers can call: +1-201-680-6825
Website: www.mybnymdr.com
Email: shrrelations@bnymellon.com
Key contacts and advisers
Registered office
J Sainsbury plc
33 Holborn London EC1N 2HT
Registered number 185647
Investor Relations
James Collins
Director of Investor Relations
J Sainsbury plc
33 Holborn London EC1N 2HT
InvestorRelations2@sainsburys.co.uk
Registrars
Equiniti
Aspect House Spencer Road
Lancing BN99 6DA
www.shareview.co.uk
Auditors
Ernst & Young LLP
1 More London Place
London SE1 2AF
Solicitors
Linklaters LLP
One Silk Street London EC2Y 8HQ
Stockbrokers
UBS
5 Broadgate
London EC2M 2QS
Stockbrokers
Shore Capital Cassini House
57 St James’s Street
London SW1A 1LD
General contact details
For any customer enquiries, please visit our websites:
• Sainsbury’s https://help.sainsburys.co.uk/help
• Argos www.argos.co.uk/help/contact-us
• Habitat www.habitat.co.uk/help/contact-us
• Nectar www.nectar.com/help
• Sainsbury’s Bank www.sainsburysbank.co.uk/insuring/support/
customer_support_zone
Cautionary statement
Certain statements included in this Annual Report are forward-looking. 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 Annual Report 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.
Strategic Report Governance Report Financial Statements
206 J Sainsbury plc Annual Report and Financial Statements 2024
Annual General Meeting (AGM) – This year the AGM will be held on 4 July
2024 at our registered office 33 Holborn, London EC1N 2HT at 11.00am.
Argos Financial Services (AFS) – ARG Personal Loans Limited; Home
RetailGroup Card Services Limited; and Home Retail Group Insurance
Services Limited.
bps – Basis points.
by Sainsbury’s – Core own-label brand.
CDP – Carbon Disclosure Project.
Click & Collect – Service which allows customers to place general
merchandise and grocery orders online for collection in-store.
Corporate Responsibility and Sustainability (CR&S) – The need to act
responsibly in managing our impact on a range of stakeholders: customers,
colleagues, investors, suppliers, the community and the environment.
CPI – Consumer Price Index.
Earnings Per Share (EPS) – Earnings attributable to ordinary shareholders
of the parent divided by the weighted average number of ordinary shares in
issue during the year, excluding those held by ESOP Trusts, which are treated
as cancelled.
Fair value – The amount for which an asset could be exchanged, or a liability
settled, between knowledgeable, willing parties in an arm’s length transaction.
FVTPL – Fair value through profit or loss. Method of valuing a financial
instrument where changes in fair value are recognised directly in the
income statement.
FVTOCI – Fair value through other comprehensive income. Method of
valuing financial instruments where changes in fair value are recognised
through other comprehensive income.
GDPR – General Data Protection Regulations.
Greenhouse Gas (GHG) – Gases in the atmosphere which absorb infrared
radiation emitted from Earth’s surface creating a ‘greenhouse effect’.
Group – The Company and its subsidiaries.
GSCOP – Grocery Supply Code of Practice.
HFSS – High fat sugar and salt.
IFRIC – International Financial Reporting Interpretations Committee.
IFRSs – International Financial Reporting Standard(s).
Joint venture (JV) – A business jointly owned by two or more parties.
Kantar Worldpanel (Kantar) / Nielson Global Solutions (Nielson) –
Independent third parties providing data on the UK Grocery Market.
Live Well for Less – Sainsbury’s customer commitment to continue to help
people live the life they want to live, with quality products at fair prices.
LTIP – Long-Term Incentive Plan.
Net zero – our commitment to becoming net zero in our own operations
by2035 through reducing our GHG emissions as much as possible and not
adding to the amount of GHG in the atmosphere.
Nectar – One of the most popular loyalty schemes in the UK.
Paris Agreement – an agreement within the United Nations Framework
Convention on Climate Change. The Agreement sets a goal for companies
tolimit global warming to 1.5°C above pre-industrial levels.
PCI – Payment card industry.
PRA – Prudential Regulation Authority.
RPI – Retail Price Index.
SONIA – Sterling Overnight Index Average
Taste the Difference – Sainsbury’s premium own brand range of products.
Total Shareholder Return (TSR) – The growth in value of a shareholding
over a specified period, assuming that dividends are reinvested to purchase
additional units of the stock.
Tu – Sainsbury’s own-label clothing range.
Glossary
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J Sainsbury plc’s commitment to environmental stewardship is reflected in this Annual
Report, which has been printed on Revive 100 Offset, which is 100% post-consumer
recycled, FSC
®
certified and totally chlorine free (TCF) paper. Printed in the UK by
ParkCommunications using vegetable-based inks, with 99% of dry waste being diverted
from landfill. The printer is a CarbonNeutral® company. Both the mill and the printer
arecertified to ISO 14001 (Environmental Management System) and ISO 9001
(QualityManagement System).
Please recycle.
Find out more at
www.about.sainsburys.co.uk
33 Holborn
London
EC1N 2HT
J Sainsbury plc Annual Report and FinancialStatements 2024
J Sainsbury plc Annual Report and FinancialStatements 2024