Good food

for all of us

Annual Report and

FinancialStatements 2025

Performance highlightsContents

Strategic Report

2 Business model

3 Business overview

4 Chair’s letter

6 Our purpose in action

8 Chief Executive’s letter

10 Strategy overview

11 Delivering on our outcomes

16 Plan for Better

20 Our people

24 Our section 172 statement

25 Engaging with our stakeholders

31 Climate change and Task Force on

Climate-related FinancialDisclosures

(TCFD)

42 Sainsbury’s climate transition plan

45 Key performance indicators

47 Financial review

54 Principal risks and uncertainties

63 Statement of viability

65 Non-financial and sustainability

information statement

Governance Report

67 Introduction to the governance report

69 Governance at a glance

71 J Sainsbury plc – Board of Directors

74 J Sainsbury plc – Operating Board

76 Board leadership and Company purpose

84 Composition, succession and evaluation

87 Division of responsibilities

88 Nomination and Governance

Committeereport

92 Corporate Responsibility and

Sustainability Committee report

96 Audit Committee report

104 Annual statement from the Remuneration

Committee Chair

107 Summary of 2024/25 remuneration

decisions

108 Summary of remuneration for 2025/26

109 Remuneration in context

111 Annual report on remuneration

122 Additional statutory information

Financial Statements

126 Statement of Directors’ responsibilities

127 Independent auditor’s report to the

members of J Sainsbury plc

137 Consolidated income statement

138 Consolidated statement of comprehensive

income/(loss)

139 Consolidated balance sheet

140 Consolidated statement of changes

inequity

141 Consolidated cash flow statement

142 Notes to the consolidated financial

statements

205 Company balance sheet

206 Company statement of changes in equity

207 Notes to the Company financial statements

210 Alternative performance measures (APMs)

215 Additional shareholder information

217 Useful contacts

218 Glossary

Non-financial highlights

52.8%

Reduction in absolute greenhouse gas

emissions within our own operations,

from our 2018/19 baseline

£33.8m

Raised for good causes

373%

More surplus food redistributed to

communities versus our 2019/20

baseline

21%

Reduction in own brand plastic

packaging, from our baselines in

2018CY for food and 2020 CY for

general merchandise

£1bn

Invested in lowering prices over the

past four years, since setting out to

put food back at the heart of

thebusiness

58%

Increased colleague pay by 58%

since2018

Financial highlights

3.1%

Retail sales growth (excl. fuel) versus

the 2023/24 financial year. Including

fuel sales increased 1.4%

£761m

Total underlying profit before tax, up

8.6% versus the 2023/24 financial year

23.1p

Total underlying basic earnings per

share, up 4.5% versus 22.1p in the

2023/24 financial year. Basic earnings

per share 10.4p

£531m

Retail free cash flow, versus £639 million

in the 2023/24 financial year. Statutory

net cash generated from operating

activities from continuing operations

was £1,364 million, versus £2,113 million

in the 2023/24 financial year

£1,036m

Retail underlying operating profit, up

7.2% versus the 2023/24 financial year

£242m

Statutory profit after tax, up 76.6%

versus the 2023/24 financial year

9.0%

Return on capital employed, up 70

basis points versus the 2023/24

financial year

We make good food joyful,

accessible and affordable

for everyone, every day

The best performing companies in the world are driven by a clear and

compelling purpose. When John James and Mary Ann Sainsbury’s

opened their first store in 1869, their purpose was clear:

to provide good quality food at affordable prices.

More than 150 years later, Sainsbury’s has stayed true to those values. People who shop with us know that

Sainsbury’s stands for quality, value and service and we are incredibly proud of the brand we have built.

Our purpose – making good food joyful, accessible and affordable for everyone, every day – is more

than a guiding principle. It shapes why we exist and how we deliver for our customers, colleagues, suppliers

and shareholders. It defines how we approach every decision and has seen us go faster and further than ever

before, as we continue to put good food at the heart of all that we do.

Our purpose

in action

Page 6

Plan for

Better

Page 16

Our people

Page 20

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Our business at a glance

It’s our ambition to be the UK’s 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, enhancing our competitive advantage.

Building on our brand

and strong assets to

create value for

our stakeholders

Everything we do is underpinned by data and technology innovation. And the

infrastructure that supports our brands enables us to drive value and efficiency.

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 resilient

and sustainable UK food system.

Read more page 16.

Business model

Sainsbury’s

brandand own

brand heritage

Reputation for

value, quality

andservice

Strength in real

estateand online

capability

Scale advantage as

the UK’s second

largest full choice

supermarket

Suppliers and

partners

Colleagues and

our winning

culture

Growing

customer

base

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Next Level

Sainsbury’s

strategy

Food volume growth

SG&A/sales reduction

Measured reinvestment in the

customer proposition

Profit leverage from sales growth

Robust profitability

Disciplined capital investment

Strong sustained cash flows

and higher return on capital

Strong sustained cash flows

Focused capital allocation

Enhanced shareholder returns

Business overview

In February 2024, we set out our Next Level Sainsbury’s plan – designed

tobuild on the success of our Food First strategy. Our strategy continues

toput food at the heart of our business and gives customers more of what

they come to Sainsbury’s for: outstanding value, unbeatable quality food

and great service.

Since setting out to put food back at the heart of the business, we have

completely reset our competitive position and created a strong financial

platform from which we will continue to grow, invest in further strengthening

the business and deliver enhanced returns to shareholders.

Our strategy for Next Level Sainsbury’s

Sainsbury’s is a trusted, well-loved

brand that has been bringing high

quality, great value food to customers

for over 150 years. Argos, Habitat, Tu,

Smart Charge, Nectar, Nectar360 and

Sainsbury’s Bank are complementary

brands which help

deliver our purpose

and give customers

more reasons to

shop with us.

Our brands work together to provide added value for our customers

Our investment case

Delivering profit leverage

from salesgrowth

Sustainable and reliable

cash generation

Enhanced returns

toshareholders

Find out about the eight key commitments our four strategic outcomes are delivering on page 10.

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

Build a world-leading

loyalty platform

that is more personalised, joyful,

rewarding and transparent

foreveryone

Unleash and transform

Argos around the three

things that have always

made it brilliant

like its curated range, famously

convenient experience and great

value – so more customers buy

more complete baskets moreoften

Save £1 billion and invest

intransforming

ourcapabilities

to take another big leap forward

in efficiency, productivity and

customer focus, continuing to

build a platform for growth

First choice

for food

Loyalty

everyone loves

More Argos,

more often

Save and invest

to win

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Chair’s letter

In a rapidly changing retail environment,

we remain focused on delivering for

ourcustomers, our colleagues and

thecommunities we serve, creating

lasting value for our shareholders and

contributing to a stronger, more

resilientUK economy.

Reflecting on another significant year for Sainsbury’s, I am proud to share

the considerable progress we have made. Today we are a stronger, more

confident business, well-equipped to navigate a challenging economic

environment shaped by persistent headwinds, regulatory changes and

rising costs. We have made tough, yet balanced choices and the strength

ofour competitive position gives me confidence in our continued progress.

Benefiting from the deep foundations we’ve laid over the last four years, this

first year of our Next Level Sainsbury’s strategy has delivered strong profit

growth. We’ve continued to invest in the business while maintaining asolid

balance sheet and returning more than £500 million of capital to

shareholders through dividends and a share buyback.

A successful and competitive Sainsbury’s

A thriving, competitive Sainsbury’s is not just good for business; it’s good

forthe UK. As one of the UK’s largest and longest established businesses,

Sainsbury’s plays an essential role in the strength of the London equity

market. Our success directly benefits the UK economy, businesses and

millions of pensioners whose savings are invested in British companies like

ours. A strong, well-run Sainsbury’s will deliver long-term value creation

andstrong, reliable returns for shareholders.

Sainsbury’s is also one of the top ten largest taxpayers in the UK,

makingasignificant contribution to both national and local economies.

Ourconsiderable tax payments help fund essential public services, including

healthcare, education and infrastructure, supporting the communities

where our colleagues and customers live and work.

Beyond our considerable financial and economic contributions, Sainsbury’s

continued success is about putting food first and people first – driven by our

purpose to make good food joyful, accessible and affordable for everyone,

every day.

As a responsible retailer and the UK’s second largest private sector employer,

weare proud to employ more than 141,000 colleagues, creating jobs where

they matter most, strengthening local economies by providing first jobs,

supporting long-term careers and skills that fuel economic mobility. To

support our colleagues further, in January we led the sector on pay for the

third year in a row and have increased frontline customer-facing colleagues’

pay by 58 per cent since 2018.

At the heart of Britain’s relationship with food

With more than 150 years of heritage at the heart of Britain’s relationship

with food, we understand the vital role we play in ensuring the UK food

system remains strong, sustainable and accessible for generations to come.

We recognise UK food and farming is facing profound challenges. Inflation

and financial pressures are amplified by the impact of climate change on

supply chains, with farmers and growers also having to adapt to shifting

consumer behaviours. Securing a strong, sustainable supply of food means

we must prioritise building resilience into our supply chains. This will require

ongoing collaboration across our sector between farmers and suppliers,

policymakers, governments and major food businesses like ours.

The appointment of Simon as the new President of The Institute of Grocery

Distribution last March, alongside being named as the sole retailer on the

Government’s new Food Strategy Advisory Board, underscores the trust

placed in Simon and Sainsbury’s. It’s a tough but vital challenge and we look

forward to playing our part in shaping the development of a forward-thinking

National Food Strategy.

A thriving Sainsbury’s

is good for the UK

Martin Scicluna

Chair

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Driving progress on sustainability

Plan for Better remains core to our Next Level Sainsbury’s strategy

andpurpose and is integrated into our business.

In the past year we have made good progress across many areas of our plan.

Through collaboration with our suppliers from pork to mushrooms, we have

worked to build partnerships that provide long-term financial assurance and

deliver sustainable outcomes that support both the planet and the communities

we serve. We have innovated to launch first to market packaging solutions

for our customers across lamb and fish and continue tohelp our customers

and the communities we serve access good, nutritiousfood.

As we look to the future, significant regulatory change and increasing

disclosure requirements will impact not just our business, but the entire

sector. Though we support the policy intent on schemes such as Extended

Producer Responsibility and Deposit Return Scheme, ensuring they deliver the

national recycling infrastructure that is required will be crucial to the delivery

of our future packaging ambitions. Close collaboration between government

and business will be required if we want to build a truly circular economy.

Financial review

The first year of our Next Level Sainsbury’s plan delivered another strong

performance, with retail underlying operating profit of £1,036 million, up

7.2per cent, ahead of sales growth. Double digit profit growth at Sainsbury’s,

delivering on our operating leverage commitment, was partially offset by

lower profits at Argos.

Our strong balance sheet allowed us to maintain an unchanged and

conservative level of leverage while continuing to invest capital in efficiency

and growth and delivering strong cash returns to shareholders of more than

£500 million.

We have further tightened our focus on our core grocery business over the

last year, through the announcements of the sale of Sainsbury’s Bank’s Core

Banking and ATM businesses and the sale of the Argos Financial Services

cards portfolio.

More information on our financial performance can be found in the Financial

Review on page 47.

Our Board

As we announced in January, we made changes within our Operating Board

to recognise the different needs of the Sainsbury’s and Argos businesses

and have reorganised our store support centre to reflect the distinction

between the two business areas. These changes are driving faster decision

making and improved performance for both Sainsbury’s and Argos. Details

of this can be found on page 75.

In April, we also announced two significant appointments to our Board of

Directors and I am delighted to welcome Katie Bickerstaffe and Steve Hare

to the Board as Non-Executive Directors. Katie will be a member of the

Corporate Responsibility and Sustainability Committee and the Nomination

and Governance Committee. Steve will join the Audit and Nomination and

Governance Committees. Their extensive experience and leadership in

retailand digital businesses will be invaluable to our Board. Katie’s strong

perspectives on digital transformation and Steve’s expertise in leading tech

businesses will greatly contribute to our strategic direction. These appointments

will be effective following the Annual General Meeting (AGM) on 3 July 2025.

Additionally, after nine years of service, Brian Cassin has announced his

retirement from the Board of Directors. Adrian Hennah, who has been a

member of the J Sainsbury plc Board since April 2021, will succeed Brian

asSenior Independent Director following our AGM. I would like to thank

Brian for his commitment and dedication to Sainsbury’s. Throughout his

time with us he has provided invaluable leadership. We wish him all the

bestfor the future.

Looking ahead with confidence

Focused action implementing our Next Level Sainsbury’s plan will ensure

we’re well positioned for continued success. Simon and his leadership team

have completely transformed Sainsbury’s, creating a stronger business

witha sharper value position, a renewed focus on innovation and focused

investment plans, which are supporting growth, driving efficiency and

building competitive advantage. We are now primed to make our biggest

investment in property in more than a decade, opening 40 new stores in

2025/26 and bringing over 700,000 more people within a ten minute drive

ofSainsbury’s over the next two years.

The significant strides made by the business over the last four years are

testament to the exceptional execution capabilities of our management

team. For this, I sincerely thank the Operating Board and Simon for their

remarkable efforts and unwavering support over the past year. The Board

and I have total confidence in Simon and his team’s ability to build on our

progress and deliver on our commitments.

My final thank you is to all our colleagues. Thank you for your brilliant

commitment, hard work, energy and passion. You are the driving force

behind all our achievements.

Martin Scicluna

Chair

16 April 2025

With more than 150 years of

heritage at the heart of Britain’s

relationship with food, we

understand the vital role we play

in ensuring the UK food system

remains strong, sustainable and

accessible for generations to come.

Martin Scicluna

Chair

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Our purpose in action

Making good food joyful

We know our customers love the choice we offer

andthe excitement of new products, whether they’re

doing their big weekly shop, looking for a quick but

delicious bite to eat, hosting friends and family or

celebrating life’s big moments. Through our food

innovation, we’re regularly adding new, high quality

and delicious products to our shelves. Over the past

year we launched 1,300 new products, 600 of which

were in our premium Taste the Difference range.

With the rising costs of dining out, more customers

are choosing to enjoy great meals at home, turning

toTaste the Difference for restaurant-quality food at

affordable prices. Only the highest quality ingredients

go into our range – from fresh fruit and vegetables

and mouth-watering treats to expertly crafted meals

and desserts – you really can taste the difference.

Perfect for those special moments and celebrations

but also for bringing something joyful to everyday

meals, Taste the Difference is the fastest growing

premium range in the market. One in three baskets

feature a product from the range and we continue to

outperform the market for all big events – including

atChristmas and Easter.

Joyful food is all about great quality. It’s food that is

well-sourced, grown sustainably, improves animal

health and welfare and supports communities.

Thisis part of the fabric of our by Sainsbury’s range

of everyday essentials. Like our MSC certified by

Sainsbury’s tuna, which is caught using lines, not

nets. And all of our fresh and frozen by Sainsbury’s

chickens have more room to roam. Because our price

position is as sharp as ever and our chickens are happier

and healthier, our chicken market share has increased

since launch.

Making good food accessible

The grocery sector has gone through huge shifts over

the decades since we opened our first store in 1869.

In a fast-moving industry like food retail, change is

constant but what shoppers want is enduring –

brilliant customer service and affordable, accessible

and joyful food, whenever and however they shop.

Our winning combination of outstanding quality,

great value and leading service continues to deliver.

Because of the success of our strategy, we’re bringing

our brilliant food offer to more customers with 40 new

stores this year – our biggest investment in property

in over a decade. It will help us bring the best of

Sainsbury’s to even more communities around the

country and place over 700,000 more people within

a10-minute drive of Sainsbury’s over the next two

years. At the same time, we’re also making more of

our food range available to more customers by

rebalancing space and improving

our stores for better

customer and colleague experience.

Great-tasting, well-sourced food brings

families and friends together, adding joy to

our lives and making every occasion special

Food matters to everyone, every single day. Yet not everyone has access togood food. For many, finding the time, energy, or inspiration to plan, shopfor and

prepare the meals they want to enjoy, or share with their loved ones, can be a real challenge. Access to good food becomes even more challenging when

budgets are tight.

That’s why our Sainsbury’s purpose is simple: to make good food joyful, accessible and affordable for everyone, every day. Whether that’s helping customers

enjoy quality food at great value or making shopping easier and more convenient. Because food fuels our lives but it should also be about so much more than

that - it’s a source of joy, connection and shared moments that matter.

Making good food affordable

We know how important the combination of great

quality and affordable prices is for our customers.

We’ve invested £1 billion in value over the last four

years but as every household continues to feel the

pressure, we’re working hard to ensure every pound

our customers spend goes further. For millions,

shopping is a balancing act. Finding quality food

atthe right price and getting everything you need

inone go needs to be as simple as possible.

Customers love the simplicity and savings of our

Nectar loyalty scheme. With Nectar Prices, we’ve

transformed the way they experience value at

Sainsbury’s, where purple is now a true symbol of

great savings and low prices. Nectar Prices are now

available on over 9,000 products and we also offer

hundreds of millions of personalised offers a week,

helping us build stronger connections and save

customers over £2 billion in 2024/25.

No matter how our customers are choosing to shop,

we’re giving them access to the cheapest prices on

the things they buy most often. In 2024, we were the

first retailer to extend Aldi Price Match across all

supermarkets, Local stores and online – offering

market-leading prices onthe most popular breakfast,

lunch and dinner products, like milk, bread, butter,

baked beans, chicken, tuna, pasta, rice and vegetables.

And we’re not just focused on staples when it comes to

great value, over 75 per cent of products in Aldi Price

Match are Healthy or Better for you choices.

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

1 in 3

Baskets contain Taste the Difference,

the fastest growing premium range in

the market

£2 billion

Saved with Nectar Prices in 2024/25

785,000

Customers participated in Nectar’s

Great Fruit and Veg challenge, an

increase of 10 per cent year-on-year

with 133 million portions of fruit and

veg purchased

£1 billion

Invested in value over the past

fouryears

£61 million

Joint investment with Cranswick in

pork welfare and supply chain

58%

Increase in hourly paid colleagues

pay since 2018

Inspiring everyone, every

day to make healthier choices

Making healthy choices can help us feel better and

live longer, but it’s not always easy. That is why we

are committed to inspiring customers to make good

choices when it comes to mealtimes. One of the ways

we’re achieving this ambition is through our Great

fruit and veg challenge with Nectar. We ran the

challenge for the fifth time this year giving

customers the chance to collect up to 1,000 bonus

Nectar points over a seven-week window when

completing personalised fruit and vegetable portion

tasks and helping shape customer behaviours for the

better. This year, 785,000 customers participated, an

increase of 10 per cent year-on-year, and 133 million

portions of fruit and veg were purchased. To further

support and inspire our customers to make healthier

choices, we launched our Healthy Choice logo on own

brand products.

A good food system that’s

fitfor the future

At Sainsbury’s, we’re committed to taking a leading

role in creating a more sustainable and resilient food

system in the UK, with a thriving farming sector at

its heart. This is a commitment to driving investment

in the food system and contributing to economic

growth. We can’t overlook the importance of financial

stability and investment in developing this strategy

as it is the foundation for long-term success. For our

part, we are working ever more closely with our

suppliers and farmers to give long-term assurance

and ensure we’re securing our supply chains for the

future, growing the produce we need here in the UK.

In partnership with Moy Park, our trusted poultry

supplier, we were the first retailer of our scale to give

our birds 20 per cent more space and enhance their

welfare, helping our by Sainsbury’s chickens have

happier and healthier lives. More recently, we signed

a ten-year partnership with Cranswick focused

onenhancing pig welfare and helping build a more

resilient UK farming sector. This collaboration will

jointly invest over £60 million towards delivering a

new standard for animal welfare across by Sainsbury’s

pork products, developing more resilient farming

methods that benefit both the animals and the

farming community in the UK. Together, Sainsbury’s

and Cranswick plan to deliver net zero Taste the Difference

pork by 2029 and by Sainsbury’s pork by 2030, working

more closely on environmentally sustainable practices.

In a first for UK retailers, we also launched the

Sainsbury’s Egg Group, which will support our egg

farmers to become more resilient by providing them

with greater financial security and working with

them to improve animal welfare. We have a history

of innovating in eggs and in 2009 we became the

first major retailer to stock 100 per cent cage-free

eggs. Since 2020, all by Sainsbury’s eggs have been

free range.

We play a vital role in ensuring the UK food system

remains strong and sustainable for generations to

come and are proud to be a leader in sector innovation.

In 2024, we were the first UK supermarket to introduce

conventional mushrooms grown without peat, a

change to production that will reduce peat usage by

20,465 tonnes per year, helping to protect nature and

reduce carbon in our supply chain. This revolutionary

move has the added benefit of growing mushrooms

that are firmer and last longer.

Food first, people first

Our people are at the heart of everything we do and

integral to delivering our purpose, which is why we

are committed to doing all that we can to support

our colleagues by continuing to make significant

investments in pay. In January 2025, we led the

industry on pay for frontline customer-facing

colleagues again, for the third year in a row,

representing an increase of 58 per cent since 2018.

It’s a reflection of how much we value and rely on the

dedication and hard work of those who serve our

customers every day.

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Chief Executive’s letter

Simon Roberts reflects on the first year

of Next Level Sainsbury’s and the value

of working across the food system with

our suppliers to deliver with purpose

forour customers, our colleagues, our

shareholders and the communities

weserve.

Retail is, above all else, a massive team effort. Success doesn’t happen

without truly committed and dedicated people; our teams working together

across all our stores, supply chains and support centres to deliver for customers

every day. That’s why I want to start with a huge thank you to all my colleagues

and our suppliers for their hard work, resilience and passion. Their commitment

has helped us make a brilliant start to our Next Level strategy, with a year of

significant progress building on the strong foundations that Food First delivered.

We have had our best year yet in Grocery since the launch of Food First.

Weoutperformed the market every quarter for a second consecutive year

and made our biggest market share gains in more than a decade as more

customers chose Sainsbury’s for their big shop.

A purpose that creates value

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 that Sainsbury’s has

stayed true to these values.

Our purpose – making good food joyful, accessible and affordable for

everyone, every day – is more than a guiding principle. It shapes why we

exist and how we work across the food system with our suppliers to deliver

for our customers, colleagues, shareholders and the communities we serve.

It defines how we approach every decision. Putting good food back at the

heart of our company has helped us go faster, make bolder decisions and

push further than ever before.

It’s no coincidence that this year has been one of our strongest, reflecting

four years of investment to improve the fundamentals of this business.

We’ve delivered great value, introduced more new and innovative products

to our shelves, given more space in our stores to our core food ranges and

continued to lead our sector on pay increases for our hourly colleagues. As a

result, we’ve grown grocery volume market share, won more loyal customers

and continue to deliver market-leading customer service, all whilst making

our business more sustainable and resilient for the future.

Delivering for our customers

In today’s tough economic climate, providing great value for our customers

has never been more important. People continue to make careful choices

about how they spend their money. They are looking for the best possible

quality at the lowest possible price and without any compromise on service

or their shopping experience. This is what we are committed to deliver for all

our customers every day.

Argos has felt the impact of customers being more careful with their

spending and tough, competitive market conditions. Online traffic was

challenged in the first half of the year and the Summer also started slowly,

resulting in sales below our expectations. In the second half, we took action

to drive more traffic and increase sales and I’m pleased to say we saw a

return to sales growth in the fourth quarter.

In our grocery business, we have invested £1 billion over the last four years

to make good food more affordable for everyone, whether that’s through

ourLow Everyday Prices, Aldi Price Match or Nectar Prices. This means that

customers feel confident choosing Sainsbury’s more often and for more

oftheir shopping, trusting the value, quality and service we provide.

Over the past year, we’ve made real progress towards our goal of making

good food more accessible by bringing more of the Sainsbury’s food range

to more customers in more locations. Through our planned programme of

space reallocation from general merchandise to food, we’ve added 90,000 sq.

ft. of additional food space in the first year of Next Level Sainsbury’s, creating

more opportunities to better serve our customers. We’ve also been trialling

anumber of changes to the look and feel of our supermarkets and convenience

stores, experimenting with around 100 new innovations in a small number of

innovation hubs and then rolling out the best of these innovations across

many more stores.

Our brilliant colleagues and suppliers are

atthe heart of everything we do

Simon Roberts

Chief Executive

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

It’s the strength of our whole

team that sets us apart.

Simon Roberts

Chief Executive

Last November, we were proud to become the first UK grocer to bring Aldi

Price Match to convenience stores. It’s so important to us that customers

can be confident in our consistently great value, whether they’re popping

into their Sainsbury’s Local or shopping in one of our supermarkets. We’ve

focused on the everyday essentials households buy most often like milk,

bread, butter, pasta, rice, salad, tuna, chicken, potatoes and vegetable oil,

making it easier for everyone to save on the items that matter most.

Constantly innovating and developing new ideas in food is a real passion

forus. In fact, innovation is one of the key reasons why people shop at

Sainsbury’s and we have been developing more and more new and delicious

choices. Nowhere is this more evident than in Taste the Difference. It

continues to grow ahead of the market as many more customers choose

Sainsbury’s for all the important celebrations and occasions throughout the

year or for a special ‘dine-in’ meal at home.

As a result of everything we have been doing to invest in our value, quality

and service, more customers are now confidently choosing Sainsbury’s for

their big shop, week after week and for all the moments in life that really

matter. Christmas was another real highlight as we won grocery market

share for our fifth consecutive year. This was only possible with the most

outstanding team effort right across the business. We really delivered for

customers, with a great range of products, leading availability and standout

quality and service. Christmas is a time when consumers make such a clear

and considered choice about who to shop with and we are proud to have

delivered again for them.

Good food requires a more resilient and sustainable

UK farming sector

At Sainsbury’s, we really understand that the foundation for consistently

sourcing and delivering good food is long term partnership. That’s why we’ve

been investing for the long term with our growers, farmers and suppliers,

working together to build a resilient and thriving UK agricultural sector that

can serve communities today and for generations to come.

I have spoken publicly and proudly about the importance of these long-term

relationships we have been working to develop with many of our suppliers,

including Moy Park for chicken. Working together, we have set new standards

for chicken welfare, reduced carbon emissions and created a new long-term

deal for farmers – all with no increase in price for customers. It’s a partnership

that will be good for Sainsbury’s but, just as importantly, good for UK farmers,

good for customers and better for the environment. A great example of

purpose-driven decision making that is delivering real value and supporting

UK farming.

In addition, we’ve partnered with Cranswick for the next ten years to

significantly improve pig welfare, making a £50 million investment to

implement higher standards by 2030. Cranswick is committing an additional

£11 million to build new sheds and housing to further improve welfare.

Thispartnership means long-term stability and support for the 170 farmers

in the Sainsbury’s Pork Producer Group, giving them the confidence to invest

in their farms, facilities, and practices. Together, we’re building financial and

environmental resilience for the future. On top of that, we’re aiming for our

Taste the Difference pork to achieve net zero by 2029 and for all by

Sainsbury’s fresh pork to achieve net zero by 2030.

Continuing to invest in our colleagues

People are at the heart of everything we do. As the UK’s second-largest

private sector employer, we’re committed to supporting all our colleagues

across Sainsbury’s and Argos who play such a critical role on the front line

across all our stores and online operations. I’m pleased to share that we led

the industry again this year on pay for the third year in a row. It’s a reflection

of our philosophy - always making decisions that put people first and food

first - and demonstrates how much we value the dedication and hard work

of our colleagues who serve customers every day.

We have increased

colleague pay by

58%

since 2018

We invested

£1bn

in lowering prices over the

past four years

This year, being named Grocer of the Year at the Grocer Gold Awards was a

huge moment of recognition for our entire team and everything we’ve done

to put food back at the heart of Sainsbury’s. Winning this award for the first

time in nearly two decades was a such special moment for all of our team.

Ithighlights our unwavering commitment to our customers and the

continued transformation of our company, as well as the dedication

andhard work of our outstanding colleagues, suppliers, and farmers.

Next Level momentum in year two and beyond

As I look to the year ahead, we remain fully focused on delivering the best

combination of value, quality and service for all our customers. We have made

four years of exceptional progress and investment, resetting our price position

andstrengthening the fundamentals of our business. This puts us in a strong

competitive position and we are committed to sustaining this in the year ahead.

There is much more to come and our belief in the strength of Sainsbury’s offer has

driven our decision to make our largest investment in expanding our store

space in over a decade as we open new supermarkets in key new locations

and extend food space within many of our existing stores.

Retail will always be, as I said at the start, a massive team effort. Like any

great team, our success will continue to come from working together and

really delivering against our Next Level goals and outcomes. Whether it’s our

Sainsbury’s and Argos colleagues delivering with so much pride and passion

in our stores and support centres, or our suppliers developing and bringing

the best products and helping us to innovate and grow - it’s the strength of

our whole team that sets us apart.

So as we look back over a year of significant transformation and further

progress, a huge thank you to everyone who has played a part in this

journey. Together, we will keep taking Sainsbury’s to the next level.

Simon Roberts

Chief Executive

16 April 2025

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Strategy overview

The first year of our Next Level Sainsbury’s strategy has built on the success of our Food

First strategy, delivering further grocery market share gains and significant operating

leverage. This reflects the investments we have made over the last four years to

improve our grocery proposition. We have built resilience and sustainable competitive

advantage through strengthening the fundamentals of the business across logistics,

technology and the way we work with suppliers.

Next Level Sainsbury’s year one

Building on strong foundations

Outcomes What this means

First choice forfood

Read more page 15

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

Food volume growth ahead of the market

Customer satisfaction higher 2026/27

than2023/24

Colleague engagement higher 2026/27

than2023/24

Deliver our Plan for Better commitments

Deliver profit leverage from sales growth

£1 billion cost savings over three years to 2026/27

1.6 billion+ retail free cash flow over the three years

to 2026/27

Higher return on capital employed

Progress key

No progress Ongoing On track

We are winning more big basket primary customers, providing us with the

confidence to accelerate our plans to bring more of the Sainsbury’s food

range to more customers. We have acquired 14 new supermarket sites in

keytarget locations. Together with further new supermarket openings

andexpanding food space in our supermarkets through space reallocation,

thisprovides a unique opportunity to drive further market share gains.

The strength of our balance sheet and cash generation are key strategic

assets, allowing us to invest capital to remain competitive, drive growth and

efficiency and build competitive advantage while also delivering strong

returns to shareholders. During the year we invested £825 million of capital

in the business and have returned more than £500 million of our £531 million

Retail free cash flow to shareholders, completing our share buyback

programme of £200 million and paying ordinary dividends of £308 million.

The strength of our balance sheet was recognised by S&P and Moody’s

giving public investment grade ratings in January 2025 and we issued

£550million of unsecured fixed income bonds, our first unsecured bond

issue in 21 years.

We have further sharpened our focus on our core grocery business over the

last year, through the announcements of the sale of Sainsbury’s Bank’s core

banking and ATM businesses and the sale of the Argos Financial Services

cards portfolio.

We have made really strong progress against our ambitious three-year commitments, consistently leading on customer satisfaction, delivering food volume

growth ahead of the market, and as a result, profit leverage from sales growth. We have good line of sight on our financial commitments and are confident in

our ability to deliver as we look ahead over the life of the plan.

Our progress against these commitments is driven by our four strategic outcomes: First choice for food, Loyalty everyone loves, More Argos, more often and

Save and invest to win.

Across the business, we are focused on delivering the eight commitments that we made at the launch of Next Level Sainsbury’s:

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Delivering on our outcomes

First choice for food

We have delivered a record-breaking year in Grocery, outperforming the

market every quarter for a second consecutive year and making our biggest

market share gains in more than a decade, as more customers come to

Sainsbury’s for their big trolley shop. Our winning combination of outstanding

quality, great value and leading service really resonates with customers,

driving a significant increase in loyalty, with primary customer numbers

18per cent higher than four years ago.

More customers are shopping

withusfortheirbigtrolley shops

We are strengthening customer loyalty and successfully converting

Secondary into Primary customers who trust Sainsbury’s as their first choice

for their big trolley shop, fuelling the largest share gains in the market for

the main shopping mission. Our commitment to consistently deliver great

value has driven a sustained improvement in our competitive value position

and a significant improvement in customers’ perception of the value we

offer. We continue to prioritise price investment in the items that matter

most to customers and were the first retailer to extend our Aldi Price Match

campaign across supermarkets, convenience stores and online. We have

rolled out our Nectar Prices offer to over 9,000 products and we are enhancing

our capabilities in personalised value through Your Nectar Prices.

We continue to work closely with our suppliers to develop innovative and

high-quality products. We launched more than 1,300 new products over the

course of the year, of which more than 600 were Taste the Difference. Taste

the Difference remains the fastest growing Premium Own Label in the market,

with sales growth of 15 per cent and a particularly strong performance in

Fresh categories.

Through strengthening our relationships with suppliers and migrating

ourFood products to a machine learning forecasting platform, we have

delivered significant improvements in availability over the last four years,

growing food availability levels by 190 basis points. As a result, we have

achieved the biggest improvement in customer satisfaction for availability

of all major competitors over the same time period.

We continue to deliver outstanding customer service, with our overall

satisfaction scores consistently ahead of the other full-choice grocers. We

believe that happy, well engaged colleagues deliver great customer service

and in January we announced our investment in an above inflation pay

award for our colleagues, leading the industry for the third year in a row.

Growing food space to bring

more of our range to more customers

We are building on the strength of our grocery performance and our winning

combination of quality, value and service to bring more of Sainsbury’s food

to more customers in more locations and improving ranges, the customer

experience and the efficiency of many of our stores.

This year, we acquired 14 new supermarket sites in key target locations from

Homebase and Co-op, the majority of which we expect to convert and open

in 2025/26. Combined with our organic store opening programme, we expect

to open 15 new supermarkets in 2025/26 and over the next two years, our

new supermarket openings will add over 400,000 sq ft of new space, our

most significant investment in new supermarket space for many years.

Thiswill bring over 700,000 more people within a 10-minute drive of a

Sainsbury’s store. We also plan to add another 25 new convenience stores

ineach of the next two years.

Our three-year ‘More for More’ plan is on track, investing in our supermarkets

to make more of our food range available to more customers by rebalancing

space towards food. In 2024/25 we added around 90,000 sq ft of food space,

weighted to the second half, and we are planning to add another 90,000 sq ft

of food space in 2025/26. We are seeing positive early results in invested

stores, with benefits expected to build through the second half of 2025/26

and beyond as we annualise periods of disruption. We are learning as we go,

making more of our range and proposition accessible to more customers,

creating an environment which enables simple and frictionless shopping

missions and improving digital capabilities across our supermarkets.

In January, we shared an update on the changes we’re going to make to

theway we offer food services in our stores, making it easier to grow and

improve availability while keeping costs down. We will close patisserie, hot

food and pizza counters and are making popular products available in aisles.

We have now closed all remaining Sainsbury’s Cafés and we are converting

our scratch bakeries to bake-off. From Autumn, we will create new On the Go

hubs with flexiserve hot food offerings. These changes will deliver an improved

customer experience.

Taking all these elements of space growth into account, we expect to grow

total food space in Sainsbury’s by nearly three per cent in 2025/26.

Delivering for customers online

and in our convenience stores

We’ve made great progress in transforming our convenience stores this year.

By reconfiguring space and optimising our range, we’ve brought more products

to customers and improved the store environment for a simpler, faster shopping

experience. This has driven nearly four per cent sales growth in 2024/25 and

an increase in market share of 20 basis points. We were the first grocer to

launch Aldi Price Match in our convenience stores, extending our value offer

and significantly improving our value for money customer satisfaction scores.

We’re also investing in new format stores to better serve specific customer

missions. We’ve opened our first airport store at Edinburgh airport and four

new format stores with features like more chilled food space, digital screens,

and increased security features

Online grocery sales have increased by seven per cent year on year and

more customers are doing their online shopping with us. They are benefiting

from the investments we have made in improving the digital customer journey

including better showcasing our product ranges and improving the relevance

of suggested basket additions. This has been a key driver of increased

basket size, more frequent visits and improved customer satisfaction.

Growth in our OnDemand rapid delivery channel remains very strong, with

sales growth of around 80 per cent in the year. We’ve strengthened our

long-term partnerships with external providers and rolled out the offer

toover 1,200 locations, serving a significant portion of the population.

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

In focus: Our

biggest investment

in new space in

over a decade

We are building on the strength of

our grocery performance and our

winning combination of quality,

value and service to bring more

Sainsbury’s food to more customers

in more locations. At the same

time, we’re focused on improving

ranges, enhancing customer

experience and making many

ofour stores more efficient.

Delivering on our outcomes

continued

First choice for food continued

Playing a leading role in driving resilience and

improving sustainability in the UK food system

We are leading work to create a new culture of collaboration and long-term

partnership to deliver shared value and build resilient supply chains, which

will enable us to offer good food to our customers now and in the future.

In March 2025, we announced a ten-year partnership with Cranswick to

setnew standards in pig welfare and to provide more stability for the 170

farmers in the Sainsbury’s Pork Producer Group as they invest in farms and

factories to build resilience for the future. Together we will invest more than

£60 million to implement these new higher standards by 2030, during which

time we also aim to offer Taste the Difference pork that meets net zero criteria

by 2029 and by Sainsbury’s fresh pork by 2030 – all whilst protecting value

for our customers.

This year we also launched the Sainsbury’s Egg Group in collaboration with

our egg farmers and became the first retailer globally to invest in Vet Vision

AI technology to measure and enhance positive animal welfare on dairy farms.

For the second year running we were awarded both the Marine Stewardship

Council UK Supermarket of the Year and Aquaculture Stewardship Council

UK Retailer of the Year. We also delivered leading packaging innovations

moving to vacuum pack all lamb mince and introducing pulp trays for fresh

salmon and trout, along with cardboard packaging for our fresh breaded

chicken and fish products.

We continue to help provide good food for all, raising £33.8 million for

goodcauses this year and redistributing 18.3 million meals to communities,

increasing the amount of surplus food redistributed by 31 per cent through

the roll out of our partnership with Olio to all stores and ongoing

redistribution through Neighbourly.

Improving performance in the products and

services that sit alongside our food offer

Sainsbury’s general merchandise and clothing delivered higher profits

onsales that were in line with the prior year. Margins benefited from the

combination of stronger clothing sales and lower household electrical and

toys sales as we continue to focus ranges and reduce space allocation in

some categories.

Clothing sales grew by 2.9 per cent, with particularly strong growth of 12.3

per cent in Q4. Our renewed focus on design and range in womenswear

resulted in strong sales growth of five per cent. The actions we have taken

toimprove availability and expand our basics range delivered growth in

essentials sales of nearly four per cent.

Sainsbury’s general merchandise sales were down 2.8 per cent, driven by

space reductions as we’ve implemented space reallocations into food and

softer demand for categories such as household electricals and toys. We

delivered particularly strong results in our home accessories and fragrance

categories and we continue to make good progress in repositioning the Habitat

brand, with a positive customer response to our design-led collaborations.

Smart Charge, our ultra-rapid electric vehicle (EV) charging network, is now

established in over 75 supermarket locations with more than 600 ultra-rapid

EV charging bays. The sites are maturing rapidly, delivering double-digit

revenue growth month-on-month on average. Twenty five per cent of all

electric vehicles entering our Smart Charge Sainsbury’s car parks now charge

with us, up from fifteen percent at launch. We invested £25 million in Smart

Charge rollout in 2024/25 and looking ahead, we will focus on building

revenues in our top supermarkets.

More fresh

food

to more

people

in more,

easy to reach

locations

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Our new supermarkets

Our belief in the strength of Sainsbury’s

offer has driven our decision to make our

largest investment in expanding our

store space in over a decade as we open

new supermarkets in key new locations

and extend food space within many of

our existing stores.

Simon Roberts

Chief Executive

40 new stores

Will open in the coming year –

15supermarketsand 25 convenience stores

Over 700,000

more people

Will be within a ten-minute drive of a

Sainsbury’s store over the next twoyears

400,000 sq ft

of space

Will be added to our supermarket

estateoverthe next two years

Glenrothes

Bearsden

Wynyard

Washingborough

Rugby

Felixstowe

Cromer

Lowestoft

Brightlingsea

Fareham

Wokingham

Yatton

Sutton Coldfield

Newark-On-Trent

Bromsgrove

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

More Argos, more often

Following a slow start to the financial year and a significant reduction in

online traffic, Argos sales were behind our expectations in the first half of the

year, particularly in the first quarter and early weeks of the second quarter.

Sales strengthened into the second half as we took action to improve online

customer traffic and volume and we returned to sales growth in the fourth

quarter. Profits declined year on year in both the first half and the second half,

with actions taken during the year improving the trend in the second half.

Within a General Merchandise market that remains highly competitive, our

focus is on encouraging customers to shop with us more often and with bigger

baskets. To this end, we are driving change in our digital and commercial

proposition and we have made some good progress strengthening the Argos

offer. We have also continued to reduce the complexity of the Argos operating

model whilst still providing market-leading convenience for customers.

Focused on extending our range, increasing

desirability and enhancing our digital capabilities

We have reset our approach to trading events to deliver more impactful and

focused value activity. We ran five of our new Big Red events during the

year, delivering strong improvements in customer satisfaction scores for

promotions and value and driving an increase in awareness of the premium

brands available at Argos.

We continue to strengthen our partnerships with key supply partners,

growing our share at launch moments of the must-have new products from

global brands, particularly across Technology, Gaming and Toy categories.

Our Lego partnership has expanded and for the first time this Christmas we

partnered to run gamified engagement activity online for the 12 days of

Christmas, attracting over 100,000 new customers to Argos.

We have improved our own labels in addition to the work over recent years

on Habitat. We will focus on five primary owned brands (Habitat, Chad

Valley, Bush, Home and McGregor), versus 11 previously. This year will see

the range relaunch of McGregor in Garden & DIY and Chad Valley in Toys.

Through our Supplier Direct Fulfilment (SDF) model we have introduced

more than 4,000 new products this year across 150 categories. This is a 43

per cent increase year-on-year, with a total of 13,500 SDF products now

available. In the year ahead we plan to go further to extend the breadth of

our range, with plans to add an additional 10,000 SDF products in key categories

such as Household Electronics, Furniture, Computing and Gifting.

Our digital capabilities have strengthened through the year, driving more

traffic to our site as we deliver a seamless online experience for customers

with greater personalisation. As a result, more customers are shopping with

us online and making a recommended “attachment” purchase in the same

transaction, increasing items per basket. We will also be modernising the

credit offer available on our website and are working closely on a new Argos

Pay proposition with NewDay, following its acquisition of the Argos

Financial Services cards portfolio. This will launch in early 2026.

Improving operational efficiencies

andcustomerexperience

We have been working hard to enhance our operating model, including

rightsizing our standalone stores to improve operational efficiency and

customer experience. We’re also rolling out more digital Collection Points and

investing in technology across our Convenience estate to make collections faster

and easier. Our improved Argos app now offers increased personalisation and

access to promotional activity and a simpler collection experience for users.

We’ve made significant improvements to our stock management processes,

delivering smarter and simpler stock flow. This has optimised working capital

and availability across our network, with a 12 per cent reduction in Argos’

stockholding year-on-year. We’re more actively managing clearance activity

to prevent stock accumulation and are using data-driven insights to improve

forecast accuracy on buying and ranging.

Loyalty everyone loves

Customers love our personalised and rewarding Nectar loyalty scheme.

Nectar Prices have transformed the way that customers experience value at

Sainsbury’s, with the purple of Nectar now synonymous with value. As value

perception has improved, we have built a bigger base of loyal primary

customers and this in turn benefits our Nectar360 Retail Media offering.

Fuelled by our connection to customers, Nectar360 continues to deliver

profitable growth and improved client satisfaction. We are expanding the

Nectar coalition, delivering leading data and insights to brands and agencies

that work with us and investing to scale our Digital Retail Media offer. In the

year ahead, we will further expand our personalisation capabilities in loyalty.

In addition, we are making high returning investments to accelerate the

growth of Nectar360 – further digitising our stores through our connected

screen network. We will launch a new industry-leading platform to better

connect clients to our full suite of retail media and measurement services.

Growing customer loyalty

through the ‘power of purple’

Nectar Prices has delivered over £2 billion in savings to our customers this

year. With more than 9,000 offers available, participation has increased to

over 85 per cent, reaching record levels during the Christmas period. We’re

going even further to showcase Nectar Prices in store, rolling out more Nectar

branding as well as offering greater opportunities for brands to connect directly

with customers through displays and digitised in-store media.

More than one million customers are already enjoying personalised savings

each week through Your Nectar Prices, available on SmartShop and Online.

This has delivered significant savings to customers and we’re further

enhancing the strength of our value offer as we work towards generating up

to 500 million personalised offers a week. We’re also focused on growing our

active digital Nectar users by enhancing the Nectar app’s digital integration

and user experience.

Investing to accelerate growth in Nectar360, ahead

of plan to deliver at least £100 million incremental

profit by March 2027

Over 900 clients and media agencies now partner with Nectar360 to

getthebest return on their advertising spend. Our enhanced retail media

capabilities, leading data and insights, and commitment to exemplary client

service have led to a four percentage point improvement in overall client

satisfaction year-on-year.

We are accelerating our ambition to create a scaled and connected

digitalscreen network in our stores. With 820 screens already installed in

partnership with Clear Channel, we’re realising the benefits of connecting

with our customers digitally on the shop floor. We’re diverting capital

towards this high-returning investment, committing to a further 1,600

screens to be rolled out over 2025/26 and into early 2026/27, with a cash

payback of less than two years. This will enable brands to communicate

directly with customers through more than 2,500 connected digital screens

in the future.

The Nectar Coalition continues to grow, achieving a 97 per cent Nectar partner

satisfaction score. We’ve announced exciting new partnerships with Marriott

Bonvoy, Severn Trent Water and Smart Charge and extended our partnership

with British Airways. Alongside this, our marketing affiliate programme,

Nectar eShops, has doubled the number of brands available for customers

over the last 18 months, offering them more choice and extending the offers

they can access.

Delivering on our outcomes

continued

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Save and invest to win

We are making strong progress towards the ambition we laid out in February

2024 and we are confident in our plans to deliver £1 billion of cost savings by

March 2027. We achieved savings of around £350 million in 2024/25, bringing

total savings over the last four years to over £1.6 billion, and are well underway

with a programme of high-returning activity that is already delivering savings

as well as driving growth and customer proposition improvements. In addition,

our capital investments in efficiency, particularly in technology, will deliver

cross-functional savings benefits over the longer-term, giving us clear line

ofsight to achieving our target.

High returning investments in technology

andautomation driving efficiencies

We have nearly completed our three-year future front-end programme,

optimising checkouts in all our supermarkets and delivering savings of

around £70 million over the course of the programme. On average, self-service

participation has increased to over 70 per cent of transactions compared to

around 40 per cent five years ago. While we have achieved a step up in

supermarket volumes, front-end labour costs have reduced, driven by

anineper cent improvement in front-end productivity year-on-year.

We’re making good early progress with the next phase of our front-end

transformation, aiming to drive growth in SmartShop participation for big

basket shops. We’re trialling payments on SmartShop handsets, delivering

flexibility and speed for customers while reducing the physical

infrastructure required.

Our longer-term investments in technology and automation are simplifying

our general merchandise logistics network, driving improvements in product

availability and efficiency. This will result in a transition from five depots to

three network distribution centres. This will begin to deliver savings in FY25/26

and a total benefit of £70 million per year once fully implemented.

We’re rolling out video analytics technology in stores to protect colleagues

and reduce costs, whilst minimising the impact on customer experience.

This technology aims to reduce mis-scanned items at self-service checkouts

and has been deployed in 150 stores, with plans to roll out to a further 250 stores

over the next financial year.

Our five-year strategic partnership with Microsoft is already delivering

goodresults, providing store colleagues with real-time data and insights

tofocus in-store processes and using machine learning capabilities to

improveefficiencies.

Reflecting our commitment to invest in sustainable technologies, we’re now

buying 100 per cent of the energy generated from eight wind farms across the

UK, with wind energy making up over 30 per cent of our electricity sourcing

and the remainder coming from other 100 per cent renewable sources.

Delivering productivity benefits

through end-to-end programmes

In January, we announced several propositional changes in our supermarkets

to drive growth and availability while reducing costs. Thesechanges include

closing all remaining Sainsbury’s Cafes, hot food, pizza, and patisserie counters

and converting scratch bakeries to bake-off. These adjustments are driving

cross-functional benefits, increasing our fresh food selling space, improving

product quality and delivering cost savings.

We also reviewed management structures in our Store Support Centres,

reducing the number of senior management roles by about 20 per cent in

anumber of areas to drive faster decision-making and execution while

reducing costs.

Additionally, we’ve completed the main phase of migrating our Food products

to machine learning forecasting, entering our second year of using the

platform. This has delivered higher sales due to improved availability,

betterwaste metrics and higher forecasting accuracy leading to better

working capital management.

Financial Services

Financial Services operating profit grew by 3.4 per cent in the year,

drivenbylower expenses as a result of a prior year fixed asset write-off

andsignificant actions taken by management to reduce operational costs,

partially offset by lower income from the decision to exit core Banking

andhigher funding costs. We have made good progress over the year in

implementing our plan for a phased withdrawal from core Banking services,

announcing in June 2024 the sale of Sainsbury’s Bank personal loan, credit

card and retail deposit portfolios to NatWest Group. We now expect this

transaction to complete in May 2025.

In September 2024, we announced the sale of the Sainsbury’s Bank ATM

business, comprising around 1,370 cash machines, to NoteMachine to

provide end-to-end ATM managed services. The deal provides a shared

commission income stream.

In October 2024, we announced the sale of the Argos Financial Services

cards portfolio to NewDay Group. NewDay acquired beneficial title to the

AFS portfolio in February 2025. The AFS cards support around 20 per cent

ofArgos sales and are held by around two million Argos customers. We

additionally announced that we will be partnering with NewDay to create

anew Argos-branded digital credit proposition. This will, in time, replace

thecurrent Argos credit card propositions with a wider choice of modern,

flexible and more convenient ways to manage the cost of purchases.

Following these transactions, we will continue to benefit from financial

services income streams which have a stronger connection to our retail offer,

including commission income from insurance, travel money and ATMs. We

expect the combination of this commission income alongside income from

the NewDay partnership to deliver sustainable annual profit from financial

services of at least £40 million in the financial year to February 2028.

We expect to return bank disposal proceeds of £250 million via special

dividend in the second half of the year, subject to regulatory approval.

Thespecial dividend will be accompanied by a proposed share consolidation.

Any distributable bank disposal proceeds in excess of £250 million will be

used to enhance the share buyback above a core £200 million base.

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

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 focus on those issues where we believe we can deliver the biggest impact. Our plan has three

interlocking pillars: Better for you, Better for the planet and Better for everyone.

We aim to provide 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 intend to play 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 champion human rights,

andstrive to ensure fair treatment for both

people and animals, creating a place where

everyone can feel safe and supported

Plan for Better

For over 150 years, providing affordable,

goodquality food for all has been at the

heartof who we are and everything we do.

Our world faces significant challenges on a global scale, from climate change

tosocial inequality to nature loss. We need to do even more to build the

resilienceof our planet, our communities and our business.

Our Plan for Better

Our 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 collaborating across our industry. We need

our many suppliers and partners to work together with us to build a resilient

supply chain which helps us to offer good food to our customers, now and into

the future. Without action, the challenges we already face such as climate

change, water scarcity, resource pressure and biodiversity loss will become

more intense and make our purpose increasingly difficult to achieve.

Plan for Better sets out our bold ambition to play a leading role in creating

amore sustainable food system in the UK. We continue to build a culture of

collaboration and long-term partnership with our suppliers to help establish

a food system which supports farmers and growers, improves planetary

outcomes, supports a healthier population, and drives economic growth

andshared value for Sainsbury’s and our supply base.

InMarch 2025, we announced a ten-year partnership with Cranswick to set

new higher standards in pig welfare and together we plan to invest more than

£60 million to implement these by 2030. We also aim to offer Taste the Difference

pork that meets net zero by 2029 and by Sainsbury’s fresh pork that meets

net zero by 2030. We launched The Sainsbury’s Egg Group to collaborate

more closely with our egg farmers to help build resilience for the future

andbecame the first retailer globally to invest in Vet Vision AI technology

tomeasure and enhance positive animal welfare on dairy farms.

Through innovation we are making improvements to source and package

ourproducts in a more sustainable way. We became the first UK supermarket

to introduce conventional mushrooms grown without peat, reducing the

carbon intensity of production by preventing extraction of peat from valuable

habitats important for carbon, nature and water. We were the first major

retailer to vacuum pack lamb mince, replacing traditional plastic tray

packaging, using a minimum of 65 per cent less plastic.

We continue to support our colleagues, customers and communities. To support

and inspire our customers to make healthier choices, we launched our Healthy

Choice logo on Own Brand products. We are also helping them to navigate

towards sustainable choices through our Good To Know launched in April 2024.

We continue to invest in colleague pay, with an above inflation pay increase

of five per cent for hourly paid colleagues in the year ahead, matching the

Living Wage from August 2025.

We helped to provide good food for our communities by raising £33.8 million

for good causes this year and redistributing 18.3 million meals to communities,

growing the amount of surplus food redistributed by 31 per cent through the

roll out of our partnership with Olio to all stores and ongoing redistribution

through Neighbourly.

We were recognised for our leadership and performance by industry benchmarks,

including achieving an A rating for climate change by CDP for the 11th consecutive

year. We were the first UK supermarket to win, for the second year running, both

the Marine Stewardship Council UK Supermarket of the Year and Aquaculture

Stewardship Council UK Retailer of the Year awards. This year, we were

acclaimed as ‘Leading on human rights innovation’ status in the CCLA

Modern Slavery UK Benchmark 2024, achieving a top tier score.

While we have made good progress year-on-year across most of our Plan for

Better metrics, we recognise that there is still work to be done. In areas such

as healthy and sustainable diets, deforestation and conversion free and plastic

packaging we face significant challenges in reaching our ultimate ambitions.

These obstacles range from a lack of infrastructure, market-wide supply chain

dynamics, the absence of viable innovation and technology and nature of

behaviour change. To effectively respond to the many 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 innovative solutions

which support in creating a more resilient food system for generations to come.

Better for you Better for the planet Better for everyone

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Our most material

issues Target Progress Key achievements

Healthy and

sustainable

diets

At least 85% Healthy

and Better for you sales

tonnage sold by 2025

81.9%

of our sales are

Healthy and Better

foryou

Up 1.2% year-on-year

Down 0.1%

versusbaseline

• We have seen continued above market growth in produce, which has helped drive our

Healthy and Better for you sales tonnage

• To support and inspire our customers to make healthier choices, we launched our

Healthy Choice logo on Own Brand products

• We helped make healthier choices more affordable, with more than 75 per cent of

products in Aldi Price Match Healthy or Better for you choices. Our Aldi Price Match

campaign was extended to convenience stores in November 2024, helping more customers

access these products. This year, over 100 of these choices were plant-based, including

our Unsweetened Soya Drink, and 30 of them were across fish and seafood, helping our

customers to diversify the protein in their baskets

• We tested multibuys on prepared fruit, frozen fruit and veg, and meat free options,

which helps further support the affordability of healthier choices. We outperformed the

market in volume growth in multiple categories including produce, frozen fruit and veg

and frozen meat-free products

• We continue our work to make healthier food more appealing, with customers participating

in our fifth Great Fruit and Veg challenge buying 133 million portions of fruit and

vegetables, up 20 million from last year

• We launched a number of new Sainsbury’s ranges and improved products, such as our

low sugar, high protein, gut-friendly healthy choices, including raw cold pressed juices

and shots and a kefir yoghurt drinks range

• Drinks influenced our healthy sales, with mix and reclassifications impacting

performance this year

Reduce

carbon

emissions

Reduce absolute Scope

1 and 2 greenhouse gas

emissions from our

own operations to net

zero by 2035

Reduce absolute Scope

3 greenhouse gas

emissions in line with

1.5

C trajectory

448,734

tCO

of absolute

greenhouse gas

(GHG) emissions

from our own

operations

Down 2.2%

year-on-year

Down 52.8%

versusbaseline

39.8%

of our Scope 3

emissions are

covered by suppliers

that have had any

1.5

C targets

approved by

theSBTi

• We were awarded an A rating for our climate change disclosure by CDP for the 11

consecutive year

• We are using even more new-to-planet renewable electricity to power our business,

following the completion and commissioning of Pines Burn Wind Farm in the Scottish

Borders. This is the eighth wind farm from which Sainsbury’s now buys 100% of

electricity generated, generating approximately 3 per cent of Sainsbury’s annual

electricity needs. Wind energy makes up over 30 per cent of our electricity sourcing,

withthe remainder from other 100 per cent renewable sources

• Through our Graphite investment programme, we have spent £19 million on the

installation of new Solar PV systems, next generation LED lighting innovation,

refrigeration and heating, ventilation and air conditioning efficiency. We continue

tofocus on engineering innovation, which supports in identifying the latest technology

to support our decarbonisation roadmap

• We invested across ten of our depots this year, installing electric plug points for our Rigid

fleet, enabling our full fleet of 450 rigids to charge their refrigeration units via 100 per cent

renewable electricity whilst stationary at our depots

• We invested £25 million in Smart Charge rollout in 2024/25 and looking ahead, we will focus

on building electric vehicle (EV) charging revenues in our top supermarkets. We now have

619 charging bays across 75 Sainsbury’s stores, helping to address the shortage of

electric chargers in the UK. From this year, customers could be rewarded with Nectar

points for charging their electric vehicles, the first electric charging service to offer

customer loyalty benefits

• We continue to engage our suppliers to understand and support their journey to net zero.

11.6 per cent of our emissions now come from suppliers that have approved SBTi 1.5°C

net zero targets. 28.2 per cent of emissions are covered by suppliers that have had any

1.5°C target approved and a further 13.4 per cent of emissions are covered by suppliers

that have either committed to a 1.5°C net zero target, or have had any target approved by

the SBTi. This represents a 119 per cent increase year on year in the number of suppliers

who have any science based target approved or a commitment to have a 1.5°C net zero

target approved by the SBTi

• 612 suppliers (covering 53 per cent of our Scope 3 emissions) have disclosed through HIGG

or Manufacture 2030 environmental disclosure platforms

• We were the first UK supermarket to launch conventional mushrooms grown without peat,

reducing the carbon intensity of production by leaving peat in the ground, removing

20,465 tonnes of peat from mushroom production each year

Our progress this year

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Our most material

issues Target Progress Key achievements

Reduce food

waste

Reduce food waste by

50 per cent by2030

0.617%

of food handled sent

to anaerobic

digestion

Down 3.9%

year-on-year

Down 15.3%

versusbaseline

• This year we have redistributed 17.5 million meals and prevented 7,386 tonnes of surplus

food going to waste, a 31 per cent increase year-on-year

• 373% more surplus food redistributed to communities versus our 2019/20 baseline

• We rolled out our partnership with Olio to all stores this year, helping us redistribute our

use-by food surplus

• We launched a new internal target to donate more of our eligible surplus to Neighbourly

or Olio by the end of 2025

• We announced that from March 2025, 30 heavy goods vehicle trucks will be powered

withfuel directly from food waste. The diesel alternative is 100 per cent biomethane,

arenewable gas produced from the anaerobic digestion of unsold food

• We started a pilot of intelligent automation in stores, including establishing a machine

learning model to optimise markdowns on near-dated products

• We supported FareShare’s pioneering Surplus with Purpose scheme, providing funding at

farm level which helped FareShare and our suppliers ‘rescue’ 271 tonnes of surplus fruit

and vegetables in 2024 and provide it to communities who need it most

Reduce

plastic

packaging

Reduce our own brand

plastic packaging by

50per cent by 2025,

increase recycled

content and

recyclability

55,154

tonnes

of own brand plastic

packaging

Down 7.6% relative

year-on-year

Down 19.5% relative

versus baseline

• On an absolute basis, our own brand plastic packaging tonnage reduced by 5.5 per cent

year-on-year and declined by 21 per cent versus our baseline

• We were the first major retailer to vacuum pack lamb mince, replacing traditional plastic

tray packaging, using a minimum of 65 per cent less plastic

• In produce, we have changed the packaging of our Taste the Difference berries to

cardboard trays, saving over 100 tonnes of plastic per year

• We were the first retailer to introduce pulp trays for fresh salmon and trout, along with

cardboard packaging for our fresh breaded chicken and fish products, saving 649 tonnes

of plastic a year

• We also announced changes across our bakery packaging, switching all doughnuts and

pastries to cardboard and paper packaging – a 90 per cent reduction in plastic, this is

expected to save over 560 tonnes of plastic a year

• In Argos, we have delivered 926 tonnes of plastic packaging reduction since our 2020

calendar year baseline, by introducing paper alternatives to replace plastic packaging

across Home and Furniture products

Champion

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

Human rights

strategy in place,

spanning HRDD,

commercial

integration,

on-the-ground

investments and

industry-wide

change

• We continued to work collaboratively with Fairtrade on our approach to improve wages

for banana workers. As well as the Fairtrade Minimum Price and Fairtrade Premium, we

have a mechanism that enables an additional contribution to go towards reducing living

wage gaps for workers on plantations within our banana supply chain. The contributions

are calculated by Fairtrade and bespoke to Sainsbury’s supply chain

• We were awarded top tier in the CCLA Modern Slavery Benchmark, recognising us

as‘Leading on human rights innovation’

• Our partnership with strategic research partner, the University of Nottingham’s Rights

Lab supported us with our advocacy approach, research into the impacts of climate

change on people and livelihoods, and the evaluation and categorisation of country risk

from ahuman rights perspective

• We commissioned an expert consultancy to review our human rights due diligence

management systems, identifying strengths and areas for improvement. An action plan

was co-created by Human Rights, Technical and Commercial teams and will be

implemented, monitored and tracked by a cross-functional working group

• In partnership with ActionAid and Ethical Tea Partnership, we began supporting a

collaboration to empower tea farmers and workers in Kenya to claim their rights to a

positive working environment and have access to fair pay and essential services like

healthcare, education, clean water and safe housing for themselves and their families

a) We have received third party limited assurance on our Scope 1 and 2 greenhouse gas emissions. For more information see pages 123 and 124.

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. Following supplier engagement over the year we have now included any 1.5°C aligned target in our headline metric. This differs from our Long Term Incentive

Plan (LTIP) metrics which focuses on suppliers with 1.5°C net zero targets approved by the SBTi.

c) We use 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) Relative: removing volume impact.

Plan for Better continued

Our progress this year continued

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Nature

positive

• We were the first UK supermarket to win, for the second year running, both the Marine Stewardship Council UK Supermarket of the Year

and Aquaculture Stewardship Council UK Retailer of the Year awards

• We published new policies for key raw materials including Coffee, Cocoa, Non-Timber Forest Products (Bamboo), Wool and Pulp, Paper and

Fibre Based Packaging

• We celebrated 20 years of partnership with The Woodland Trust. In that time we have raised over £14 million to support the creation and

protection of UK woodland and we planted 132,878 trees over the year

• We continued our agroforestry initiative to help our farmers and growers deliver farming practices which have a positive impact on the

environment and help to protect and regenerate nature. Our Nectar partnership with The Woodland Trust, which plays a key role in

conservation projects, was also extended to 2027

• We made a £300,000 investment in the Produce, Conserve, Inform initiative in Mato Grosso, Brazil, supporting the sustainable development

of soy and cattle farming by helping to protect and restore forests and natural habitats, improve farming practices, promote strong local

governance and strengthen protections for indigenous peoples

Minimise

water use

• We reduced water usage in our own operations by 2.2 per cent year-on-year, to 2,562,660m³ through better management of water in our

estate and through leak prevention

• We maintained our CDP rating, achieving an A- for our water disclosure

• We supported seven collective action projects situated in important sourcing areas for our supply chain for long-term integrated and

sustainable water management in collaboration with WRAP

• We trialled two additional replenish projects in partnership with the Rivers Trust in the Beult and Cocker catchments. These use nature-

based solutions to reduce flood risk and replenish the equivalent annual water used by three stores in the catchments into local ecosystems

Support our

communities

• We raised £33.8 million for good causes this year

• We celebrated 25 years of partnership with Comic Relief, raising over £179 million in total since 1999. Since the launch of our Nourish the

Nation programme with Comic Relief, we have donated over £21 million to help those experiencing food poverty, allowing us to donate over

31million meals to those who need it most. Through the programme, we donated over £8.9 million to Comic Relief this year to help tackle

food poverty for the communities at risk now and in the future

• We launched a Seasonings Shuttle service for food club users, an initiative that offered free herbs and spices throughout the months of May

and August to users at mobile food clubs in Greater Manchester and the North East of England, run by The Bread and Butter Thing, ensuring

communities had access to good food without having to compromise on taste

• Through our Community Grant scheme, we supported 605 local good causes this year, donating over £4 million to initiatives supporting our

local communities since 2021

• Alongside our partners Comic Relief and Feeding Britain, we advocated for the extension of the Government’s Holiday Activities and Food

(HAF) programme which was confirmed in January 2025. Through our Nourish the Nation programme and partnership with Comic Relief,

we’ve helped to create over 35,000 additional HAF places which have helped children access good food during school holidays

Improve

animal health

and welfare

• First retailer in the world to invest in Vet Vision AI technology used to measure and enhance positive animal welfare on dairy farms

• Launched Sainsbury’s Egg Group to collaborate with our egg farmers to build resilience for the future

• We improved our performance across four of five Animal Health and Welfare metrics

• We increased our sales volumes from food products with welfare standards above the UK industry baseline to 62.7 per cent, up 0.6 per cent

year-on-year

• We increased our sales volume of feather and down from an independently audited farm assurance standard to 99.9 per cent, up 4.4 per cent

year-on-year

• 80 per cent of our animal health and welfare outcome KPIs achieved Sainsbury’s KPI performance targets, improving 1.9 per cent year-on-year

• We remained flat at 86.7 per cent of our key animal supply chains achieving Sainsbury’s responsible use targets for total antibiotic use

• We saw a decrease of 10 per cent year-on-year for key animal supply chains achieving responsible use targets for antibiotics deemed

critically important for human health. This remains above our baseline and we are confident in reaching our end ambition

For information on how we are driving an inclusive culture, please see pages 20 to 23 in this report.

Future priorities

• We will drive progress against our new packaging ambition to strive towards 100 per cent recyclable or reusable packaging in line with Extended Producer

Responsibility legislation, working actively with industry to address problem materials and drive the right solutions

• We will drive progress towards our ambition to achieve deforestation and conversion free in our own brand products, improving our traceability and data. We will

work to address challenges limiting our progress such as market-wide challenges in achieving conversion free soy through industry collaboration and action groups

• We will continue to reduce food waste with a focus on our non-human redistribution channels such as redistribution to animal feed

• We will continue to identify carbon reduction levers and develop decarbonisation roadmaps in key hotspots including within our agricultural supply chains

ontopics such as soya, low carbon fertilisers and soil supporting engagement and collaboration through our Making it Happen action groups

• We will work to quantify and cost carbon reduction roadmaps and embed the required investments for Scope 1 and 2 reductions further into financial planning

• We will continue to work in collaboration with industry groups to effectively measure Scope 3 carbon reduction

• We will build actionable plans for key products and ingredients across our five human rights pillars and continue to collaborate with partners to accelerate

industry-wide initiatives

• In the year ahead we will be looking to evolve our approach in a number of pillars. In ‘Healthy and sustainable diets’ we will look to diversify protein sales and

drive greater purchase of healthier, plant-rich choices. In Nature we will develop a more detailed understanding of our material risks and opportunities nature

building actions plans to support our ambition to protect and regenerate nature

• We will review our material topics through a refreshed materiality assessment in line with best practice

Key achievements

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Our people

Driving 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. Our colleagues are fundamental to achieving our

NextLevel Sainsbury’s strategy and 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 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. To deliver our Next Level Sainsbury’s strategy, our

leaders need to role model our purpose and culture and in 2024 we

redefined our leadership performance expectations to reflect this.

Investing in colleagues

At Sainsbury’s, our colleagues are the very heart and soul of our business.

We believe that happy well engaged colleagues deliver great customer

service and so, to support our frontline customer-facing colleagues further,

earlier this year we led the industry on pay again - for the third year in a row.

To further support our colleagues, we provide free food for store and depot

colleagues during their shifts and free sanitary products across all sites and

stores for colleagues. We have maintained 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. In addition, the colleague discount on

Argos purchases increases from 10 per cent to 15 per cent every pay day.

Our partnership with Salary Finance includes loans and Pay Advance, which

gives colleagues the option to access their pay ahead of pay day. Colleagues

also have access to Simple Savings and Help to Save saving schemes, where

they can save directly from salary. 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.

Opportunities to develop and grow

We have a wide variety of development programmes and opportunities

available for colleagues. These include personal development toolkits

andprogrammes, including apprenticeships and graduate programmes.

Ourrange of leadership programmes includes Leading@Sainsbury’s

andAccelerate YOU (see page 22 for more details).

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. The 178 colleagues who completed their apprenticeship this year

achieved a first-time completion rate of 92 per cent. 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 even more 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.

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. We continue to respond

to the ongoing challenges of increasing retail crime, including through

improving communication locally in every store, along with enhancing

training and development for colleagues. 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 six per cent and customer accidents by 23 per cent over

thelast five 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.

Own It

Human

Make It

Better

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

Our governance processes ensure colleagues can feed back 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. Progress against our wellbeing policies

is tracked to ensure that we’re supporting our colleagues to be their best.

Our Mental Health policy confirms our commitment to providing a working

environment which supports and respects colleagues experiencing mental

health problems to thrive through line manager support, workplace adjustments

and occupational health where required. Our line managers are trained in

Mental Health Awareness, to help them understand the role they can play in

supporting colleagues at work. This year we are proud to have achieved a

Tier 1 rating in the CCLA Mental Health benchmark, the first and only retailer

to achieve this ranking.

I think we all sometimes need a helping

hand to ensure that we maintain

wellbeing as a priority.

Clodagh Moriarty

Operating Board Sponsor for Wellbeing

Colleagues who told us

they feel comfortable being

themselves at work

78%

Rated

Tier 1

in the 2024 CCLA

Mental Health benchmark.

The first and only retailer

to achieve this ranking

At Sainsbury’s, we have empowered our colleagues to work differently.

Weintroduced Smarter Working, which covers flexible working, hybrid

working and meeting frameworks – 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 allow our

colleagues flexibility in when they work by flexing the length of their days

toaccommodate workload peaks or personal commitments.

Diversity, equity and inclusion

We remain deeply committed to creating an environment that is inclusive

and truly reflective of the diverse communities we serve – which helps us

fulfil our purpose of making good food joyful, accessible and affordable for

everyone, every day. 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. This year, 78 per cent of our colleagues

told us they are able to be themselves at work, with 92 per cent of our colleagues

who told us that their manager is accessible and approachable.

We continue to prioritise representation and transparency across the business

and this year marks our eighth gender pay gap report and the fifth year of

voluntarily reporting on our ethnically diverse pay gap. This year’s report

shows that our mean gender pay gap decreased further from 8.4 per cent to

7.5 per cent in favour of men, while our median gender pay gap has

decreased

from 6.7 per cent to 6.1 per cent. This gap continues to be influenced by more

senior positions held by men and men occupying more hourly paid roles

that attract a premium. We are dedicated to increasing the number of

women in senior roles across the business and are seeing positive results

with 50 per cent of our Operating Board being women.

Our mean ethnicity pay gap has grown by 0.5 per cent to -3.4 per cent, and

the median ethnicity pay gap has increased by 0.4 per cent to -5.8 per cent,

meaning the gap favours our ethnically diverse colleagues. This is driven by

the high proportion of hourly paid colleagues who are ethnically diverse and

work in London, where we pay a premium for these roles.

As we go through organisational changes, we continue to focus on diverse

representation at all levels with a stretching ambition to have 50 per cent

women and 15 per cent ethnically diverse representation at senior levels

by2028. When establishing our representation targets for 2024 to 2028,

weconducted a thorough analysis of our current business demographics

incomparison to national statistics. This comprehensive review enabled us

to set realistic andrelevant targets that align with our business needs and

goals. Progressagainst these targets can be seen on page 23.

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.

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Diversity, equity and inclusion continued

We offer leadership development acceleration programmes to support colleagues and build a diverse talent pipeline. Our Accelerate YOU programme aims

tospeed up the progression of high potential ethnically diverse colleagues through targeted andpersonalised development. We have introduced a more

accessible Retail Management programme that allows colleagues from any part of the business to put themselves forward for the development opportunity.

This year, 18 of our high potential ethnically diverse colleagues went through Accelerate YOU, providing them with the support and development to move into

a senior leadership role. Further, we regularly analyse different parts of our business to identify areas that require further investment into diversifying the

talent pipeline. We know that the Tech and Digital division is an area where we had ashortage of female candidates for roles and therefore we partnered

withCode First Girls, helping us recruit 29 women to join our business in 2024.

Sainsbury’s Colleague Networks

Our networks are led by our colleagues and are open to colleagues of that community and other allies.

13,000 of our colleagues are members of the networks.

at Sainsbury’s

Our EnAble network champions all colleagues with disabilities, long-term conditions and neurodiverse conditions and supports

them all to fulfil their potential by building an inclusive environment for them to thrive and feel empowered. It is sponsored by

Bláthnaid Bergin, Chief Finance Officer.

This year, the EnAble network hosted a Disability Week which focused on the unique contributions we each bring to our roles and

lives beyond any disabilities or neurodivergent conditions we might have and included an insightful keynote event with Alex Brooker.

Our I AM ME network is dedicated to fostering confidence, driving authenticity and supporting better career progression of

ethnically diverse colleagues, celebrating different cultures and building an inclusive environment. It is sponsored by Graham

Biggart, Managing Director Argos, and Chief Strategy and Supply Officer.

In the year, the I AM ME network hosted many business-wide events, including Race Equality Week, South Asian Heritage Month,

East and South East Asian Heritage Month and Black History Month, providing our colleagues with a platform to express themselves

and empowered allies to enhance 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 Commercial Officer - Sainsbury’s.

Throughout the year, the Inspire team has completed extensive colleague listening and focused on setting up three new

communities to support our colleagues experiencing, or supporting others with, infertility, parenthood and menopause challenges.

The team also marked many important events, including International Men’s Day, International Women’s Day and World

Menopause Day.

Our Proud@Sainsbury’s network aims to support our ambition to be a truly inclusive retailer where every one of our colleagues can

fulfil their potential and where our customers feel welcome when they shop with us. It is sponsored by Mark Given, Chief Marketing,

Data and Sustainability Officer.

This year, the Proud@Sainsbury’s team and allies were a visible presence at more than 30 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, Bisexual Awareness Week, Lesbian Visibility Day, Non-Binary Awareness Week and LGBT+ History Month.

We Care at Sainsbury’s

Our We Care network aims to make caring visible by raising awareness and supporting our carer colleagues to reach their full

potential by building empathy and real flexibility to drive positive culture change. It is sponsored by Claire Pickthall, Director of

Stores and Channel Operations. During the year, the We Care network focused on providing resources, guidance and advice for our

carers and line managers. It also celebrated Carers Week, Young Carers Rights Day and Carers Rights Day and hosted informal

support sessions throughout the year.

Our commitment to continuing

to embed inclusion is clear.

Aswe make progress, we always

hold ourselves to account where

we can be better.

Prerana Issar

Chief People Officer

Ranked 4th

in our sector in the FTSE 350

Women on Boards report and 28th

overall in the FTSE 100 Women on

Boards and in Leadership rankings.

Top 50

Employer

For the third consecutive year, included

as a The Times Top 50 Employer for

Gender Equality (one of only two

retailers recognised in the list)

We are proud that our

diversity, equity and

inclusion initiatives

have been recognised

at a national level.

Our people continued

J Sainsbury plc Annual Report and Financial Statements 2025 Strategic Report Governance Report Financial Statements

At Sainsbury’s, our colleagues

arethe very heart and soul of

ourbusiness. We remain deeply

committed to creating an

environment that is inclusive

andtruly reflective of the

diversecommunities we serve.

Simon Roberts

Chief Executive

Total colleagues

Women (71,564) 50.6%

Men (69,953) 49.4%

2028 target: 50% Women 2028 target: 15% Ethnically diverse

We continue to be accredited as a Disability Confident Leader, which is

thehighest tier of accreditation in the Government’s Disability Confident

scheme. The Chair of our EnAble network was also recognised in the

ShawTrust Disability Power 100 list for her contribution to advocating

forthe disabled community.

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.

Two Sainsbury’s colleagues were recognised in the Role Models for Inclusion

in Retail Index, our Proud@Sainsbury’s network was nominated for the

Outstanding LGBTQI+ Network of the Year category at the British LGBT+

awards and two of our colleagues were included in the 2025 Women to

Watch (WiHTL) index.

We are very proud that both our Chief Executive and Chair were recognised

at the Diversity in Retail Inclusion Awards as Most Inclusive Chief Executive

Officer in Retail and Most Inclusive Chair in Retail.

We are making progress in driving positive, sustainable change to improve

the lived experience and opportunities for under represented 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

Diversity and inclusion targets

Senior leadership positions (the top 200 leaders)

2024/25 2024/25

48.4% 8.9%

2023/24 2023/24

48.5% 9.3%

1 Excluding Bank and Asia colleagues

2028 target: 50% Women 2028 target: 15% Ethnically diverse

Senior management positions (the top 1,000 leaders beneath the top 200 senior leadership positions)

2024/25 2024/25

41.4% 11.7%

2023/24 2023/24

40.8% 11.1%

2 Excluding Bank and Asia colleagues

J Sainsbury plc Annual Report and Financial Statements 2025Strategic Report Governance Report Financial Statements

Our section 172 statement

Stakeholder considerations play

an important part in the Board’s

discussions and decision-making

in promoting the long-term

success of theCompany.

During the year ended 1 March 2025, 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 67 to 86.

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

Business model on page 2

Chair’s letter on page 4

Our purpose in action on page 6

Chief Executive’s letter on page 8

Strategy overview on page 10

Delivering on our outcomes on page 11

Plan for Better report on page 16

Our people on page 20

Engaging with our stakeholders on page 25

Key performance indicators on page 45

Financial review on page 47

Principal risks and uncertainties on page 54

Statement of viability on page 63

Introduction to the governance report on page 67

Board leadership and Company purpose on page 76

Annual report on remuneration on page 111

The interests of

our colleagues

Our business model on page 2

Chair’s letter on page 4

Our purpose in action on page 6

Chief Executive’s letter on page 8

Plan for Better report on page 16

Our people on page 20

Engaging with our stakeholders on page 25

Key performance indicators on page 45

Introduction to the governance report on page 67

Board leadership and Company purpose on page 76

Annual report on remuneration on page 111

The need to foster

our business

relationships

withsuppliers,

customers

andothers

Business model on page 2

Our purpose in action on page 6

Chief Executive’s letter on page 8

Strategy overview on page 10

Delivering on our outcomes on page 11

Engaging with our stakeholders on page 25

Key performance indicators on page 45

Introduction to the governance report on page 67

Board leadership and Company purpose on page 76

Corporate Responsibility and Sustainability

Committee report on page 92

Section 172 duties Relevant disclosure and page number

The impact of our

operations on the

community and

the environment

Our purpose in action on page 6

Chief Executive’s letter on page 8

Strategy overview on page 10

Delivering on our outcomes on page 11

Plan for Better report on page 16

Task Force on Climate-related Financial Disclosures

(TCFD) on page 31

Principal risks and uncertainties on page 54

Board leadership and Company purpose on page 76

Corporate Responsibility and Sustainability

Committee report on page 92

The desirability

ofmaintaining

areputation for

high standards of

business conduct

Strategy overview on page 10

Delivering on our outcomes on page 11

Engaging with our stakeholders on page 25

Key performance indicators on page 45

Principal risks and uncertainties on page 54

Non-financial and sustainability information

statement on page 65

Introduction to the governance report on page 67

Board leadership and Company purpose on page 76

Composition, succession and evaluation on page 84

Division of responsibilities on page 87

Nomination and Governance Committee report on

page 88

Annual report on remuneration on page 111

The need to act

fairly between

shareholders

Engaging with our stakeholders on page 25

Introduction to the governance report on page 67

Board leadership and Company purpose on page 76

Audit Committee Report on page 96

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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. More customers

are choosing usfor their big weekly shop and we now have

24million active Nectarusers.

Within Argos we have 19.5 million active customers, of

which1.9 million benefit from a credit proposition offering.

The Argos website is the third most visited online retailer in

the UK.

In Financial Services, we have 1.5 million active Sainsbury’s

Bank 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

• Quality of products

• Great service levels

• Availability and range of products

• Convenience and location

• Speed of Groceries Online delivery

• Sustainability

How we engage

• 2.9 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

• Store working and store visits

• 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

• The Board and Operating Board engage directly and indirectly with

customers, via store visits as well as receiving updates on customer

feedback and overall metrics on consumer sentiment and trends.

Thisfeedback and research is used to inform our responses to the key

issues impacting customers, such as price inflationary pressures and

availability of products

• The Chief Marketing, Data and Sustainability Officer provided regular

updates to ensure that the Board received feedback from our customer

listening sessions

• We delivered our highest ever Christmas customer satisfaction scores

both online and in supermarkets

• The Board continues to focus on delivering for customers in line with

ourpriorities in the first year of 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.

Welaunched 1,300 new products as we continued to deliver food

innovation to customers

– Loyalty everyone loves: we continue to advance our personalisation

capability, extending the range and reach of our offers as well as

creating more individual customer engagement. Our fifth annual Great

Fruit and Veg Challenge performed better than ever before with more

than 780,000 customers participating, an increase of 10 per cent

year-on-year, and over 130 million portions of fruit and veg purchased

– More Argos, more often: we remain focused on extending our range,

increasing desirability and enhancing our digital capabilities to drive

greater customer consideration

– 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

Customers

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Next Level Sainsbury’s – periodic

updates for colleagues

In addition to our seven Let’s Talk sessions which provided direct

dialogue between colleagues and the Board and Operating Board,

this year, we introduced our Next Level Sainsbury’s – periodic updates

for colleagues. To make it easier for colleagues to know the latest

company news, Simon Roberts and other Operating Board members

shared updates on significant events during the previous pay period

and updated colleagues on the key events coming up in thenext

period. Each update was accompanied by a short video message

toprovide the key messages to colleagues.

Colleague pay increase

At Sainsbury’s, our colleagues are the very heart and soul of our

business. We believe that happy well engaged colleagues deliver

great customer service and so, to support our frontline customer-facing

colleagues further, earlier this year we led the industry on pay again

- for the third year in a row.

Changes to our proposition and

management structures

In January, we spoke to colleagues about some changes to our

storesupport centres, our food services offer, cafés and our Argos

management teams, which we expect to result in the reduction of over

3,000 roles from across the business. The changes to our proposition

will drive cross-functional benefits, increasing our fresh food selling

space and improving customer proposition and product quality

alongside delivering cost savings. The changes to the management

structures in our Store Support Centres are to drive faster decision

making and execution whilst reducing costs.

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 We’re Listening colleague engagement survey,

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

• 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 inflationary pressures, safety and communication

• We have increased colleague pay by 58 per cent since 2018

• 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 announced that we will raise pay for our hourly paid colleagues by five

per cent in the year ahead, split into two separate increases to help manage

a particularly tough cost inflation environment.

• Further supporting colleagues with inflationary pressures, we continue

toprovide colleague discount uplifts in Sainsbury’s to 15 per cent every

Friday and Saturday, with a discount uplift in Argos from 10 to 15 per cent

every pay day

• We continue to deliver development and career growth opportunities for

colleagues through apprenticeship and graduate programmes which are

designed to equip individuals with the essential skills needed to thrive in

an ever-evolving job market

Colleagues

Engaging with our stakeholders continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Why they matter

We have over 92,000 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 incorporate investors’ views and

considerations within strategic decision-making.

What matters to them

• How consumer spending habits are evolving, particularly in general

merchandise but also in grocery, as inflationary pressures and higher

interest rates persist

• The outlook for grocery inflation given increased retailer cost pressures,

including National Insurance Contribution increases

• Whether there are signs of a change in competitive behaviour

andwhatthis means for industry dynamics

• The sustainability of Sainsbury’s grocery volume share momentum

andsources of market share gains, including our decision to grow

supermarket space

• Argos’s trading momentum and the outlook for sales and profit,

givenpressures on discretionary spend

• Understanding the source of and delivery of our cost savings targets and

therefore our ability to mitigate cost inflation, particularly inflationary

pressures in wage costs

• Providing confidence in profit guidance, including ongoing delivery

ofoperating leverage in Sainsbury’s and the impact of changes in

Argos’sprofitability

• Providing confidence in cash flow guidance, including capital expenditure

discipline, return on capital employed and the impact of working capital

• Providing clarity on capital allocation, including dividends and

sharebuybacks

• 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

• Real-time feedback from investors after meetings and presentations

• The Annual General Meeting

• Investor meetings with the Chair and the Chair of the Remuneration

Committee to discuss remuneration decisions

• Attendance at results presentations, key investor conferences and tours

of our stores

• Regular email and telephone contact with investors and analysts

• Dialogue with shareholder groups

• Regular engagement with investors on how we are delivering on our

Planfor Better, including specialist group meetings with subject matter

experts. Support from the Chair and Chair of the Corporate Responsibility

and Sustainability Committee on Plan for Better investor engagement

• Analyst attendance at the Board strategy meetings, providing insight

andperspective on the retail sector

• Throughout 2024/25, we engaged in investor roadshow activity in London,

Edinburgh, Paris, the United States, Canada and Dubai

Engagement outcomes

• In January 2025, the Chief Executive and Chief Financial Officer hosted

more than 30 investors in our Fosse Park store, showcasing our strategy

inaction

• In September 2024, the Operating Board hosted around 20 sell-side

analysts and advisors in our newly refurbished Cobham store, bringing

our More for More strategy - to reallocate space in our supermarkets

towards food and away from general merchandise and clothing - to life

• Ahead of the issuance of our unsecured fixed income bonds in January

2025, we held a number of meetings with debt investors as part of a bond

issuance roadshow

• The Board used its understanding of investor viewpoints when evaluating

and supporting strategic updates, ensuring strategic and financial

outcomes for shareholders

• The Board regularly received reports and updates from the Director

ofInvestor Relations, summarising key feedback from our principal

shareholders, to ensure that shareholders’ views inform decision-making

throughout the year

Shareholders

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Suppliers as partners

The success of our business relies on strong partnerships with our

suppliers, which help us offer quality food and innovative products

tailored to our customers’ needs. We are committed to building lasting

relationships with both our GFR and GNFR suppliers, and we’re proud

that suppliers ranked us the highest retailer for conducting trading

relationships “fairly, in good faith and without duress” in the Groceries

Code Adjudicator (GCA) Survey Results 2024.

One year into the Next Level Sainsbury’s strategy, we have continued to shift

our focus on supplier relationships to view them as partners. This change has

fostered open dialogue with suppliers, ensuring the continuous delivery of

high quality products and services for both our business and customers. This

partnership approach is crucial in addressing and improving the complex

environmental and social challenges we face, contributing to a more

sustainable food system in the UK.

To support our approach we announced that we are launching the

Sainsbury’s Egg Group, an industry first development group to support

egg farmers and protect supply for years to come. We will work in

collaboration with our three main egg packers and around 100 farmers,

not only to support continuous improvements in animal welfare but to

committing to always pay at or above the cost of production for eggs.

This commitment will give financial reassurance for our farmers and give

them the confidence to invest in future business advancements. The

group will also support our Plan for Better commitments, as those who

and an annual carbon footprint assessment.

Why they matter

We have 8,200 Goods For Resale (GFR) suppliers that supply

products for food, general merchandise and clothing, and over

1,600 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

• Publishing journals, newsletters and video content to ensure suppliers

have access to and can understand our Next Level Sainsbury’s strategy

• Providing free-to-air events such as our Supplier Trade Briefing event in

May 2024 from our Operating Board, Food Commercial Leadership team

and Category teams to ensure we are delivering key messages

• Hosting supplier networking sessions to give suppliers a dedicated opportunity

to spend more time collaborating in person with our category teams

• Taking part in annual, independent surveys which benchmarked us

against other retailers and highlighted areas for improvement; these

included the Advantage survey and the Groceries Supply Code ofPractice

supplier survey

• Clear requirements for suppliers through supplier sourcing manuals,

including our Plan for Better requirements

• Publishing our Modern Slavery Statement to ensure suppliers understand

the importance of preventing Modern Slavery and human trafficking to

our business

• Collaboration with agricultural suppliers on sustainability through action

groups and our Sainsbury’s Dairy Development Group and newly formed

Egg Group

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

• 97 per cent of direct suppliers rated Sainsbury’s positively for our

GSCOPcompliance

• In May 2024, we held our virtual Supplier Trade Briefing event, attended by

over 1,900 delegates where our Operating Board and Food Commercial

Leadership teams touched on the launch of our Next Level Sainsbury’s

strategy and how our suppliers can help drive its success. We also delivered

virtual category-specific updates across all our individual categories so

suppliers, no matter the size, could dive further into the strategic details of

how we can work together to all reach the ‘Next Level Sainsbury’s’

• Results day briefings were delivered to our key suppliers to ensure they

were kept up to date with business performance

• To support face-to-face engagement, in June and September we launched

category supplier networking sessions. The purpose of these was to give

suppliers a dedicated opportunity to spend time with our entire category teams

• We actively engaged with our supply chains to manage key short and

longer-term risks, focusing on building more resilient supply chains for

the future

• Market first collaborations such as the launch of conventional mushrooms

grown without peat. See page 36 for further information

• In March 2025, we announced our ten-year partnership with Cranswick to

set new standards in pig welfare and to provide more stability for the 170

farmers in the Sainsbury’s Pork Producer Group as they invest in farms,

factories and procedures to build resilience for the future.

• The Corporate Responsibility and Sustainability Committee received

updates during the year on the outcomes of the annual independent

surveys, which helped understand what suppliers value and prioritise

focus areas for the year ahead

• 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

• Our ongoing collaborative approach to our Plan for Better engagement

with our key carbon suppliers has resulted in a greater understanding of

progress towards net zero, 39.8 per cent of our Scope 3 emissions now

being covered by suppliers with either a 1.5 degree net zero target, or any

other 1.5 degree target approved by the SBTi, representing a 100 per cent

increase year on year in the number of suppliers with such targets

More information

More detail on how we work with our suppliers on sustainability can be found

onpage 16 and in our standalone Plan for Better report.

Suppliers

Engaging with our stakeholders continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 over 14 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

• Tackling food poverty for children, now and in the future, so every young

person can have a good start in life

• Impacting our communities at a local and national level

• Supporting communities internationally exposed to humanitarian disasters

How we engage

• Advocating for the extension of the Government’s Holiday Activities

andFood (HAF) programme alongside Comic Relief and Feeding Britain

• Launched a Seasonings Shuttle service for food club users, an initiative

that offered free herbs and spices throughout the months of May and

August to users at mobile food clubs in Greater Manchester and the North

East of England, run by The Bread and Butter Thing, ensuring communities

had access to good food without having to compromise on taste

• Ongoing partnerships with our food redistribution partners to address

theimmediate need for access to food within our communities

• 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

• We raised £33.8 million for good causes this year

• We celebrated 25 years of partnership with Comic Relief, raising over

£179million in total. Since the launch of our Nourish the Nation programme,

we have donated over £21 million to help those experiencing food poverty,

allowing us to donate over 31 million meals to those who need it most

• Through the programme, we donated over £8.9 million to Comic Relief

this year to help tackle food poverty for the communities at risk now

andin the future

• Through our Community Grant scheme, we supported 605 local good

causes this year, donating over £4 million to initiatives supporting our

local communities since 2021

• We’ve helped to create over 35,000 additional HAF places which will

continue to help children in future school holidays

• We supported FareShare’s pioneering Surplus with Purpose scheme,

providing funding at farm level which helped FareShare and our suppliers

‘rescue’ 271 tonnes of surplus fruit and vegetables in 2024 and provide it

to communities who need it most

More information

More information on our communities can be found on in our Plan for Better

report on www.about.sainsburys.co.uk

Communities

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 141,000

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

Government, parliamentarians and regulators

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 a wide range of issues of relevance

toour business sector

• Our Chief Executive was appointed as a Member of the Government’s

Food Strategy Advisory Board

• 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 proposed legislation

announced at Budget 2024; the Employment Rights Bill; the development

of new schemes to improve recycling, such as the Deposit Return Scheme

(DRS) and Extended Producer Responsibility (EPR); and the growing wider

burden on the retail sector including the changes to employer National

Insurance Contributions announced at Budget 2024

• We hosted a reception in the UK Parliament for MPs and Ministers in

November, alongside attending four national Political Party Conferences.

Both sets of activity provided opportunities for Sainsbury’s to discuss our

economic and societal contributions throughout the UK with politicians

and policymakers

More information

More information on our activities with government, parliamentarians

andregulators can be found in our standalone Plan for Better report

on www.about.sainsburys.co.uk

Why they matter

Non-governmental organisations (NGOs) play a key role

infacilitating collaboration by convening industry on a

pre-competitive basis to drive 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

addressing the market challenges we face to unlock progress.

This is particularly important as we progress our Next Level

Sainsbury’s strategy and Plan for Better and through our

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

Non-governmental organisations

How we engage

• Ongoing development of partnerships with NGOs

• Regular industry meetings and collaboration, supported by NGOs

• Participation in key benchmarks and disclosures

• Driving progress through our priority industry collaboration groups

(including Mondra, IGD and WRAP)

Engagement outcomes

• Our Chief Executive, Simon Roberts, became IGD President and will focus

on leading work to build a more sustainable food system. He has also

given a number of speeches including at the National Food Congress

• Supported IGD and Ernst and Young’s work on an industry climate

transition plan to champion a clearer action plan to support UK food

businesses to deliver on their net zero ambitions

• Met with signatories to the WWF’s Retailers’ Commitment for Nature

andsubmitted second year of data to WWF Basket Report to support

ourcommitment

• Worked with NGOs to unlock sector challenges including data definition

and measurement. See our standalone Plan for Better report for details

Engaging with our stakeholders continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Climate change and Task Force on Climate-related

Financial Disclosures(TCFD)

Introduction

With the impacts of climate change being felt around the world, we must

play our role in addressing the current, evolving and future climate risks faced.

We have a Science Based Targets initiative (SBTi) 1.5°C aligned target 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 track record in

reducing our own emissions and we are also engaging closely with our

suppliers to ensure we’re driving positive change across our valuechain.

No one business or organisation can tackle the challenge of climate change

in isolation. 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 to build resilience into our

food system and collaborate across our industry, such as The Institute of

Grocery Distribution (IGD), Waste and Resources Action Program (WRAP)

and the Consumer Goods Forum (CGF).

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 know 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 fifth year of reporting against the recommendations set by the

Task Force. We have complied with the Financial Conduct Authority Listing

Rule 6.6.6(8) 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. The Board continues to upskill

in this area and understands that responding to the impacts of climate change

involves everyone in the organisation. This year our finance and sustainability

teams delivered upskill sessions on specific climate-related topics, such as

Scope 3 emissions footprinting, for Non-Executive Directors and the senior

leadership team who attend the Plan for Better Acceleration Squad. We also

continue to upskill the wider commercial teams across the food and general

merchandise divisions on topic areas such as carbon emission reductions,

water and biodiversity.

See pages 71 to 73 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 and 3 GHG emissions (see page 113 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 92 to 121.

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 the Corporate Responsibility and Sustainability Committee.

Further information on the key climate-related discussions is on page 82.

Plan for Better Acceleration Squad

The Plan for Better Acceleration Squad 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 Acceleration Squad is chaired by the Chief

Marketing, Data and Sustainability Officer and has cross-divisional

representation at the senior leadership level. Climate risks are reviewed

annually at the Acceleration Squad 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 the Acceleration Squad. The Government Affairs team

provides regular updates to the Plan for Better Acceleration Squad, the

Operating Board and the 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 92 to 95, 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 value 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 consumer

preferences or climate-related regulation, such as carbon taxes.

Climate change also presents opportunities to build business resilience and

efficiency, create new products with a reduced environmental impact for

our customers and develop and invest in new technologies.

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 54).

Financial impact ranges

Impact Financial range (revenue)

High Greater than £125m

Medium £25m to £125m

Low Less than £25m

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 2025

Climate change and Task Force on Climate-related

Financial Disclosures(TCFD) continued

Strategy continued

Strategy a) Climate-related risks and opportunities identified over the short, medium and long term continued

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 35 to 36 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 Medium 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

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.

b) We are focusing on strengthening the offer and building revenue in our top supermarkets and will invest selectively where we can see a clear opportunity for returns with the costs

associated with the infrastructure are considered within our corporate plan. Further details are on page 39.

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. Our strategy supports our transition to

a low carbon economy and achieving our SBTi approved 2030 near-term and net zero targets, achieving net zero within our own operations by 2035 and in our

Scope 3 emissions by 2050.

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

Reduce food waste

Our Next Level strategy places focus on being First choice for food and sets an ambition to play a leading role in creating

amore sustainable food system in the UK. We want our customers to be able to access affordable, nutritious and diverse

food that forms part of a healthy and sustainable diet, particularly with more customers wanting to make sustainable

choices when it comes to food. We continue to support a healthy and sustainable portfolio with a focus on the development

and promotion of plant-rich foods, lower GHG animal protein and meat alternatives, to capture switching calories from

existing and new customers. We are learning from the success of our lower carbon Taste the Difference Aberdeen Angus

beef range to explore how we can develop lower carbon products across other supply chains. We continue to build a

culture of collaboration and long-term partnership with our suppliers to help establish a food system which supports

farmers and growers.

To reduce the emissions of our products, we became the first UK supermarket to introduce conventional mushrooms

grown without peat, reducing the carbon intensity of production by preventing extraction of peat from valuable habitats

important for carbon, nature and water. These mushrooms also have a day longer shelf life, helping to reduce food waste.

See our case study on page 36 for more details. We are currently also trialling low carbon fertilisers in our spring onion

and potato supply chains.

We continue to use recycled and alternative fibres in our garments, with a focus on projects relating to garment

durability to increase longevity of garments. We are still exploring 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 35 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 StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Key climate-related risk/opportunity How our strategy addresses the risks and opportunities identified

Investment in climate

changesolutions

Reduce carbon

emissions

Reduce food waste

We continue to invest in engineering innovation, energy efficiency and carbon reduction initiatives. Progress is

underway to further embed these costs into our corporate financial plans which are approved by the Board. These

initiatives are necessary to achieve our net zero targets.

When investing in our estate we work to prioritise 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, the removal of gas heating and

the removal of hydrofluorocarbon (HFC) refrigerant gas and replacement with natural alternatives – CO

. Furthermore,

wehave continued to increase on-site renewable electricity generation as well as increasing new-to-the-planet Power

Purchase agreements. We are working on transitioning our vehicle fleet to alternative fuel by 2035.

Examples of innovative technology that we have introduced include: 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 in-store refrigeration systems according to their lifecycles, ensuring that fridges

using HFC refrigerant gas are replaced with those that use natural CO

refrigerants, which are more energy efficient.

Wehave invested in technology to mitigate air infiltration, maintaining store temperatures. This feature is being rolled

out to a number of existing and new stores this year. We are also trialling next generation LED lighting technology and

we have an ongoing programme of installing solar photovoltaics (PV) panels across our estate increasing on-site

renewable electricity generation.

We are exploring opportunities to convert operational food waste to bio-fuels, alower carbon fuel alternative for our

logistics fleet, reducing reliance on the use of diesel. We announced that from March 2025, 30 heavy goods vehicle (HGV)

trucks will be powered with fuel directly from food waste. The diesel alternative is 100 per cent biomethane, a renewable

gas produced from the anaerobic digestion of unsold food.

We work closely with external academic partners to support us in making investments in climate change solutions.

Collaboration with 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. We are working

on a longer-term project to understand the potential impact of climate change across our estate and any resilience

measures and mitigations that may be required.

Ban on the sale of new petrol/

diesel cars and vans from 2035

leading to a reduction in

fuelsales

Reduction in

carbonemissions

Following the launch of our dedicated electric vehicle (EV) charging business, Smart Charge, in 2024, our customers can

now access 619 ultra-rapid EV charging bays across 75 Sainsbury’s stores to date.

To better understand the financial impacts of this transition risk we have performed quantitative scenario analysis on

our fuel category (see page 35 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 continue to work alongside key suppliers on sustainability issues with a focus on building supply chain resilience.

This includes engaging with suppliers to understand their climate adaptation plans and ensuring the protection of

human rights across our supply chain. Our scenario analysis also considers 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.

This year we completed a pilot to assess a variety of physical climate risks using geolocation farm data for our suppliers

in areas of geographically heightened risk.

More information on our qualitative assessment on our supply chain is detailed on page 34.

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 36 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.

We continue to use the Volumetric Water Benefit Accounting (Replenish) methodology to support us to reach our

operational water neutrality target through nature-based solutions. This year we trialled two additional projects in the

Beult and Cocker catchments which reduced flood risk, not only to our stores, but also to the surrounding areas. The pilot

successfully replenished water into local ecosystems for three stores – Cockermouth, Staplehurst and Headcorn.

To further our understanding of how material flood risk is to our estate we completed a pilot to quantify the impact

ofcoastal, river and surface water flooding at a property level across three financial parameters – revenue loss due

tobusiness interruption, infrastructure damage and contents damage.

More information on our qualitative and quantitative assessment on our own operations is detailed on page 34.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Climate change and Task Force on Climate-related Financial

Disclosures(TCFD) continued

Case study

Tadcaster store floodprotection

Tadcaster is one of our stores we have identified as being 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.

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 GHG

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 Acceleration Squad 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

We have worked with a third-party climate specialist to complete a pilot to

better understand the impact of physical climate risks on selected supply

chains in the following geographic areas of heightened risk – the UK, Spain,

Peru, South Africa and Morocco. Using geolocation data from over 500 of our

farms, we looked at five physical climate risks: flooding, heat, water stress,

wildfire and tropical cyclones, under three different climate scenarios

(RCP2.6, 4.5 and 8.5) up to 2050. Overall, the qualitative analysis indicated

that these supply chains are at high risk from heat, water stress and wildfire

under all climate scenarios and over all time frames. South Africa and the UK

are most exposed to flood risk, but the qualitative analysis indicated that

the risk is not expected to increase over time. We are working with our

third-party climate specialist to develop a climate risk dashboard which

shows the geographical spread of each climate risk and the exposure

according to the farm location which we intend to use to upskill our

technical and commercial teams to inform decisions about sourcing

locations or for onboarding new suppliers as part of our existing due

diligence processes.

Quantitative scenario analysis

Our own operations

Building on the qualitative analysis undertaken above we conducted a

pilotto quantify the potential impact from coastal, river and surface water

flooding over two climate scenarios (RCP 4.5 and 8.5) in 2030, 2050 and 2100

at a property level. We looked at three financial parameters: revenue loss

due to business interruption, content damage and damage to the building.

Overall, the potential total financial impact as a proportion of total retail

revenue is low across all scenarios and timeframes. The analysis helped to

identify the most exposed properties in our portfolio – 40 properties within

our estate make up over 70 per cent of total potential financial impact due

to flood events. We intend to use this analysis toinform the strategic

direction of flood mitigation strategies and prioritisation of stores in

collaboration with our property and facilities management teams.

Strategy continued

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 have assessed

the impact of climate change within high risk areas of our value chain as

well as within our own operations. Scenario analysis can act as a ‘stress test’

for our current business operations and value 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.

We continue to work 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

decision and targeted investments to minimise the impact of flooding.

We model the impact of future flood risk on our operations under four

climate scenarios (RCP

2.6, 4.5, 6 and 8.5) up to 2100. We assign each store

afloodability rating, measuring the frequency and flood depth to the risks

of flooding from rivers, seas and surface level water. Over ten 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 the

properties in our estate in the future. To further our understanding of how

material the impact of flood risk is for our estate we completed a pilot to

understand the potential financial impacts to help 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.

(1) A Representative Concentration Pathway (RCP) is a GHG concentration trajectory

adopted by the IPCC and refers to different scenarios and actions that can be taken

tomanage climate change over time.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Our products and value chains

Within our value chain we annually perform 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 a 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 products

inthe meat, fish and poultry category. For fuel we have assumed a rapid

uptake of battery electric vehicles leading to a 25 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

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

Meat, Fish and

Poultry

Clothing Fuel

Meat, Fish and Poultry

• Continue to establish long-term contracts with key suppliers and work with them to

reduce their GHG emissions, for example, joint plans, supplier targets, animal health

and welfare and feed efficiency, hosting action groups covering biodiversity and water,

soil and energy and carbon

• Continue to explore development of lower GHG emission animal protein within existing

product (having launched a range in 2023 from our integrated beef supply chain delivering

our Taste the Difference Angus Aberdeen lower carbon beef range) and promotion of

meat alternatives to capture switching calories from existing and new customers

• Engagement with traders in Brazil to explore options to source deforestation- and

conversion-free soy within our supply chain

Clothing

• Increase the use of recycled and alternative fibres

• Explore options for circularity programmes

• Signatories of Textiles 2030, which aims to reduce the aggregate water footprint of new

products sold by 30 per cent

• Continue to drive progress towards our target for 100 per cent of our cotton to be

sourced to an independent standard by the end of the 2025 calendar year. This year, we

are collaborating with our key clothing and home textiles suppliers to achieve

traceability to farm level

• ‘Test and trial’ projects focusing on durability in clothing blueprints to increase

longevity of garments

Fuel

• Smart Charge, powered by Sainsbury’s, our ultra-rapid EV charging service now has 619

charging bays across 75 Sainsbury’s stores, helping to address the shortage of electric

chargers in the UK. From this year, customers could be rewarded with Nectar points for

charging their electric vehicles, the first electric charging service to offer customer

loyalty benefits

• We continue to develop decarbonisation roadmaps for our Scope 3 hotspots and

investigate lower carbon fuel offerings at our petrol filling stations

Regulation £100m to

£150m

revenue

lossto MFP

category in

isolation

Overall

opportunity

tobusiness

post-

mitigations

N/A £1,200m to

£1,300m revenue

loss to fuel

category in

isolation

Smaller revenue

loss risk/potential

opportunity to

business

post-mitigations

Changes in

consumer

preferences

£300m to

£350m

revenue

lossto MFP

category in

isolation

Overall

opportunity

tobusiness

post-

mitigations

£30m to

£35m

revenue

loss to

clothing

category in

isolation

a) Risks should be considered in isolation as the complex interrelationship between multiple risks has not been considered.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Climate change and Task Force on Climate-related Financial

Disclosures(TCFD) continued

Case study

Conventional mushrooms grown

withoutpeat

In October 2024 we became the first UK supermarket to launch

conventional mushrooms grown without peat, removing 20,465

tonnes of peat from mushroom production each year. This change

tothe growth process reduces the carbon intensity of mushroom

production and leaves peat in the ground which will help us protect

valuable habitats important for carbon, nature, and water.

Strategy continued

Strategy c) Resilience of strategy, taking into consideration different climate-related scenarios, including a 2°C or lower

scenariocontinued

Quantitative scenario analysis continued

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 emissions) as a result of no

global action having been taken to reduce emissions, leading to extreme physical risks manifesting in the long term and a 1.5°C (low emissions) 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 emissions) 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

Produce

Cotton Coffee Tea • Engage: continue to work closely with oursuppliers

through working groups and dedicated forums to better

understand supplier climate adaptation plans and how

sustainability risks, including climate, associated with

growing locations are being addressed, for example,

engaging with factories which have low performance in

water conservation on their water resilience plans

• Explore supply chain adaptation options

withsuppliers: higher altitude locations, lowerflood

risk areas, vertical farming, glass growing structures,

installing reservoirs, drainage channels and using

drought and temperature resistant crop strains

• Investment: prioritising support for suppliers where we

have long-term contracts on areas ofrisk and working

with them to reduce the climate-related risks such as

developing new supply chains and support where cost

ofsustainability is a challenge

• Certification: sourcing of sustainable crops through

relevant certification standards, including Fairtrade and

Rainforest Alliance, expanding to instant coffee

andexploring other types of cotton

• Human rights: work towards a transition to net zero is

just and equitable for the communities we source from

Heat events £35m to £40m

revenue loss

tocrops

£55m to £60m

revenue loss

tocrops

£45m to £50m

revenue loss

to crops

£30m to £35m

revenue loss

tocrops

Labour capacity N/A N/A £45m to £50m

revenue loss

to crops

£30m to £35m

revenue loss

tocrops

Drought £5m to £10m

revenue loss

tocrops

£0m to £5m

revenue loss

tocrops

£0m to £5m

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

£5m to £10m

revenue loss

to crops

£0m to £5m

revenue loss

tocrops

Key sourcing

locations

Spain

Benin

Brazil

India

USA

Bangladesh

(manufacturing)

Brazil

Columbia

Honduras

Peru

Vietnam

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 169). 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. In January 2024 we announced

thephased withdrawal of the Core Banking business from the Group. The Banking segment is included within the consolidated accounts for the year ended

1March 2025; however, the majority of this is separately presented as discontinued operations and is classified as held for sale as at the balance sheet date.

Given the size of the Bank in relation to the Group, we deem the climate-related impacts to be immaterial. There has been no change to the Bank’s exposure

to the impact of climate-related risks and opportunities since the prior year which remains limited as the Bank does not have a mortgage portfolio or

undertake any corporate lending.

Case study

UK grown Brassicas

One of the ways we mitigate flood risk is to have multiple growing

locations for any given crop. For example, for UK grown Brassicas we

use three distinct areas – Cornwall, East Anglia and Scotland. These

areas have similar growing conditions, ensuring consistency of both

quality and supply, but are far enough apart to reduce the risk of all

three areas simultaneously suffering from a severe weather event.

This allows each area to act as a contingency for the others if

required, reducing the risk of shortages and ensuring resilient supply.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Risk management

Risk management a) Processes for identifying and assessing

climate-related risks

Environment and social sustainability is one of our principal risks and

incorporates our climate-related risks as well as social sustainability risks.

See page 58 for more detail.

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, Scope 2 and Scope 3 targets and consideration of physical and

transition climate risks impacting our operations and value 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 Acceleration Squad 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 Acceleration Squad. These risks are considered

intandem with other business-related risks (such as 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 Acceleration Squad has cross-divisional

representation at the senior leadership 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 58.

The risk management process for climate is in line with the business-wide

risk management framework described on pages 54 to 62.

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. More information about our sustainability

metrics methodology is published in our annual Data Book which can be found on our corporate website.

Plan for Better commitment Metric Methodology

Reduction in

carbonemissions

Absolute GHG emissions within our own

operations (tCO

Absolute, market-based, Scope 1 and 2 GHG emissions in the financial year

forSainsbury’s Group, supported by third-party South Pole and follows the

GHGProtocol. This metric is verified by ERM CVS (providing limited assurance

underISAE3000).

Electricity which comes from renewable

sources (%)

The amount of renewable electricity 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. This metric

isverified by ERM CVS (providing limited assurance under ISAE 3000).

Absolute Scope 3 GHG emissions (tCO

e) Near-term (2030) target boundary includes emissions from the material categories:

1a) purchased goods for resale, 4) upstream transport and distribution and 11a) our

customers’ use and consumption of the products we sell and follows the GHG protocol.

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°C net zero targets

approved (% of emissions)

Suppliers with approved SBTi 1.5°C aligned net zero targets recorded on the SBTi

platform. This is considered the gold standard for GHG emission targets.

Suppliers with any 1.5°C target approved

bythe SBTi (% of emissions)

Suppliers with any approved SBTi 1.5°C aligned targets recorded on the SBTi platform.

Reduction in water use Absolute water usage within our own

operations (m

)

Absolute water usage in the financial year for both Sainsbury’s and Argos, supported

by third parties WaterScan and South Pole.

Healthy and

sustainable diets

Healthy and Better for you sales tonnage

asa proportion of total sales tonnage (%)

Food sales tonnage of Healthy 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 and Better for you defined using a nutrition criteria tool, including

criteria from the Eatwell Guide which is lower in GHG emissions.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Climate change and Task Force on Climate-related Financial

Disclosures(TCFD) continued

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

Plan for Better commitment Metric Methodology

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 during the

financial year. We follow the WRAP recommended calculation as follows: food waste

/(tonnes food product sold as intended + tonnes food waste + tonnes food surplus

sent to other destinations).

Nature Soy independently certified - Credits /

Mass-Balance / Segregated/ Low risk origin

(%)

Sustainably sourced soy tonnage during the 2024 calendar year as a percentage of

total soy tonnage, as calculated by third party 3Keel.

Palm oil sourced to an independent standard

- Mass-Balance / Segregated / IP (%)

Sustainably sourced palm oil tonnage during the 2024 calendar year as a percentage

of total palm oil tonnage, 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

the 2024 calendar year. Sustainability assessments were carried out by third party

Track Record Global Ltd.

Cotton sourced to an independent standard

- Mass-Balance / Fairtrade / Organic /

Recycled (%)

Cotton tonnage independently sourced and certified by third party standards as a

percentage of total cotton tonnage sold during the financial year. This metric is

verified by ERM CVS (providing limited assurance under ISAE3000).

Woodland trees planted against January

2020 1.5m commitment (number)

Total number of trees planted in the financial year through partnership with the

Woodland Trust.

Manmade cellulosic fibres sourced to an

independent environmental standard (%)

Percentage of own brand SKUs which contains environmentally sourced manmade

cellulosic fibres as a percentage of total own brand SKUs containing manmade

cellulosic fibres in the financial year.

Leather tonnage from tanneries certified to

a minimum of bronze level by the Leather

Working Group (%)

Leather tonnage from own brand products sourced from tanneries which have a

bronze or above accreditation from the Leather Working Group as a percentage of

total leather tonnage sold during the financial year.

Volumes of cocoa bean equivalent sourced

to an independent standard - Mass-Balance /

Segregated (%)

Independently sourced cocoa bean equivalent tonnage during the 2024 calendar year

as a percentage of total cocoa bean equivalent tonnage, as calculated by third party 3Keel.

Volumes of coffee sourced to an

independent standard (%)

Independently sourced coffee tonnage from own brand products as a percentage

oftotal coffee tonnage sold during the 2024 calendar year where coffee is the

mainingredient.

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

e Absolute GHG emissions for Scopes 1, 2 and 3 are included within our climate-related metrics table on pages 40 and 41.

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 ten 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 cover over 23 per cent of total revenue.

Weperform scenario analysis for the risks we have identified as most material to our business outlined in the

strategy section on pages 35 and 36.

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

transition 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 section on pages 35, 36 and note 17 of the financial statements on

page 169.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Metric category

Unit of

measurement Narrative

Capital deployment

Amount of capital

expenditure, financing

or investment deployed

towards climate-related

risks and opportunities

Reporting

currency

This year, through Graphite (our energy efficiency investment programme), we have spent £19 million focused on

thedecarbonisation of heat, increasing the amount of renewable energy, energy efficiency and the removal of HFC

refrigerant gas. Examples over the year have included the installation of new solar PV systems, next generation LED

lighting innovation, refrigeration and heating, ventilation and air conditioning efficiency. We continue to focus on

engineering innovation, which supports in identifying the latest technology to support our decarbonisation roadmap.

Wehave focused on controller trials, enhanced metering, remote monitoring and thermal energy storage control

strategies, along with continued advancements in store aerodynamic design and methods for reducing infiltration

impact and recovering energy from the air.

In addition to this capital investment we continued to invest in replacing in-store refrigeration systems according

totheir lifecycles as part of our store maintenance programme, ensuring that fridges using HFC refrigerant gas are

replaced with those that use natural CO

refrigerants, which are more energy efficient. We also made a significant

investment across ten of our depots by installing electric plug points for our rigid fleet, enabling our full fleet of 450

rigids to charge their refrigeration units via 100 per cent renewable electricity whilst stationary at our depots. We

continue to trial using electric vehicles in our Grocery Online (GOL) operations testing different brands to determine

which work best operationally. We now have three stores with fully electric GOL fleets and dedicated charging points

intheir loading areas and this year, in our Christchurch store, started a trial leveraging our Smart Charge chargers in

customer car parks to eliminate the need for dedicated chargers to optimise equipment.

We invested £25 million in Smart Charge rollout in 2024/25 and looking ahead, we will focus on building EV charging

revenues in our top supermarkets.

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 directed towards the removal of natural gas heating, replacing this with RIHC

systems, using the refrigeration systems to provide all heating and cooling requirements. This is aligned with the

replacement of refrigeration systems, considering equipment lifecycles. Through this process we also remove

refrigeration systems using HFC refrigerant gas, replacing it with CO

. We have fully mapped our estate, allowing us

to identify which sites need to be invested in and when, including options to optimise reductions in emissions. We

continue to learn from the successes of our new stores and ensure that our store rollout model uses similar technology.

For further details see page 42.

Engineering innovation is at the heart of our decarbonisation programme and builds up new, innovative technology

to be rolled out into both new and existing store developments. This includes work to review thefuture of

refrigeration, energy efficiency and controls optimisation and heat recovery efficiency.

Internal carbon prices

Price on each tonne of

GHG emissions used

internally by an

organisation

Price in

reporting

currency, per

MT of CO

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. We do not currently use an ICP, but it may be something we choose to

adopt in the future.

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. To improve the accuracy of our Scope 3

emissions footprint we are working with some of our key suppliers to obtain primary emission factor data and a

third-party service provider to improve the accuracy and specificity of data relating to our own brand products.

More information can be found in the Scope 3 section on page 40.

Remuneration

Proportion of executive

management

remuneration linked to

climate considerations

Description Our Plan for Better metrics, which includes climate-related metrics, form part of the Executive Directors’ long-term

incentive arrangements.

Further details can be found on page 113.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Climate change and Task Force on Climate-related Financial

Disclosures(TCFD) continued

Metrics and targets continued

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

Reduction against

baseline (%)

2018/19 (baseline) 949,744 —

2019/20 840,680 11.5%

2020/21 81 7,4 20 13.9%

2021/22 746,681 21.4%

2022/23

461,692 51.4%

2023/24 458,973 51.7%

2024/25 448,734 52.8%

The significant reduction in emissions in 2022/23 was due to our move to 100 per cent renewable electricity in 2022.

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 123

which provides a more detailed breakdown of our Scope 1 and 2 GHG emissions. 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. We remain committed to achieving our near-term target of reducing our Scope 1 and 2 GHG emissions

by68 per cent by 2030. We set out our strategy and progress to date on our transition to net zero within our own operations on pages 42 to 44.

Scope 3

Baseline

2018/19 tCO

Scope 3 GHG target boundary emissions 25,652,904

Forest, Land and

Agriculture (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

As we continue to work to improve the accuracy of our Scope 3 footprint this may result in a future restatement of our baseline and resubmission of our net zero targets to SBTi (see below for

more information).

Our 1.5°C net zero SBTi approved target is to reduce our Scope 3 near-term boundary FLAG emissions by 36.4 per cent and our energy and industrial emissions

by 50.4 per cent by 2030. Our Scope 3 near-term target boundary covers emissions from the following material categories: 1a) purchased goods for resale; 4)

transport; and 11a) consumer use.

Our GHG emissions footprint continues to be calculated using industry average carbon emission factors which enables us to identify our most carbon-intensive

products and the suppliers which constitute the top 80 per cent of our Group emissions. We continue to actively work towards an aligned industry approach

to measure supplier specific emissions as this is the most effective way to track emissions reductions within our own value chain.

We are continuously improving the accuracy of our Scope 3 footprint and we recognise that without accurate supplier-specific primary emission factor data,

reporting actual emission reductions is extremely challenging. This year we have commenced a programme of work to improve the accuracy ofthe data we

use in our emissions footprint. We identified several workstreams to improve the quality of our data, including engaging with some of our strategic suppliers

within fuel and protein to obtain primary emission factor data. We are also working with a third-party data provider to develop more specific secondary

emission factors, at the ingredient level, in our own brand composite products. We are still developing principles around data quality and a system to assess,

capture and embed primary data into our footprint. We continue to collaborate with other retailers and WRAP on reporting Scope 3 emissions which includes

accurately and transparently reporting emission reductions.

We are engaging directly with our strategically important suppliers to understand their carbon reduction roadmaps so that we can more accurately model

realistic emission reductions forecasts within our value chain. We continue to request our suppliers to disclose on either Manufacture 2030 or HIGG and our

key suppliers to set SBTi approved targets.

We recognise we cannot solve the challenges relating to reducing Scope 3 emissions on our own and are therefore committed to working at the industry level

to find a solution. We continue to participate in industry-wide working groups such as the Institute of Grocery Distribution (IGD) to help build resilience in our

food system. In July 2024 the IGD, together with partners across the food chain including Sainsbury’s, launched a transition plan to help the UK food system

achieve its net zero ambitions. More information on our Scope 3 strategy can be found in our Climate Transition Plan section on pages 43 and 44.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 are governed by the Plan for Better Acceleration Squad with oversight from the Corporate Responsibility and Sustainability

Committee. We have set SBTi approved GHG emissions reduction targets covering all scopes and timeframes. We include sustainability metrics within the

long-term remuneration targets for Executive Directors (see page 113 for more details). We have reviewed the relevance of our Plan for Better metrics and

have updated the below table to show the current metrics that we are reporting performance against. We publish all of our sustainability metrics, including

historical metrics, in our annual Data Book which is published on our corporate website.

Plan for Better

commitment

Metric

Baseline

Results

Target2023/24 2024/25

Reduction in

carbonemissions

Absolute GHG emissions within our own operations

(tCO

949,744 tCO

2018/19

458,973 tCO

e 448,734 tCO

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

e) 25,652,904 tCO

2018/19

N/A N/A 36.4% FLAG and 50.4% energy/

industry emissions reduction

by 2030/31

72% FLAG and 90% energy/

industry emissions reduction

by 2050/51

Suppliers disclosing through Manufacture 2030 or

HIGG (% emissions)

43.8% 2022/23 57.2% 53.0% N/A

Suppliers with SBTi 1.5°C net zero target approved

(%emissions)

<2% 2022/23 6% 11.6% 80% of emissions by 2025/26

(LTIP target only)

Suppliers with any 1.5°C target approved by the SBTi

(% of emissions)

N/A 31.9% 39.8% 80% of emissions by 2025/26

Reduction in

wateruse

Absolute water usage within our own operations (m

) 3,224,000 m

2018/19

2,621,341 m

2,562,660m

Water neutral 2040/41

Healthy and

sustainable diets

Healthy and Better for you sales tonnage as a

proportion of total sales tonnage (%)

82.0% 2021/22 80.9% 81.9% 85% 2025/26

Reduction in

foodwaste

Food waste to anaerobic digestion as a percentage

offood handled (%)

0.728% 2019/20 0.642%

0.617% 0.364% 2030/31

Nature Soy independently certified - Credits / Mass-Balance /

Segregated/ Low risk origin (%)

5.8% 2019 88.3% 96.7% 100% 2025

Palm oil sourced to an independent standard - Mass-

Balance / Segregated / IP (%)

99.1% 2019 100% 100% 100% 2025

Timber sourced to an independent sustainability

standard (%)

58.2% 2019 92.9% 98.0% 100% 2025

Cotton sourced to an independent standard - Mass-

Balance / Fairtrade / Organic / Recycled (%)

76.0% 2019 97.4% 98.2% 100% 2025

Woodland trees planted against January 2020 1.5m

commitment (number)

493,750 trees

2019/20

1,292,583 1,425,461 1,500,000 (cumulative) 2025/26

Manmade cellulosic fibres sourced to an independent

environmental standard (%)

95.3% 2023/24 95.3% 91.4% 100% 2025

Leather tonnage from tanneries certified to a

minimum of bronze level by the Leather Working

Group (%)

96.4% 2023/24 96.4% 98.9% 100% 2025

Volumes of cocoa bean equivalent sourced to an

independent standard - Mass-Balance / Segregated

(%)

47.0% 2023 47.0% 65.4% 100% 2025

Volumes of coffee sourced to an independent

standard (%)

64.0% 2024 N/A 64.0% 100% 2025

a) 2023/24 food waste to humans result restated from 6,345 tonnes to 5,637 tonnes due to data correction and change of methodology.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Sainsbury’s climate transition plan within the TCFD section

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

(GHG) emissions aligning to a 1.5°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,

with many of our Plan for Better commitments supporting ourcarbon

reduction strategy (see the Plan for Better report for details).

In line with the SBTi guidance, our climate transition plan does not include

thepurchase of carbon credits to meet our near-term or long-term reduction

targets. We acknowledge the potential role of carbon credits to neutralise

residual emissions in support of our net zero ambition and so we intend to

investigate and understand this opportunity in line with developing best practice.

Driving progress

Reduction targets from

baseline

Absolute emissions

target tCO

2018/19 baseline 949,744

2024/25 52.8% 448,734

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 GHG emissions in our own

operations (Scope 1 and 2) over the last 18 years, reducing our emissions

by52.8 per cent from our 2018/19 baseline. We have implemented projects

through our ongoing Graphite investment programme, now in its 15th year,

which reduce energy consumption and GHG emissions and improve energy

efficiency. Examples include a move to 100 per cent LED lights across

ourestate, replacement of hydrofluorocarbon (HFC) refrigerant gases

withnatural alternatives, electrification of our heating and moving to

100percent renewable electricity since 2022 and our commitment to

long-termpurchasing of renewable energy from new-to-the-planet

PowerPurchase agreements.

We continue to collaborate with Imperial College on our transition roadmap

for our entire estate and direct operations, which provides modelled scenarios

up to 2035. We continue to commit capital investment to support our roadmap

to net zero by 2035 across own operations. Progress is underway to further

embed capital allocation into our corporate financial plan which is approved

by the board.

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

52.0% • We are working on transitioning our vehicle fleet to

alternative fuel by 2035

• Moving the majority of company cars to electric and hybrid

• Three stores with fully electric GOL fleets

• Further GOL trials including leveraging Smart

Charge for GOL EV fleet in Christchurch store

• Participation in eFreight 2030 consortium to

test and trial electric HGVs and chargers

Refrigerants:

Switch to natural

refrigerants

29.4% • Replacing our remaining refrigeration systems that use

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

• Ongoing removal of HFC refrigerant gas

through our annual refrigeration replacement

programme, replacing this with CO

• We invested across ten of our depots this year,

installing electric plug points for our rigid fleet,

enabling our full fleet of 450 rigids to charge

their refrigeration units via 100 per cent

renewable electricity whilst stationary at

ourdepots

Heating:

Electrification of heat

18.5% • Remove the use of gas heating and replace with our RIHC

and heat pumps programme

• Continued replacement alongside refrigeration

replacement schemes

Other:

Business travel and other

0.1%

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, invest in on-site generation, secure long-term Power Purchase agreements with new-to-the-planet

wind farms and implement energy efficiency programmes to support the switch to electrification of heat and transport as well as mitigating costs. This year we

launched our eighth wind farm Power Purchase agreement to our portfolio. The new wind farm, featuring seven turbines, adds 33.6 MW of renewable capacity to

the grid and is expected to generate 92,000 MWh of electricity annually, covering approximately three per cent of Sainsbury’s annual energy needs. Wind energy

makes up over 30 per cent of our electricity sourcing, with the remainder from other 100 per cent renewable sources.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 255

suppliers making up 80 per cent of the emissions covered by our

2030 Scope 3 target. The SBTi has approved our Scope 3 targets, which are in

line with limiting global temperature increases to 1.5°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.

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

• Support suppliers to understand, develop

and deliver their own emission reduction

plans and work to understand opportunities

for supply chain collaboration that

accelerates progress

• 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

• Drive progress towards our ambition to zero

deforestation- and conversion-free in own

brand products 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

• ‘Making it Happen’ action groups covering carbon

• Launched action group with our High Environmental Impact

suppliers across livestock, crops and fish supply chains. Began

incorporating sustainability data and insights within regular

conversations with these high impact suppliers

• Launched new Egg Group, a first for the UK retail sector, to

support our egg farmers, ensuring a stable supply of eggs and

improving sustainability

• Continued collaboration with The Land App and the UK Centre for

Ecology and Hydrology: to date, 264 farmers in our supply chain

have used Land App to survey their farms, supporting the

establishment ofbiodiversity baselines and which can be used

tosuggest possible landmanagement plans

• Published policies on high risk deforestation materials including

Cocoa, Coffee, Non-Timber Forest Products and Pulp, Paper and

Fibre-based requiring certified products supporting sustainable

forest management and ensuring 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

• 612 suppliers disclosed on either M2030 or HIGG platforms, which

provide data insights onwhere collaboration or support is needed

to overcome barriers to climate action and provide insights on

supplier maturity in emissions reduction, whilst also supporting

supplier sites to improve their own environmental performance

• Played an active role in the British Retail Consortium (BRC) Mondra

Coalition working to improve the measurement and management

of the food sector’s Scope 3 emissions

• Worked with suppliers in product development e.g.conventional

mushrooms grown without peat, Vet Vision AI technology and

vacuum packlamb mince

• Ten-year partnership with Cranswick which alongside improving

pig welfare standards, aim to offer Taste the Difference pork that

meets net zero by 2029 and by Sainsbury’s fresh pork that meets

net zero by 2030

Healthy and

sustainable

diets

N/A

• Making it easier for customers to make

healthy, affordable, accessible and

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 outperformed the market in volume growth in multiple

categories including produce, frozen fruit and veg and frozen

meat-free products

• Over 100 of our Aldi Price Match choices were plant-based,

including our Unsweetened Soya Drink, and 30 were across fish

and seafood

• We have worked to independently evaluate initiatives to help

support healthier purchases in collaboration with The Institute

ofGrocery Distribution (IGD)

• Continued to advocate for sector change andalignment on

definitions of healthier and sustainable choices

Healthy and sustainable diets does not have its own emissions footprint as it covers food products in general with the emissions captured by the rows above.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Value chain – Scope 3 – net zero by 2050 continued

Emission reduction targets from our 2018/19 target boundarybaseline continued

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

• Continue to explore carbon reduction opportunities with

our suppliers

• Remain a 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

• Continue to develop decarbonisation

roadmaps for our Scope 3 hotspots and

investigate lower carbon fuel offerings at

our petrol filling stations

• Expanded Smart Charge, powered by Sainsbury’s,

ourultra-rapid EV charging service which now has 619

charging bays across 75 Sainsbury’s stores

Acknowledging the uncertainties for Scope 3

By definition, Scope 3 is beyond our direct control. This 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 and farmer access to appropriate funding 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 (incl. 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°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°C net zero science-based targets (to match our own), setting this as an expectation for our own

brand food suppliers through sourcing manuals

• Create supplier working groups focused on key climate-related topics, projects relating to efficiency and innovation in

products and services

• Support our key carbon suppliers in hotspot areas to create decarbonisation roadmaps and take actions to reduce their emissions

• Develop incentive initiative schemes for suppliers

• Engage with and encourage suppliers to 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

• Engage clearly with government on our key advocacy priorities

• Drive progress through our priority industry collaboration groups (including Mondra, IGD and WRAP)

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 acknowledge that our transition plan

will be an iterative document and will annually report progress against our plan within our TCFD disclosure.

Sainsbury’s Climate Transition Plan within the TCFD section continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Key performance indicators

Operational

Food volume growth (%)

ahead of the market

Definition: Growth in Sainsbury’s Grocery volume market share over 52

weeks as measured by Kantar.

+35bps

vs 2023/24 base

Customer satisfaction (score)

versus 2023/24 base

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?

Maintained

vs 2023/24 base

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.

Colleague engagement (score)

versus 2023/24 base

Definition: Colleague engagement score out of 100 from the internal,

annual ‘We’re Listening’ survey in response to the question: “How happy are

you working for Sainsbury’s”.

(2)

vs 2023/24 base

2024/25 2024/25

2024/25

12.84

2023/24 2023/24

2023/24

12.49

2022/23 2022/23

12.21

2021/22 2021/22

12.22

Food Volume Growth (%)

Customer satisfaction

Colleague engagement score

Carbon Scope 1 and 2 - ahead of target

Carbon Scope 3 - progress during year, but behind target

Plastic - low end of target range

Food waste - progress during year, but behind target

Healthy and sustainable diets - progress during year, but behind target

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Retail free cash flow (£m)

£1.6 billion over three years to 2026/27

Definition: Net cash generated from retail operations, after cash capital

expenditure and after investments in joint ventures and associates. Refer to

note A2.1 on page 212 for reconciliation.

£531 million

cumulative cash

Return on capital employed (%)

versus 2023/24 base

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 214.

forreconciliation.

+70 bps

vs 2023/24 base

531 9.0

639 8.3

645 7.6

503 8.4

Profit leverage from sales growth (%)

Retail underlying operating margin versus 2023/24

Definition: Profit leverage measured through an improvement in retail

underlying operating margin. Calculated as retail underlying operating

profit as a percentage of retail sales excluding fuel excluding VAT.

+10 bps

vs 2023/24 base

Cost savings (£m)

£1 billion over three years to 2026/27

Definition: Total cost savings as a result of identified initiatives excluding

Sainsbury’s Bank.

£349 million

cumulative savings

Financial

349

347

363

553

2024/25

2023/24

2022/23

2024/25

2023/24

2022/23

2021/22

2024/25

2023/24

2022/23

2021/22

2024/25

2023/24

2022/23

2021/22

Retail underlying operating margin (%) Cost savings (£m)

Retail free cash flow (£m) Return on capital employed (%)

Key performance indicators continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Financial review

Growth in sales and operating profit

have driven continued strong cash

generation, enabling continued

investment in the business in line with

our Next Level Sainsbury’s plan while

maintaining a strong balance sheet.

We have also delivered stronger cash returns to shareholders, including the

completion of a £200 million share buyback programme, and have additionally

committed to a further programme of at least £200 million in 2025/26.

Grocery sales increased by 4.5 per cent, reflecting strong volume growth

despite inflationary pressures on prices. With the first full year of our Nectar

Prices offering, we continued to prioritise value for customers, keeping

inflation below cost to protect value, with a particular focus on those

products customers buy most often. This has led to an increase in basket

sizes, and improved value perception year-on-year.

Argos faced a challenging market as customers continued to reduce

discretionary purchases, compounded by wetter summer weather in the first

half of the year, resulting in a 2.7 per cent reduction in sales. However, sales

recovered in the second half, exiting the year with Q4 sales growth of 1.9 per

cent year-on-year.

Overall, our Group sales (including VAT) increased by 1.0 per cent

year-on-year as a 3.1 per cent increase in retail sales (including VAT,

excluding fuel) offset an 8.9 per cent decrease in fuel sales (including VAT),

driven by reduced demand and lower average fuel price.

Retail underlying operating profits increased 7.2 per cent, driven by higher

grocery volumes and cost savings from our save and invest to win programme,

offsetting lower profits at Argos.

Our Save and invest to win programme delivered £349 million of savings in

its first year of the three-year programme. This was driven by enhanced

productivity from end-to-end initiatives and high returning investments in

technology and automation.

Financial Services underlying operating profit was £30 million, up 3.4 per

cent, driven by cost reductions from last year’s fixed asset write-off and

proactive management actions to lower operational costs. This was partially

offset by lower income as a result of the decision to exit Core Banking and

increased funding costs.

We announced in January 2024 that we would exit Core Banking and that

futureFinancial Services activities would be run as a distributed model.

Asaconsequence, we have presented the results relating to Core Banking,

ATMoperations, Argos Financial Services cards and mortgages as discontinued

operations. Underlying operating profit from discontinued operations was

£37million (2023/24: £47 million). This only includes those costs that can be

directly attributed to those assets and liabilities which are to be sold, with the

remaining central costs allocated to continuing operations. However, we

anticipate these costs will decrease as we right size our support functions.

We are making excellent progress in the transition to a distributed model.

We sold our ATM estate and partnered with NoteMachine; the transition is

set to complete by May 2025 ensuring that our customers will continue to

have access to free cash services. Our Core Banking products will be transferred

to NatWest during the first half of 2025. The transfer of beneficial ownership

of Argos Financial Services cards to NewDay was finalised on February 28, 2025,

with the legal title and migration expected to be completed in the first

quarter of 2026, supporting Argos purchases.

Total underlying profit before tax of £761 million (2023/24: £701 million), of

which £724 million related to continuing operations (2023/24: £654 million)

was up by 8.6 per cent year-on-year. This was driven predominantly by

higher retail underlying operating profit, partially offset by an increase in

net finance costs.

Non-underlying costs reduced £47 million to £377 million (2023/24: £424

million) and include; discontinued operations of £274 million for Financial

Services loss on disposal and phased withdrawal and £103 million relating to

continuing operations. This decrease year-on-year was primarily driven by

the gains from property related transactions such as the Hendon mixed use

development site.

Total statutory profit before tax increased £107 million year-on-year to

£384million (2023/24: £277 million). Group statutory profit after tax was

£242 million (2023/24: £137 million) with £420 million relating to continuing

operations (2023/24: £308 million).

Underlying basic earnings per share increased to 23.1 pence (2023/2024: 22.1 pence),

reflecting the increase in underlying operating profit and despite a higher

tax rate. Basic earnings per share increased to 10.4 pence (2023/24: 5.9 pence).

Working capital generated £98 million, driven by an increase in payables

whilst maintaining a flat inventory position. Retail free cash flow generation

remained strong at £531 million (2023/24: £639 million) although declined by

£108 million year-on-year due to the reduction in working capital inflow and

higher capital expenditure. We returned the majority of our retail free cash

flow generated to shareholders following the completion of the share

buyback programme announced in April 2024.

Bláthnaid Bergin

Chief Financial Officer

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Financial review continued

Non-lease net debt increased by £64 million, driven primarily by £52 million

of costs incurred in relation to our strategic review of Financial Services as

part of the phased withdrawal from Core Banking services, as well as

additional costs incurred for other share related transactions. Total net debt

increased by £204 million, with lease net debt increasing by £140 million.

We delivered a return on capital employed of 9.0 per cent, up from 8.3 per

cent in 2023/24, driven by improved underlying retail operating profits

supported by our increased capital investment in growth and efficiency.

As at 1 March 2025 the net defined benefit pension surplus under IAS 19 for

the Group was £731 million (excluding deferred tax). The £41 million increase

from 2 March 2024 primarily reflected lower obligations due to a higher discount

rate. This was partially offset by a decrease in asset values. For 2025/26 we

expect total pension scheme cash contributions of around £27 million.

With the success of the Food First strategy and our continued momentum

under the Next Level Sainsbury’s strategy, the Group is firmly in the middle

of its leverage target range and the Group published investment grade credit

ratings from Moody’s and Standard & Poor’s at Baa3 and BBB respectively.

In January, the Group established a £5 billion Euro Medium Term Note

(EMTN) programme and subsequently issued a £250 million five-year bond

and a £300 million ten-year bond. The transaction was very successful and

significantly over-subscribed. The establishment of the EMTN programme

and the success of the debut bond issues has diversified the Group’s funding

sources and enhanced its go-forward funding options. The proceeds of the

bond issue were used to repay the term loan taken out to finance the 2024

Highbury and Dragon property transaction.

Last February 2024, we announced that we would move to a progressive

dividend policy from the start of this financial year, ending March 2025.

TheBoard has recommended a final dividend of 9.7 pence per share,

anincrease of 5.4 per cent year-on-year to be paid on 11 July 2025 and

contributing to full-year dividends of 13.6 per share, up 3.8 per cent

year-on-year.

Following the completion of the £200 million share buyback programme

during the year, the strength of our balance sheet enables us to commit

toafurther buyback programme during 2025/26, repurchasing at least

£200million of shares in 2025/26. In addition, we expect to distribute

£250million of Bank disposal proceeds via a special dividend in the second

half of the year. Any additional bank disposal proceeds exceeding £250

million will be allocated to further enhance the share buyback beyond the

core £200 million base.

Financial review of the year results for the 52 weeks to 1 March 2025

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 within this

financial review refers to the Group’s performance on a continuing operations and discontinued operations basis before non-underlying items, unless where

otherwise stated. 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210 to 214.

The comparative results have been re-presented, as Core Banking, ATM operations, Argos Financial Services cards and mortgages have been classified as

discontinued operations, following the respective agreement to sell and announced sale of related operations as part of the strategic review of Financial

Services. Further details can be found in note 11 on page163.

Summary income statement

52 weeks to

1 March 2025

£m

52 weeks to

2 March 2024

£m

Change

Underlying Group sales (excluding VAT) 33,142 32,721 1.3

– Continuing 32,812 32,238 1.8

– Discontinued 330 483 (31.7)

Underlying operating profit

Retail 1,036 966 7.2

Financial Services 30 29 3.4

– Continuing (7) (18) 61.1

– Discontinued 37 47 (21.3)

Total underlying operating profit 1,066 995 7.1

Underlying net finance costs (305) (294) (3.7)

Underlying profit before tax 761 701 8.6

Items excluded from underlying results (377) (424) 11.1

– Continuing (103) (165) 37.6

– Discontinued (274) (259) (5.8)

Profit before tax 384 277 38.6

Income tax expense (142) (140) (1.4)

– Continuing (201) (181) (11.0)

– Discontinued 59 41 43.9

Profit for the financial period 242 137 76.6

– Continuing 420 308 36.4

– Discontinued (178) (171) (4.1)

Underlying basic earnings per share 23.1p 22.1p 4.5

Basic earnings per share 10.4p 5.9p 76.3

Interim dividend per share 3.9p 3.9p —

Final dividend per share 9.7p 9.2p 5.4

Total dividend per share 13.6p 13.1p 3.8

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

In the 52 weeks to 1 March 2025, the Group generated total profit before tax

of £384 million (2023/24: £277 million) and a total underlying profit before

tax of£761 million (2023/24: £701 million).

Profit growth was driven primarily by the performance of the food business,

reflecting a second year of strong volume growth and market outperformance

in every quarter. Higher food profits more than offset the impact of a

challenging general merchandise market on Argos, where both sales and

profit declined. Our ongoing cost savings programme helped reduce the

impact of inflationary headwinds and allowed us to lead the market in

announcing an above inflation pay increase for colleagues.

Cash generation remained strong, supporting higher capital investment,

with retail free cash flow of £531 million, most of which was returned to

shareholders through dividend payments of £308 million and a share

buyback of £200 million.

Group sales

Group sales (including VAT) increased by 1.0 per cent year-on-year, with a

3.1per cent increase in retail sales (including VAT, excluding fuel) offset by

an 8.9 per cent decrease in fuel sales (including VAT).

Total sales (including VAT)

performance by category

52 weeks to

1 March 2025

£m

52 weeks to

2 March 2024

£m

Change

Sainsbury’s 26,639 25,561 4.2

Grocery 24,777 23,699 4.5

General merchandise

(Sainsbury’s) and clothing 1,862 1,862 —

Argos 4,916 5,054 (2.7)

Retail (exc. fuel) 31,555 30,615 3.1

Fuel sales 4,653 5,106 (8.9)

Retail (inc. fuel) 36,208 35,721 1.4

Financial Services 512 637 (19.6)

Continuing operations 182 154 18.2

Discontinued operations 330 483 (31.7)

Group sales 36,720 36,358 1.0

Continuing operations 36,390 35,875 1.4

Discontinued operations 330 483 (31.7)

Retail like-for-like sales performance

52 weeks to

1 March 2025

52 weeks to

2 March 2024

Like-for-like sales (exc. fuel) 3.2% 7. 5%

Like-for-like sales (inc. fuel) 1.5% 3.8%

Grocery sales increased by 4.5 per cent, reflecting strong volume growth

ahead of the market. Customers continue to respond positively to the

improvements we have made to the grocery customer proposition in recent

years, including the introduction of Nectar Prices, and we are attracting and

retaining more big basket primary customers, who do the majority of their

shopping with Sainsbury’s. General merchandise and clothing sales at

Sainsbury’s were in line with last year, with higher clothing sales reflecting

range and availability improvements and offsetting lower general

merchandise sales.

Argos sales reduced by 2.7 per cent, impacted by a subdued and highly

competitive general merchandise market. In the first half of the financial

year, a significant reduction in online traffic and cooler and wetter summer

weather meant Argos sales were behind expectations. Whilst remaining

highly promotionally driven, sales strengthened in the second half as the

online traffic trend improved and Argos returned to year-on-year growth

inthe fourth quarter.

Fuel sales decreased by 8.9 per cent as a consequence of both reduced

demand and lower forecourt prices driven by falling commodity prices

inahighly competitive market.

Total sales (including VAT) performance by channel

52 weeks to

1 March 2025

52 weeks to

2 March 2024

Total sales fulfilled by supermarket stores 4.0 10.3

Supermarkets (inc. Argos stores in Sainsbury’s) 3.5 11.0

Groceries Online 7.0 5.5

Convenience 3.7 10.3

Sales in our supermarkets were up 4 per cent and we have made excellent

progress in the execution of our ‘More for More’ strategy, with around 90,000

sq ft of space rebalanced into food during the year. In addition, throughout the

second half we began implementing changes across several of our food

service propositions; moving to a more efficient model, driving improved

availability and choice for customers, whilst simultaneously unlocking more

space to reinvest into the wider food hall.

Groceries Online sales grew by 7 per cent. This was ahead of the market

anddriven primarily by an increase in the number of orders per week.

Convenience sales also grew ahead of the market and benefited from a

large-scale layout alteration across the estate - aimed at ensuring each

storehas a product range specifically designed to meet its customers’ needs.

Retail underlying operating profit

Retail underlying operating profit Note

52 weeks to

1 March 2025

52 weeks to

2 March 2024 Change

Retail underlying operating profit (£m) A1.2 a) 1,036 966 7.2%

Retail underlying operating margin (%) A1.2 a) 3.17 3.01 16bps

Retail underlying EBITDA (£m) A1.2 d) 2,192 2,078 5.5%

Retail underlying EBITDA margin (%) A1.2 d) 6.72 6.48 24bps

a) Note references for reconciliations refer to the Alternative Performance Measures on pages 210 to 211.

Retail underlying operating profit increased by 7.2 per cent to £1,036 million (2023/24: £966 million) and retail underlying operating margin increased by

16basis points year-on-year to 3.17 per cent (2023/24: 3.01 per cent). This represents the benefit of sales leverage across our cost base, driven by volume

growth in Sainsbury’s and cost savings helping offset operating cost inflation, particularly in wages.

Retail underlying EBITDA increased to £2,192 million (2023/24: £2,078 million), with retail underlying EBITDA margin improving 24 basis points to 6.72 per cent

(2023/24: 6.48 per cent).

In 2025/26, the Group expects a retail underlying depreciation and amortisation charge of around £1.2 billion (2024/25: £1.2 billion), including £0.5 billion

right-of-use asset depreciation.

The Group expects to deliver retail underlying operating profit of around £1 billion in 2025/2026.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Financial review continued

Space

During 2024/25, Sainsbury’s opened four new supermarkets and closed three, and opened 25 new convenience stores, closing three.

We opened 16 new Argos stores in Sainsbury’s and closed ten standalone Argos stores. As at 1 March 2025, Argos had 664 stores, including 461 stores in

Sainsbury’s, and a total of 1,107 points of presence.

Store numbers and retailing space

As at

2 March 2024 Remeasurement

New stores

Disposals/

closures Reclassifications

As at

1 March 2025

Supermarkets 597 — 4 (3) 1 599

Supermarkets area ’000 sq ft 20,801 103 93 (77) 10 20,930

Convenience 834 — 25 (3) (1) 855

Convenience area ’000 sq ft 2,016 1 61 (14) (10) 2,054

Sainsbury’s total store numbers 1,431 — 29 (6) — 1,454

Argos stores 213 — — (10) — 203

Argos stores in Sainsbury’s 446 — 16 (1) — 461

Argos total store numbers 659 — 16 (11) — 664

Argos collection points 456 — 25 (38) — 443

a) Remeasures and smaller projects which took place across a large number of stores.

b) Desborough Harborough was reclassified as a supermarket, previously being a convenience.

During the year we acquired 12 leasehold stores from Homebase and an

additional two from Co-op, all of which will be converted to Sainsbury’s

supermarkets during 2025/26 and 2026/27, alongside our existing organic

supermarket growth pipeline. These are not included in the table above as

they are not yet trading.

In total for 2025/26, we plan to open 15 new supermarkets and 25 convenience

stores and we anticipate a modest number of supermarket and convenience

store closures. We expect a net space impact on retail sales growth of

around 0.5 per cent in 2025/26.

Financial Services

During the year we announced the sale of our Core Banking services, ATM

business and the Argos Financial Services cards portfolio

. These, along

withthe previously disposed mortgage operations, have been classified as

discontinued operations as they form part of the single co-ordinated plan to

move to a distributed financial services model as announced in January 2024.

Financial Services results

12 months to 28 February 2025 2025 2024

Change

Underlying revenue (£m) 512 637 (19.6)

– Continuing 182 154 18.2

– Discontinued 330 483 (31.7)

Underlying operating profit (£m) 30 29 3.4

– Continuing (7) (18) 61.1

– Discontinued 37 47 (21.3)

Total capital ratio (%) 25.3 19.4 590bps

a) The Core Banking business comprising of personal loans, credit cards and retail deposit

portfolios are subject to a sale agreement with NatWest Group which is expected to be

completed in the first half of 2025/26. The Argos Financial Services card portfolio was

sold to NewDay Group Holdings on 28 February 2025. ATM operations will be fully

migrated to NoteMachine by May 2025.

Financial Services underlying revenue declined 19.6 per cent driven

primarily as a result of the accounting impact of the announced sales of

Core Banking portfolios. Certain elements of interest income adjustments

for those discontinued operations previously recognised as revenue have

now been reclassified as a fair value gain within operating costs. These

adjustments have no impact on the overall reported operating profit.

On a continuing basis, revenue has increased 18.2 per cent driven primarily

by improved returns on treasury assets that are not deemed directly

attributable to the discontinued operations, and strong performance

acrossthe remaining commission products.

Underlying operating profit of £30 million increased by £1 million

(2023/24:£29 million). During the year, performance benefited both from

areduced depreciation charge following a fixed asset write-off in the prior

year and significant actions taken by management to reduce operational

costs, with headcount lower by 19 per cent since February 2024. This was

partly offset by lower income as balances reduced following the decision

toexit Core Banking and the cessation of new lending activity.

Financial Services remains well capitalised, with a total capital ratio of

25.3per cent, an increase of 590 basis points driven by the sale of Argos

Financial Services andthe rundown of the credit cards and personal loans books.

Underlying operating losses from continuing operations reduced by £11 million

in the 12 months to 28 February 2025, driven by strong performances in

travel money and pet insurance.

Underlying profit on discontinued operations includes costs wholly associated

with assets which are to be sold, namely, the Argos Financial Services cards

portfolio, the Core Banking portfolios and ATMs, together with a proportion

of central and cross-product costs. The remainder of our central costs have

been allocated to continuing operations, albeit we expect these costs to

reduce as we right size our support functions in line with the transition

toadistributed model.

In 2025/26, the Group expects Financial Services underlying operating profit

on a continuing basis to be around £10 million.

Underlying net finance costs

52 weeks to

1 March 2025

£m

52 weeks to

2 March 2024

£m

Change

Non-lease interest costs (76) (71) (7.0)

Non-lease interest income 29 28 3.6

Finance costs on lease liabilities (258) (251) (2.8)

Total underlying net

financecosts (305 ) (294) (3.7 )

Underlying net finance costs increased by £11 million to £305 million

(2023/24:£294 million) driven by non-lease interest. The increase in net

non-lease interest was due to the £575 million term loan being fully drawn

forthe vast majority of 2024/25, whereas in 2023/24 £200 million was drawn

inMarch and the remaining £375 million in July. Net financing costs on lease

liabilities increased to £258 million (2023/24: £251 million), due primarily to

theincreased number of equipment leases added in the year.

In January, the Group issued £550 million of fixed rate bonds split into two

tranches; a £250 million five-year tranche and a £300 million ten-year tranche.

The Group expects underlying net finance costs in 2025/26 of between

£300million and £310 million, including around £255 million lease interest costs.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Items excluded from underlying results

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 Note

52 weeks to

1 March 2025

£m

52 weeks to

2 March 2024

£m

Continuing operations:

Retail restructuring programmes (128) (95)

Impairment of non-financial assets (16) —

IAS 19 pension income 28 44

Property, finance and acquisition

adjustments 30 (86)

Financial Services phased withdrawal

(17) (28)

Items excluded from underlying

results –continuing operations 5 (103) (165)

Discontinued operations:

Financial Services loss on disposal

11.4 (141) (14)

Financial Services phased

withdrawal

11.3 (133) (245)

Items excluded from underlying

results –discontinued operations (274) (259)

Total items excluded from

underlying results (377) (424)

a) Post-tax loss on disposal of £106 million post recognition of £35 million income tax credit

(2024: £11 million post recognition of £3 million income tax credit).

b) Post-tax phased withdrawal costs directly attributable to the disposal group of

£103million post recognition of £30 million income tax credit (2024: £196 million

postrecognition of £49 million income tax credit).

Continuing operations

Retail restructuring programme costs of £128 million (2023/24: £95 million)

were recognised in the year. Of this, £66 million relates to the multi-year

programme announced in November 2020. Cash costs in the period relating

to this programme were £40 million (2023/24: £67 million). Most of the 2020

programme has now completed, with costs incurred to date of £907 million,

and cash costs to date of £310 million.

Separately, as part of our Next Level Sainsbury’s strategy implementation

announced in February 2024, we have commenced a three-year restructuring

programme which will update our central management structures to support

faster decision-making and drive performance at both Sainsbury’s and

Argos, creating fewer, bigger roles with clearer accountabilities. As part

ofthe strategy, it was also announced in the current year that we will be

consulting on the closure of food counters, cafés, and the conversion of

remaining scratch bakeries. In the current year, these initiatives resulted in

costs of £62 million, with cash costs of £31 million. We expect this programme

to incur total cash costs of around £150 million.

Overall retail restructuring programmes cash costs of £71 million were lower

than the guidance of £100 million due to a change in phasing of the cash

outflows in relation to the newly announced multi-year programmes. The Group

expects to incur non-underlying cash costs relating to retail restructuring

programmes of around £100 million in 2025/26.

The Group recognised £16 million impairment on non-trading sites,

reflecting rent reviews.

IAS 19 pension income decreased to £28 million (2023/24: £44 million).

Thelower pension income in the current period was primarily driven by the

impact of the lower opening surplus at the beginning of the financial year

compared to the prior year.

Property, finance and acquisition adjustments of £30 million income

(2023/24:£86 million expense) include £57 million of gains relating to property

related transactions, predominantly driven by the completion of the Hendon

mixed use development site, offset by £17 million of acquisition adjustment

costs and £12 million of lease interest costs. The expense in the prior year

included £15 million related to property transactions, a £46 million loss on

energy derivatives caused by decreases in electricity forward prices in the

period (compared to a £2 million gain on energy derivatives in 2024/25),

£15million of acquisition adjustment costs and £10 million of lease interestcosts.

Costs associated with the phased withdrawal from Financial Services

comprise £8 million of onerous contracts, £8 million of employee costs and

£1 million of consultancy costs (2023/24: £22 million of fixed asset impairments,

£3 million of consultancy costs and £3 million of employee costs).

Discontinued operations

The loss of £141 million on disposal relates to the sale of Financial Services

product portfolios. It is comprised of the difference between the carrying

amount of the net assets to be disposed and the agreed selling price and

disposal costs including those required to migrate the portfolios to the

buyers. During 2023/24, the Group disposed of its mortgage portfolio for

proceeds of £446 million, which resulted in a loss on disposal of £14 million.

Costs of £133 million associated with the withdrawal primarily relate to

onerous contracts, loss on derivatives no longer classified in an effective

hedge relationship and employee costs. In 2023/24, costs of £245 million

associated with the withdrawal mainly comprised 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.

Taxation

The income tax expense was £142 million (2023/24: £140 million). The tax

charge on continuing operations was £201 million (2023/2024: £181 million).

The underlying tax rate on continuing operations was 29.8 per cent

(2023/24:26.7 per cent) and the effective tax rate on continuing operations

was 32.4 per cent (2023/24: 37.1 per cent).

The effective tax rate on continuing operations of 32.4 per cent for the year was

higher than the underlying rate because of a change in estimate with regards to

the treatment of dilapidations. It was significantly lower than the prior year

which included the release of a deferred tax asset on capital losses as a result

ofthe Highbury and Dragon property transaction in that year.

The Group expects an underlying tax rate in 2025/26 of around 30 per cent.

Earnings per share

Statutory basic EPS increased to 10.4 pence (2023/24: 5.9 pence) due to

anincrease in statutory earnings. Statutory diluted EPS also increased

to10.2 pence (2023/24: 5.7 pence).

Underlying basic EPS increased to 23.1 pence (2023/24: 22.1 pence), due

toanincrease in underlying earnings. Underlying diluted EPS increased

to22.7pence (2023/24: 21.6 pence).

Dividends

The Board has recommended a final dividend of 9.7 pence per share

(2023/24: 9.2 pence). This will be paid on 11 July 2025 to shareholders on the

Group’s new policy to pay a progressive dividend, the total full-year dividend

was 13.6 pence per share, an increase of 3.8 per cent (2023/24: 13.1 pence).

Sainsbury’s has a Dividend Reinvestment Plan (DRIP). This allows shareholders

to reinvest their cash dividends in our shares. The last date that shareholders

can elect for the DRIP is 20 June 2025.

For the financial year 2025/26, as per our capital allocation policy, we are

committed to a progressive dividend policy. Reflecting the strength of our

balance sheet, we will buy back at least £200 million of shares in 2025/26. We

expect to return bank disposal proceeds of £250 million via special dividend in

the second half of the year. The special dividend will be accompanied by a

proposed share consolidation. We will continue to review the level of cash return

to shareholders through buybacks on an annual basis.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Financial review continued

Net debt and retail cash flows

Summary retail cash flow statement Note

52 weeks to

1 March 2025

£m

52 weeks to

2 March 2024

£m

Retail underlying operating profit 6 1,036 966

Adjustments for:

Retail underlying depreciation and amortisation 1,156 1,112

Share-based payments and other 67 78

Adjusted retail underlying operating cash flow before changes in working capital 2,259 2,156

Decrease in underlying working capital 98 262

Retail non-underlying operating cash flows (excluding pensions) (71) (72)

Pension cash contributions (45) (44)

Retail cash generated from operations 2,241 2,302

Interest paid (347) (323)

Corporation tax paid (89) (58)

Retail net cash generated from operating activities 1,805 1,921

Cash capital expenditure (825) (814)

Repayments of lease liabilities (487) (505)

Initial direct costs on right-of-use assets (34) (6)

Proceeds from disposal of property, plant and equipment 45 16

Interest income 27 27

Retail free cash flow 531 639

Dividends paid on ordinary shares (308) (306)

Purchase of own shares – share buyback (200) —

Net (repayment)/drawdown of borrowings (79) 534

Net consideration paid for Highbury and Dragon property transaction — (670)

Other share-related transactions (43) (3)

Financial Services strategic review (52) —

Net (decrease)/increase in cash and cash equivalents (151) 194

Decrease/(increase) in debt 566 (29)

Highbury and Dragon non-cash lease movements — 1,042

Other non-cash and net interest movements

(619) (417)

Movement in net debt 32 (204) 790

Opening net debt 32 (5,554) (6,344)

Closing net debt 32 (5,758) (5,554)

Of which:

Lease liabilities 32 (5,494) (5,354)

Net debt excluding lease liabilities (264) (200)

a) Note references relate to Alternative Performance Measures in notes A2.1 and A2.2 on pages 211 to 213.

b) 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 £103 million year-on-year to £2,259 million (2023/24: £2,156 million)

primarily due to an increase in retail underlying operating profit.

Cash inflow from reduced working capital of £98 million (2023/24: £262 million working capital reduction), was driven by an increase in payables while maintaining

a flat inventory position. Year-on-year working capital generation reduced by £164 million, primarily due to timing within payables and receivables.

Retail non-underlying operating cash flows of £71 million relate to retail restructuring programme costs, of which £40 million relates to the multi-year

programme announced in November 2020 and £31 million relates to the implementation of the Next Level Sainsbury’s strategy.

Pension cash contributions of £45 million remained consistent with the prior year as no funding level events occurred. The Group expects pension cash

contributions in 2025/26 to be £27 million.

We paid corporation tax of £89 million in the year (2023/24: £58 million). The£31 million increase in tax payable year on year is predominantly attributable

toan increase in retail profitability and the annualisation of taxrate changes.

Cash capital expenditure was £825 million (2023/24: £814 million). Theyear-on-year increase was primarily driven by increased investment intechnology,

supply chain and logistics. Strategic investment in electric vehicles (EV) charging infrastructure was £25 million (2023/24: £63 million). The Group expects

coreretail cash capital expenditure (excluding Financial Services) in 2025/26 to be between £800 million to £850 million.

Initial direct costs of right-of-use assets were £34 million (2023/24: £6 million), relating to costs incurred on the acquisition of Homebase stores.

Proceeds from the disposal of property, plant and equipment were £45 million (2023/24: £16 million) of which £22 million was received in relation to the Hendon

mixed use development site completion in the year. The remaining proceeds resulted from disposals in line with our property strategy.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Retail free cash flow declined by £108 million year-on-year to £531 million

(2023/24: £639 million), driven by the reduction in working capital inflow and

higher capital expenditure, but remains in line with our commitment to

generate at least £1.6 billion of retail free cash flow over three years to

2026/27. In 2025/26 the Group expects to generate retail free cash flow of

more than £500 million.

Dividends of £308 million were paid in the year, covered 1.7 times by free

cash flow (2023/24: 2.1 times).

On 26 April 2024 the Group announced the commencement of a £200 million

share buyback programme, which was completed on 17 December 2024.

Net drawdown of borrowings includes the repayment in full of the

£575million unsecured term loan facility drawn down in 2023/24 to part

fund the Highbury and Dragon property transaction. The Group received

£544 million net of fees from the issuance of Investment Grade Corporate

Bonds, split into two tranches, a £250 million tranche maturing in June 2030

and a £300 million tranche maturing in January 2035.

As at 1 March 2025, net debt was £5,758 million (2 March 2024: £5,554 million),

an increase of £204 million. Excluding the impact of lease liabilities, non-lease

net debt increased by £64 million in the year, to £264 million (2 March 2024:

£200 million), impacted by increased costs in relation to the Financial

Services strategic review and costs incurred in relation to other

share-related transactions.

Net debt includes lease liabilities of £5,494 million (2 March 2024: £5,354 million).

Lease liabilities increased by £140 million, of which £27 million related to the

acquisition of Homebase stores.

For the financial year ending 1 March 2025, the definition of retail free

cashflow has changed (as stated on page 52 of the 2024 Annual Report and

Financial Statements). This now excludes capital injections to, dividends

from, and any other exceptional cash movements with or on behalf of

Sainsbury’s Bank and its subsidiaries. As at 1 March 2025, there have been

£52 million of retail exceptional costs on behalf of Sainsbury’s Bank relating

to Core Banking withdrawal which have been excluded from retail free

cashflow.

Financial ratios

Key financial ratios

As at

1 March 2025

As at

2 March 2024

Return on capital employed 9.0% 8.3%

Net debt to EBITDA 2.6x 2.6x

Fixed charge cover 2.8x 2.7x

a) Reconciliations are set out in notes A4.1, A3.2 and A4.2 of the APMs on pages 213 to 214.

Return on capital employed (ROCE) improved 70 basis points, primarily

driven by improved underlying retail operating profit.

Sainsbury’s continues to target leverage of 3.0x - 2.4x to deliver a solid

investment grade balance sheet. Net debt to EBITDA remains stable within

the targeted leverage range. Fixed charge cover is stable.

Defined benefit pensions

At 1 March 2025, the net defined benefit surplus under IAS 19 for the

Groupwas £731 million (excluding deferred tax). This marks an increase of

£41million from the prior year-end date of 2 March 2024. The primary driver

of this increase was changes in financial assumptions, specifically an increase

in the discount rate from 5.00 per cent per annum to 5.45 per cent per annum,

which led to a decrease in scheme liabilities. This decrease in scheme liabilities

was broadly offset by a reduction in the value of matching assets used to

hedge against movements in gilt yields and inflation.

An updated triennial funding valuation of the Scheme is currently being

carried out with an effective date of 30 September 2024.

For 2025/26, the total defined benefit pension scheme contributions are

expected to be £26 million (2024/25: £45 million).

Retirement benefit

obligations

Sainsbury’s

as at

1 March 2025

£m

Argos

as at

1 March 2025

£m

Group

as at

1 March 2025

£m

Group

as at

2 March 2024

£m

Present value of

funded obligations (4,820) (755) (5,575) (5,988)

Fair value of plan

assets 5,418 911 6,329 6,702

Pension surplus 598 156 754 714

Present value of

unfunded obligations (13) (10) (23) (24)

Retirement benefit

surplus 585 146 731 690

Deferred income tax

liability (179) (39) (218) (244)

Net retirement

benefit surplus 406 107 513 446

Bláthnaid Bergin

Chief Financial Officer

16 April 2025

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Principal risks and uncertainties

We are a resilient, values led business

and managing risk is both part of how

we operate and recognised as key to

achieving our ambitions

Our approach to risk management

Key activities

Stakeholder input

2. Risk assessment

• Risks are assessed based

on their likelihood and

potential operational,

reputational and

financial impacts

• We evaluate these

risksover different

timeframes and

perspectives, using

relevant risk metrics

aligned with our

corporate risk appetite

• This approach allows

usto adapt focus and

mitigation strategies

forcurrent principal

risks, respond to

business events and

uncertainties, and

monitor emerging risks

3. Risk response

• Manage risks by

implementing

mitigation plans and

controls aligned with our

risk appetite and

tolerances

• The implementation of

the risk management

framework in the

business is devolved,

ensuring that ownership

for managing risks is

embedded throughout

the organisation

• This approach drives

accountability and aligns

with our valued behaviours,

ensuring integrity and

visibility in the risk

management process

4. Monitoring

andreporting

• Monitor and report

onour risks, key risk

indicators, associated

mitigation plans and

changes to the internal/

external environment

tothe relevant

governance forums

1. Risk identification

• Both ‘bottom-up’ divisional

and ‘top-down’ Operating

Board led assessments

are used to identify key

risks that could prevent

us from achieving our

strategic objectives

• To drive consistency,

weuse risk categories

toidentify and assess

completeness:

• Strategic risks that are

born 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

deployment of

resources, e.g. funding

• Operating Board

• Governance forums

• Divisional leadership teams

• Audit and Risk team

• Operating Board

• Governance forums

• Divisional leadership

teams

• Audit and Risk team

• Operating Board

• Governance forums

• Divisional leadership teams

• Audit and Risk team

• Board

• Audit Committee

• Operating Board

• Business leaders

• Audit and Risk team

The Board has conducted a thorough review of the

specific risks we face andhow we mitigate them.

TheBoard has invested time to ensure that

governance, oversight and risk frameworks remain key

pillars in delivering the Next Level Sainsbury’s strategy.

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.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 forums covering: safety; data governance; and environment,

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 risks 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.

To ensure a joined-up view of risk from the bottom-up and top-down

processes, the risk and internal audit team is involved in each process.

Itprovides the Audit Committee with a risk management update at each

meeting to support it to fulfil its risk management objectives. Thisincludes

an overview of changes to the corporate risk map and risk disclosures

agreed by the Operating Board for its review and comment, aswell as any

changes to our risk framework, policies or processes.

Risk and internal audit provide independent assurance to management

andthe Audit Committee over specific risk areas as part of their annual

audit plan. The Board, Audit Committee and Operating Board actively

monitor risk throughout the year. They achieve this through routine risk

management updates at dedicated sub-committees focused on specific

riskdomains, as well as updates on key matters through strategic planning

and the periodic business performance review processes.

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 time frame and degree

of certainty. The risks are reported to the Operating Board and Audit Committee

and considered in strategic planning, and relevant actions are agreed.

Emerging risk themes continue to relate to:

• Increasing economic and political uncertainty and supply chain insecurity,

which can impact our operations, supply chains and customers

• Technology acceleration, which presents both risks and opportunity to

our customers, our business operations, our 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

The Board has overall responsibility for risk management, the system of internal control and reviewing the effectiveness of these at least annually.

As such, it has approved our principal risks disclosure, as set out on pages 58 to 64. Certain responsibilities have been delegated to the Audit

Committee, as outlined on page 96.

Board

Approval of

riskdisclosures

Audit Committee

Corporate risk updates,

deepdives and review of

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

• 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 received

• Governance forum risk map reviewed

• Divisional risk maps reviewed

and challenged

• Divisional emerging risk

mapreviewed

• Monitor risk actions

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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.

The number of principal risks has remained consistent with last year, with

changes reported in the net risk position of three risks. The net risk exposure

for ‘Business continuity, operational resilience and major incident response’

has increased compared to last year, as the Incident Response Team

convened at various points during the year to manage incidents that

disrupted operations and trade. Conversely, the net risk exposure for ‘data

security’ and ‘Sainsbury’s Bank’ has decreased due to enhancements and

good progress in withdrawing from Core Banking, respectively.

Our principal risks

The most significant principal risks identified by the Board and the associated

mitigations are set out on the following pages. The risks with the potential

to significantly impact the business have been included in the risk modelling

conducted during the preparation of the viability statement They are

highlighted with this symbol:

We have also clearly set out the link between each principal risk and the

Group’s key performance indicators (see pages 45 to 26) 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:

change

Increased net

risk exposure

Reduced net

risk exposure

Mitigations in place, supporting the management of the risk to a net risk

position, are also described for each principal risk. Accepting that it is not

possible to identify, anticipate or eliminate every risk that may arise, and

that risk is an inherent part of doing business, our risk management process

aims to provide reasonable assurance that we understand, monitor and

manage the main uncertainties that we face in delivering our strategic priorities.

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, our

broad supplier base and some ageing systems.

Business 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 points throughout the year to

manage our response to and minimise the impact of:

• External events impacting our customers, colleagues

and operations, including disorder and severe weather

• Technology incidents which disrupted trade and

operations in H1 2024/25

• Other operational matters.

• The Operating Board sets the operational resilience strategy for the business, ensuring it is

targeted on our core operations required to run the business. The Operating Board oversees

the delivery of technology improvements which are designed to improve operational resilience

going forward

• 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:

Principal risks and uncertainties continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Business strategy and change

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

• 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 monitors and reviews the in-year implementation of the plans to meet

budget targets through the periodic Business Performance Review process and dedicated

strategic updates. In addition, each strategic outcome is closely monitored by a dedicated

Acceleration Squad chaired by the relevant Operating Board sponsor

Direct oversight: Business Performance Review,

Operating Board

Link to strategy: All strategic priorities

Link to key performance indicators: All metrics

Movement:

Data security

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 remains challenging with deliberate

acts of cybercrime including ransomware attacks a

continued threat, targeting all markets, and there remains

a key risk exposure to broader business disruption as well

as to data breaches. Our security arrangements continue

to evolve in order to protect the business.

• 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, the Operating

Board and the Audit Committee on progress in delivering our information security strategies

• A suite of 17 information security policies is in place, which focuses 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 which 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 email 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:

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Our principal risks continued

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 focus on those issues where we

believe we can deliver the biggest impact. Our plan has three interlocking pillars: Better

for you, Better for the planet and Better for everyone (see page 16 for further detail)

• The Plan for Better Acceleration Squad meets every four weeks and provides regular

updates to the Corporate Responsibility and Sustainability Committee and to the

Operating Board as required. This Acceleration Squad oversees delivery of the Plan for

Better programme

• Progress in achieving our targets is monitored, with the approach being adjusted as

needed. Additionally, progress towards achieving all targets within Plan for Better is

publicly reported annually to ensure transparency

• In 2024, Sainsbury’s became an adopter of the Taskforce on Nature-related Financial

Disclosures. The framework, will be utilised to build an understanding of nature-related

risks and opportunities, and to further embed them into the strategy and

decision-making processes

Further information on our approach to managing climate-related risks and opportunities

as well as our high level plan to transition to a low carbon economy can be found on pages 31

to 44.

Direct oversight: Corporate Responsibility and Sustainability

Committee, Plan for Better Acceleration Squad

Link to strategy: All strategic priorities

Link to key performance indicators: Plan for Better

commitments

Movement:

Financial and treasury

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 continued uncertainty during the last year

with high inflation and fluctuations in commodity prices

and interest rates.

• The Treasury function is responsible for securing access to sufficient core and contingent

funding and for managing financial markets and counterparty risk as set out in line with the

Treasury policies and overseen by the Treasury Committee

• This year the Group published two investment grade credit ratings to secure access to the

deeply liquid investment grade bond markets. Securing access to the bond markets diversifies

the Group’s sources of funding and allows for the issuance of longer-dated borrowings

• 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 committed 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

• Treasury policies, approved by the Board, are in place to address liquidity, refinancing,

financial markets and counterparty credit risks

• Hedging policies, approved by the Chief Finance Officer, are in place to address foreign

exchange and energy (electricity, gas and diesel) price risk. Adherence to the hedging policies

is overseen by the Energy Price Risk Committee

• 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:

Principal risks and uncertainties continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Safety and security

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 Board receive regular reporting on safety. An annual Operating Board

deep dive on safety and security is conducted with the Director of Occupational Health, Safety

and Insurance, the Director of Food Technical and the Head of Crime and Security

• Our approach to both safety and security continues 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:

Political and regulatory environment

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, variable adoption in

devolved nations and impact) and 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, the Digital

Markets Competition and Consumer Act (which encompasses pricing and promotional

requirements), regulations regarding High Fat, Salt and Sugar products, the Groceries Supply

Code of Practice, circular economy reforms (such as Extended Producer Responsibility) and

the 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

– 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 vigorously defend the equal value claims

• 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. For example, our work on the new aggravated

offence of assault on a retail worker. 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:

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Our principal risks continued

Product safety and sourcing

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 - General

Merchandise and the Director of Occupational Health, 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

• The Operating Board and Board receive regular reporting on safety. An annual Operating Board

deep dive on safety is conducted with the Director of Food Technical

• 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 audits 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, Plan for Better

Acceleration Squad, Corporate Responsibility and

Sustainability Committee

Link to strategy: First choice for food, Loyalty everyone

loves, More Argos, more often

Link to key performance indicators: N/A

Movement:

Principal risks and uncertainties continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Sainsbury’s Bank

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.

Good progress has been made in transitioning Financial

Services to a distributed model, with assets and operations

being transferred to NatWest, NewDay, and NoteMachine.

This transition has reduced the risk profile. The sale of

banking operations to NatWest is currently in progress

and subject to regulatory approval. Meanwhile, ATM

operations are being transitioned to NoteMachine, and

inFebruary 2025, NewDay acquired beneficial title tothe

Argos Financial Services portfolio.

Execution-related risks arise from the consequent

technology changes, customer migrations and colleague

impacts. Conversely economic risks such as credit,

liquidity, and capital adequacy will reduce. 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 its Audit Committee. The Board of Sainsbury’s

Bankplc is comprised of five Non-Executive Directors, four of whom are independent

• 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 lines 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 Services 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

Risk Mitigations

We operate in a highly competitive market during a time of

higher economic uncertainty. 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

• 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 alternative 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: Food volume growth

Movement:

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Our principal risks continued

Colleague engagement, retention and capability

Risk Mitigations

The business employs over 141,000 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 continuity 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 further

in colleague pay. Our colleagues receive a colleague discount of 10 per cent in Sainsbury’s

rising to 15 per cent every Friday and Saturday and to 20 per cent on a number of key

dates across the year. Additionally, colleague discount at Argos increases to 15 per cent

every pay day

• Executing against the workforce strategy developed and owned by the Operating Board

toidentify the key skills and capability shifts needed to help plan for the long term

• Leadership Performance Expectations and Accelerators have been introduced and

embedded around what’s required of all leaders in Sainsbury’s. This includes how we hire,

onboard and deploy performance management. Aligned 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

• Colleague sentiment and views are sought through regular listening activity. Listening

outputs are complemented with Let’s Talk, Viva Engage and Make It Better Together

forums. We benchmark our engagement against global benchmarks and specific retail

benchmarks. In addition, the Operating Board and Non-Executive Directors hold active

listening sessions on a regular basis

• Specific programmes are in place across operational, early careers, professional and

executive hiring including 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:

Principal risks and uncertainties continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 66. The financial position of the Group, its cash flows and

liquidity are highlighted in the financial review on pages 47 to 53.

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 approved in January 2025, 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. We’ve committed to

become the First choice for food by bringing more of Sainsbury’s food

range to more customers. This will deliver further grocery market volume

share gains and profit leverage from sales growth

• Changes to the Group’s Financial Services model. As we transition

Financial Services to a distributed model, assets and operations are being

transferred to NatWest, NewDay and NoteMachine. As such, consideration

has been given to the credit, liquidity and capital adequacy of the Bank as

the phased withdrawal is executed

• Inflationary pressures. Sustained levels of high inflation continue to

putpressure on the Group’s cost base and on consumer spend. External

forecasts indicate that this is expected to continue, limiting discretionary

spend and putting further competitive pressure on non-discretionary

spend as consumers become increasingly price sensitive

• Climate change considerations. The Group’s most recent corporate

planning and budgeting processes include assumed cash flows to address

climate change risks. These include costs associated with Plan forBetter

commitments to reduce environmental impacts and meet customer

expectations in this area, notably through sustainability initiatives such

as reducing packaging and reducing energy usage acrossthe estate.

Theimpact of new packaging fees regulations has beenincluded in the

Group’s corporate plan

• The Group’s financial position. The Group has continued to generate

strong free cash flow. 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 2029 and Facility B

has a maturity of December 2028. As at 1 March 2025, the Revolving Credit

Facility was undrawn. The Group paid in full the £575 million committed

term loan facility which had been in place during 2024/25. In January 2025

the Group issued £550 million of Investment Grade Corporate Bonds.

TheBonds were split into two tranches, a £250 million tranche maturing

inJune 2030 and a £300 million tranche maturing in January 2035

2) The assessment period

The Directors have determined that the three years to March 2028 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 54 to 62). 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 54 to 62 has a potential impact and has

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 2025

3) Assessment of viability continued

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. External forecasts indicate that this could continue, impacting consumer confidence and disposable

incomes, contributing to a reduction in consumer spend on discretionary items across our general merchandise and

clothing business and manifesting via downtrading in food.

Assumptions:

• Sales - volume losses more severe than 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

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 while the transition of Financial Services to a distributed model is executed.

Assumptions:

• Costs – those associated with restructuring the Financial Services model are significantly in excess of those estimated

• Liquidity – ability to withstand unforeseen scenarios such as planned divestments not concluding as expected and cash

outflows to third parties being higher than expected as a result of costs being in excess of estimates

• Sainsbury’s Bank

Scenario 4 – Failure to deliver sustainable cost savings

Delays in delivering the Save and to invest to win programme, which would have an impact of c. £100 million in each

year of the assessment period, were considered.

Assumptions:

• Costs – additional costs of c. £100 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 breaches 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 2028.

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 125 to 209.

Statement of viability continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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.

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 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 and have continued to make

significant investments in pay.

• Chair’s letter on page 4

• Plan for Better report on page 16

• Our people on page 20

• Engaging with our stakeholders and our Section 172

statement on page 25

• Key performance indicators on page 45

• Nomination and Governance Committee report on page 88

• Annual statement from the Remuneration Committee

Chair on page 104

• Gender and ethnicity pay reports

Further information can be found at

www.about.sainsburys.co.uk/sustainability

Environment

Our sustainability plan, Plan for Better, is integrated across

our business to ensure that we support the delivery of 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 the Companies

(Strategic Report) (Climate-related Financial Disclosure)

Regulations 2022, are included within our TCFD report.

• Plan for Better report on page 16

• Task Force on Climate-related Financial Disclosures on

page 31

• Engaging with our stakeholders and our section 172

statement on page 25

• Corporate Responsibility and Sustainability Committee

report on page 92

• Standalone Plan for Better report

• SASB disclosure

• Policy on ethical sourcing

• Key raw material policies: Cocoa, Coffee, Cotton, Feather

and Down, Forest Products, Leather, Manmade Cellulosic

Fibres, Natural Rubber, Non-Timber Forest Products, Palm

Oil, Precious Metals and Minerals, Pulp, Paper and

Fibre-based, Soy Feed, Timber, Wool

Further information on these policies and our lists of Tier 1

sitesfor general merchandise, food, clothing and goods not

forresale at

www.about.sainsburys.co.uk/sustainability/plan-for-better

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 £2.4 billion in cash

taxes borne and collected this year.

• Chair’s letter on page 4

• Plan for Better report on page 16

• Engaging with our stakeholders and our section 172

statement on page 25

• Corporate Responsibility and Sustainability Committee

report on page 92

• Groceries Supply Code of Practice

• Policy on Whistleblowing

Further information can be found at

www.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

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.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Our commitment Our approach Where to find more information and outcomes

Human rights

At Sainsbury’s, we set high standards and work collaboratively

with our suppliers to ensure these standards are met.

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.

This year, we were acclaimed as ‘Leading on human rights

innovation’ status in the CCLA Modern Slavery UK Benchmark

2024, achieving a top tier score.

• Chair’s letter on page 4

• Plan for Better report on page 16

• Engaging with our stakeholders and our section 172

statement on page 25

• Corporate Responsibility and Sustainability Committee

report on page 92

• Modern Slavery Statement

• Policy on Whistleblowing

• Policies on: Ethical Sourcing, Flexible Working, Home Work,

Prison Labour

Further information can be found at

www.about.sainsburys.co.uk/sustainability/better-for-

everyone/human-rights

Further information on these policies and our lists of Tier 1

sitesfor general merchandise, food, clothing and goods not

forresale at

www.about.sainsburys.co.uk/sustainability/plan-for-better

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, including our expectations on colleagues 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.

Our Group Suppliers’ Anti-bribery and Corruption Policy

provides guidance and expectations for any supplier who

supplies goods and services to Sainsbury’s Group Companies,

including both goods for resale and goods or services that we

use within our business.

• Audit Committee report on page 95

• Compliance with the Groceries Supply Code of Practice on

page 100

• Policy on Anti-Bribery and Corruption

• Policy on Whistleblowing

• Group Suppliers’ Anti-bribery and Corruption Policy

Further information can be found at

www.about.sainsburys.co.uk/sustainability

Other

information

Other information to support this statement can be found on

the following pages:

• Business model on page 2

• Our strategy on page 10

• Delivering on our outcomes on page 11

• Non-financial KPIs on page 45

• Principal risks and uncertainties on page 54

• Statement of viability on page 63

• Board leadership and Company purpose on page 76

• Audit Committee report on page 96

• Remuneration policy

• Health policies: Energy Drinks Sales, Infant Foods,

Marketing Communications, Nutrition Labelling,

Responsible Retailing of Alcohol

Further information can be found at

www.about.sainsburys.co.uk

The strategic report was approved by the Board of Directors and signed on its behalf by:

Bláthnaid Bergin

Chief Financial Officer

16 April 2025

Non-financial and sustainability information statement continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Introduction to the governance report

Dear Shareholder

One year into our Next Level Sainsbury’s

strategy, we remain focused on

delivering for our customers, colleagues,

suppliers and shareholders. In February

2024, we shared the key metrics by

which we would judge our progress

against the strategy and I am pleased

to report that our food business is going

from strength to strength and we’re

making the biggest market share gains

inmore than a decade.

Purpose and culture

Our strong culture and values remain fundamental to the success of the

business. Together with the Operating Board, the Board has worked to

embed our new strategy and purpose, ensuring that these remain aligned to

our culture and values. 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 strategy and priorities can be found on pages 10 to 15

Our purpose articulates the impact we want to create for customers and

wider stakeholders and creates multiple opportunities for commercial and

social growth. As a Board, we are responsible for ensuring that the business

is purpose-led and that 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.

We recognise our role in monitoring, assessing and promoting a positive

culture to ensure an inclusive working environment for our colleagues.

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, feeding into our decision-making process.

Further information on how we monitor culture can be found on pages 20 to 23

Stakeholder engagement

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 9.7 pence per share, reflecting our commitment to deliver

strong dividends for shareholders. This year we paid ordinary dividends

of£308 million and completed our £200 million share buyback programme,

delivering enhanced shareholder returns. Reflecting the strength of our

balance sheet, we will buy back at least £200 million of shares in 2025/26

and we expect to return bank proceeds of £250 million via special dividend

in the second half of the year. The special dividend will be accompanied by a

proposed share consolidation.

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 continue to shape the implementation of our Next Level

Sainsbury’s strategy, including key decisions on price investment to offer

customers consistent value and additional investment to bring the best of

Sainsbury’s to more people in more locations.

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 in January 2025 we announced that we will

raise pay for our hourly paid colleagues by five per cent, split into two

separate increases to help manage a particularly tough cost inflation

environment. We believe in rewarding our colleagues well for delivering

leading service and productivity and the increase we announced in January

for our hourly paid retail colleagues will represent a 58 per cent increase

hourly pay since 2018.

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. Building resilience

into our business and supply chains is critical to our long-term success,

which is why our Plan for Better sustainability strategy remains at the heart

of what we do. Our shift in focus to viewing suppliers as partners has directly

enabled the continuous delivery of high quality products and services for

our business and customers. We firmly believe that the partnership approach

is critical to address and improve the complex environmental and social

challenges we face, contributing to a more sustainable food system in the UK.

Diversity, equity and inclusion

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.

Further information on the Group’s diversity, equity and inclusion strategy

can be found on pages 21 to 22

Plan for Better

Our sustainability strategy is a key priority for the Board and the Corporate

Responsibility and Sustainability Committee, whose report is set out on

pages 92 to 95. Plan for Better is a core part of our purpose and Next Level

strategy and we have continued to support our colleagues, customers and

suppliers and have made further investments across the value chain this

year. Through Plan for Better, we are taking a leading role in creating a

sustainable food system to truly make good food for all of us.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Compliance with the Corporate Governance Code 2018 (the 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 76 to 83

Division of responsibilities

More information can be found on page 87

Composition, succession and evaluation

More information can be found on pages 84 to 86

Audit, risk and internal control

More information can be found on pages 54 and 96

Remuneration

More information can be found on pages 104 to 121

Corporate governance

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 outcomes.

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. During 2024/25, we have reviewed and updated

our governance framework to align with the 2024 UK Corporate Governance

Code. These changes will be effective from the start of 2025/26.

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 2024/25, which

concluded that the Board and each of its Committees continue to be

effective. The Board’s strengths included a good balance of support and

challenge, a complementary set of skills, the constructive relationship

between the Board and the Operating Board and an inclusive

decision-making process.

Our progress against last year’s areas of focus, as well as further information

on this year’s evaluation, can be found on pages 10 to 15

Year ahead

As we go into 2025/26, we remain focused on our bold ambition to

becomethe UK’s first choice for food and to bring more of our food

offeringto more customers.

I would like to take the opportunity to thank all of my Board colleagues

fortheir commitment, support and flexibility over the past year. I will

againexpress my thanks to Brian Cassin for his many years of service

andhis significant contribution to the Board, particularly as Senior

Independent Director. Following a rigorous recruitment process, we

welcome Katie Bickerstaffe and Steve Hare to the Board and look forward

totheir insights and contributions as we continue to drive Sainsbury’s forward.

Following Brian’s retirement from the Board, Adrian Hennah will succeed

Brian as Senior Independent Director with effect from 3 July.

An inclusive culture

Our inclusive culture and leadership were recognised at the highest

level in our industry, with Sainsbury’s taking home two awards at the

Diversity in Retail 2024 Inclusion Awards. Our Chief Executive Simon

Roberts was named ‘Most Inclusive CEO in Retail’, and our Chair

Martin Scicluna was honoured as ‘Most Inclusive Chair in Retail’.

AtSainsbury’s, inclusion is a fundamental part of who we are.

Wearecommitted to embracing diversity andworking towards a

more inclusive future for everyone.

Martin Scicluna

Chair

Introduction to the governance report continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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.

Governance at a glance

Key Board decisions

• Approval of the sale of

Sainsbury’s Bank plc’s Core

Banking business to NatWest

Group and sales of our Argos

Financial Services cards

portfolio to NewDay Group

andour ATM business to

NoteMachine

• The establishment of a £5

billion Euro Medium Term Note

Programme and the issuance of

£550 million of unsecured fixed

income bonds

Highlights

78%

of colleagues who told us they

are able to be themselves at work

Acquisition of 14

new supermarket sites in key target

locations

Over 9,000 Nectar

Prices

rolled out to customers

Our year

Read more on pages 71 to 73

What we bring to the Board

The Board benefits from a wide range of backgrounds and strengths.

The diagrams on the previous page and below provide an overview of

the Board members’ specific skills, experience and diversity.

Governance at a glance continued

Board and Committee attendance (scheduled meetings)

Board

Audit

Committee

Corporate

Responsibility

and Sustainability

Committee

Nomination and

Governance

Committee

Remuneration

Committee

Martin Scicluna 9/9 – 3/3 2/2 –

Bláthnaid Bergin 9/9 – – – –

Jo Bertram 9/9 – 3/3 2/2 –

Brian Cassin 8/9

3/4

– 2/2 –

Jo Harlow 9/9 – 3/3 2/2 4/4

Adrian Hennah 9/9 4/4 – 2/2 4/4

Tanuj Kapilashrami 9/9 – – 2/2 4/4

Simon Roberts 9/9 – 3/3 – –

Keith Weed 9/9 3/4

3/3 2/2 –

1 Brian Cassin was on jury duty and was unable to attend the December Board meeting.

2 Brian Cassin was unable to attend due to a family bereavement.

3 Keith Weed was unable to attend due to prior business commitments.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

J Sainsbury plc – Board of Directors

Martin Scicluna

Chair

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 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.

Simon Roberts

Chief Executive

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 and

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, a Member of the Government’s

Food Strategy Advisory Board, a 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 Next

Level Strategy, driven by our purpose

to make good food joyful, accessible

and affordable for everyone, every day.

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:

Non-Executive Director of Haleon plc.

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 six 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.

Key to Committee members

Audit Committee

Corporate Responsibility and

SustainabilityCommittee

Nomination and Governance Committee

Remuneration Committee

Denotes Chair of Committee

Jo Bertram

Non-Executive Director

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 and 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 and 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.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

J Sainsbury plc – Board of Directors continued

Adrian Hennah

Non-Executive Director

Appointed to the Board:

1 April 2021.

Adrian joined the Board on 1 April 2021

and will become Senior Independent

Director on 3 July 2025.

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 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.

Tanuj Kapilashrami

Non-Executive Director

Appointed to the Board:

1 July 2020.

Skills and experience: Tanuj is an

international banker with significant

experience in strategy, 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

Corporate Strategy, Bank-wide

Transformation and Corporate

functions (HR, Brand and Marketing,

Corporate Affairs, Supply Chain

Management and Corporate Real

Estate), 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.

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 Vault22,

an integrated digital wealth, health

and lifestyle solutions start-up. She

has also previously served as a Board

member of the UK Financial Services

Skills Commission Limited.

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.

Brian Cassin

Non-Executive Director

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

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: Senior

Independent Director and Chair of the

Remuneration Committee of Halma

plc, Senior Independent 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.

Jowas previously Chair of the Corporate

Responsibility and Sustainability

Committee and has helped the business

deliver and evolve its sustainability

strategy. She also brings current external

remuneration committee experience.

Independent: Yes.

Key to Committee members

Audit Committee

Corporate Responsibility and

SustainabilityCommittee

Nomination and Governance Committee

Remuneration Committee

Denotes Chair of Committee

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Nick Grant

General Counsel and

CompanySecretary

Appointed to the Board:

4 July 2024.

Nick was appointed to the newly

created role of General Counsel and

Company Secretary in July 2024.

Skills and experience: Prior to this

appointment Nick was for Director of

Legal Services at Sainsbury’s for eight

years, leading a full-service in-house

team of 40 legal advisers and advising

senior management on corporate

transactions, material litigation and

reputation management.

External appointments: None.

Specific contributions to the

Company’s long-term success:

Nickprovides legal and corporate

governance advice and support to the

Board and Committees and oversees

secretarial support for all legal

entities within the Group.

Independent: No.

Company Secretary

changes

Following Tim Fallowfield’s retirement

from Sainsbury’s in July 2024, Nick

Grant was appointed as General

Counsel and Company Secretary in

July 2024, having previously occupied

the role of Director of Legal Services

at Sainsbury’s.

Keith Weed CBE

Non-Executive Director

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

strategic focus 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.

Katie Bickerstaffe

Non-Executive Director

Appointed to the Board:

To be appointed on 3 July 2025.

Skills and experience: Katie is a

highly regarded retail and consumer

business leader, bringing strong

perspectives on digital business

models and transformation

programmes. She has held numerous

leadership positions, including as

Co-CEO of M&S, Executive Chair and

CEO Designate at SSE and CEO, UK and

Ireland at Dixons Carphone. She also

held roles at Somerfield Stores group,

Dyson, PepsiCo and Unilever.

External appointments:

Non-Executive Director of Aberdeen

Group plc and Barratt Redrow plc,

Non-Executive Director and Senior

Independent Director of Diploma plc.

Specific contributions to the

Company’s long-term success:

Katie’s strong perspectives on digital

transformation will greatly contribute

to our strategic direction.

Independent: Yes.

Steve Hare

Non-Executive Director

Appointed to the Board:

To be appointed on 3 July 2025.

Skills and experience: Steve is a very

experienced leader of digital and tech

businesses. He previously worked at

Apax Partners as Operating Partner

and Co-Head of the Portfolio Support

Group. Prior to this, Steve built over 10

years’ experience leading the finance

function for three listed UK companies,

including as CFO of Invensys plc,

Group Finance Director for Spectris

plc and CFO at Marconi PLC. Steve

qualified as a chartered accountant in

1985 with Ernst & Whinney, now part

of EY, and holds a bachelor of commerce

degree from Liverpool University.

External appointments:

ChiefExecutive Officer of

TheSageGroup plc.

Specific contributions to the

Company’s long-term success:

Steve’s expertise in leading tech

businesses will greatly contribute

toour strategic direction.

Independent: Yes.

Key to Committee members

Audit Committee

Corporate Responsibility and

SustainabilityCommittee

Nomination and Governance Committee

Remuneration Committee

Denotes Chair of Committee

Board changes

Subject to shareholder approval, Katie Bickerstaffe and Steve Hare will be

appointed as Non-Executive Directors with effect from 3 July 2025.

Brian Cassin has notified the Board that he will not seek re-election at the

Sainsbury’s AGM on 3 July 2025, after nine years’ service.

The Board has appointed Adrian Hennah, who has been a member of the

JSainsbury plc Board since April 2021, to succeed Brian as Senior

Independent Director with effect from 3 July 2025.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

J Sainsbury plc – Operating Board

Simon Roberts

Chief Executive

See page 71

Bláthnaid Bergin

Chief Financial Officer

See page 71

Graham Biggart

Managing Director Argos, and

ChiefStrategyand Supply Officer

Date of appointment:

March 2022.

Skills and experience: Graham is

accountable for our Argos business,

ensuring its continued success as the

second largest general merchandise

retailer in the UK, and a digital leader

with iconic consumer brands such as

Habitat, Chad Valley and Bush. Graham

also leads our strategy across Sainsbury’s,

as well as our global Supply Chain,

Logistics and Fulfilment teams. He

isthe Operating Board Sponsor for

Ethnicity. Graham joined Sainsbury’s

in 2015 and has led a number of

different areas of the business in

thattime, across commercial, change,

operations and channels, including as

Chief Transformation Officer, Chief

Commercial Officer, General Merchandise

and Clothing, Commercial Director for

Fresh Food and Foodservice, and

Commercial Operations Director,

which included the Sainsbury’s Local

and Argos Republic of Ireland businesses.

Prior to Sainsbury’s, Graham worked

atMcKinsey and Company, and

before that at Brunswick Group.

External appointments: Graham is a

Non-Executive Director and Chair of

the Risk and Audit Committee of

GS1UK.

Patrick Dunne

Chief Property and Procurement

Officer and MD Smart Charge

Date of appointment:

January 2025.

Skills and experience: Patrick joined

Sainsbury’s in2017 as Director of

Procurement and Cost Transformation,

responsible for improving governance

and driving greater value for money

across our extensive cost base and

goods not for resale spend. In 2018

Patrick was asked to lead the group’s

extensive property portfolio as group

property and procurement director.

He has over 30 years’ experience in

global industries, automotive,

manufacturing and retail and has

held a variety of UK and international

senior leadership roles, including

Chief Operating Officer, Howdens

Manufacturing, MD MFI Asia Limited

and Chief Property and Procurement

Officer, Walgreens Boots Alliance.

Patrick also leads our carbon activities

to achieve net zero by 2030 and recently

initiated and set up our new electrical

vehicle charging venture Smart Charge.

He most recently was a Trustee for the

University of London and in 2019 was

celebrated as global procurement

leader of the year for the Chartered

Institute of Procurement (CIPS).

External appointments: None.

Rhian Bartlett

Chief Commercial Officer -

Sainsbury’s

Date of appointment:

November 2020.

Skills and experience: Rhian 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.

External appointments: Rhian is a

Non-Executive Director ofSpeedy

HirePlc.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Operating Board

changes

As part of our plan to

accelerate into the second

year of our three-year Next

Level Sainsbury’s strategy, we

have made changes within our

Operating Board to recognise

the different needs of the

Sainsbury’s and Argos

businesses and have

reorganised across our store

support centre teams to

reflect the distinction between

the two. Rhian Bartlett, Chief

Commercial Officer for

Sainsbury’s, will lead our

commercial proposition across

grocery, Sainsbury’s general

merchandise and clothing. To

ensure a clear focus on

delivering our More Argos,

more often plan, Graham

Biggart takes on the role of

Managing Director for Argos.

These changes will drive faster

decision-making and

improved performance for

both Sainsbury’s and Argos.

We also brought together all of

our expert data and analytics

teams from across the business

into one new Data and Analytics

function, reporting into

MarkGiven, so that we can

improve our capabilities and

ways of working in this critical

area to stay ahead of

competitors, best serve our

customers and work more

efficiently with all the data

and insights we have available.

Mark Given continues to

sponsor our Plan for Better

and will continue to do so

through his new role.

TheSustainability team will

continue to report to Mark,

and making Sustainability its

own division will ensure

continued focus to deliver

ourambition.

We welcomed Patrick Dunne,

Director of Property and

Procurement to our Operating

Board as Chief Property and

Procurement Officer and

Managing Director for

SmartCharge.

The Operating Board is

supported by the Company

Secretary, see page 87

fordetails.

Clodagh Moriarty

Chief Retail and Technology

Officer

Date of appointment:

June 2018.

Skills and experience: Clodagh

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,

customer experience and end-to-end

technology and platforms. Clodagh’s

previous roles in Sainsbury’s include

Retail and Digital Director and Chief

Digital Officer. Clodagh is the Operating

Board Sponsor for Wellbeing. Clodagh

joined Sainsbury’s as Head of Strategy,

following nine years at Bain and

Company and, during her time with

us, has had numerous leadership roles

across commercial and channels.

External appointments: Clodagh

isaNon-Executive Director of Taylor

Wimpey plc and sits on their

Nomination and Governance

andRemuneration Committees.

Prerana Issar

Chief People Officer

Date of appointment:

May 2023.

Skills and experience: Prerana

joined the Operating Board in May

2023. 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.

External appointments: Prerana is

atrustee on the Marie Curie Board

ofTrustees.

Mark Given

Chief Marketing, Data and

SustainabilityOfficer

Date of appointment:

June 2020.

Skills and experience: Mark joined

the Operating Board in June 2020. He

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 and

Loyalty across the Sainsbury’s, Argos,

Tu clothing and Habitat brands. Mark

has also been responsible for the

Nectar Loyalty Coalition and the

Nectar360 media business since 2018.

In 2021, Mark assumed responsibility

for all sustainability activity, including

delivery of our Plan for Better targets.

In 2025 Mark will also be responsible

for our business-wide data and analytics

capability. Since 2024 Mark has been

the Operating Board Sponsor for the

LGBT+ inclusion lane. 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 andGamble UK before working

across Europe on a variety of brands.

External appointments: Mark is

currently a Council Member of the

Incorporated Society of British

Advertisers (ISBA) and a Fellow

oftheMarketing Society.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Board leadership and Company purpose

Our purpose is to make good food joyful, accessible and affordable for everyone,

every day. This 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 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 25 to 30

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 20 to 23

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 77

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. During the year, the Operating Board delivered progress against

our key performance measures across each of the four strategic outcomes.

Each Operating Board Director has a range of responsibilities,

as detailed in their biographies on pages 74 to 75

Sainsbury’s Bank Board

Sainsbury’s Bank plc board membership comprises an independent Chair,

five Non-Executive Directors, four 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 Group 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

Translating the Next Level strategy into delivering the four strategic

outcomes required our previous governance framework to evolve and

reset. A new decision-making structure, below the Operating Board,

has been implemented and was effective for 2024/25. This structure is

directly aligned to the strategic outcomes, with clear accountability

and ownership of deliverables. An assessment of the effectiveness of

the framework was undertaken in late 2024/25 and actions

implemented to ensure that it continued to drive clearer

accountabilities and improve the speed of decision-making. Further

information on our governance framework can be found on page 77.

The Matters Reserved for the Board and the terms of references of

each of its key Committees were reviewed and updated in line with

the 2024 Corporate Governance Code and will be implemented

for2025/26.

Our purpose shapes both our

‘why’ and our ‘how’: why we

exist and how we deliver for our

customers, colleagues, suppliers

and shareholders.

Simon Roberts

Chief Executive

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 92

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 applicable UK Corporate

GovernanceCode

More information can be found on page 88

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 104

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 the risk management and internal control frameworks

• Approves internal and external audit processes

• Maintains relationship with the external auditor

• Carries out in-depth reviews of specific risks, ensuring that risks are

appropriately identified, managed and mitigated

More information can be found on page 96

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

• Monitors and reviews key transformation deliverables and programmes

• 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 Chief Information Security

Officer and Director of Data Governance, to the Operating Board,

Audit Committee and Board

Group Safety Committee

• Reviews the robustness of safety approaches and management

systems throughout the business, including food safety, product

safety, colleague and customer safety

• 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 Acceleration Squad

• 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

The terms of reference for these Committees can be

found on our website at www.about.sainsburys.co.uk

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 on pages 24 and 25 to 30

A typical Board meeting will cover 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.

Matters considered

Strategy

Outcome

• Discussed progress against the strategic plan and the impact of

inflationary pressures and interest rate rises on our customers,

colleagues and suppliers

• Monitored progress against culture, behaviours and the diversity,

equity and inclusion strategy which supports the long-term planning

and future direction of the Group

• Approved key decisions and outcomes required to implement the Next

Level Sainsbury’s 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, including changes to the central management structure

• Discussed and created relevant action plans for long-term

strategicchallenges

• Approved the Suppliers as Partners strategy, committing to working

with suppliers over the longer term, enabling suppliers to invest in their

business and build resilience

• Made considerable progress in the withdrawal from Core Banking,

including the sale of the Core Banking products, the ATM business and

the Argos Financial Services cards portfolio

More information can be found on pages 10 to 15

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

• Evaluating and supporting strategic updates, ensuring strategic and

financial outcomes will deliver for shareholders

• 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

• Focusing on a multi-year purpose-led organisation will create multiple

opportunities for commercial and social growth

• Partnering with our suppliers is critical to address and improve the

complex ethical, environmental and social challenges we face,

contributing to a more sustainable food system in the UK

Stakeholders considered

• Customers

• Suppliers

• Colleagues

• Communities

• Shareholders

• Government, parliamentarians

and 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

Key to links to strategy

First choice for food

Loyalty everyone loves

More Argos, more often

Save and invest to win

Board leadership and Company purpose continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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

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

• Suppliers

• Colleagues

• Communities

• Shareholders

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

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 2024.

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

• Delivery of the four strategic outcomes and short,

medium and long-term choices required

• Challenges to achieving the eight strategic

commitments and where improvements would need

to be made across the business, including key

investment and cost-saving priorities

• Cultural change needed for growth

Outcomes

• Agreed the corporate plan and budget for year two of

thestrategy

• Restructuring of central divisions and management

structures to drive Sainsbury’s and Argos’s performance

Next steps

• The Board will continue to receive regular updates on

the strategic outcomes at every Board meeting via

the Chief Executive’s update, as well as deep dive

agenda topics

• Deep dive updates will be presented at the strategy

review day in June 2025

We make good

foodjoyful, accessible

andaffordable

foreveryone, everyday.

Did you know...

The first year of our Next Level Sainsbury’s strategy has built on the

success of our Food First strategy, delivering continuing grocery

market share gains and significant operating leverage. This reflects

the investments we have made over the last four years to improve our

grocery proposition and build sustainable competitive advantage

through strengthening the fundamentals of the business across

logistics, technology and the way we work with suppliers.

Strategy update:

NextLevel Sainsbury’s

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Board leadership and Company purpose continued

Key areas of focus for theBoard continued

More people are choosing

Sainsbury’s for their main

grocery shop

Simon Roberts

Chief Executive

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

• Cancellation of the capital redemption reserve, increasing distributable

reserves by £680 million

• Established a Euro Medium Term Note Programme and refinancing

ofterm loan with newly issued public debt

Benefits and consideration

• Board oversight supports the strategic direction and long-term viability

and ensures that future liabilities can be met

Stakeholders considered

• Customers

• Suppliers

• Colleagues

• Communities

• Shareholders

Link to KPIs

• Group market share performance

• Retail free cash flow

• Return on capital employed

• Retail operating cost to sales

• Underlying profit before tax

Link to strategy

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

Benefits and consideration

• The Board reviews the most significant and principal risks facing

theGroup

• Strengthening the risk and internal control environment is

fundamental to our governance framework

Stakeholders considered

• Customers

• Suppliers

• Colleagues

• Communities

• Shareholders

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

Key to links to strategy

First choice for food

Loyalty everyone loves

More Argos, more often

Save and invest to win

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Matters considered

Culture, diversity and inclusion

Talent, succession and development

Outcome

• Committed to further investment into colleague pay for our

retailcolleagues

• 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 appointment of Katie Bickerstaffe and Steve Hare to the Board

and the appointment

of Patrick Dunne to 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 embedding the Group’s purpose

toenable 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

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

A healthy corporate culture is one

inwhich Sainsbury’s purpose, values

and strategy are respected by its

stakeholders and an operating

environment that encourages employees

to make a positive difference for

stakeholders. TheBoard recognises that,

as well as theworkforce, its relationships

with suppliers and customers can provide

valuable insight into our culture.

Embedding

our purpose

and culture

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, suppliers, 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. Individual Board members visited a range of our

stores during the year, either alone or accompanied by a member of our

management team, to gain insight into different customer journeys and

experiences. In addition, the Board received regular updates on customer

satisfaction scores and the outcomes of supplier surveys. Collectively, these

updates and metrics provide the Board with broad insights into day-to-day

operations, the practical execution of strategy and the culture context in

which our colleagues, suppliers and communities operate. The Board also

receives updates on supplier surveys, including the GSCOP and the Advantage

surveys which provide valuable insights into how Sainsbury’s is viewed

externally. Supplier events are held throughout the year and the Board

engage directly with suppliers via supplier visits.

Our cultural metrics:

Further information on our culture can be found on pages20 to 23

78%

of colleagues told us theyare

able to be themselves at work

84%

of our direct suppliers who

responded in the Grocery Code

Adjudicator survey agreed that

Sainsbury’s conducts trading

relationships fairly, in good

faith and without duress

92%

of colleagues told us their

manager is accessible and

approachable

Focusing on culture

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Board leadership and Company purpose continued

Key areas of focus for theBoard continued

Key to links to strategy

First choice for food

Loyalty everyone loves

More Argos, more often

Save and invest to win

Matters considered

Oversight of our Plan for Better strategy

bythe Corporate Responsibility and

Sustainability Committee

Outcome

• Reviewed our approach to Scope 1 and 2 decarbonisation and approach

to measurement in Scope 3

• Reviewed the future packaging strategy, understanding and reflecting

on the implications of Extended Producer Responsibility legislation

• Continued collaboration with suppliers, industry and government to

understand and address challenges across the UK food system

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

• Suppliers

• Colleagues

• Communities

• Shareholders

• NGOs

Link to KPIs

• Grocery market share performance

• Colleague engagement

• Plan for Better commitment

Link to strategy

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 the implementation of year one of the Next Level

Sainsbury’s strategy

• Completion of a £200 million share buyback programme, delivering

enhanced shareholder returns

Benefits and consideration

• Ensures shareholder sentiment is understood and considered when

making decisions

Stakeholders considered

• Shareholders

Link to KPIs

• Grocery market share performance

• Customer satisfaction score

• Colleague engagement

• Plan for Better commitment

• Retail free cash flow

• Return on capital employed

• Retail operating cost to sales

• Underlying profit before tax

Link to strategy

This year we completed a

£200m

share buyback programme

Did you know...

In March we announced a ten-year partnership with Cranswick to set

new standards in pig welfare and to provide more stability for the 170

farmers in the Sainsbury’s Pork Producer Group as they invest in

farms, factories and procedures to build resilience for the future.

Together we will invest more than £60 million to implement these new

higher standards by 2030, during which time we also aim to offer Taste

the Difference pork that meets net zero by 2029 and by Sainsbury’s

fresh pork that meets net zero by 2030 – all whilst protecting value for

our customers.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Matters considered

Governance matters

Outcome

• Updates from the Chairs of the Committees

• Review of regulatory reforms and implications for Sainsbury’s

• 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.

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

• Suppliers

• Colleagues

• Communities

• Shareholders

• Government, parliamentarians and regulators

Link to KPIs

• Customer satisfaction score

• Colleague engagement score

• Plan for Better commitment

Link to strategy

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

• Updates on food safety, including the impact of macro events on the

global food supply chain

• Responded to the ongoing challenges of increasing retail crime,

including through improving communication locally in every store,

along with enhancing training and development for colleagues

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

• Suppliers

• Colleagues

Link to KPIs

• Customer satisfaction score

• Colleague engagement score

• Plan for Better commitment

Link to strategy

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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.

The induction programme includes a combination of senior management

meetings, site visits and a library of documents which is shared with all new

Directors. The programme is adapted to reflect changing business priorities,

the experience and expertise of the new Director and the role they will

perform. For example, an individual to be appointed to the Remuneration

Committee would have additional meetings with senior members of the

reward team and the remuneration advisers; those joining the Audit

Committee would have a more detailed finance and audit programme;

andaNon-Executive Director joining the Corporate Responsibility and

Sustainability Committee would have additional meetings with the

Directorof Sustainability and their team. Further details on the induction

programme are detailed in the table below.

As part of the induction process for Katie Bickerstaffe and Steve Hare, they

will meet with Board members and senior leadership and visit stores,

providing them with an excellent opportunity to engage directly with store

colleagues. The induction programmes have been tailored to reflect their

individual experiences and skills and build an understanding of key

business challenges, colleague experience and the culture embedded across

the business.

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. External advisers attended Board dinners to provide an outside-in

perspective of the Group’s strategy and held discussions on data and

analytics, the fundamentals of generative artificial intelligence and how

technology can be used to improve colleague engagement and productivity.

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 15

Directors are encouraged to visit a wide range of stores, both individually

and with members of the management team. This builds the Directors’

understanding of the different customer journeys and enables them to

interact directly with store colleagues.

1 Understanding the business

• 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

2 Understanding the sector and environment

• 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

3 Meeting the Sainsbury’s internal team

andadvisers

• Directors

• Committee Chairs

• General Counsel and Company Secretary

• Members of the Operating Board

• Senior leadership across the business

• Members of the external audit team

• Remuneration consultants

• Brokers

• Other key advisers, dependent on role

4 Visiting Group operations

• Store visits

• Distribution centres

• Store support centres

Evolving our

approach

The Directors’

induction

process

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 sustainability matters from management. All members of the Corporate

Responsibility and Sustainability Committee and each of the Committee

Chairs received training on Scope 3 emissions.

More information can be found on pages 92 to 95

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 UK Corporate Governance Code and

Directors’ responsibilities under Section 172 of the Companies Act.

Inaddition, the Board received updates on the corporate governance

reforms and the 2024 UK Corporate Governance Code and training on key

topics which are relevant to the implementation of strategy and changing

regulation. Directors have access to advice from the General Counsel and

Company Secretary and independent professional advice is available at

theCompany’s expense, if necessary, in relation to fulfilling their duties

andresponsibilities.

2024/25 training and development activities

• Internal Controls programme updates at every Audit

Committeemeeting

• Updates on the UK Corporate Governance and Audit reforms

• An overview of the NIST Cybersecurity Framework and examples

of the Group’s compliance with the framework

• Store visits and engagement with key suppliers

• Sustainability updates, including Scope 3 training

• Presentation from external advisers on:

– Data and analytics strategy

– Generative artificial intelligence

– Technology as a tool for enhanced engagement and

productivity

Board evaluation

A combination of Board

evaluation and Director

appraisal

Progress and actions

implemented during

2024/25

Agreed actions for 2025/26

and beyond

Year 2

Internally

facilitated review

Year 3

Internally

facilitated review

Year 1

Independent

and externally

facilitated review

Board evaluation cycle

The Board monitors its performance through an annual assessment to ensure the Board remains effective, which includes an assessment of the

performance of the Board, its Committees and Directors. The review is externally facilitated every three years with the last external review undertaken by

Clare Chalmers during 2022/23. The next external review will be in respect of the 2025/26 financial year. The outcome of the review is reported to the Board

and each individual Director, enabling the Board to strengthen and enhance its performance, skills and experience in alignment with Group strategy.

Progress against actions identified from the 2023/24 internal Board evaluation

Key areas of focus from 2023/24 review Progress and actions implemented during 2024/25

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

The Board received regular updates on the strategic outcomes as part of the

CEO update. Deep dives on specific topics were added to the Board’s forward

agenda, with deep dives on each of the strategic outcomes provided at the

July and October strategy reviews

Colleague engagement

Provide greater visibility of high potential colleagues, ideally in a store environment

The Board received regular updates from the Operating Board and key

members of their teams during the year, some of which took place in stores.

This has been identified as an area of continued focus for 2025/26

Skills and experience of the Board and Committees

Skills matrix to be reviewed and top five skills identified

The skills matrix was reviewed and approved by the Nomination and

Governance Committee during the year

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Internal Board evaluation process for 2024/25

A summary of each

interview was

prepared, together

with individual

actions.

These were then

collated into one

report for discussion

at Board and

Committee meetings

The Board and

Committees

discussed the results

of the review.

Individual feedback

was provided to the

Directors by the Chair

and by the Senior

Independent Director

to the Chair

The Board and

Committees agreed

an action plan for

implementation in

2025/26.

Progress against the

action plan will be

reviewed by the

Nomination and

Governance

Committee

throughout

theyear

An agenda for the

interviews was

agreed with the Chair

and General Counsel

and Company

Secretary.

The interviews

discussed past

performance and

topics for future focus

Analysis Discussion

Action

plan

Board

interviews

This year’s internal evaluation was conducted from December 2024 to

February 2025 and was led by the General Counsel and Company Secretary,

who met with each Director on an individual basis to carry out the evaluation.

The review explored the effectiveness of the Board over the year, themes

that arose for action in the 2023/24 internal evaluation and key topics for

oversight during 2025/26.

The review was carefully structured to encourage debate on issues that were

relevant and 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. Each Director was

given the opportunity to raise their own additional points. Their discussions

remained confidential and no views were attributed to any individual in the

final report.

Following the individual discussions, the General Counsel and Company

Secretary 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. In accordance with the 2018 UK 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.

Findings of the 2024/25 review

The report identified a number of strengths of the Board, including:

• The Board’s dynamic was effective, with a good balance of skills

and experience, support and challenge

• The Board continues to operate effectively, with the Chair being

praised for running a tight agenda and fostering an inclusive

decision-making process

• The Board continues to have a constructive relationship with the

Operating Board

• The Chief Executive has an open style which was a key factor in

facilitating effective decision-making

• The strategy process was run well and the Board continues to

operate in a transparent and open manner

The review identified some opportunities for the Board, including the

following key priorities:

• Skills and experience: increase the amount of retail and technology

experience on the Board to be increased to provide a broader

perspective

• Succession planning: increase the number of Nomination and

Governance Committee meetings to enable increased discussion

of succession planning and talent development of senior

management to feature more often on the agenda

• Colleague engagement: Board members to be matched with rising

talent to ensure periodic contact and mentorship

• Customer voice: incorporate broader perspectives into customer

insight sessions, expanding on existing updates on customer

feedback and consumer sentiment

An action plan for the Board and its Committees has been developed

which will be reviewed to track progress throughout the 2025/26 year.

Composition, succession and evaluation continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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, and is supported by the Company Secretary. Our Board

members’ responsibilities are listed below and more information on their specific contributions can be found in their biographies on pages 71 to 75.

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

• Ensuring the performance of the Board, its Committees and individual

Directors are reviewed at least once a year, and acting on the results

Independent Non-Executive Directors

Jo Bertram

Jo Harlow

Adrian Hennah

Tanuj Kapilashrami

Keith Weed CBE

Katie Bickerstaffe (with effect from 3 July 2025)

Steve Hare (with effect from 3 July 2025)

• 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

Nick Grant

• 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, risk management and

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 (retiring with effect from 3 July 2025)

Adrian Hennah (appointed with effect from 3 July 2025)

• 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, Corporate Responsibility and

Sustainability, Nomination and Governance, and Remuneration. The Chair of

each Committee provided a detailed summary of Committee activities and

decisions at the Board meeting following the relevant Committee meeting.

Where appropriate, non-Committee members are invited to attend specific

Committee meetings to facilitate Board discussion. For example, all

members of the Board attended the Nomination and Governance

Committee to hear the results of the Board evaluation and all members of

the Board attend the Audit Committee ahead of the announcement of the

preliminary results.

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 70 shows the attendance of Directors at scheduled Board

meetings. The Board held nine scheduled meetings during the year,

together with additional unscheduled meetings which were well attended

by all Directors.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 2024/25

• Carried out a robust recruitment process, culminating in the appointment

of Katie Bickerstaffe and Steve Hare as Non-Executive Directors

• Reviewed progress against the Board evaluation action plan

• Completed the annual evaluation of the Board and its Committees,

identifying actions for implementation in 2025/26

• Approved changes to the Group’s governance framework to align

with the 2024 UK Corporate Governance Code

• Reviewed and approved the Directors’ register of interests

• Recommended to the Board that all of the Directors, other than

Brian Cassin, who will be stepping down at the AGM, stand for

election and re-election at the AGM

• Reviewed and approved talent and succession planning for the

Operating Board and senior management

• Approved the revised Board diversity policy

Dear Shareholder

On behalf of the Board, I am pleased to

present the Nomination and Governance

Committee’s report for 2024/25, 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

Succession planning

It’s been a busy year for the Committee, which 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 69 demonstrates

the broad diversity and experience of the Board.

Brian Cassin has notified the Board that he will not seek re-election at the

Sainsbury’s AGM on 3 July after nine years’ service. The Board has appointed

Adrian Hennah, who has been a member of the J Sainsbury plc Board since

April 2021, to succeed Brian as Senior Independent Director with effect

from3July.

Katie Bickerstaffe and Steve Hare will join the Board on 3 July 2025 and I look

forward to the part that they will both play in delivering Next Level Sainsbury’s.

The Committee recommended the appointment of Katie and Steve to the

Board following a rigorous recruitment process which incorporated the work

completed during the year to identify the skills and experience required to

deliver our strategy.

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.

Diversity, equity and inclusion

The Board continues to make good progress against its diversity, equity and

inclusion strategy. The diversity of the Board is detailed on page 70 and I am

pleased to report that we continue to be 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.

Board evaluation

I am pleased to confirm that this year’s Board evaluation, which was

conducted internally, found that the Board and its Committees, including

the Nomination and Governance Committee, continued to operate effectively.

Further details can be found on pages 85 and 86

Martin Scicluna

Chair, Nomination and Governance Committee

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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. During the year, the Committee followed this

procedure during the search for the new Non-Executive Directors, Katie

Bickerstaffe and Steve Hare. Egon Zehnder was engaged by the Committee as

the external executive search consultant. They had no connection with the

Company prior to appointment as recruitment consultant and had no relevant

connection with individual Directors. The Committee briefed the search

consultant on our specification, and we considered and interviewed awide

and diverse range of candidates for each role. The Board was unanimous inits

decision to appoint Katie and Steve as Non-ExecutiveDirectors.

Identify

The Committee discussed the overall skill sets of the

Board and agreed a detailed job specification, skill set

and preferred attributes for the appointees. A thorough

review of potential candidates was undertaken and

Egon Zehnder presented a diverse long list of external

and internal candidates from a broad range of backgrounds.

The Committee shortlisted a number of candidates.

Interview

The Chair and each of the Directors met the shortlisted

candidates who confirmed their interest in the role.

Following the interviews, the Nomination and Governance

Committee members met to discuss feedback.

Select

The Committee discussed and was unanimous in its

selection of the final candidates. It recommended to

the Board that Katie Bickerstaffe and Steve Hare be

appointed as Non-Executive Directors. Their specific

contribution to the Company can be found in their

biographies on page 73.

Appoint

Katie Bickerstaffe and Steve Hare’s appointment as

Non-Executive Directors was announced on 3 April 2025

and they will join the Board on 3 July 2025.

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.

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 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 two scheduled meetings 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 70.

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 the existing Operating Board

structure to support faster decision-making and drive performance at both

Sainsbury’s and Argos. Rhian Bartlett’s role was changed to Chief Commercial

Officer, Sainsbury’s and Graham Biggart became Managing Director Argos

and Chief Strategy and Supply Officer. We also announced the appointment

of Patrick Dunne to the Operating Board as Chief Property and Procurement

Officer and MD for Smart Charge.

Further information on the changes to the Operating Board can be found on

page 75

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, Patrick Dunne, Mark Given and Clodagh Moriarty,

progressing through this route.

Our Leadership Acceleration, 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 the Directors as appropriate.

Priorities for next year

• Continued oversight of the business’s diversity, equity and

inclusionstrategy

• Implementation of actions arising from the Board evaluation in 2024/25

• Review of talent and succession planning for senior management

• Implementation of revised governance framework and ensuring

compliance with the 2024 UK Corporate Governance Code

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Succession planning continued

Board effectiveness and evaluation

The Board and senior management set the tone from the top and lead

byexample through effective management and good stewardship.

Effectiveness of the Board encompasses many aspects of Board governance

including: matters reserved for the Board and delegation of authority; review

of Board and Committee performance; Board and Committee composition

and succession planning; review of skills and expertise; independence; time

commitments; conflicts of interest; and Director election and re-election.

The Committee undertakes detailed reviews of each of these aspects at

least annually and oversees the Board performance evaluation process.

TheCommittee reviewed the progress of the actions identified through the

2023/24 evaluation and discussed whether any further actions were needed.

In addition, the Committee reviewed the proposed approach to the internal

2024/25 evaluation of the Board, Committees and Directors, considering the

key themes and focus of the review.

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 and

strategic guidance and holds management to account.

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. Other than Brian Cassin, who will be stepping

down at the conclusion of the AGM in July 2025, the Committee concluded

that there were no reasons identified to prevent any Director from being

recommended for election or re-election at the 2025 AGM.

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 22

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,

with good progress being made against these targets.

We have renewed our commitment to increasing gender and ethnic diversity

at the senior levels of the organisation with a set of new representation targets

for 2024 to 2028. We have set stretching targets to achieve 50 per cent

women senior leaders

, 50 per cent women senior managers, 15 per cent

ethnically diverse senior leaders

and 15 per cent ethnically diverse senior

managers by 2028.

Further information on our progress against these targets can be found on

page 23

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.

The Board’s diversity policy applies to the Board and its Committees and

complements the Group’s wider diversity strategy.

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

and personal strengths and backgrounds.

We are keen to ensure that Board and Committee membership reflects

diversity in its broadest sense, our colleague base and the communities in

which we serve. As at 1 March 2025, the Board met each of the FCA Listing

Rules and FTSE Women Leaders Review targets of maintaining a minimum

of 40 per cent female representation on the Board, with female

representation at 44 per cent. With effect from the conclusion of the AGM in

July 2025, this will increase to 50 per cent.

Further details on the implementation of the diversity policy can be found in

the table on page 21

As at 1 March 2025, one member of the Board was from an ethnically diverse

background, meeting the target set out in the FCA Listing Rules and the

Parker Review recommendations.

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 21 to 23

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 and its Committees have 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 the composition of the

Board and its Committees, succession planning, talent development and the

broader aspects of diversity.

More information on the Group’s diversity and inclusion strategy can be

found on pages 21 to 23, including diversity information of our senior leadership

and management positions

Nomination and Governance Committee report continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Objective Implementation Progress

Maintain a level of at least 40 per cent female

representation on the Board and senior

management

Regular succession planning sessions are undertaken to

review the Board and Committee composition to ensure

that the appropriate balance of skills and experience are

inplace

Independent executive search firms are required to ensure

any Director searches include a diverse range of candidates

As at 1 March 2025, four of our nine Board

Directors are female (44 per cent)

With effect from the conclusion of the AGM

in July 2025, 50 per cent of the Board will

befemale

Appoint a female director to at least one of

thesenior Board positions (Chair, Chief Executive,

Senior Independent Director or Chief

FinancialOfficer)

Consideration of this topic is given as part of the succession

planning process; as well as the development of our

internal talent pipeline

Independent executive search firms are required to ensure

any Director searches include a diverse range of candidates

Bláthnaid Bergin holds a senior Board

position as Chief Financial Officer

Maintain at least one Director who identifies as

ethnically diverse

Succession planning considerations ensure the balance

ofskills and experience on the Board to deliver on

long-term strategy

Independent executive search firms are required to ensure

any Director searches include a diverse range of candidates

One of our Board Directors identifies

asethnically diverse

Assist the development of a pipeline of high

calibre candidates by encouraging a diverse

range of senior individuals within the business

to take on additional responsibilities and roles

to gain valuable board experience

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

1 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 200 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 200 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 1 March 2025 (the reference date), the

Company has complied with the Board diversity targets detailed in Listing Rule 6.6.6R(9).

There have been no changes to the Board between the reference date and the date on which this Annual Report was approved. On 3 April 2025, the

Company announced that Katie Bickerstaffe and Steve Hare would join the Board on 3 July 2025.

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

Percentage of

executive

management

Men 5 56% 3 4 50%

Women 4 44% 1 4 50%

1 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

Percentage of

executive

management

White British (or other White including

minority-white groups) 7 7 7.8% 4 7 87.5%

Mixed/Multiple ethnic groups 0 0% 0 0 0%

Asian/Asian British 1 11.1% 0 1 12.5%

Black/African/Caribbean/Black British 0 0% 0 0 0%

Other ethnic group 0 0% 0 0 0%

Not specified/ prefer not to say 1 11.1% 0 0 0%

1 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.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

(GHG) emissions to 448,734 tCO2e – a reduction of 52.8% from our 2018/19

baseline. Within Scope 3 we have set a target to reduce FLAG emissions by

36.4 per cent and our energy and industrial emissions by 50.4 per cent by

2030, which is aligned with a 1.5°C emission reduction trajectory, thelatest

and most ambitious SBTi target requirement (further information on our

targets canbe found in our TCFD report on page 31). Whilst data and

measurement continue to be a challenge for Scope 3 reporting, we have

engaged with 255 ‘key carbon suppliers’ which account for 80 per cent of our

Scope 3 emissions and encouraged them to get approved SBTi targets by the

end of 2030. 39.8 per cent of our Scope 3 emissions are now covered by

suppliers with either a 1.5 degree net zero target, or any other 1.5 degree

target approved by the SBTi, representing a 100 per cent increase year on

year in the number of suppliers with such targets . Our environmental

progress and transparency has again been recognised by the CDP which

awarded us an A rating for climate change disclosures, making us the

onlyUK food retailer to have achieved this for 11 consecutive years.

Plastic reduction is a key sustainability concern for our customers and we

have made significant investment in progressing towards our ambition to

reduce our plastic packaging use. In 2024, we became the first major retailer

to vacuum pack lamb mince, replacing traditional plastic tray packaging,

using a minimum of 65 per cent less plastic. We were also the first retailer to

introduce pulp trays for fresh salmon and trout, along with cardboard

packaging for our fresh breaded chicken and fish products, saving 649

tonnes of plastic a year, and the world’s first retailer to introduce plastic-free,

oil-resistant, recyclable paper tub through Flora Plant Better. However, the

reality is that finding the right alternatives isn’t always simple. Some materials,

like films and polystyrene don’t yet have viable replacements that keep food

fresh and safe and the UK’s recycling system isn’t fully equipped to handle

certain materials. The expanded scope of Extended Producer Responsibility

(EPR) legislation is starting to drive real action, encouraging us all to rethink

packaging all together and focus more on recyclability.

Charitable partnerships

It’s now 25 years since we partnered with Comic Relief and three years

sincewe launched our Nourish the Nation community programme together,

funding initiatives designed to resolve immediate hunger, tackle food insecurity

and improve access to balanced, nutritional and sustainable food. Since its

launch in 2022, Nourish the Nation has raised over £21 million for Comic

Relief, providing more than 31 million meals for those who need them most.

We continue to work with Neighbourly on our ‘Good food for all of us’

Community Grant Scheme, with colleagues from our depots and stores

nominating a not-for-profit partner to receive a grant of at least £500 to help

tackle food poverty. Since 2021, we have donated over £4 million for good

causes. This year we supported 605 local initiatives, donating over £1 million

to help support our local communities.

Partnering with our suppliers

We’re creating a new culture of collaboration and long-term partnership to

deliver shared value and build a resilient supply chain, which will enable us

to offer good food to our customers now and in the future. In March 2025, we

announced a ten-year partnership with Cranswick to set new standards in

pig welfare and to provide more stability for the 170 farmers in the Sainsbury’s

Pork Producer Group as they invest in farms, factories and procedures to

build resilience for the future. Together, we will invest more than £60 million

to implement these new higher standards by 2030, during which time we

also aim to offer Taste the Difference pork that meets net zero by 2029 and

by Sainsbury’s fresh pork that meets net zero by 2030 – all whilst protecting

value for our customers. Our partnership with Moy Park has set new

standards around chicken welfare, reduced carbon emissions and created a

new long-term deal for farmers. A large proportion of our fresh products are

now on long-term agreements, and we have made good progress across a

broad range of product areas.

We’ve worked hard to incentivise action in carbon hotspots through key

supplier groups such as our Sainsbury’s Dairy Development Group, where we

offer farmers an extra premium for implementing animal welfare and sustainability

measures. Marking a significant step, and a UK first, our new Sainsbury’s Egg

Group aims to provide financial stability, encourage investment, enhance

Corporate Responsibility and Sustainability Committee report

Dear Shareholder

It has been a busy year for the

Committee as we continue to deliver

against our sustainability agenda.

As a Committee, we focus on overseeing the implementation of our Plan

forBetter strategy across the Group, ensuring it is aligned to our purpose,

strategy and valued behaviours.

The retail sector is facing challenging economic headwinds, rising costs and

increasing disclosure requirements with the expected adoption ofthe IFRS

general and climate-related standards by the UK Government and a growing

need for traceability with legislation such as EU deforestation regulations.

Whilst the environment is challenging, our Next Level Sainsbury’s strategy

enables us to adapt in the face of uncertainty and to invest where itmatters

the most. We continue to play a leading role in creating a more sustainable

food system in the UK to make good food available for everyone.

We launched our sustainability strategy, Plan for Better, in 2021, focusing on

three key pillars: Better for you, Better for the planet, and Better for everyone.

This strategy, which forms part of the Next Level Sainsbury’s strategic

commitments, provides the Committee with a clear set of focus areas

whichwe prioritise for action.

Stakeholder engagement

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. The Committee

conducted a site visit to G’s, one of the Group’s fresh produce suppliers, to

see first hand the impact that sustainability initiatives have on the growing

process, together with future opportunities for change. In October Sainsbury’s

became the first UK supermarket to introduce conventional mushrooms

grown without peat, as a result of close collaboration with our supplier

Monaghan, which spent ten years researching peat alternatives.

Further information on ton our stakeholder engagement can be found on

pages 25 to 30.

Progress against targets

During the year we reviewed progress against our targets, ensuring that we

have robust plans to address the social and environmental challenges facing

the world, and made good progress on integrating Plan for Better into our

strategic outcomes.

We remain committed in our efforts to reduce greenhouse gas (GHG)

emissions across the value chain. In our Scope 1 and 2 we continue to work

towards our target to reduce emissions by 68 per cent by 2030 and net zero

by 2035. In our operations, we have reduced our absolute greenhouse gas

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

animal welfare and reduce carbon. We also became the first retailer globally

to invest in Vet Vision AI technology to measure and enhance positive

animal welfare on dairy farms. 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 our Plan for Better targets.

I am pleased with 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 further understanding and prioritising our most material risks and

opportunities and continuing our work in collaboration with suppliers,

industry and government to understand and address challenges across

theUK food system. Not only is this 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

Key activities in 2024/25

• Approved the year-end results and reporting for 2023/24 including

Sustainability Accounting Standards Board (SASB) disclosure

• Reviewed customers’ perceptions across the Plan for Better pillars

• Reviewed progress against the communities and partnership

strategy in 2023/24 and agreed priorities for 2024/25

• Reviewed the Plan for Better targets, including the key risks and

dependencies to deliver. Topic discussions included healthy and

sustainable diets, plastic and human rights. Proposals for targets

beyond 2025 were reviewed and approved, including potential

metrics for the 2025 LTIP

• Discussed the impact of the Extended Producer Responsibility

legislation (EPR) for packaging and the Group’s future approach to

packaging

• Received updates on Scope 1, Scope 2 and Scope 3 carbon

emissions and renewable energy

• Renewed our ambition to increasing gender and ethnic diversity at

the senior levels of the organisation with a set of new

representation targets for 2024 to 2028

• Discussed the Group’s performance in the Advantage survey and

identified strengths and opportunities for the future

• Received updates on the government relations strategy for 2024/25

• Reviewed the investor Plan for Better communication strategy and

approved future investor engagement plans

• Received training on Scope 3 emissions, including the challenges

and steps the Group is taking to report on these emissions

• Approved changes to the Committee’s terms of reference

Priorities for next year

• Approval of the year-end results and reporting for 2024/25

• Continue to focus on embedding Plan for Better into all aspects of

the Next Level Sainsbury’s strategy and financial planning

• Assess future reporting regulations and disclosure readiness, including

TNFD, UK Sustainability Disclosure Standards and IFRS ISSB

• Refine our Climate Transition Plan including levers and roadmaps

for key hotspots

• Evolve our approach in healthy and sustainable diets whilst

influencing the system through sector advocacy and collective action

• Deliver our evolved packaging strategy, assessing the impact of

legislative change such as Extended Producer Responsibility (EPR)

modulated fees and their impact to the strategy

• Oversee progress towards delivery of our deforestation and

conversion free target and evolve our future approach to

protecting and regenerating nature

• Update our materiality assessment to ensure continued focus on

material issues

• Oversee our approach to enhanced human rights due diligence

• Continue to focus on accelerating action to reduce food waste

• Listening and learning from stakeholders, including customers,

community, government, investors and suppliers to further

enhance our strategy

• Upskilling and training including supplier visits and guest speakers

Supplier site visit

In March 2024, the Committee conducted a site visit to G’s, a

vertically integrated, family owned fresh produce company who has

been supplying Sainsbury’s with fresh produce for over 60 years. The

visit explored how long-term strategic partnership has enabled the

G’s business and Sainsbury’s to drive effective progress towards

sustainability performance and resilience. Sustainable agricultural

initiatives and innovations were discussed across a range of material

topics from soil, peat, carbon, biodiversity, water and labour. G’s

shared the challenges the UK horticulture sector faces in these areas

which led to discussion on the role of business, industry and

government in taking collective action to improve the system.

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 integrated into every

aspect of our business and overseeing updates and progress

against our targets and ambitions

• 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’s 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

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 General Counsel and Company Secretary or his nominee acts as the

Secretary of the Committee. Following her appointment to the Board in July

2025, KatieBickerstaffe will join the Committee.

Other attendees include: Chief Marketing, Data and Sustainability Officer,

Director of Corporate Affairs, Director of Sustainability and the Deputy

Company Secretary.

Through the annual Board evaluation process (pages 85 to 86), the Boardhas

confirmed the effectiveness of the Corporate Responsibility and

Sustainability Committee.

Complementing the Committee’s role, the Audit Committee is responsible

for overseeing the assurance of our Plan for Better targets 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 three scheduled meetings in the year. Attendance at

the Corporate Responsibility and Sustainability Committee meetings can

befound on page 70.

Further information on our the Group’s sustainability agenda can be found on

pages 16 to 19 and in our Plan for Better report, available at www.about.

sainsburys.co.uk

J Sainsbury plc Board

Oversight of the sustainability strategy

Chair: Martin Scicluna, Chair

See page 71 for bio

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

See page 71 for bio

Plan for Better Acceleration Squad

Leads operational execution of our sustainability strategy,

Planfor Better, by overseeing activity, ensuring delivery

ofperformance

Chair: Mark Given, Chief Marketing,

Data and Sustainability Officer

Attendees include the Chief Commercial Officer, Sainsbury’s,

ChiefProperty and Procurement Officer, MD Smart Charge,

Director of Sustainability, Directorof Corporate Affairs, Director

of Finance and subject matter experts from different areas of

the business

Remuneration

Committee

Reviews remuneration targets

aligned to the sustainability

strategy

Chair: Jo Harlow, Non-Executive

Director

Audit Committee

Reviews risks and confidence in

disclosures aligned to our

sustainability strategy

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

1 Remit of Committee in relation to the sustainability strategy. For full details on the Committees, please read the Remuneration Committee report on page 111 and the Audit

Committee report on page 96.

Corporate Responsibility and Sustainability Committee report continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Plan for Better

Sustainability underpins our purpose - to make good food joyful, accessible

and affordable for everyone, every day – 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 16 to 19.

Progress on conversion-freesoy

We are proud of the progress made across six commodities linked to

deforestation (see the standalone Plan for Better Report for more

details), but our target of achieving conversion-free soy by 2025

continues to face significant industry-wide challenges. Increasing

demand for soy has led to the conversion of millions of hectares of

forests, grasslands and savannahs, with production doubling globally

over the last two decades. To achieve a reliable and verifiable

conversion-free supply chain, we need to work collectively both

within the UK and through global initiatives toengage directly with

traders.

This year, we made a £300,000 investment in the Produce, Conserve,

Inform initiative in Mato Grosso, Brazil. This supports the sustainable

development of soy and cattle farming by protecting and restoring

forests and natural habitats, improving farming practices, promoting

strong local governance and strengthening protections for indigenous

peoples. This will support the production of deforestation and

conversion-free soy in an important sourcing area and strengthens

the resilience of our supply chain with greater traceability.

We are also committed to extending our existing investment in the

Responsible Commodities Facility until 2030, giving green loans to

soy farmers on the condition of no deforestation or conversion, while

providing technical support for agroforestry.

Decarbonisation roadmaps

The Committee oversaw carbon reduction roadmaps in Scope 1 and 2

and two Scope 3 areas: fuel and agriculture. This included engaging

suppliers to set SBTi targets. Key levers and investment needed for

Scope 1 and 2 decarbonisation as well as the use of REGOs were

discussed, with suggestions provided for refinement before future

discussions. The Committee supported the Scope 3 roadmaps,

keylevers identified and the supplier engagement approach.

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 engagement across these stakeholder groups, with

deep dives of individual groups at each meeting.

The Committee was updated on the latest investor feedback on

sustainability themes and the Company’s sustainability communication

activities and plans for future investor sustainability engagement.

The Committee reviewed our engagement with suppliers, including the

Advantage Suppliers Survey which helped determine focus areas for the

year ahead. More information on suppliers can be found on page 28.

Updates were provided to the Committee on recent and upcoming political

milestones and the government engagement strategy for 2024/25, including

key focus areas on health, packaging and engagement with key government

figures and departments.

Further information on stakeholder engagement can be found on pages 25

to30

Packaging

The Committee discussed the changing legislative landscape

(Extended Produce Responsibility) and the recommendation to set

atarget to reach 100 per cent recyclable or reusable packaging,

providing challenge for the need to set a time bound targets when

appropriate given current legislative uncertainty. The Committee

emphasised the role for Sainsbury’s engaging government and wider

industry bodies to ensure the enabling environment is in place such

as appropriate recycling infrastructure and material availability and

stressed the need to continue to clearly engage customers on

reduction and material changes.

Material sustainability matters

During the year, the Committee received deep dive presentations on

anumber of key issues:

• Delivery of the Plan for Better targets, including the evolution of

thegovernance framework with a new Acceleration Squad, revised

membership and scope to accelerate decision-making and

prioritiseintegration

• Performance against existing and proposals for future sustainability

related LTIP targets for recommendation to the Remuneration Committee

• The Group’s progress against the community and partnership

programme, including the challenges faced by communities, customers

and colleagues. The Committee also discussed key priorities including

stepping up support for local communities and the launch of the

Neighbourly platform to all colleagues

• Reviewed carbon reduction roadmaps in Scope 1 and 2 and two Scope 3

hotspots (fuel and agriculture) including discussion on the future

purchasing of REGOs and supplier engagement approach on SBTi targets

• The challenges faced disclosing Scope 3 emissions and action plans to

address these and implications for our reporting approach. The Committee

also discussed the capital choices over the next ten years to support

delivery of net zero

• An overview of the Group’s climate transition plan and key actions

todrive progress, aligned to the Next Level Sainsbury’s strategy

• The Group’s progress against our health targets and the wider context,

including lack of impact seen by HFSS legislation, 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

• Progress made against the Group’s plastic targets with an update on the

expansion of our future strategy to include all packaging - with a focus

onrecyclability – in response to the changes in the legislative context,

including EPR

• Insights into consumer knowledge, perceptions and attitudes towards

sustainability matters, noting that understanding of issues varies from

topic to topic but customers are most concerned about plastic and

recycling, food waste, water and carbon emissions

• An update on human rights issues and risks, impact to the Group and key

actions taken to mitigate risk

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Audit Committee report

Dear Shareholder

I am pleased to present the Committee’s

report for the year ended 1 March 2025.

This report is intended to provide

shareholders with an insight into the

principal areas considered by the

Committee, together with how the

Committee has discharged its

responsibilities during theyear.

The Committee assists the Board 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 matters disclosed and reported upon

address the needs of our stakeholders. During the year, the Committee has

focused on the continued evolution of the Group’s systems of internal

control, the quality and effectiveness of the external and internal audit and

a number of matters aligned with the Group’s principal risks.

Cyber security

Cyber security is an area that requires ongoing attention and vigilance, and

the Committee receives regular updates from the Group Chief Information

Security Officer and Director of Data Governance. 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 2024/25 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.

In2024, the Group announced an increase in investment in technology as

part of its next three-year plan; 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

designing, implementing and operating appropriate security measures.

Cyber security will continue to receive attention this year.

Internal controls

Work has continued on the evolution of the Group’s internal core financial

and operating internal controls. Good progress has been made in further

strengthening the Group’s internal controls, including improved documentation

and testing of our control environment, the strengthening of IT general

controls and Internal Controls over Financial Reporting (ICFR). Following

publication of the revised 2024 UK Corporate Governance Code, the scope of

the internal control programme has expanded to include material operational,

compliance and financial and non-financial reporting controls linked to our

principal risks.

Sainsbury’s Bank

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 is a Non-

Executive Director of Sainsbury’s Bank and a member of the Bank’s Audit

and Risk Committees, which provides the Group Audit Committee with

another line of sight on activities within the Bank. During the year, the Group

concluded the review of the Financial Services business, resulting in the sale

of Sainsbury’s Bank plc’s Core Banking business, constituting personal loan,

credit card and retail deposit portfolios, to NatWest Group. We also announced

the sales of our Argos Financial Services cards portfolio to NewDay Group

and our ATM business to NoteMachine.

External auditor

In last year’s report, we reported on the outcome of the external audit

tender including the Committee’s recommendation to appoint

PricewaterhouseCoopers (PwC). 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), which has been the Company’s auditor since July

2015, will continue in the role until that time, and has therefore undertaken

the Group audit for the year ending 1 March 2025.

Details of the external audit transition are set out on page 100.

Committee changes

As announced on 3 April 2025, Brian Cassin will step down from the Board

and the Audit Committee at the conclusion of the AGM on 3 July 2025.

Following his appointment to the Board in July, I am pleased to announce

that Steve Hare will join the Audit Committee on 3 July 2025.

Committee effectiveness

Through the annual Board evaluation process (pages 85 to 86), the Board has

confirmed the effectiveness of this Committee in its role of supporting the

Board in compliance with its duties. Looking ahead to 2025/26, 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

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 71 to 73.

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,

Chief Executive, Chief Financial Officer, Director of Internal Audit, Risk and

Resilience, Director of Group Finance, General Counsel and Company

Secretary, Deputy Company Secretary, Chief Information Officer, 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 70

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 auditor, 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 separately 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; Plan for

Better sustainability 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 to 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 the

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 findings of the internal audit function

• Reviewing the Committee’s terms of reference, carrying out an

annual performance evaluation exercise and acting as appropriate

on the findings of the evaluation

• 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 2024/25

• Reviewed financial reporting, including the processes in place to

ensure the Annual Report and Financial Statements are fair,

balanced and understandable

• Reviewed cyber security and the IT control environment,

incorporating deep dives on, and continued monitoring of, cyber risk

• Assessed the Plan for Better sustainability metrics, reporting

andassurance

• Considered management’s assessment of the status of ongoing

regulatory investigations and litigations

• Reviewed the continued evolution of our risk management and

internal controls framework

• Adopted the Financial Reporting Council’s ‘Audit Committee and

theExternal Audit: Minimum Standard’, noting that the majority of

provisions are already met by the Group

• Monitored the transition plan for the external auditor

• Updated the terms of reference of the Committee in line with the

2024 UK Corporate Governance Code

Priorities for next year

• Cyber security

• Internal control evolution and preparation for the new attestation

• Transition of the external auditor

• Implementation of the revised terms of reference

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 reviewed 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 54 to 62

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 five Non-Executive Directors,

four of which are independent. The Bank Chief Executive Officer and Bank

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, including in particular updates on the withdrawal

from the Core Banking business. There is regular communication between

Sainsbury’s internal audit function and its equivalent within the Bank.

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 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 103

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.

Committee governance continued

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, impairments,

non-GAAP metrics (Alternative Performance Measures), and the impact

ofthe Group’s strategic review of its Financial Services division.

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.

In January 2025, the Group established a Euro MTN (EMTN) Programme

which provided a platform for accessing the public bond markets, and also

published two investment grade credit ratings, Moody’s Baa3 and S&P BBB.

The publication of the investment grade credit ratings facilitated a re-entry

into the bond markets with the issuance of £550 million of investment grade

public bonds (Bonds) under the EMTN Programme, split between a five-year

£250 million trance and a ten-year £300 million tranche. The proceeds of the

Bonds were used to prepay the £575 million term loan.

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 63

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 126) 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 Annual Report and provided feedback on it,

highlighting any areas that required further clarity. The draft Annual

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

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.

Audit Committee report continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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

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 and other 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 non-audit work undertaken by EY during 2024/25 related to services

provided in relation to the establishment of the Euro MTN (‘EMTN’)

Programme which provided a platform for accessing the public bond

markets. The total non-audit fees were £0.1 million. The audit fees for the

year in respect of the Group and subsidiaries were £4.3 million. A breakdown

of the fees is provided in note 8.4 of the consolidated financial statements

on page 160.

Management collated the

responses and reported back

tothe Board and the

AuditCommittee.

The results of the review were

discussed and feedback

provided to the external auditor.

It was determined that EY

maintained good working

relationships and had

demonstrated strong

technical understanding,

particularly evident in its

audit of inventory and our

phased withdrawal from

Core Banking, and in its

Treasury and Climate

specialist teams. Previously

identified improvements

had been implemented.

Questionnaires were

distributed 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.

Analysis Discussion OutcomeQuestionnaires

Audit effectiveness review for 2024/25

The Audit Quality Review team of the Financial Reporting Council (FRC) wrote

to the Chair of the Committee setting out the scope of its review into EY’s

audit of the Group’s financial statements for the period ended 2 March 2024,

a summary of the key findings, and the actions which EY proposed to take in

response. The Committee noted the key findings over deferred revenue

relating to Nectar points, in particular the breakage rate used, and over

inventory cost testing. The Committee considered this report and discussed

the proposed actions with EY, noting in particular the planned enhancement

to audit documentation and challenge of management.

In the current year, the Committee specifically reviewed the assumptions

applied by management in accounting for the fair value of points awarded

under the Nectar programme including the appropriateness of data sources

used to estimate the number of points issued that will never be redeemed

and therefore subject to uncertainty. The Committee assessed the sensitivity

analysis over the impact of a change in breakage estimate on the deferred

points liability, which is presented in the financial statements in relation

tothis significant estimate.

The Committee consider 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 impacts of the phased withdrawal

fromthe Core Banking business. The Committee concluded that EY remained

effective, objective and independent in its role as external auditor.

The Committee has confirmed compliance with the provisions of the

Statutory Audit Services Order 2014.

Tender of external auditor

In accordance with current regulations that require an audit tender every

ten years, in 2023/24 the Committee held a competitive tender process for

the statutory audit for the financial year ending 28 February 2026.

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 approval by shareholders at the AGM in

July 2025. Going forward, the Committee anticipates that the audit will be

put out to tender at least every ten years.

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Audit Committee report continued

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, including

the 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 85 to 86 for

further details. The review found the Committee to be strong, robust and

challenging, with good coverage of financial and other skills. 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 whistleblowing

matters in the year resulted in a significant incident.

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 has appointed

theGeneral Counsel and Company Secretary as the CCO.

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, regular monitoring and reporting of

compliance and support to provide all relevant colleagues with day-to-day

advice and guidance.

Sainsbury’s Audit Committee Chair and Chief Commercial Officer met the

GCA during the financial year. 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 where appropriate. We were

also pleased that the GCA attended our Annual Supplier Conference.

Committee governance continued

External audit continued

Recommendation of the appointment of PwC as auditor

Following the outcome of the tender process concluded in 2023/24, the Committee has recommended to the Board the appointment of PwC as auditor for

the2025/26 financial year. A resolution to this effect will be tabled at the 2025 AGM. Detail of the transition plan are below.

Transition plan

Up to and including September

/October 2024

PwC undertook a detailed assessment of non-audit services and other related independence matters and completed

transition away from all non-permissible services

October 2024 Provided the Audit Committee with formal confirmation of independence

November 2024 Attended and performed initial walkthrough meetings

Engaged in initial discussions on key judgements and accounting matters

December 2024 Preliminary design of bespoke technology solutions to fit audit approach

Performed an early risk assessment and created an outline audit approach to address risks

March/April 2025 Shadowed EY’s year-end audit by attending key clearance meetings and Audit Committee meetings

Provided an update on transition and implementation of technology

July 2025 Seek formal appointment as external auditor at the AGM

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In September 2024, we announced that we are partnering with software

company SAP to improve our Core Commercial systems and processes.

Thisis a multi-year implementation that will consolidate our current

systems into one platform and will reduce complexity, improve how we

work with our suppliers and be more agile and responsive for our customers.

This is a big programme, and a core element in enabling us to keep growing

at pace and deliver on our ambitious Next Level Sainsbury’s plan.

As part of this programme implementation and following the GCA’s

feedback from the supplier deep dive themes, we set up a new Core

Commercial Transformation Supplier Working Group in March 2025,

consisting of supplier representatives across all our categories. As the

programme progresses and we design detailed new ways of working, we will

engage additional suppliers in the design and testing of new processes and

systems in order to facilitate a smooth implementation across our varied

supplier base.

We streamlined our Supplier Communications and Events Engagement

Strategy in2024, adding regular touch points such as newsletters to improve

our visibility and relationships with our supplier audiences. We continue to

bringall relevant messaging updates to our suppliers virtually in ‘free-to-air’

virtual events. We have also committed to delivering individual virtual

category specific updates across all our categories, so suppliers, no matter

their size, can dive further into the details of how we can all reach the Next

Level together.

During the reporting year, we have continued to enhance our compliance

with GSCOP, taking in any feedback from the suppliers, the GCA and the

findings from the GCA Annual Survey.

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 other colleagues who are directly or indirectly involved in

decisions that impact GSCOP. As a result, over 1,860 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 Operations teams 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 three

times a year on GSCOP matters.

Six potential breaches were reported in 2024/25 (21 in 2023/24). Of the six

potential breaches of GSCOP, five were in scope.

Three breaches were raised directly to the CCO and three were raised

withinour Trading Division and were escalated to the CCO using standard

escalation procedures. Five potential breaches reported in the year were

resolved in the year, and one potential breach is ongoing at the date of this

report. In addition, two potential breaches from the previous year (2023/24)

were also resolved in the financial year. The majority of complaints raised

directly to the CCO related to delists.

No breaches were pursued as a formal Article 11 Dispute and none have been

referred to the GCA for arbitration. Causes of potential breaches are reviewed

to identify areas for improvement.

Significant financial reporting matters and judgements

The areas of focus and actions taken by the Committee in relation to the 2025 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 210 to 214

See note 5, non-underlying items, on pages 155 to 157

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, after challenging management and in consultation

with the external auditor, 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

£377 million (2024: net charge of £(424) million). Excluded items are

detailed on pages 155 to 157. The most significant items relate to costs

relating to the Group’s phased withdrawal from the Core Banking business,

costs associated with retail restructuring programmes, and the gain on

disposal of the Hendon Mixed Use Development site.

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 £731 million,

whichcomprises £6,329 million of assets, and £(5,598) million of liabilities.

This compares to a net surplus in the prior year of £690 million.

See note 34, retirement benefit obligations, on pages 194 to 199

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.

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Audit Committee report continued

Areas of focus Actions taken

Going concern and viability

Going concern and viability projections are produced bi-annually and

monitored regularly.

See Statement of viability on page 63

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 2025

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 2025.

Sainsbury’s Bank reporting and phased withdrawal

from Financial Services

As part of the Group’s phased withdrawal from Financial Services products,

the assets and liabilities of the disposal group have been classified and

measured as held for sale, and its results re-presented to classify the

operations as discontinued.

Furthermore, associated costs have been recognised, financial assets

remeasured, and goodwill impaired as part of the phased withdrawal.

See note 11, discontinued operations, on page 163

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 key accounting judgements associated with the

phased withdrawal, and challenged management on the classification

and measurement of assets and liabilities treated as held for sale and the

income and costs attributed to operations re-presented as discontinued.

The Committee was satisfied with the outcome of the assessment and

that the related disclosures presented a clear understanding of the

transaction to users of the financial statements.

The Committee also reviewed the recognition and measurement of

charges attributed to the transaction, including the loss on disposal;

migration and exit costs; and redundancy and onerous contract provisions.

The Committee was satisfied with the recognition as well as the classification

as non-underlying and, where appropriate, discontinued operations.

The Committee also reviewed the impact of the phased withdrawal on the

Group’s going concern and viability assessments and was satisfied that

these did not impact the conclusions reached.

Climate change disclosures

With the impacts of climate change being felt around the world, we

understand the important role we can play, not only in managing the impacts

of climate change on our business but also to help reduce the impact of the

food system on our environment. Consideration has been given to the impact

of both physical and transition climate change risks, and how these impact

the financial statements.

See pages 31 to 41 for our TCFD report

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 is 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 201 for further details

The Committee further considered management’s assessment of the

status of ongoing regulatory investigations and litigation, its classification

of this as a contingent liability and the associated disclosure.

Committee governance continued

Significant financial reporting matters and judgements continued

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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

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

• 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 its recommendations

• The Committee reviews the scope and results of the work of the external

auditor and any significant issues arising

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Annual statement from the Remuneration Committee Chair

Dear Shareholder

The first year of our Next Level strategy

has been a year of strong performance,

building on the success of our Food First

strategy and reflecting the investment

we have made to strengthen the

fundamentals of our business over

thelast four years. The Remuneration

Committee is focused on ensuring that

executive remuneration reflects the

level of performance and drives delivery

against our strategy.

Giving customers more of what they come to Sainsbury’s for – outstanding

quality, great value and leading service – is at the core of our Next Level

Sainsbury’s strategy. During the first year, we have gained grocery volume

market share and maintained our leading customer service position, whilst

delivering significant operating leverage.

We have set ourselves ambitious financial targets which drive value for our

shareholders. In 2024/25 we delivered retail underlying operating profit of

£1,036 million, alongside above target retail free cash flow generation of

£531 million. The proposed full-year dividend of 13.6 pence adds to the

strong returns for shareholders over the past few years. We have committed

to a second year of our share buyback programme of £200 million for 2025/26.

Our hourly paid colleagues are critical to giving our customers the best

possible offer and experience in order to deliver our Next Level Sainsbury’s

plans. In a challenging cost inflation environment, we have made balanced

decisions around where we should invest, choosing again this year to invest

in an above inflation pay increase for hourly paid colleagues. In January

2025 we announced a split pay increase for our retail hourly paid colleagues,

bringing the national retail hourly rate to £12.60 from August 2025, the third

year that we have paid colleagues the Living Wage. This represents a 58 per

cent increase in hourly pay since 2018. To accelerate us into year two of our

Next Level Sainsbury’s strategy whilst facing into the challenging cost

environment, we announced significant changes to our operating model.

This included the removal of our food services and café offer and changes to

the way we are organised across our store support centre teams.

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,

the Committee has carefully considered the external environment, the

results delivered and ensured executive pay is aligned with our purpose

andappropriate in the context of wider workforce investments.

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

2024/25 remuneration

• Executive Directors received a four per cent pay increase, below

the over nine per cent increase that retail hourly paid colleagues

received in the year

• Reflecting our strong financial performance despite a tough

trading period and strong delivery against strategic scorecard

measures, the annual bonus paid out at 91 per cent of maximum

for both Simon Roberts and Bláthnaid Bergin

• The 2022 Leaders’ Share Award, our Long-Term Incentive Plan,

vested in 2025 at 72.5 per cent of maximum as a result of delivery

against the eight key performance indicators

2025/26 remuneration

• Continued investment in colleagues – retail hourly paid colleagues

across both Sainsbury’s and Argos moved from £12 to £12.45 per

hour in March 2025, and £13.15 to £13.70 for those based in London,

with a further increase to £12.60 per hour in August and £13.85 for

those based in London

• Executive Directors receive a three per cent pay increase, below the

five per cent increase for retail hourly paid colleagues

• The Committee reviewed the Long-Term Incentive Plan and updated

the targets to ensure it remains aligned to our Next Level Sainsbury’s

strategy

• The 2025 Leaders’ Share Award 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)

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Colleague engagement and oversight

The Remuneration Committee considers pay and conditions in the wider

organisation when making executive pay decisions. Our remit includes

oversight of pay arrangements across Sainsbury’s and meetings start with

an update on recent reward activity and initiatives for our colleagues and an

overview of colleague feedback collated from a range of communication

channels. Non-Executive Directors spend time in stores and participate in

colleague listening events to hear our colleagues’ perspective on their pay

and life at Sainsbury’s at first hand. In addition, the Chair and I meet with

colleagues each year to hear their views on executive pay and to give them

more insight into the structure of our executive remuneration package.

Continuing our commitment to investing in our colleagues, in March 2024,

our national pay rate increased to £12 per hour and our London rate increased

to £13.15 per hour. From 2 March 2025, our base rates of pay for our national

Sainsbury’s and Argos Retail, Travel Money and LFC colleagues increased

to£12.45 per hour, and to £13.70 per hour for our London colleagues. From

17August 2025, our national base rates will increase further to £12.60 per

hour and to £13.85 per hour in London, in line with the Living Wage.

Front-line managers will receive a three per cent salary increase effective

25May 2025. We have a comprehensive benefits package, which includes a

generous pension, colleague discount, an Employee Assistance Programme,

access to a salary advance and savings product supported by financial

education, as well as free food and free sanitary products for colleagues

instores, depots, LFCs and Contact Centres.

The Committee recognises the importance of diversity, equity and inclusion

at Sainsbury’s and reviews the Company’s progress in closing its gender and

ethnicity pay gaps. We are continuing our journey towards gender balance

in our business with improved representation for women at senior leadership

level. Our mean gender pay gap is 7.5 per cent (down from 8.4 per cent last year),

alongside a decrease to the median pay gap to 6.1 per cent (from 6.7 per cent),

both of which remain well below the UK average. Our ethnicity pay gap has

further improved, with the mean moving in favour of ethnically diverse

colleagues to -3.4 per cent from -2.9 per cent.

Customers and community

Our purpose is to make good food joyful, accessible and affordable for

everyone, every day, so delivering outstanding value for our customers

remains a major focus and we have invested £1 billion in price over the last

four years, prioritising the items that matter most to customers. Our Aldi

Price Match covers more products than ever before and we are the first

grocer to extend this into convenience stores. Nectar Prices continue to

enable customers to access great value, with more than £2 billion of savings

delivered to customers over the course of the year. We continue to work to

make healthier choices more affordable, with more than 75 per cent of

products in Aldi Price Match a Healthy or Better For You choice.

Through our acquisition of 14 new supermarket sites from Homebase and

Co-op, along with our organic store opening programme, more than 700,000

more potential customers will be within a ten minute drive of a Sainsbury’s

supermarket over the next two years. Our ‘More for More’ plan, through which

we are rebalancing space in our stores, will enable us to make more of our

food range available to more customers in a simpler shopping environment.

Sainsbury’s has a strong community presence across the UK. We continue

towork with Neighbourly on our ‘Good food for all of us’ Community Grant

Scheme and we supported 605 local good causes this year, donating over

£4million to initiatives supporting our local communities since 2021.

Sinceits launch in 2022, our Nourish the Nation community programme

inpartnership with Comic Relief has raised over £21 million to help those

experiencing food poverty.

Executive remuneration in 2024/25

The Committee carefully assesses performance to ensure that incentive

outcomes are aligned to the underlying performance of the business and

the experience of shareholders and other stakeholders.

The Committee is satisfied that the total remuneration for Executive

Directors in respect of 2024/25 reflects performance over the period,

considering the prevailing market and economic conditions and the progress

that has been made in the first year of the Next Level Sainsbury’s strategy.

Specifically, the Committee considers that bonus outturns over recent years

reflect returns to our shareholders, as evidenced through our TSR

performance (see graph on page 118).

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. For our

Executive Directors, profit is defined as Group underlying profit before tax.

The profit element

outturn isat maximum, with an above target outturn for

retail free cash flow.

The strategic scorecard (30 per cent of the overall bonus) is made up of

customer metrics, colleague metrics and individual strategic objectives.

TheCommittee considered performance across all elements to determine

the outturn. We have maintained our high customer satisfaction scores

year-on-year and delivered significant increases in customer frequency

andloyalty. Whilst our colleague engagement score has stepped back,

thisis against a backdrop of significant change in our operating model.

Wecontinue to make progress towards our stretching gender and ethnicity

targets. The Committee has agreed that both the customer and colleague

elements should pay out at nine 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.

In the first year of the Next Level strategy, Simon Roberts has driven

momentum against all eight of our commitments, delivered a record

breaking year in grocery and achieved all budgeted financial outcomes

despite a challenging GM market. The Committee agreed he had delivered

very strongly against his objectives and determined a payout of ten per cent

(out of a possible ten per cent) for Simon Roberts.

Bláthnaid Bergin has been pivotal in delivering a stronger than expected

financial outcome for Sainsbury’s Bank and enabling the execution of our

exit from Financial Services. She has partnered with the Operating Board to

deliver Next Level financial commitments ahead of target. The Committee

agreed she had a very strong year and determined a payout of ten per cent

(out of a possible ten per cent) for Bláthnaid Bergin.

This results in an overall bonus of 91 per cent of the maximum for both

Simon Roberts and Bláthnaid Bergin, of which 50 per cent will be deferred

into shares for two years. Given Simon Roberts’ ultimate responsibility for

our successful exit from Financial Services, the Committee determined that

the cash bonus value attributable to Financial Services profit performance

should be deferred into shares to vest at the earlier of the return of bank

capital to shareholders or the end of the 2025/26 Financial Year, aligning

Simon’s interests with those of shareholders.

Long-Term Incentive Plan – 2022 Leaders’ Share Award

The 2022 Leaders’ Share Award was aligned to the delivery of our Food First

strategy and the eight key metrics that we used to track our progress.

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 reduction).

Theremaining 20 per cent of the plan was subject to key strategic indicators

(market share, customer, colleague and Plan for Better). The Committee

determined that this award should vest at 72.5 per cent of maximum.

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Annual statement from the Remuneration Committee Chair continued

Long-Term Incentive Plan – 2022 Leaders’ Share

Award continued

This outturn is a result of strong retail free cash flow performance above the

stretch target, ROCE between target and stretch, with EPS and cost

reduction above target. Grocery market share also outperformed the stretch

target, with a strong performance in the customer element and colleague

and Plan for Better part way through the performance range. As last year, due

to the industry-wide difficulties in measuring Scope 3 emissions, the

Committee had to make a performance assessment in respect of Scope 3.

The Committee recognised the significant progress made in encouraging

suppliers to report their emissions.

Further detail is set out on pages 112 and 113.

Bláthnaid Bergin’s 2022 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 77.5 per

cent of maximum in line with other participants.

2025/26 remuneration

The Committee again considered the pay of the broader workforce and

senior management when determining the pay review for Executive Directors

this year. It awarded Simon Roberts and Bláthnaid Bergin a three per cent

pay increase effective May 2025, taking their base salaries to £1,008,910 and

£696,280 respectively. This is below the five per cent increase awarded to

retail hourly paid colleagues and in line with the pay increase awarded to

other senior management roles.

A year ago, following the launch of our updated strategy, we launched the

2024 Next Level incentive plan which was linked to the eight key performance

indicators that we use to monitor our progress. For Executive Directors,

70per cent is based on the four financial metrics (EPS, cost savings, retail

free cash flow and ROCE), each with a weighting of 17.5 per cent and the

remaining 30 per cent is based on the four strategic indicators (volume market

share, customer, colleague and Plan for Better), each with a weighting of 7.5

per cent. These metrics will once again be utilised for long-term share awards

in 2025. The Committee has reviewed the performance targets to ensure

they remain appropriately stretching.

Plan for Better ambitions remain at the core of our new purpose and we

remain committed to playing a leading role in creating a sustainable food

system to truly make good food for all of us, it is therefore key that it is

reflected appropriately in our incentive plans. The Committee has reviewed

which Plan for Better objectives should be measured through our incentive

arrangements and has determined that carbon Scope 1 and food waste

metrics should be included in the Leaders’ Share Award 2025.

The award level for the Chief Executive in 2025 will remain at 250 per cent of

salary and the award for the Chief Financial Officer will remain at 225 per cent

of salary.

Closing remarks

Our Remuneration Policy was approved at the 2023 AGM and will be due for

renewal at the 2026 AGM. We will be reviewing our policy during the coming

year and will engage with stakeholders as appropriate.

Over the next two pages there are summaries of our approach to remuneration

in 2024/25 and 2025/26. 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 remains 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

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Summary of 2024/25 remuneration decisions

Pay element 2024/25 decisions

Salary

Four per cent increase for

Executive Directors

(below that of colleagues)

• Chief Executive, Simon Roberts – £979,524 and Chief Financial Officer, Bláthnaid Bergin – £676,000

• A four per cent salary increase was awarded to Simon Roberts and to Bláthnaid Bergin from 26 May 2024, which was

below the over nine per cent increase for retail hourly paid colleagues, and in line with the pay review for senior management

Annual bonus

Award of 91 per cent of

maximum for both CEO andCFO

• The 2024/25 bonus outturn was 91 per cent of the maximum for both Simon Roberts and 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 13 per cent (out of 20 per cent)

• The Committee determined an outturn of 9 per cent for both the customer and colleague metrics (each out of ten per

cent). Simon Roberts’ individual annual objectives paid out at 10 per cent (out of ten per cent), resulting in an overall

strategic scorecard outturn of 28 per cent (out of 30 per cent). Bláthnaid Bergin’s individual annual objectives paid out

at 10 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 111 and 112

Maximum opportunity

Actual % of maximum

Retail free cash flow Market share

ROCE Customer

EPS Colleague

Cost reduction Plan for Better

20%

16%

20%

12%

20%

10.5%

Salary

Benefits

Pension

Annual bonus

LTIP

Maximum opportunity

CEO bonus outturn

Actual % of maximum

Profit

Retail free cash flow

Strategic scorecard

50%

20%

13%

30%

28%

2023/24

2024/25

£0 £1,000

£70

£73

£19

£2,000 £3,000

£000s £000s

£4,000 £5,000

£933

£971

£2,054

£1,948

£1,730 Total £4,806

£2,177 Total £5,188

2023/24

2024/25

£0 £500

£49

£50

£19

£1,000 £1,500 £2,000 £2,500

£650

£670

£1,147

£1,100

£488

£426

Chief Financial Officer – Bláthnaid Bergin

Chief Executive – Simon Roberts

Total £2,353

Total £2,265

Total remuneration for 2024/25

Long-Term Incentive Plan

(LTIP): 2022 Leaders’

ShareAward

Vesting at 72.5 per cent of

maximum

• Financial metrics (each with a 20 per cent weighting): maximum payout under the retail free cash flow element,

withROCE between target and stretch and both EPS and cost reduction part way through the range

• Strategic indicators (each with a five per cent weighting): maximum payout under the market share element,

withstrong customer and colleague performance and Plan for Better paying out partway through the range

• This results in a vesting multiplier of 2.9x (out of a maximum of 4.0) or 72.5 per cent of maximum

Further details of the LTIP outturn can be found on pages 112 and 113

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108

Summary of remuneration for 2025/26

Pay element Executive Directors Other colleague groups

Salary • Chief Executive, Simon Roberts – £1,008,910 effective 25 May

2025 (three per cent salary increase)

• Chief Financial Officer, Bláthnaid Bergin – £696,280 effective

25 May 2025 (three per cent salary increase)

• Five per cent increase for retail hourly paid colleagues

• Three per cent for management

Benefits • Includes colleague discount, life assurance (six times salary),

company car cash allowance (or car), private medical cover

and group income protection

• 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 2025/26:

– 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, bonus is part paid in cash, and

part in shares deferred for two years

LTIP: 2025

Leaders’ Share Award

• 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

• Maximum award of up to 250 per cent of salary per annum

• For 2025 awards:

– Simon Roberts – 250 per cent of salary

– Bláthnaid Bergin – 225 per cent of salary

• Top 195 managers participate in this plan

• Maximum award varies by grade

Measure Weighting Threshold Maximum

Underlying basic EPS

17.5% 24.0p 30.0p

Cumulative cost savings 17.5% £800m £1,000m

Cumulative retail free cash flow

17.5% £1,550m £1,850m

ROCE

17.5% 9.0% 11.5%

Strategic indicators 30% Based on market share, customer satisfaction, colleague

engagement and Plan for Better.

Further details set out on pages 115 and 116.

a) These measures are defined in the Alternative performance measures section of the Annual Report on pages 210 to 214.

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

All payments made in the year and the remuneration planned for 2025/26 are in line with our approved Remuneration Policy, full details of which can be

found in the 2023 Annual Report and Accounts on our Company website.

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109

Remuneration in context

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 and 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 and Leadership

Performance Expectations (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 Long-Term Incentive Plan 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 141,000 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.

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

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110

Remuneration in context continued

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 (c.195 colleagues) also participate in our

Long-Term Incentive Plan

• We offer colleague discount in Sainsbury’s, Argos, Tu and Habitat

and during 2024/25 colleagues saved over £77 million – around

£425per colleague on average

• Colleague discount at Sainsbury’s is enhanced from ten to 15 per

cent every Friday and Saturday, enabling colleagues to plan their

spending and access higher discount for their weekly shop. Argos

discount increases from ten to 15 per cent every payday

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 2024/25 we issued over 295,000 recognition rewards worth

over £3.2 million as well as giving additional gifts of appreciation

with a value of over £0.5 million

• We empower the organisation to thrive by building the capabilities

of leaders and colleagues to achieve Next Level Performance. In

2024/25 we supported colleague development through interventions

including; retail apprenticeships, skills boosts aligned to living our

valued behaviours, finance fast start, code first girls, negotiation

skills programme and the retail trainee manager programme

• Our Wellbeing agenda is sponsored by Clodagh Moriarty, our Chief

Retail and Technology Officer, demonstrating the importance we

place on our colleagues’ mental, financial and physical wellbeing. We

offer a range of support mechanisms, including self-serve wellbeing

resources, manager training and 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 UK colleagues have the opportunity to become shareholders

intheCompany through our all-employee share plans

• Over 20,000 colleagues participate in our Sharesave plans,

representing an uptake rate of 16 per cent

• Colleagues can also buy shares through the Sainsbury’s Share

Purchase Plan (SSPP)

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 they are

feeling. Further details are set out on page 26 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 June 2024 and the next one is in June 2025

• Through our two-way discussion forum called Let’s Talk, colleagues

are able 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 remuneration policy in the same way as

othershareholders

CEO pay ratios

• Our CEO median pay ratio is 195:1. 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 2024 mean gender pay gap is 7.5 per cent (reduced from 8.4 per

cent in 2023). Our median gender pay gap has also decreased from

6.7 per cent to 6.1 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 2024 mean ethnicity pay gap is negative and

has changed to -3.4 per cent from -2.9 per cent and our median

ethnicity pay gap to -5.8 per cent from -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 and we continue to track our progress against

stretching aspirational targets. We have achieved a 50/50 gender

split on our Operating Board and have maintained our progress

within our senior leadership population, of whom over 46 per cent

are women (including Sainsbury’s Bank and Asia based colleagues)

• For the third year running, we featured on the Times Top 50 list for

gender equality

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111

Annual report on remuneration

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 1 March 2025, together with comparative figures for the

52weeks to 2 March 2024.

Notes

Simon Roberts

£000

Bláthnaid Bergin

£000

2024/25 2023/24 2024/25 2023/24

Base salary 971 933 670 650

Benefits a) 19 19 19 19

Pension 73 70 50 49

Total fixed pay 1,063 1,022 739 718

Annual bonus b) 1,948 2,054 1,100 1,147

Long-Term Incentive Plan c) 2,177 1,730 426 488

Total variable pay 4,125 3,784 1,526 1,635

Total 5,188 4,806 2,265 2,353

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. 50 per cent is paid in cash and 50 per cent in bonus shares which vest after

two years. In addition, £170,866 of Simon Roberts’ cash bonus will be deferred into shares to vest on the earlier of the return of bank capital to shareholders or the end of the 2025/26

Financial Year.

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 2024/25 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 2024/25 values are based on the average share price over the fourth quarter for 2024/25 of £2.637.

The2024/25 values shown above include the share price growth since grant +£238k for Simon Roberts and +£47k for Bláthnaid Bergin. The 2023/24 LTIP figure has also been updated from

the fourth quarter average share price to the actual share price on the vesting date of 29 April 2024 (£2.624).

Base salary (audited information)

2024 Base salary

Simon Roberts (effective 26 May 2024) £979,524

Bláthnaid Bergin (effective from 26 May 2024) £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 of salary. This is in line with the majority of the wider workforce.

Benefits

For 2024/25, benefits for Executive Directors included the provision of company car benefits, private medical cover, group income protection insurance, life

assurance and colleague discount.

Annual bonus for 2024/25 (audited information)

For 2024/25 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. 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 2024/25 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. In addition to the 50 per cent of bonus

that is normally deferred into shares for two years, the Committee determined that £170,866 of Simon Roberts’ cash bonus will be deferred into shares to vest

on the earlier of the return of bank capital to shareholders or the end of the 2025/26 Financial Year. 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% 1,068 50% 603

Retail free cash flow 13% 282 13% 159

Strategic scorecard 28% 598 28% 338

Total 91% 1,948 91% 1,100

Profit performance

The table below sets out the threshold, target and stretch profit targets and the actual profit outcome.

Threshold

(0% payable)

£m

Target

(50% payable)

£m

Stretch

(100% payable)

£m

Outcome

£m

Profit

650 722 750 761

a) Underlying profit before tax. This measure is defined in the Alternative performance measures section of the Annual Report on pages 210 to 214.

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112

Annual report on remuneration continued

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

N/a

500 600 531

a) These measures are defined in the Alternative performance measures section of the Annual Report on pages 210 to 214.

b) For 2024/25 there was no payout for retail free cash flow performance below target.

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 28 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 Maintained customer satisfaction vs. the high 2023/24 base, with year-on-year growth in several key touch points.

Delivered significant increases in customer frequency and loyalty, with primary customer numbers 18 per cent higher

than four years ago. Volume has grown across all channels, with stronger food availability and customers increasingly

trading up, now with 1 in 3 baskets containing a Taste the Difference product

Continued focus on delivering value for our customers, investing £150 million in 2024/25. Aldi Price Match covers more

products than ever before and we were the first grocer to extend this into convenience stores. Nectar Prices remain a

key driver of our improved value perception, with more than £2 billion of savings delivered to customers over the

course of the year

9% (out of 10%)

Colleague Inclusion and diversity remain central to our purpose and strategy. We have an Operating Board with 50/50 gender

representation and we are one of the top ranked companies in the FTSE Women Leaders Report, maintaining our high

proportion of women in our most senior roles

During the year, Simon Roberts was awarded Most Inclusive CEO in Retail by Diversity in Retail and sits on their

Advisory Board. Bláthnaid Bergin is our Executive sponsor for the Disability Business Resource Group

Colleague engagement remains high despite the backdrop of change activity impacting colleagues

We have continued to prioritise investment in colleagues and for the third year in a row, we were the first UK

supermarket to announce a pay increase above or in line with inflation for hourly colleagues

9% (out of 10%)

Simon Roberts Bláthnaid Bergin

Director-specific Significant strategic momentum against our Next

Level plan and all eight of our commitments. Built on

the success of Food First delivering both market share

improvement and significant operating leverage, as

well as strong progress towards our cost savings

ambition, saving £349 million in the year

Delivered a record breaking year in grocery and

achieved all financial outcomes in line with plan

despite a challenging general merchandise market

Reorganised to ensure Sainsbury’s and Argos have the

necessary leadership focus and capabilities to deliver

further strategic and performance improvements

Transactions agreed during the year to facilitate a

clear exit of Financial Services, delivered effectively

and at pace

Delivered a stronger than expected financial outcome

from the Bank in FY25. Enabled three strategic

transactions which are pivotal to the execution of the

Financial Services exit and agreed future FS strategy and

associated operating model

Worked in partnership with Operating Board to deliver

Next Level financial commitments ahead of target.

Smoothly executed buyback of £200 million shares and

launched a £550 million bond returning Sainsbury’s to the

credit market after 21 years

Delivered finance restructuring in line with cost savings

commitments, with significant reduction in Cost to Serve

Significant progress made in preparation for the

introduction of the new Corporate Governance Code

Simon Roberts:

10% (out of 10%)

Bláthnaid Bergin:

10% (out of 10%)

2022 Leaders’ Share Award (2022/23 to 2024/25 performance period) (audited information)

The 2022 Long-Term Incentive Plan is known as the 2022 Leaders’ Share Award.

Awards were granted under the Long-Term Incentive Plan approved by shareholders in 2016. A core award of shares was 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 2022 Leaders’ Share Award was subject to the eight key performance indicators that we use to measure our success against our Food First strategy.

For Executive Directors, the four financial metrics (retail free cash flow, ROCE, EPS and cost reduction), 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.

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113

In terms of the financial metrics, retail free cash flow performance is above the stretch target, strong ROCE performance between target and stretch, with

EPS part way through the performance range. Whilst the cost reduction result is only part way through the range, with the target having been set as a percentage

of sales, the Committee noted that significant progress has been made in removing cost from the business. Market share also outperformed the stretch target,

alongside strong customer performance.

For the colleague metric, the Committee reviewed the colleague engagement score (which had increased over the three years) and the overall improvement

in representation against the stretching aspirational targets that we set ourselves in 2021 (see table below). The Committee determined an overall colleague

outcome of 70 per cent of max or 0.14x of the total multiplier.

For Plan for Better, the Scope 1, Scope 3 and plastics elements are each weighted at 1.67 per cent of the total award (a combined total of five per cent).

Our carbon Scope 1 result is below threshold (a zero per cent outturn) but our ambition to achieve net zero by 2035 remains and we are ahead of our SBTi

glidepath on our combined Scope 1 and 2 reductions. Whilst we have continued to make progress in Scope 1 emissions reduction, our overall result has been

impacted by a rephasing of capital allocation.

With the ongoing challenges across the market to get an agreed methodology to measure Scope 3 emissions, the Committee considered a number of factors

and data points to determine an appropriate outturn. One key consideration was our work to engage our suppliers to set targets, 11.6 per cent of our

emissions now come from suppliers that have approved SBTi 1.5°C net zero targets. 39.8% of emissions are covered by suppliers who have had any 1.5 degree

target approved. 53.2 per cent of emissions are covered by suppliers that have either committed to a 1.5 degree net zero target or have had any target

approved by the SBTi. This represents a 119 per cent increase year on year in the number of suppliers who have any science based target approved or a

commitment to have a 1.5°C net zero target. This is good progress, but there is more to do and so the Committee determined an outcome of 50 per cent of

max.

For the plastic element, the Committee assessed performance against the own brand reduction targets across food and general merchandise and determined

an outturn of 29per cent of max.

This results in an overall outturn under the Plan for Better element of 26 per cent of max or 0.05x of the total multiplier.

Taking account of all eight metrics, this results in a performance multiplier of 2.9x (out of a possible 4.0) i.e. 72.5 per cent of the maximum for the 2022 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

20%  £1,250m £1,650m £1,815m 0.80

ROCE

20%  6.75% 9.75% 9.00% 0.65

EPS

20%  19.8p 26.5p 23.1p 0.50

Cost reduction 20%  80bps 280bps 153bps 0.42

Market share 5% 11.69% 12.11% 12.8% 0.20

Customer 5% Sainsbury’s 0bps 200bps 310bps 0.17

 Argos 300bps 500bps 300bps

Colleague 5% Engagement Maintain eSAT score Met 0.14

 Representation See below Partially met

Plan for Better 5%  See below Partially met 0.05

Performance gateway The Remuneration Committee must be satisfied that the Company’s

underlying performance over the period justifies the level of vesting

Achieved

 Total 2.9x

(out of a maximum of 4.0x)

a) These measures are defined in the Alternative performance measures section of the Annual Report on pages 210 to 214.

Colleague representation targets



Target – senior leadership

positions (top 230 leaders) Outcome

Target – senior management positions

(1,200 leaders beneath senior leadership) Outcome

Female 50% 46.3% 43% 41.1%

Ethnically diverse 12% 8.3% 12% 11.3%

Black 3% 2.3% 3% 1.2%

a) Includes Sainsbury’s Bank and Asia colleagues

Plan for Better targets

 Threshold Stretch Outcome

Scope 1 – GHG emissions 382,403 tCO

e 345,258 tCO

e 448,734 tCO

Scope 3 – GHG emissions 23,783,081 tCO

e 23,108,004 tCO

e See text above

Own brand plastic packaging reduction 55,871 tonnes 41,903 tonnes 55,154 tonnes

The 2022 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 3.1x (out of a possible 4.0) i.e. 77.5 per cent of maximum and will be

released in April 2025 consistent with the other below Board participants.

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Annual report on remuneration continued

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 1.9x salary, as at the end of the 2024/25 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.

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

Shareholding guidelines

Simon Roberts Bláthnaid Bergin

Share awards

Shareholding

Guideline

5.8 x salary

1.9 x salary

Number of shares (000)

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 misstatement 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.

Remuneration in 2025/26

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 2025/26 Simon Roberts and Bláthnaid Bergin will receive a three per cent

salary increase. This is below the five per cent award agreed for retail

hourly-paid colleagues and in line with senior management.

2025 Base salary

(effective 25 May 2025)

Simon Roberts £1,008,910

Bláthnaid Bergin £696,280

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 2025/26 are unchanged and will include

the provision of company car benefits, private medical cover, group income

protection insurance, life assurance and colleague discount.

Annual bonus

The annual bonus for 2025/26 will operate on the same basis as 2024/25.

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 approved 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.

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115

2025 Leaders’ Share Award

During the year, we reviewed our incentive arrangements and determined the current Long-Term Incentive Plan structure supports the delivery of our

strategy. In line with last year, our 2025 Leaders’ Share Award will vest subject to the eight metrics that align to our performance commitments used to

measure our progress. Awards will be granted under the Long-Term Incentive Plan approved by shareholders in 2024.

The four financial metrics (EPS, cost savings, retail free cash flow and ROCE) will each have a weighting of 17.5 per cent, a total of 70 per cent overall. The total

weighting on the strategic indicators (market share, customer satisfaction, colleague engagement and Plan for Better) is 30 per cent and each element has a

weighting of 7.5 per cent. The Committee has set stretching targets against these measures for the 2025 awards as shown below.

The Committee has reviewed which Plan for Better objectives should be measured through our incentive arrangements and has determined that Scope 1

emissions and food waste should be included. 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. Whilst significant work has been done to improve food waste data accuracy,

the Committee acknowledges the challenges involved in measurement and has agreed a target range with scope for judgement to be applied. The overall

outcome will be determined against the combined performance on Scope 1 and food waste. As with any new incentive measure, the Committee will keep the

food waste metric under review to ensure that it continues to appropriately capture performance in line with our strategic goals.

Simon Roberts will receive a maximum award of 250 per cent of salary and Bláthnaid Bergin will receive a maximum award of 225 per cent of salary.

The Leaders’ Share Award 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

17.5% 24.0p 30.0p

Cumulative cost savings 17.5% £800m £1,000m

Cumulative retail free cash flow

17.5% £1,550m £1,850m

ROCE

17.5% 9.0% 11.5%

Strategic indicators

Market share 7.5% Targets are commercially sensitive and will be disclosed at the end of the performance period

Customer satisfaction 7. 5% 0bps improvement against Company CSAT score 150bps improvement against Company CSAT score

Colleague engagement 7.5% -3 vs 2024 score +2 vs 2024 score

Plan for Better

Scope 1

Food waste

7.5%

453,000 tCO

e absolute GHG emissions

6% above Food Waste target

370,000 tCO

e absolute GHG emissions

6% below Food Waste target

a) These measures are defined in the Alternative performance measures section of the Annual Report on pages 210 to 214.

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.

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116

Annual report on remuneration continued

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 1 March 2025 for each Non-Executive Director, together with

comparative figures for the 52 weeks to 2 March 2024.

2024/25 2023/24

Fees

£000

Benefits

£000

Total

£000

Fees

£000

Benefits

£000

Total

£000

Martin Scicluna 533 0 533 512 1 513

Jo Bertram 76 0 76 73 0 73

Brian Cassin 97 0 97 93 0 93

Jo Harlow 97 0 97 93 1 94

Adrian Hennah 97 0 97 93 0 93

Tanuj Kapilashrami 76 0 76 73 0 73

Keith Weed

97 7 104 93 13 106

a) Paid in relation to the year. Fees were set 28 May 2023 and 26 May 2024.

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) Keith Weed’s 2023/24 expenses relate to a four-year period.

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 Chair fee increased to £537,591 and the base fee for Non-Executive Directors increased to £76,405. Senior Independent Director and Committee Chair fees

increased from £20,280 to £21,091. The new fee levels were effective from 26 May 2024.

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.

2025 Leaders’ Share Award performance measures

(definitions for previous 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 and including

payments of lease obligations, and cash flows from joint ventures and

associates. Excludes capital injections to, dividends from, and any

other exceptional cash movements with or on behalf of Sainsbury’s

Bank and its subsidiaries. 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

• Food waste sent to anaerobic digestion as a percentage of total tonnes

handled (%)

More information can be found in the Alternative performance measures

section of the Annual Report on pages 210 to 214.

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117

Chair and Non-Executive Director fees for 2025/26

In 2025 the Chair and Non-Executive Directors’ fees were reviewed and an

increase of three per cent was approved in line with senior management

colleagues. The following table sets out the fee levels which are effective

from 25 May 2025.

Fees effective from 25 May 2025

Chair £553,719

Base fee £78,697

Senior Independent Director fee (additional) £21,724

Chair of Remuneration Committee fee (additional) £21,724

Chair of Audit Committee fee (additional) £21,724

Chair of Corporate Responsibility and Sustainability

Committee fee (additional) £21,724

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

3 March 2024 1 March 2025 16 April 2025

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 111

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 colleagues earning

additional premiums such as unsociable hours premium and drivers’

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

173:1 173:1 153:1

2020/21

Option B

122:1 122:1 107:1

2021/22 Option B

202:1 183:1 178:1

2022/23 Option B

247:1 229:1 218:1

2023/24 Option B

227:1 212:1 202:1

2024/25 Option B

217:1 195:1 194:1

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

2024 gender pay gap data. In line with the regulations, our 2024 gender pay

gap data identifies employees using a snapshot date of 5 April 2024. 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.

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)

2024/25 Base salary £971,000 £22,932 £25,480 £25,799

Total remuneration £5,188,000 £23,934 £26,552 £26,722

The Remuneration Committee considers pay ratios as one of many reference points when reviewing executive remuneration and considers that the median

pay ratio for 2024/25 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.

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118

Annual report on remuneration continued

Pay in the wider organisation continued

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 five 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

Percentage change in

remuneration

from 2023/24 - 2024/25

Salary

change

Benefits

change

Bonus

change

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% 4.0% 1.3% -5.2%

Bláthnaid Bergin

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.1% -0.7% -4.1%

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 4.0% -100% N/A

Jo Bertram

N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.9% -100% N/A 4.0% 0.0% N/A

Brian Cassin

1.1% 0.0% N/A 0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% 0.0% N/A 4.0% 0.0% N/A

Jo Harlow

2.8% -100% N/A 0.0% 0.0% N/A 7. 2 % 0.0% N/A 4.9% N/A N/A 4.0% -100% N/A

Adrian Hennah

N/A N/A N/A N/A N/A N/A 18.4% -100% N/A 3.7% 0.0% N/A 4.0% 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 4.0%

0.0% N/A

Keith Weed

N/A N/A N/A 0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% N/A N/A 4.0% -43.4% N/A

All colleagues

4.0% -15.3% 308.1% -1.2% -21.9% 5.2% 7.6% -6.6% -5.4% 15.3% 0.8% 30.2% 13.3% 1.6% -14.6%

a) Bláthnaid Bergin was appointed to the Board on 5 March 2023 so there is no year-on-year comparison in 2023/24.

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.

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 8.2 to the financial statements)

anddistributions to shareholders (declared dividends and share buy back).

Colleague pay Distribution to shareholders

2023/24

£m

2024/25

£m % change

2023/24

£m

2024/25

£m % change

3,879 4,091 5.5% 306 508

66.0%

a) The percentage change in the declared dividend excluding share buy back is 0.7 per cent

Sainsbury’s

200

150

100

Mar-15 Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Mar-24 Mar-25

FTSE 100

FTSE All-Share Food & Drug Retailers

TSR performance since March 2015

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

119

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.

Chief Executive 2015/16 2016/17 2017/18 2018/19 2019/20 2020/21

2021/22 2022/23 2023/24 2024/25

Single figure

remuneration (£000)

S Roberts — — — — — 1,325 3,599 5,217 4,806 5,188

M Coupe 2,802 2,354 3,630 3,569 2,999 1,447 — — — —

Bonus/Bonus Shares/

Deferred Share Award

award as a percentage

of maximum

S Roberts — — — — — 0% 87% 86% 100% 91%

M Coupe 78% 35% 57% 56% 22% 0% — — — —

LTIP vesting

percentage of

maximum

S Roberts — — — — — 60% 70% 7 7.5% 70% 72.5%

M Coupe 0% 22.5% 42.5% 55% 65% 60% — — — —

a) 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.

Nick Grant, General Counsel and Company Secretary, acts as secretary to the Committee (previously Tim Fallowfield, Company Secretary and Corporate

Services Director, fulfilled this role until his retirement in July 2024). Martin Scicluna, Simon Roberts, Prerana Issar (ChiefPeople Officer), 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. The Committee complies with relevant regulations and considers

theCode and best practice when determining pay and policy.

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 £102,150 (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 at the 2024 AGM and on 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 (2024 vote) 98.60%

1,724 million

1.40%

24 million

—

22 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.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

120

Annual report on remuneration continued

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 2024/25

financial year. Further details of the movements of the Executive Directors’ share awards are set out on page 121.

Ordinary shares

Scheme interests

3 March 2024 1 March 2025 16 April 2025

Bonus Share

Awards

LTIP awards

with performance

period completed

LTIP awards

with performance

period outstanding

SAYE

Simon Roberts 726,455 941,338 941,338 681,133 1,683,010 2,7 2 7,410 0

Bláthnaid Bergin 160,370 348,397 348,397 286,161 0 1,324,048 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 2023 and 2024 Bonus Share Awards.

d) Relates to 2020 Future Builder awards and 2021 Win in Food award. Notional dividends are added for LTIP awards where the performance period has ended.

e) Relates to 2022 Leaders’ Share Award, 2023 Leaders’ Share Award and Next Level incentive plan (all expressed at the maximum) where the performance period has not ended. As noted

above, following the year-end, the 2022 Leaders’ Share Award will vest at 72.5 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 39.3 million shares (2024: 30.1 million) held by the Trustees.

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 2024 Leaders’ Share Award

250% of salary £2,448,810 25% of each element 881,818 28 February 2027

Bonus Share Award

50% of bonus award £1,026,837 N/A 369,765 N/A

Bláthnaid Bergin 2024 Leaders’ Share Award

250% of salary £1,690,000 25% of each element 608,570 28 February 2027

Bonus Share Award

50% of bonus award £573,298 N/A 206,445 N/A

a) The performance conditions applying to the 2024 Next Level incentive plan are set out later in this section. The basis of award shows the maximum value. The award was made on 31 May

2024 and the number of shares has been calculated using the average share price between 23 May and 30 May 2024 of £2.777. Subject to performance, the award will vest in May 2027 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 31 May 2024 based on performance over the 2023/24 financial year. Simon Roberts received a bonus of 100 per cent of the maximum level (maximum

of 220 per cent of salary), of which 50 per cent was awarded in shares. Bláthnaid Bergin received a bonus of 98 per cent of the maximum level (maximum 180 per cent of salary), of which 50

per cent was awarded in shares. The number of shares has been calculated using the average share price between 23 May and 30 May 2024 of £2.777. No further performance conditions

apply. The Bonus Share Awards will be released in March/April 2026.

Unvested Long-Term Incentive Plan awards

The targets for Long-Term Incentive Plan awards granted in 2023 and 2024 are set out in the tables over the next two pages.

2023 Leaders’ Share Award

(2023/24 to 2025/26 performance period) Weighting

Threshold

(25% of element vests)

Maximum

(100% of element vests)

Cumulative retail free cash flow

20% £1,350m £1,650m

ROCE

20% 7.0% 10.0%

Underlying basic EPS

20% 20.0p 27.0 p

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 210 to 214.

b) From 2024/25 the Group’s provider of market share data changed from Nielsen to Kantar. This has been 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.

Plan for Better targets Baseline Threshold Stretch

Scope 1 – GHG emissions 554,936 (tCO

e) 18/19 FY 354,971 308,539

Scope 3 – GHG emissions-suppliers with SBTi 1.5°C net zero target approved Less than 2% of emissions 22/23 FY 50% 80%

Plastic – own brand food, general merchandise and clothing –

tonnesofplastic packaging

69,839 own brand food 2018 CY/

GM&C 2020 CY 52,379 34,920

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

121

2024 Next Level incentive plan

(2024/25 to 2026/27 performance period) Weighting

Threshold

(25% of element vests)

Maximum

(100% of element vest)

Financial metrics

Underlying basic EPS

17.5% 21.3p 28.3p

Cumulative cost savings 17.5% £800m £1,100m

Cumulative retail free cash flow

17.5% £1,500m £1,800m

ROCE

17.5% 8.0% 11.0%

Strategic indicators

Market share 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 7.5% -200 bps vs strong 2023 score +300 bps vs strong 2023 score

Plan for Better-Scope 1 7.5% 433,733 tCO

e absolute GHG emissions 354,872 tCO

e absolute GHG emissions

a) These measures are defined in the Alternative performance measures section of the Annual Report on pages 210-214.

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

Options

exercised

during the

year

Remaining

options

Share price on

exercise

(£)

Date of

exercise

Notional

gain

on exercise

(£000)

Simon

Roberts

Long-Term

Incentive

Plan

07/05/2020

(Part 1) 1.991 512,580 115,331 397,249 100,078 0 497,327 — — —

07/05/2020

(Part 2) 1.991 512,584 115,332 397, 252 100,079 0 497,331 — — —

04/06/2021 2.670 819,288 245,787 573,501 114,851 0 688,352 — — —

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 — — —

31/05/2024 2.777 881,818 0 881,818 0 0 881,818 — — —

Bonus Share

Award

01/06/2022 2.303 363,601 0 363,601 39,097 402,698 0 2.632 02/05/2024 1,060

02/06/2023 2.730 311,368 0 311,368 0 0 311,368 — — —

31/05/2024 2.777 369,765 0 369,765 0 0 369,765

Sharesave

14/12/2020 N/A 1,833 — 1,833 — 1,833 0 2.614 26/04/2024 2

Total 5,618,429 476,450 5,141,979 354,105 404,531 5,091,553 1,062

Bláthnaid

Bergin

Long-Term

Incentive

Plan

07/05/2020

(Part 2) 1.991 85,052 19,137 65,915 13,240 79,155 0 2.632 02/05/2024 208

04/06/2021 2.670 215,640 53,910 161,730 24,142 185,872 0 2.632 02/05/2024 489

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 — — —

31/05/2024 2.777 608,570 0 608,570 0 0 608,570 — — —

Bonus Share

Award

01/06/2022 2.303 81,601 0 81,601 8,773 90,374 0 2.632 02/05/2024 238

02/06/2023 2.730 79,716 0 79,716 0 0 79,716 — — —

31/05/2024 2.777 206,445 0 206,445 0 0 206,445 — — —

Total 1,992,502 73,047 1,919,455 46,155 355,401 1,610,209 935

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.

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 £1.610 (2020).

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.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

122

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 117 and

120. 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 9 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 20 to 23.

Health and safety The health and safety of our colleagues and customers is an essential part of our business operations. See pages 20 to 21 for

moreinformation.

Colleague

engagement

Details on how we engage with our colleagues can be found on page 26.

Political donations The Company made no political donations in 2024/25 (2023/24: £nil).

Post balance

sheetevents

On 15 April 2025, the High Court approved the transfer of the personal loans, credit cards and retail deposit portfolios to NatWest

Group concluding the Part VII process. Following this approval, the transaction is expected to complete in May 2025 at which

point legal title of these portfolios will transfer from Sainsbury’s Bank to NatWest Group.

Financial risk

management and

financial instruments

Notes 28 and 29 on pages 176 to 186 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 126.

Dividends Details of the payment of the final dividend can be found on page 165.

Ordinary shares Details of the changes to the ordinary issued share capital during the year are shown on page 174. As at 15 April 2025,

2,344,162,374 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 £3,887,810.62. 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 2024, the Company was authorised by shareholders to purchase its own shares within

certain limits and as permitted by the Articles of Association.

On 26 April 2024, the Company announced the commencement of a share buyback programme of up to £200 million, to be

completed by the end of 2024/25 (the Programme).

The Programme completed on 17 December 2024 and took place using the authority to purchase its own shares as approved

byshareholders. Further information can be found in note 26 on page 174.

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.

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

123

Major interests in shares

As at 1 March 2025, 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

Qatar Holdings LLC 11 October 2024 239,446,132 10.14

VESA Equity Investment

S.à r.l. 7 November 2024 235,773,510 10.00

BlackRock, Inc. 7 January 2025 161,783,256 6.89

Schroders plc 31 March 2021 116,161,658 5.22

Bestway Group UK Limited 2 August 2024 118,273,900 5.01

Pzena Investment

Management, Inc 7 January 2025 118,145,905 5.05

1 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 15 April 2025, 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

Qatar Holdings LLC 11 October 2024 239,446,132 10.14

VESA Equity Investment

S.à r.l. 7 November 2024 235,773,510 10.00

BlackRock, Inc. 10 April 2025 179,214,912 7.63

Schroders plc 31 March 2021 116,161,658 5.22

Bestway Group UK Limited 2 August 2024 118,273,900 5.01

Pzena Investment

Management, Inc 7 January 2025 118,145,905 5.05

1 Percentages shown are as a percentage of the Company’s issued share capital when the

Company was notified of the change in holding.

Information requirement Location within Annual Report

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 6.6.1 are not applicable to

theCompany.

Updated Streamlined Energy and Carbon Reporting

– 2024/25 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 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 2024, IEA 2024 and Association

of Issuing Bodies (AIB) 2024. 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 2024/25, 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. During the 2024/25 reporting year, the

latest global warming potential (GWP) emission factors from the IPCC’s

Sixth Assessment Report (AR6) have been used where available. Where AR6

factors were not available, emission factors from the Fifth Assessment

Report (AR5) have been applied.

In 2024/25, 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).

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 2024/25 and 2023/24.

Sainsbury’s Group Total Carbon Figures and Intensities

GHG emissions (tCO

e) – location-based emission source 2024/25 2023/24

Scope 1 448,734 458,973

Scope 2 248,452 247,143

Total (tCO

697,187 706,115

S1 and 2 Intensity measurement (tCO

e/000 sq. ft.) 26 25

GHG emissions (tCO

e) – market-based emission source 2024/25 2023/24

Scope 1 448,734 458,973

Scope 2 0 0

Total (tCO

448,734 458,973

S1 and 2 Intensity measurement (tCO

e/000 sq. ft.) 17 16

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.

The table on the following page represents Sainsbury’s energy use and

associated GHG emissions from electricity and fuel in the UK for the

reporting years 2024/25 and 2023/24, in line with UK Government

Streamlined Energy and Carbon Reporting requirements.

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

124

Sainsbury’s breakdown

UK locations

Energy consumption kWh Location-based (tCO

e) Market-based (tCO

Emission source 2023/24 2024/25 2023/24 2024/25 2023/24 2024/25

Combustion of fuel and

operationoffacilities (Scope 1) 1,377,579,245 1,354,032,684 403,057 396,566 403,057 396,566

Electricity, heat, steam and cooling

purchased for own use (Scope 2) 1,156,234,413 1,182,621,736 233,869 239,230 — —

Total 2,533,813,658 2,536,654,419 636,927 635,795 403,057 396,566

Argos and Habitat Breakdown

UK locations

Energy consumption kWh Location-based (tCO

e) Market-based (tCO

Emission source 2023/24 2024/25 2023/24 2024/25 2023/24 2024/25

Combustion of fuel and operation of

facilities (Scope 1) 238,394,880 222,984,795 55,848 52,162 55,848 52,162

Electricity, heat, steam and cooling

purchased for own use (Scope 2) 60,767, 536 44,516,788 12,583 9,190 — —

Total 299,162,416 267,501,583 68,431 61,352 55,848 52,162

Global locations (excludes UK)

Energy consumption kWh Location-based (tCO

e) Market-based (tCO

Emission source 2023/24 2024/25 2023/24 2024/25 2023/24 2024/25

Combustion of fuel and operation of

facilities (Scope 1) 371,070 37,760 68 7 68 7

Electricity, heat, steam and cooling

purchased for own use (Scope 2) 2,176,895 112,892 690 33 — —

Total 2,547,965 150,652 757 40 68 7

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 2024 for all sources.

Scope 2: All Scope 2 Location based emissions have been calculated using

UK Government’s GHG Conversion Factors for Company Reporting 2024, IEA

2024 and Association of Issuing Bodies (AIB) 2024. 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 2024/25, 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 14th 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.

• A number of energy efficiency projects have taken place including:

– Heating and ventilation optimisation

– 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

Refrigeration

We continue to replace refrigeration systems that use HFC refrigerant gas

with more efficient alternatives that use natural refrigerants – CO2, 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.

Logistics

We invested across ten of our depots this year, installing electric plug points

for our Rigid fleet enabling our full fleet of 450 rigids to charge their

refrigeration units via 100 per cent renewable electricity whilst stationary at

our depots.

Nick Grant

General Counsel and Company Secretary

16 April 2025

Additional statutory information continued

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Financial statements

126 Statement of Directors’ responsibilities

127 Independent auditor’s report to the members of J Sainsbury plc

137 Consolidated income statement

138 Consolidated statement of comprehensive income/(loss)

139 Consolidated balance sheet

140 Consolidated statement of changes inequity

141 Consolidated cash flow statement

142 Notes to the consolidated financial statements

205 Company balance sheet

206 Company statement of changes in equity

207 Notes to the Company financial statements

210 Alternative performance measures (APMs)

215 Additional shareholder information

217 Useful contacts

218 Glossary

125

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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

Nick Grant

General Counsel and Company Secretary

16 April 2025

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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

1 March 2025 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

1March 2025 which comprise:

Group Parent company

Consolidated balance sheet as at

1March 2025

Balance sheet as at 1 March 2025

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 40 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 16 April 2026

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, including that of the £550m

unsecured bonds issued in the year and the extension of the revolving

credit facility, 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, and we reviewed the going

concern assessment prepared at a Sainsbury’s Bank level to understand

whether there were any potential liquidity requirements from J Sainsbury

plc during the going concern period.

• 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.

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Basis for opinion continued

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 16 April 2026.

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.

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

9components.

• The components where we performed full or

specific audit procedures accounted for 96%

ofprofit before tax, 100% of Revenue and 99%

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

• Valuation of defined benefit pension

schemeassets

• IT environment

Materiality • Overall Group materiality of £36 million which

represents 5% of Profit before tax, adjusted for

non-recurring items.

An overview of the scope of the Parent Company and

Groupaudits

Tailoring the scope

In the current year our audit scoping has been updated to reflect the new

requirements of ISA (UK) 600 (Revised). We have followed a risk-based

approach when developing our audit approach to obtain sufficient appropriate

audit evidence on which to base our audit opinion. We performed risk

assessment procedures, with input from our component auditors, to identify

and assess risks of material misstatement of the Group financial statements

and identified significant accounts and disclosures.

When identifying components at which audit work needed to be performed

to respond to the identified risks of material misstatement of the Group

financial statements, we considered our understanding of the Group and its

business environment, the potential impact of climate change, the

applicable financial framework, the Group’s system of internal control at the

entity level, the existence of centralised processes, applications and any

relevant internal audit results.

We determined that centralised audit procedures would be performed on

goodwill, share-based payments, equity and retirement benefits.

We identified 24 components as individually relevant to the Group due to

the identified risks of material misstatement to the Group financial

statements identified within the component, materiality, or financial size of

the component relative to the Group financial statements. These

individually relevant components included twelve Group related

components, nine Retail related components and three Financial Services

related components.

All Group and Retail components were audited directly by the primary audit

team. The Financial Services related components were audited by an EY

component team based in Edinburgh.

For those 24 individually relevant components, we identified the significant

accounts where audit work needed to be performed at these components by

applying professional judgement, having considered the Group significant

accounts on which centralised procedures will be performed, the reasons for

identifying the financial reporting component as an individually relevant

component and the size of the component’s account balance relative to the

Group significant financial statement account balance.

We then considered whether the remaining Group significant account

balances not yet subject to audit procedures, in aggregate, could give rise to

a risk of material misstatement of the Group financial statements. No

additional components were required to be included in our audit scope to

address these risks.

Having identified the components for which work will be performed, we

determined the scope to assign to each component.

Of the 24 components selected, we designed and performed audit

procedures on the entire financial information of 15 components (“full scope

components”). For nine components, we designed and performed audit

procedures on specific significant financial statement account balances

ordisclosures of the financial information of the component (“specific

scopecomponents”).

These 24 individually relevant components contributed 100% of Group

Revenue, 96% of Group Profit before tax (as measured on an absolute basis)

and 99% of Total assets (2023/24: 100% of Group Revenue, 96% of Group

Profit before tax measured on an absolute basis and 96% of Group Total

assets).

Our scoping to address the risk of material misstatement for each key audit

matter is set out in the Key Audit Matters section of our report.

Independent auditor’s report continued

to the members of J Sainsbury plc

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Basis for opinion continued

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

operating under our instruction.

Of the 24 individually relevant components, audit procedures were

performed on all 21 Group and Retail components directly by the Primary

audit team and on three Financial Services components by an EY

component audit team in Edinburgh.

The Primary audit team continued to follow a programme of planned visits

that has been designed to ensure that the Senior Statutory Auditor visited

the EY component team in Edinburgh throughout the year. These visits

involved discussing the audit approach with the component team and any

issues arising from their work and meeting with local management. Virtual

visits were also performed including attending planning and closing

meetings and reviewing relevant audit working papers on risk areas.

ThePrimary audit team interacted regularly with the component team

where appropriate during various stages of the audit, reviewed relevant

working papers and were responsible for the scope and direction of the audit

process. Where relevant, the section on Key Audit Matters details the level

of involvement we had with component auditors to enable us to determine

that sufficient audit evidence had been obtained as a basis for our opinion

on the Group as a whole.

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 31 to 44 in the required

Task Force On Climate Related Financial Disclosures and on pages 54 to 62 in

the principal risks and uncertainties. The Group has also explained their

climate commitments as part of the Plan for Better strategy on pages 16 to

19. 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.

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 32

and 33 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 cash flow 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.

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Basis for opinion continued

Key audit matters

Key audit matters are those matters that, in our professional judgement, 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 Our response to the risk

Accounting and reporting for the Group’s phased withdrawal from the

Core Banking business

Refer to the Audit Committee Report (page 96), notes 5 (page 155), 11 (page

163), 22 (page 172), 25 (page 174) and 28 (page 176) of the Consolidated

Financial Statements

In January 2024, the Group announced a phased withdrawal from the Core

Banking business. Subsequently, agreements have been reached to sell the

Core Banking portfolios as follows:

• In June 2024, an agreement was reached for the sale of the personal loan,

credit card and retail deposit portfolios to NatWest Group, which is expected

to be finalised in May 2025.

• In September 2024, an agreement was reached to sell the ATM estate to

NoteMachine, with the transfer of assets expected to be completed by May

2025.

• In October 2024, an agreement was reached to sell the Argos store card

portfolio to NewDay Group which completed in the financial year.

As a result, a number of accounting estimates are required to be made to

reflect the transactions, which includes providing for restructuring costs,

migration costs, onerous contracts, as well as determining the overall loss on

the disposal of the portfolios.

We have therefore identified risks in the following areas, driven by the

complexity and level of management judgement involved in determining the

appropriate accounting treatment:

• Appropriateness and completeness of provisions relating to onerous

contracts (£93 million), restructuring programmes (£32 million)

• Classification and valuation of assets (£2,512 million) and liabilities (£3,136

million) held for sale, including estimation of costs of disposal (£27 million)

in accordance with IFRS 5;

• Classification of discontinued operations in accordance with IFRS 5; and

• Timing of derecognition and ongoing valuation of financial assets and

liabilities under IFRS 9 and related fair value disclosures required

underIFRS 7.

This risk has been updated in the year to reflect that the sale agreements

above had been reached in the current financial year.

• We assessed the design effectiveness of key controls across the processes

relevant to the Group’s evaluation of accounting impacts from the phased

withdrawal from Core Banking.

• We determined the appropriateness and completeness of provisions for

onerous contracts, employee costs and costs of disposal by:

– Challenging the calculation methodology, input data and key

assumptions used;

– Undertaking completeness checks to validate that all significant

contracts were considered within the onerous contract assessment;

– Validating the accuracy of the provisions made through vouching of

terms and values to a sample of contracts, including contracts that

wereexcluded from the provision;

– Validating that provisions reflected communications made by the

Group, and agreements entered into with third parties; and

– Performing substantive testing over data points used in the calculations.

• We evaluated the classification of assets and liabilities as ‘held for sale’

inthe consolidated balance sheet by inspecting signed contracts and

reviewing internal papers and expected timelines for key milestones of the

transactions and the specific circumstances at the balance sheet date.

• We evaluated the classification of discontinued operations within the

consolidated income statement by testing that costs and income within

discontinued operations were directly attributable to those assets and

liabilities that were being sold.

• With respect to the derecognition of the Argos store card portfolio, we

inspected the sales agreement and other supporting documentation,

agreed the cash proceeds received to bank statements, and tested that the

appropriate criteria had been met for derecognition in accordance

withIFRS 9.

• Fair value disclosures were assessed against the contractual sale terms,

which reflect the value at which the portfolios are expected to transfer to

third parties.

• We assessed the classification, measurement principles and disclosures

required under IFRS 5, IFRS 7, and IFRS 9 through inspection of

management’s accounting documents, enquiries of management and

engaging EY IFRS specialists in this process.

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.

How we scoped our audit to respond to the risk

We performed audit procedures in relation to this risk over two Financial Services related components, one of which was full scope, one specific scope.

The Primary audit team issued Group audit instructions to the EY component team based in Edinburgh which included specific substantive procedures to

address the risk of material misstatement in relation to the Group’s withdrawal from the Core Banking business. The primary audit team, visited the component

audit team, discussed the key audit matter directly with component management, and reviewed the component audit team’s key workpapers which were

executed in line with the Group audit instructions.

Independent auditor’s report continued

to the members of J Sainsbury plc

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Basis for opinion continued

Key audit matters continued

Risk Our response to the risk

Supplier arrangements

Refer to the accounting policy in note 3.2 (page 146) and disclosure within

note 7 (page 159) 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

1March2025 were £525 million (2023/2024: £481 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.

• 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.

How we scoped our audit to respond to the risk

We performed procedures over supplier arrangements at two individually relevant, full scope, Retail components. Allauditwork performed to address this

risk was undertaken by the Primaryaudit team.

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Basis for opinion continued

Key audit matters continued

Risk Our response to the risk

Aspects of revenue recognition

Refer to the accounting policy in note 3.1 (page 145), and note 6 (page 157) of

the Consolidated Financial Statements

Revenue recognised, including the effects of manual adjustments, for

theperiod ended 1 March 2025 totalled £32,807 million (2023/2024:

£32,700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

andaccounting for coupons and vouchers.

There is a risk that these adjustments are not complete and accurate for the

period ended 1 March 2025 and that accounting judgements taken are

inappropriate. The opportunity exists through management override of

controls, such as the posting of manual journals, to misstate revenue in

theperiod.

The risk has been refined in the year, to remove the aspects of deferred

revenue that are not subject to higher risk of material misstatement.

• 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.

• 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.

How we scoped our audit to respond to the risk

We performed procedures over adjustments to revenue at the two individually relevant, full scope, Retail components. All audit work performed to address

this risk was undertaken by the Primary audit team.

Independent auditor’s report continued

to the members of J Sainsbury plc

132

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Basis for opinion continued

Key audit matters continued

Risk Our response to the risk

Valuation of the defined benefit pension scheme assets

Refer to the Audit Committee Report (page 96); Accounting policy in note 3.19

(page 152); and notes 4.2 (page 154) and 34 (page 194) of the Consolidated

Financial Statements

Retirement benefit surplus (2024/2025: £731 million; 2023/2024: £690 million)

Fair value of plan assets (2024/2025: £6,329 million; 2023/2024: £6,702 million)

Present value of funded and unfunded obligations (2024/2025: £5,598 million;

2023/2024: £6,012 million)

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;

(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 (2024/2025: £2,727 million; 2023/2024:

£2,876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.

• 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.

How we scoped our audit to respond to the risk

Our audit procedures covered the Sainsbury’s Pension Scheme which has two sections: the Sainsbury’s Section and the Argos Section. All audit work

performed to address this risk was undertaken by the Primary audit team and supported by EY professionals with specialist skills.

133

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Basis for opinion continued

Key audit matters continued

Risk Our response to the 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.

• 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.

How we scoped our audit to respond to the risk

Our audit procedures covered the Group and Retail related components. All audit work performed to address this risk was undertaken by the Primary audit team.

In the prior year, our auditor’s report included a key audit matter in relation to Measurement of provision for impairment of loans and advances to financial

services customers. In the current year, this was not a key audit matter given that the assets were recorded at fair value in accordance with IFRS 9 at the

balance sheet date and the assessment of this valuation is included within the ‘Accounting and reporting for the Group’s phased withdrawal from the Core

Banking business’ key audit matter above.

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 £36 million (2023/2024: £35 million), which is 5% (2023/20244: 5%) 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 £112 million (2023/2024: £136 million), which is 2% (2023/2024: 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 – continuing operations: £625 million

• Adjust for non-recurring items: £101 million, comprising

– Restructuring and impairment: £158m (Note 5.1)

– Property related profits: £(57m) (Note 5.3)

• Total £726 million materiality basis

• Materiality of £36m (5% of materiality basis)

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.

Independent auditor’s report continued

to the members of J Sainsbury plc

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Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Our application of materiality continued

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% (2023/2024: 50%) of our planning materiality, rounded

to £18 million (2023/2024: £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 £3.6 million to

£16.2million (2023/2024: £3.4 million to £15.3 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 £1.8 million (2023/2024:

£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 124 and pages 210 to 220, 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

n 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 64;

• 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 63;

• 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 64;

• Directors’ statement on fair, balanced and understandable set out on

page 126;

• Board’s confirmation that it has carried out a robust assessment of the

emerging and principal risks set out on page 54;

• The section of the annual report that describes the review of effectiveness

of risk management and internal control systems set out on page 54; and;

• The section describing the work of the Audit Committee set out on

page96.

Responsibilities of Directors

As explained more fully in the Directors’ responsibilities statement set out

on page 126, 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.

135

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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 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 centres 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 10 years, covering the years ending

12March 2016 to 1 March 2025.

• 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

16 April 2025

Independent auditor’s report continued

to the members of J Sainsbury plc

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Consolidated income statement

						52 weeks to 2 March 2024
			52 weeks to 1 March 2025			(restated*)
			Non-			Non-
			underlying			underlying
		Underlying	items		Underlying	items
		items	(note 5)	Total	items	(note 5)	Total
	Note	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	6	32,812	—	32 ,812	3 2,238	—	32,238
Cost of sales		(30 ,513)	(78)	(30, 591)	(3 0,009)	(1 39)	(3 0,148)
Gross profit/(loss)		2,299	(78)	2,221	2, 229	(1 39)	2,090
Administrative expenses		(1, 32 5)	(10 0)	(1 ,4 2 5)	(1,333)	(7 1)	(1 ,4 0 4)
Other income		55	53	10 8	52	6	58
Operating profit/(loss)		1,0 29	(1 25)	904	948	(2 04)	74 4
Finance income	9	31	36	67	30	51	81
Finance costs	9	(3 36)	(14)	(3 50)	(324)	(1 2)	(3 36)
Profit/(loss) before tax – continuing operations		7 24	(10 3)	621	654	(16 5)	489
Income tax (expense)/credit	10	(216)	15	(2 01)	(1 74)	(7)	(1 81)
Profit/(loss) after tax – continuing operations		508	(8 8)	420	480	(17 2)	308
Profit/(loss) after tax – discontinued operations	11	31	(20 9)	(1 78)	36	(2 07)	(17 1)
Profit/(loss) for the financial period		539	(297)	24 2	516	(3 79)	1 37
		pence		pence	pence		pence
Total earnings per share	12
Basic – total		23.1		1 0.4	22 .1		5.9
Diluted – total		22 .7		10. 2	2 1.6		5.7
Earnings per share – from continuing operations	12
Basic – continuing				18 .0			13.2
Diluted – continuing				1 7. 7			1 2.9

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

The notes on pages 142 to 204 form an integral part of these financial statements.

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Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Consolidated statement of comprehensive income/(loss)

			52 weeks to
		52 weeks to	2 March 2024
		1 March 2025	(restated*)
	Note	£m	£m
Profit for the financial year		24 2	1 37
Items that will not be subsequently reclassified to the income statement
Remeasurement on defined benefit pension schemes	34	(3 3)	(3 89)
Movements on financial assets at fair value through other comprehensive income		—	1
Cash flow hedges fair value movements – inventory hedges	30	1	(67)
Current tax relating to items not reclassified		(1)	10
Deferred tax relating to items not reclassified	10	9	177
		(24)	(2 68)
Items that may be subsequently reclassified to the income statement
Currency translation differences		—	(3)
Movements on financial assets at fair value through other comprehensive income		1	—
Cash flow hedges fair value movements – non-inventory hedges	30	13	(82)
Items reclassified from cash flow hedge reserve	30	2	4
Deferred tax on items that may be reclassified	10	(4)	17
		12	(6 4)
Total other comprehensive loss for the year (net of tax)		(1 2)	(332)
Total comprehensive income/(loss) for the year		230	(195)
Continuing operations		408	(24)
Discontinued operations	11	(1 78)	(17 1)
Total comprehensive income/(loss) for the year		230	(195)

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

The notes on pages 142 to 204 form an integral part of these financial statements.

138

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Consolidated balance sheet

		1 March 2025	2 March 2024
	Note	£m	£m
Non-current assets
Property, plant and equipment	14	9, 3 58	9, 28 2
Right-of-use assets	15	4 ,4 55	4,296
Intangible assets	16	807	806
Investments in joint ventures and associates		2	2
Other financial assets	18	769	761
Trade and other receivables	20	42	108
Amounts due from Financial Services customers and other banks	21	—	1 ,46 7
Derivative financial assets	30	35	68
Net retirement benefit surplus	34	7 31	690
		16,199	1 7, 4 8 0
Current assets
Inventories	19	1,9 46	1,927
Trade and other receivables	20	57 2	582
Amounts due from Financial Services customers and other banks	21	—	3 ,050
Other financial assets	18	612	17
Derivative financial assets	30	15	8
Cash and cash equivalents	31	2,777	1,98 7
		5,92 2	7,571
Assets of disposal group and non-current assets held for sale	22	2,527	10
		8,4 4 9	7 ,581
Total assets		24, 64 8	25,06 1
Current liabilities
Trade and other payables	23	(5 ,2 78)	(5,091)
Amounts due to Financial Services customers and other deposits	24	(1, 955)	(5,515)
Borrowings	33	(72)	(65)
Lease liabilities	15	(5 90)	(515)
Derivative financial liabilities	30	(1 5)	(28)
Taxes payable		(141)	(12 5)
Provisions	25	(2 30)	(1 13)
		(8, 28 1)	(11, 452)
Liabilities of disposal group held for sale	22	(3,1 36)	—
		(1 1 ,41 7)	(11, 452)
Net current liabilities		(2 ,9 68)	(3,8 71)
Non-current liabilities
Trade and other payables	23	(24)	(11)
Amounts due to Financial Services customers and other deposits	24	(13)	(206)
Borrowings	33	(1 ,04 2)	(1 ,13 0)
Lease liabilities	15	(4 , 90 4)	(4 ,8 39)
Derivative financial liabilities	30	(1 1)	(59)
Deferred income tax liability	10	(42 9)	(32 9)
Provisions	25	(1 57)	(167)
		(6, 58 0)	(6,7 41)
Total liabilities		(1 7, 9 9 7)	(1 8,19 3)
Net assets		6,65 1	6, 868
Equity
Called up share capital	26	669	678
Share premium		1 ,4 48	1 ,4 30
Merger reserve	26	17 3	568
Capital redemption and other reserves	27	(5 4)	955
Retained earnings		4, 415	3, 237
Total equity shareholders' funds		6,65 1	6, 868

The notes on pages 142 to 204 form an integral part of these financial statements.

Approved by the Board of Directors on 16 April 2025, and are signed on its behalf by:

Simon Roberts Bláthnaid Bergin

Chief Executive Chief Financial Officer

139

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Consolidated statement of changes in equity

					Capital
			Share		redemption
		Called up	premium	Merger	and other	Retained	Total
		share capital	account	reserve	reserves	earnings	equity
	Note	£m	£m	£m	£m	£m	£m
At 3 March 2024		67 8	1 ,4 30	568	955	3, 237	6, 868
Profit for the financial year		—	—	—	—	24 2	24 2
Other comprehensive income/(loss)	27	—	—	—	17	(33)	(16)
Tax relating to other comprehensive income/(loss)		—	—	—	(4)	8	4
Total comprehensive income		—	—	—	13	217	230
Cash flow hedges losses transferred to inventory	27, 30	—	—	—	18	—	18
Transactions with owners:
Transfer between reserves	26,27	—	—	(395)	(1 ,035)	1 ,4 3 0	—
Dividends	13	—	—	—	—	(308)	(3 08)
Share-based payment	35	—	—	—	—	80	80
Purchase of own shares for share schemes	27	—	—	—	(6 3)	—	(6 3)
Allotted in respect of share schemes	26,27	12	18	—	37	(4 4)	23
Purchase of own shares for cancellation	27	—	—	—	(20 0)	—	(2 00)
Cancellation of own shares	26,27	(2 1)	—	—	221	(2 00)	—
Tax on items charged to equity		—	—	—	—	3	3
At 1 March 2025		669	1 ,4 4 8	17 3	(5 4)	4, 415	6,6 51

					Capital
			Share		redemption
		Called up	premium	Merger	and other	Retained	Total
		share capital	account	reserve	reserves	earnings	equity
	Note	£m	£m	£m	£m	£m	£m
At 5 March 2023		67 2	1 ,41 8	568	95 4	3,6 41	7, 2 5 3
Profit for the period		—	—	—	—	1 37	137
Other comprehensive loss	27	—	—	—	(14 7)	(38 9)	(536)
Tax relating to other comprehensive loss		—	—	—	99	105	204
Total comprehensive loss		—	—	—	(4 8)	(147)	(1 95)
Cash flow hedges losses transferred to inventory	27, 30	—	—	—	32	—	32
Transactions with owners:
Dividends	13	—	—	—	—	(306)	(306)
Share-based payment	35	—	—	—	—	87	87
Purchase of own shares for share schemes	27	—	—	—	(18)	—	(1 8)
Allotted in respect of share schemes	26,27	6	12	—	35	(38)	15
At 2 March 2024		678	1 ,4 30	56 8	955	3,2 37	6,8 68

The notes on pages 142 to 204 form an integral part of these financial statements.

140

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Consolidated cash flow statement

			52 weeks to
		52 weeks to	2 March 2024
		1 March 2025	(restated*)
	Note	£m	£m
Cash flows from operating activities
Cash generated from operations - continuing operations	31	1,7 76	2, 510
Interest paid		(35 9)	(3 36)
Corporation tax paid		(53)	(61)
Net cash generated from operating activities - continuing operations		1, 36 4	2 ,11 3
Cash flows from investing activities
Purchase of property, plant and equipment		(61 7)	(1,381)
Initial direct costs on new leases		(34)	(6)
Purchase of intangible assets		(208)	(1 78)
Proceeds from disposal of property, plant and equipment		45	77
Interest received		27	27
Net cash used in investing activities - continuing operations		(787)	(1,4 6 1)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		2 0	1 5
Proceeds from borrowings	33	5 44	57 5
Repayment of borrowings	33	(6 23)	(41)
Purchase of own shares for share schemes	27	(63)	(18)
Purchase of own shares for cancellation	27	(20 0)	—
Capital repayment of lease obligations		(4 8 7)	(507)
Dividends paid on ordinary shares	13	(308)	(3 06)
Net cash used in financing activities - continuing operations		(1,1 17)	(282)
Net increase in cash and cash equivalents
Continuing operations		(54 0)	370
Discontinued operations		1, 32 9	2 98
Total increase in cash and cash equivalents		78 9	668
Opening cash and cash equivalents		1 ,987	1,31 9
Closing cash and cash equivalents	31	2 ,7 76	1,987

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

The notes on pages 142 to 204 form an integral part of these financial statements.

141

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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 1 March 2025 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, ‘2025’ refers to the 52 weeks to 1 March 2025, or as at 1 March 2025; and ‘2024’ refers to the 52 weeks

to 2 March 2024, or as at 2 March 2024.

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 certain financial instruments, defined benefit pension scheme assets and

share-based payments.

Sainsbury’s Bank plc and its subsidiaries have been consolidated for the twelve months to 28 February 2025 being the Bank’s year-end date (2024: 29 February

2024). Adjustments are made for the effects of significant transactions or events that occur 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.

Discontinued operations

A discontinued operation is a component of the Group which represents a separate major line of business which has been disposed of or is classified as held

for sale. Such classification assumes the expectation that the sale will complete within twelve months of the assessment date.

Non-current assets (or disposal groups) are classified as assets held for sale when their carrying amount is to be recovered principally through such sale

transactions. Assets and liabilities held for sale are measured at the lower of their carrying amount and fair value less costs to sell.

Where the carrying amount of a non-current asset or disposal group held for sale exceeds its fair value less costs to sell, a loss is recognised. This is allocated

firstly against any goodwill attributable to the disposal group, and then to other non-current assets in the disposal group that are in scope of IFRS 5

‘Non-current assets held for sale and discontinued operations’ measurement requirements. Any excess loss remaining is recognised against the remaining

assets of the disposal group as a whole.

A component of the Group that is held for sale or disposed of is presented as a discontinued operation either when it is a subsidiary acquired exclusively with

a view to resale or it represents, or is part of a coordinated plan to dispose of, a separate major line of business.

Operations classified as discontinued are disclosed further in note 11.

Following the announcement on 20 June 2024 that the Group had entered into an agreement for the sale of Sainsbury’s Bank plc’s personal loan, credit card

and retail deposit portfolios (together, the Core Banking Business) to NatWest Group (NatWest), the agreement triggered a change in business model as the

objective is now to sell financial assets and no longer to hold for the collection of contractual cash flows. The underlying portfolios have therefore been

reclassified from being measured at amortised cost to being measured at fair value through profit and loss by reference to the pricing mechanism within the

sale agreement and reflects the market conditions prevailing at the balance sheet date. Provisions for expected credit loss and effective interest rate

adjustments have been derecognised as a result. The adjustment has been made prospectively from 15 September 2024, being the first day of the reporting

period following the change in business model. Prior to the reclassification, the financial assets were classified and subsequently measured at amortised

cost using the effective interest method, net of any loss allowance.

Amounts have been recognised within discontinued operations.

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 31, 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.

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2 Basis of preparation and consolidation continued

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 16 April 2026.

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, for example through the Investment Grade Corporate Bond markets and structuring core

borrowings with phased maturities to manage refinancing risk, evidenced by the issuance in January 2025 of £550 million of Investment Grade Corporate Bonds,

split into two tranches, a £250 million tranche maturing in June 2030 and a £300 million tranche maturing in January 2035. In addition, the Group has in place an

inflation-linked amortising loan with a principal of £438 million outstanding at the reporting date. As at 1 March 2025, both facilities were fully drawn.

The Group also seeks to minimise liquidity risk and maintain sufficient levels of standby liquidity and a suitable level of undrawn additional funding capacity

via the Revolving Credit Facility. 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. This is the second extension resulting in revised maturity dates of December 2029 for Facility A and December 2028 for Facility B. As at

1 March 2025, the Revolving Credit Facility was undrawn. No additional forms of financing are assumed in the assessment of the Group as a going concern.

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 64 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 suspending dividend payments.

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 which include reducing environmental impacts and meeting customer

expectations in this area, notably through sustainability initiatives such as 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 phased withdrawal from Financial Services as we transition to a distributed model, with assets and

operations being transferred to NatWest, NewDay, and NoteMachine. 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 to a third-

party distributed model. 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 phased withdrawal and the risks arising thereon. The evaluation has included costs to exit being higher

than planned and the ability to withstand unforeseen scenarios such as planned divestments not concluding as expected. 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 phased withdrawal, prior to any additional mitigating actions being taken. 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 28 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 28 February and the Group’s balance sheet date.

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Notes to the consolidated financial statements continued

2 Basis of preparation and consolidation continued

2.3 Basis of consolidation continued

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 assets and liabilities of foreign operations are translated into pound sterling using the exchange rates prevailing at the balance sheet date. The results

of foreign operations are translated using the average rates of exchange for the year. Exchange differences are recognised in the Group statement of

comprehensive income/(loss) and included within 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.

2.4 New standards, interpretations and amendments adopted by the Group

a) New accounting standards adopted by the Group

The Group has applied the following new standards and interpretations which became effective in the 52 weeks to 1 March 2025:

• Amendments to IFRS 16: Lease liability in a sale and leaseback

• Amendments to IAS 1: Classification of liabilities as current or non-current and non-current liabilities with covenants

• Amendments to IAS 7 and IFRS 7: Supplier finance arrangements

The new accounting standards, interpretations and amendments to standards and IFRIC interpretations which became applicable during the year were

either not relevant or had no impact, or no material impact, on the Group’s results or net assets. Therefore, the adoption of the new standards and

interpretations listed above did not require any changes to be made to the Group accounting policies and the policies have remained unchanged from those

disclosed in the Annual Report for the financial year ended 2 March 2024.

b) New accounting standards in issue but not yet effective

The following standards and interpretations were in issue at the date of approval of these financial statements but not yet effective and therefore have not

been applied for the 52 weeks to 1 March 2025:

• Amendments to IAS 21: Lack of exchangeability

• Amendments to IFRS 9 and IFRS 7: Classification and measurement of financial instruments

• IFRS 18: Presentation and disclosure in financial statements

• IFRS 19: Subsidiaries without public accountability

• Amendments to IFRS 9 and IFRS 7: Contracts Referencing Nature-dependent Electricity

• Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture.

The adoption of the above standards and interpretations, with the exception of the adoption of IFRS 18, is not expected to lead to any changes to the Group’s

accounting policies nor to have any impact, or any material impact, on the Group’s results or net assets.

The impact of IFRS 18 ‘Presentation and disclosure in financial statements’, which will become effective in the consolidated Group financial statements for

the financial year ending 26 February 2028, subject to UK endorsement, is still under assessment.

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.

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2 Basis of preparation and consolidation continued

2.5 Alternative Performance Measures (APMs) continued

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 reflects how the business measures performance internally. These adjusted measures exclude items recognised

in reported profit or loss before tax which, if included, could distort comparability between periods. Underlying profit is not an IFRS measure and therefore

not directly comparable to other companies.

Reconciliations to IFRS measures

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 includes further information on the definition,

purpose and reconciliation to the closest IFRS measure.

Changes to APMs

Following the Group’s announcement over phased withdrawal from Financial Services, the definition of the Group’s retail free cash flow APM has been

updated during the period to now exclude capital injections to, dividends from, and any other exceptional cash movements with or on behalf of Sainsbury’s

Bank and its subsidiaries. This change results in more relevant information as retail free cash flow will now solely present retail cash flows without any

impacts of the phased withdrawal from Financial Services, and enables management to assess solely the cash flows associated with its core retail operations.

No comparatives have been restated as exceptional cash movements with Sainsbury’s Bank in the prior year were immaterial.

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 within

trade and other payables.

Other revenue items

Other revenue items comprise income from commissions.

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.

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.

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Notes to the consolidated financial statements continued

3 Material accounting policies continued

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.

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 or a transaction that gives rise to an equal and deductible temporary difference 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.

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. 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.

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3 Material accounting policies continued

3.5 Property, plant and equipment continued

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.

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.

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Notes to the consolidated financial statements continued

3 Material accounting policies continued

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.

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.

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3 Material accounting policies continued

3.8 Impairment continued

a) Non-financial assets continued

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 measured at amortised cost 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 (FVPL), 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 Amounts due 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.

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.

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Notes to the consolidated financial statements continued

3 Material accounting policies continued

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.

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 FVPL.

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

• Financial assets at FVPL

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 (FVPL) or a combination

thereof (FVOCI).

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.

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3 Material accounting policies continued

3.15 Financial instruments continued

a) Financial assets continued

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. On initial recognition, financial assets at FVOCI are measured at fair value plus transaction

costs and subsequently recorded at fair value at each period end with the movements recognised in other comprehensive income until derecognised 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. Cumulative gains and losses on equity instruments are never recycled to the income statement, but are transferred from financial asset

reserve to retained earnings within equity. 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

Financial assets that do not meet the classification criteria to be measured at amortised cost or at FVOCI are measured at FVPL. Financial assets measured

at FVPL are carried in the statement of financial position at fair value with net changes in fair value recognised in the income statement. Interest on debt

instruments is recognised using the effective interest method.

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 FVPL. 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 and other taxes and social security costs payable

• 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.

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 applies 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 adopted IAS 39 for its macro portfolio fair value hedges of fixed rate personal loans up to the point of announced disposal

in June 2024, and for Mortgages in the comparative year up until the point of disposal in August 2023.

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.

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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 continued

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

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.

The Group used portfolio fair value hedging as a risk management tool for hedging interest rate risk on the personal loans portfolio up to the point of

announced disposal in June 2024, and for mortgages in the comparative year up until the point of disposal in August 2023. Following the announced exit of

personal loans, the related derivatives classified in a hedge relationship were deemed ineffective with changes in fair value recognised immediately in the

income statement from this date.

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.

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.

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3 Material accounting policies continued

3.19 Retirement benefit obligations continued

b) Defined benefit pension scheme (Sainsbury’s Pension Scheme) continued

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 accounting for the phased withdrawal from Financial Services.

Key judgements have included the classification of costs as non-underlying items (note 4.1 a)), the timing of recognition of provisions, the classification

of amounts within discontinued operations, and the timing and quantum of assets held for sale and loss on disposal recognition. Key estimates have

included the measurement of onerous contracts and restructuring provisions.

The following judgements, which were disclosed as significant judgements in the prior year financial statements, are no longer deemed to be significant judgements:

• Classification of cash flows as part of asset acquisition - As part of the asset acquisition in the prior year, 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. This acquisition was completed in the prior year and as there have been no asset acquisitions in 52 weeks ended

1 March 2025, this has been removed as a significant judgement

The following estimates, which were disclosed as significant estimates in the prior year financial statements, are no longer deemed to be significant estimates:

• 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. However, any reasonably possible changes in the estimates applied in calculating these provisions would not have a material impact on

the provisions recognised. Therefore, provisioning is no longer deemed to be a significant estimate

• Impairment of financial assets - This estimate related to the Expected Credit Loss (ECL) approach on the Bank’s financial assets. Following the transfer

of the Core Banking portfolios to assets of the disposal group held for sale, and the derecognition of AFS cards, financial assets are no longer material and

therefore a significant estimate over their impairment no longer exists

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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.

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, and is

calculated with reference to lifetime actual breakage and lifetime issuance. A sensitivity analysis, showing the impact of a change in breakage estimate on

the deferred points liability, is set out in note 23.1.

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 measurement 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) Impairment of 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 and 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

d) 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.

d) Post-employment benefits continued

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
			2025				(restated*)
		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
Cost of sales		(80)	—	2	(78)	(73)	—	(66)	(139)
Administrative expenses		(75)	(8)	(17)	(100)	(49)	(7)	(15)	(71)
Other income		(4)	—	57	53	—	—	6	6
Affecting operating profit		(159)	(8)	42	(125)	(122)	(7)	(75)	(204)
Net finance (costs)/income		(2)	36	(12)	22	(1)	51	(11)	39
Affecting profit before tax
–continuing operations		(161)	28	30	(103)	(123)	44	(86)	(165)
Income tax credit/(charge)	10				15				(7)
Affecting profit after tax
–continuing operations					(88)				(172)
Loss on disposal after tax
–discontinued operations	11.4				(106)				(11)
Restructuring and impairment costs after tax
–discontinued operations	11.3				(103)				(196)
Affecting profit after tax
–discontinued operations					(209)				(207)
Affecting profit for the financial period					(297)				(379)

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

The impact of non-underlying items on Retail cash generated from operations is presented in note A2.2.

5.1 Restructuring and impairment

a) Restructuring

Financial Services model

As part of the phased withdrawal from Financial Services, costs incurred associated with the exit that are directly attributable to the disposal group have

been classified as discontinued operations as set out in note 11.

Costs which are not directly attributable to the disposal group, but have specifically been incurred as part of the phased withdrawal, have been recognised

within non-underlying items within continuing operations.

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Notes to the consolidated financial statements continued

5 Non-underlying items continued

5.1 Restructuring and impairment continued

a) Restructuring continued

Retail restructuring programmes

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, and further rationalise/repurpose the Group’s supermarkets

and convenience estate. The programme also considered the Group’s Store Support Centre ways of working.

Separately, as part of our Next Level Sainsbury’s strategy implementation, launched in the current year, we have commenced a multi-year restructuring

programme which will update our central management structures to support faster decision-making and drive performance at both Sainsbury’s and Argos,

creating fewer, bigger roles with clearer accountabilities. In addition, it was announced in the current year that we will be closing food counters, converting

cafes to expert partners, and converting remaining scratch bakeries.

As the costs incurred facilitate future underlying cost savings, it was considered whether it was appropriate to report these costs within underlying profit.

Whilst they arise from changes in the Group’s underlying operations, they can be separately identified, are material in size and do not relate to ordinary

in-year trading activity. In addition, the areas being closed or restructured no longer relate to the Group’s remaining underlying operations and their

exclusion provides meaningful comparison between financial years.

b) Non-restructuring items

Impairments of non-financial assets

Separate from restructuring initiatives, the Group has recognised £16 million of impairment (2024: £nil) in relation to non-trading sites, reflecting rent reviews.

Analysis of restructuring and non-restructuring impairment items

							2024
				2025			(restated*)
		Financial	Retail	Impairment of		Financial	Retail
		Services	restructuring	non-financial		Services	restructuring
		model	programmes	assets	Total	model	programmes	Total
	Note	£m	£m	£m	£m	£m	£m	£m
Non-financial asset impairments
Property, plant and equipment	17	—	(4)	—	(4)	(3)	(1)	(4)
Right-of-use assets	17	—	—	(16)	(16)	(3)	(3)	(6)
Intangible assets	17	—	—	—	—	(16)	—	(16)
		—	(4)	(16)	(20)	(22)	(4)	(26)
Accelerated depreciation of assets	a)	—	(42)	—	(42)	—	(19)	(19)
Employee costs	b)	(8)	(43)	—	(51)	(3)	(33)	(36)
Onerous contracts	c)	(8)	—	—	(8)	—	—	—
Property closure provisions	d)	—	(12)	—	(12)	—	(33)	(33)
Other costs	e)	(1)	(27)	—	(28)	(3)	(6)	(9)
		(17)	(128)	(16)	(161)	(28)	(95)	(123)

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

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 incremental project-related employee costs.

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. 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) Other costs comprise predominantly consultancy costs.

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.

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5 Non-underlying items continued

5.3 Other

			2024
		2025	(restated*)
		£m	£m
Property related transactions	a)	57	(15)
Non-underlying finance and fair value movements	b)	(10)	(56)
Acquisition adjustments	c)	(17)	(15)
		30	(86)

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

a) Predominantly relates to the profit on completion of the disposal of land associated with the Hendon Mixed Used Development Scheme, which included the closure of the existing

supermarket and the recognition of a new supermarket asset within property, plant and equipment (2024: an impairment charge of £19 million of property, plant and equipment was

recognised in cost of sales as part of the asset acquisition of 21 stores, whereby the asset base of these stores’ CGUs had significantly changed as a result of the transaction and therefore

were reviewed for impairment, offset by a gain on disposal of non-trading properties of £4 million recognised in other income).

b) Comprises £12 million (2024: £10 million) finance costs relating to lease interest paid on impaired non-trading sites, and £2 million gain (2024: £46 million loss) within cost of sales relating

to favourable (2024: 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.

c) Comprises the unwind of non-cash fair value adjustments arising from the Home Retail Group. Classification as non-underlying is because these assets would not normally be recognised

outside of a business combination.

6 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.

In determining the Group’s reportable segments, management have considered the economic characteristics, in particular average gross margin, similarity

of products, production processes, customers, sales methods and the regulatory environment of its two Retail operating segments. In doing so it has been

concluded that they should be aggregated into one ‘Retail’ reportable 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.

The Group’s reportable operating segments have therefore been identified as follows:

• 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, 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, include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Segment assets and liabilities,

including investments in associates and joint ventures, are not disclosed because they are not reported to, or reviewed by, the CODM.

In presenting discontinued operations, income and costs directly attributable to the discontinued operations are presented separately. A high proportion

of central and multi-product costs continue to be recognised within continuing operations as they are not deemed to be directly attributable to the

discontinued operation.

6.1 Income statement

				2025
					Group –
				Group –	Discontinued
			Financial	Continuing operations		Group
		Retail	Services	operations	(Note 11)	Total
	Note	£m	£m	£m	£m	£m
Revenue
Grocery, general merchandise and clothing		28,762	—	28,762	—	28,762
Fuel		3,868	—	3,868	—	3,868
Interest receivable		—	103	103	273	376
Fees and commission		—	79	79	57	136
		32,630	182	32,812	330	33,142
Underlying operating profit/(loss)
Underlying operating profit/(loss)		1,036	(7)	1,029	37	1,066
Underlying finance income		31	—	31	—	31
Underlying finance costs		(336)	—	(336)	—	(336)
Underlying profit/(loss) before tax		731	(7)	724	37	761
Non-underlying items	5			(103)	(274)	(377)
Profit/(loss) before tax				621	(237)	384
Income tax (expense)/credit	10			(201)	59	(142)
Profit/(loss) for the financial year				420	(178)	242

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Notes to the consolidated financial statements continued

6 Segment reporting continued

6.1 Income statement continued

				2024
					Group –
				Group –	Discontinued
			Financial	Continuing operations
		Retail	Services	operations	(restated*)	Group
			(restated*)	(restated*)	(Note 11)	Total
	Note	£m	£m	£m	£m	£m
Revenue
Grocery, general merchandise and clothing		2 7, 830	—	2 7,830	—	27,8 3 0
Fuel		4,254	—	4,254	—	4,254
Interest receivable		—	79	79	414	493
Fees and commission		—	75	75	69	144
		32,084	154	32,238	483	32,721
Underlying operating profit/(loss)
Underlying operating profit/(loss)		966	(18)	948	47	995
Underlying finance income		30	—	30	—	30
Underlying finance costs		(324)	—	(324)	—	(324)
Underlying profit/(loss) before tax		672	(18)	654	47	701
Non-underlying items	5			(165)	(259)	(424)
Profit/(loss) before tax				489	(212)	277
Income tax (expense)/credit	10			(181)	41	(140)
Profit/(loss) for the financial year				308	(171)	137

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

6.2 Balance sheet

		2025			2024
		Financial			Financial
	Retail	Services	Group	Retail	Services	Group
	£m	£m	£m	£m	£m	£m
Assets	18,423	6,223	24,646	18,288	6,771	25,059
Investments in joint ventures and associates	2	—	2	2	—	2
Segment assets	18,425	6,223	24,648	18,290	6,771	25,061
Segment liabilities	(12,446)	(5,551)	(17,997 )	(12,171)	(6,022)	(18,193)

6.3 Other segment items

				2025
				Group –	Group –
			Financial	Continuing	Discontinued
		Retail	Services	operations	operations	Group
	Note	£m	£m	£m	£m	£m
Depreciation expense
Property, plant and equipment	14	532	—	532	—	532
Right-of-use assets	15	501	—	501	—	501
Amortisation expense
Intangible assets	16	182	—	182	—	182
Impairment of non-financial assets	17	22	—	22	—	22
Impairment loss on financial assets		—	2	2	61	63
Share based payments	35	71	4	75	5	80

				2024
				Group –	Group –
			Financial	Continuing	Discontinued
			Services	operations	operations
		Retail	(restated*)	(restated*)	(restated*)	Group
	Note	£m	£m	£m	£m	£m
Depreciation expense
Property, plant and equipment	14	538	—	538	1	539
Right-of-use assets	15	449	1	450	—	450
Amortisation expense
Intangible assets	16	159	13	172	17	189
Impairment of non-financial assets	17	23	22	45	152	197
Impairment of goodwill	17	—	—	—	38	38
Impairment loss/(reversal) on financial assets		(4)	2	(2)	100	98
Share based payments	35	83	2	85	4	89

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

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6 Segment reporting continued

6.3 Other segment items continued

			2025			2024
			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	629	—	629	1,654	1	1,655
Intangible assets	16	208	—	208	165	13	178
Right-of-use assets	15	676	—	676	435	3	438

6.4 Geographical segments

In the current year, the Group traded in the UK and consequently the majority of revenues, capital expenditure and segment net assets arise there. The assets

of the businesses in the Republic of Ireland and Asia, where the Group does not trade but maintains an operational presence, are not material.

7 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

	2025	2024
	£m	£m
Fixed amounts	293	271
Supplier rebates	40	76
Marketing and advertising income	174	134
	507	481

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

	2025	2024
	£m	£m
Within inventory	(2)	(3)
Within current trade receivables
Supplier arrangements due	54	47
Accrued supplier arrangements	65	48
Within current trade payables
Supplier arrangements due	37	39
Accrued supplier arrangements	—	1
Total supplier arrangements	154	132

Additionally, £18 million (2024: £nil) of supplier arrangements contractually agreed but not yet earned is held on the balance sheet within deferred income.

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Notes to the consolidated financial statements continued

8 Operating profit

8.1 Operating profit is stated after charging/(crediting):

					2024
				2025	(restated*)
Continuing operations			Note	£m	£m
Employee costs			8.2	3,983	3,803
Inventories recognised as an expense within cost of sales				26,557	26,087
Write-down of inventories				721	672
Depreciation	– Property, plant and equipment	a)	14	532	538
	– Right-of-use assets		15	501	450
Amortisation	– Intangible assets	a)	16	182	172
Impairment of non-financial assets			17	22	44
Short-term lease expense				30	30
Sublet income				(47)	(46)
Profit on disposal	– Property, plant and equipment			(53)	(5)
	– Lease terminations			(9)	(11)
Foreign exchange (gain)/loss				(1)	12

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

a) Includes the unwind of acquisition adjustments as set out in note 5.3.

8.2 Employee costs

	2025	2024
	£m	£m
Wages and salaries, including bonus and termination benefits	3,532	3,348
Social security costs	275	254
Pension costs – defined contribution schemes	204	188
Share-based payments expense	80	89
	4,091	3,879
Discontinued operations	108	76
Continuing operations	3,983	3,803

8.3 Employee numbers

	2025	2024
Average number of employees, including Directors and discontinued operations:	’000	’000
Full-time	53	57
Part-time	92	95
	145	152
Full-time equivalent	95	100

Details of key management compensation can be found in note 38.1 and within the Directors’ remuneration report on pages 104 to 121.

8.4 Auditor’s remuneration

	2025	2024
	£m	£m
Audit of the parent company and consolidated financial statements	1.5	1.2
Audit of the Company’s subsidiaries	2.7	2.4
Audit-related assurance services, including half-year review	0.1	0.1
	4.3	3.7
Non-audit services	0.1	—
Total fees	4.4	3.7

Non-audit services relate to services provided by the Group’s auditor in relation to the establishment of the Euro MTN (EMTN) Programme which provided

a platform for accessing the public bond markets.

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9 Finance income and finance costs

		2025			2024
		Non-			Non-
	Underlying	underlying	Total	Underlying	underlying	Total
Continuing operations	£m	£m	£m	£m	£m	£m
Interest on bank deposits and other financial assets	29	—	29	28	—	28
IAS 19 pension financing income	—	36	36	—	51	51
Finance income on net investment in leases	2	—	2	2	—	2
Finance income	31	36	67	30	51	81
Secured borrowings	(35)	—	(35)	(38)	—	(38)
Unsecured borrowings	(41)	—	(41)	(33)	—	(33)
Lease liabilities	(260)	(12)	(272)	(253)	(11)	(264)
Provisions – amortisation of discount	—	(2)	(2)	—	(1)	(1)
Finance costs	(336)	(14)	(350)	(324)	(12)	(336)

10 Taxation

10.1 Income statement

		2024
	2025	(restated*)
Continuing operations	£m	£m
Current tax
Corporation tax	124	129
Over provision in prior years	(34)	(4)
	90	125
Deferred tax
Origination and reversal of temporary differences	61	36
Under/(over) provision in prior years	54	(19)
Adjustment from change in applicable rate of deferred tax	—	(1)
(Recognition)/derecognition of capital losses	(4)	40
	111	56
Total income tax expense	201	181
Analysed as:
Underlying tax	216	174
Non-underlying tax	(15)	7
Total income tax expense	201	181
Underlying tax rate	29.8%	26.7%
Effective tax rate	32.4%	37.1%

* Comparative periods have been re-presented to separately disclose discontinued operations. Tax associated with discontinued operations is presented in note 11.

The effective tax rate of 32.4 per cent (2024: 37.1 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:

						2024
			2025			(restated*)
			Non-			Non-
		Underlying	underlying	Total	Underlying	underlying	Total
Continuing operations		£m	£m	£m	£m	£m	£m
Profit before tax		724	(103)	621	654	(165)	489
Income tax at UK corporation tax rate of 25% (2024: 24.6%):	a)	181	(26)	155	161	(41)	120
Disallowed depreciation on UK properties		37	1	38	39	—	39
(Gain)/loss on disposal of properties		—	(6)	(6)	—	3	3
Restructuring programmes		—	—	—	—	3	3
Other		(2)	—	(2)	(3)	3	—
Under/(over) provision in prior years		—	20	20	(23)	—	(23)
(Recognition)/derecognition of capital losses		—	(4)	(4)	—	39	39
		216	(15)	201	174	7	181

* Comparative periods have been re-presented to separately disclose discontinued operations. Tax associated with discontinued operations is presented in note 11.

a) In the prior year, a blended rate of 24.6% was used in the reconciliation above to reflect the increase in UK corporation tax from 19% to 25% which was effective from 1 April 2024.

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Notes to the consolidated financial statements continued

10 Taxation continued

10.1 Income statement continued

The Group is within the scope of global minimum tax (GMT) under the OECD Pillar Two rules (Pillar Two). Pillar Two reporting requirements were enacted for

the UK on 18 July 2023 and apply to the Group from the period ended 1 March 2025. Under these requirements, the Group is liable to pay a top up tax for any

deficit between the minimum tax rate of 15 per cent and the effective tax rate per jurisdiction. As a primarily UK focused Group, we do not anticipate the

impact of any GMT being material, and anticipate being able to benefit from the transitional safe harbour rules for the majority of the Group’s overseas subsidiaries.

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.

10.2 Income tax charged or (credited) to equity and/or other comprehensive income

		2025			2024
	Current tax	Deferred tax	Total	Current tax	Deferred tax	Total
	£m	£m	£m	£m	£m	£m
Share based payment reserve	(3)	—	(3)	(3)	3	—
Actuarial reserve	—	(8)	(8)	(8)	(97)	(105)
Financial asset reserve	1	(1)	—	(2)	(80)	(82)
Cash flow hedge	—	4	4	—	(17)	(17)
	(2)	(5)	(7)	(13)	(191)	(204)

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.

10.3 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
3 March 2024	(134)	44	(1)	(92)	(244)	35	81	(18)	(329)
(Charge)/credit to income statement
–continuingoperations	(75)	(5)	(8)	—	18	(3)	(18)	(24)	(115)
Credit to income statement
–discontinued operations	—	—	—	—	—	—	—	6	6
(Charge)/credit to equity or other comprehensive income	—	—	(3)	—	8	—	—	—	5
Recognition of deferred
tax asset	—	4	—	—	—	—	—	—	4
1 March 2025	(209)	43	(12)	(92)	(218)	32	63	(36)	(429)
5 March 2023	(166)	87	(102)	(93)	(330)	32	109	(13)	(476)
Credit/(charge) to income statement – continuing	22	(3)	4	1	(11)	6	(29)	(5)	(15)
Credit to income statement
– discontinued	10	—	—	—	—	—	—	—	10
Credit 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)
								2025	2024
								£m	£m
Total deferred tax liabilities								(567)	(489)
Total deferred tax assets								138	160
Net deferred income tax liability recognised in non-current liabilities								(429)	(329)

Deferred tax assets have not been recognised in respect of capital losses of £399 million (2024: £355 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.

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11 Discontinued operations

In January 2024 the Group announced it had completed its strategic review of the Financial Services division, culminating in a single co-ordinated plan to

move to a third-party distributed model. Owing to the complex nature of assets and liabilities that make up the separate major line of business, this will

result in a phased withdrawal with components completing at various stages.

Following the announcement on 20 June 2024 that the Group had entered into an agreement for the sale of Sainsbury’s Bank plc’s personal loan, credit card

and retail deposit portfolios (together, the Core Banking Business) to NatWest Group (NatWest), the associated assets and liabilities of the disposal group

were classified as held for sale. The sale is expected to complete in the first half of calendar year 2025. The announced agreement subsequently triggered a

change in business model in accordance with IFRS 9 ‘Financial Instruments’ as the objective is to sell financial assets and no longer to hold for the collection

of contractual cash flows. The underlying portfolios within the disposal group have therefore been reclassified from being measured at amortised cost to

being measured at fair value through profit and loss by reference to the pricing mechanism within the sale agreement and reflects the market conditions

prevailing at the balance sheet date. The adjustment has been made prospectively from 15 September, being the first day of the reporting period following

the change in business mode. Prior to the reclassification the financial assets were classified and subsequently measured at amortised cost using the

effective interest method, net of any loss allowance, whilst the disposal group was measured at fair value less costs to sell in accordance with IFRS 5

‘Non-current assets held for sale and discontinued operations’.

On 25 September 2024, the Group announced the sale of its ATM estate to NoteMachine, with transfer of assets expected to be completed by May 2025.

Following the transfer, the Group will cease manufactured ATM operations. At the balance sheet date, remaining ATM assets are classified as held for sale.

Following the classification of the Core Banking Business and ATMs as held for sale, and both components forming part of the single co-ordinated plan to

move to a third-party distributed model, results have also been re-presented to classify the operations as discontinued.

On 31 October 2024 the Group announced it had entered into an agreement for the sale of AFS cards to NewDay Group representing the next phase of the

single co-ordinated plan to move to a third-party distributed model. As a result, results have been re-presented to classify the operations as discontinued.

The sale subsequently completed on 28 February 2025 with associated assets being derecognised as a result.

In August 2023, the Group disposed of its mortgage portfolio which in isolation was not sufficiently material to be classified as a discontinued operation

at that time but did form part of the move to a third-party distributed model in prior periods and accordingly has now been reclassified as a discontinued

operation for the 52 week period to 2 March 2024.

The loss for these operations is set out in note 11.2 with associated non-underlying items previously included in continuing operations set out in note 11.3.

Further costs associated with this restructuring will be incurred in future years as further detailed plans to execute these changes are formulated and

communicated. Loss on disposal is measured by reference to the fair value of portfolios at the balance sheet date, or in the case of AFS cards, by reference

to the fair value of consideration received, as set out in note 11.4.

11.1 Discontinued operations total loss after tax

		2025	2024
	Note	£m	£m
Loss after tax	11.2	(72)	(160)
Net loss arising from disposals	11.4	(106)	(11)
Loss after tax		(178)	(171)
Of which:
Underlying items		31	36
Non-underlying items	11.3, 11.4	(209)	(207)
Loss after tax		(178)	(171)

11.2 Discontinued operations loss after tax excluding net loss arising from disposals

			2025	2024
		Note	£m	£m
Revenue
Interest receivable			273	414
Fees and commission income			57	69
			330	483
Operating costs			(293)	(436)
Operating profit, excluding non-underlying restructuring costs			37	47
Non-underlying restructuring and impairment costs	a)	11.3	(133)	(245)
Loss before tax			(96)	(198)
Income tax credit			24	38
Loss after tax			(72)	(160)

a) Amounts for 2025 have been recognised in administrative expenses (2024: £21 million effective interest rate adjustment to financial assets was recognised in revenue, with the remaining

£224 million recognised in administrative expenses) .

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Notes to the consolidated financial statements continued

11 Discontinued operations continued

11.3 Non-underlying restructuring and impairment costs included in discontinued operations

		2025	2024
		£m	£m
Impairment charges	a)	—	(190)
Employee costs	b)	(43)	(6)
Onerous contracts	c)	(75)	(17)
Effective interest rate adjustment to financial assets	d)	—	(21)
Other costs	e)	(15)	(11)
		(133)	(245)
Income tax credit		30	49
		(103)	(196)

a) 2024: comprises impairment charges of property, plant and equipment and intangible assets including goodwill.

b) Comprises severance costs and incremental employee costs.

c) Comprises long-dated IT contracts where early termination will result in incremental costs to exit. Costs represent the lower of the costs of fulfilling contracts and the costs of terminating.

d) 2024: The withdrawal from Core Banking operations has a commercial impact upon future management initiatives and potential impact on customer behaviours. This required refreshed

assumptions in the calculation of the effective interest rate, reducing the amortised cost of financial assets with the impacts being recognised in revenue.

e) Comprises loss on derivatives no longer classified in an effective hedge relationship, and consultancy costs (2024: comprises consultancy costs).

11.4 Discontinued operations net loss arising from disposals

		2025	2024
		£m	£m
Fair value of consideration received/(payable)	a)	149	446
Fair value of net assets disposed	b)	(218)	(457)
Write down of net liabilities/loss on net assets disposed	c)	(69)	(11)
Costs of disposal	d)	(72)	(3)
Loss on disposal before tax		(141)	(14)
Income tax credit		35	3
Loss on disposal after tax		(106)	(11)

a) Comprises amounts payable in relation to the Core Banking activities with net liabilities inclusive of a £132 million discount on gross assets based on pricing mechanisms set out in the sale

agreement but measured at the reporting date. The discount at expected point of completion in 2025 is £125 million (2024: comprises proceeds in respect of the sale of the mortgage portfolio).

Amounts are offset by £749 million related to AFS cards and the debt instrument notes derecognised, and £2 million related to the ATM assets.

b) Comprises the fair value of assets and liabilities of the Core Banking portfolios held for sale, AFS cards assets disposed inclusive of £24 million goodwill previously allocated to the Home

Retail Group CGU, and ATM related assets (2024: Comprises the fair value of the assets and liabilities of the mortgage portfolio inclusive of £7 million goodwill).

c) By the point of completion of the Core Banking sale in the first half of calendar year 2025, the write down of net assets disposed is expected to be up to £7 million lower than the amount

recognised as at 1 March 2025. Furthermore, the total loss on disposal by this point will also include further incremental legal and consultancy costs to be incurred.

d) Relates to disposal costs comprising legal, consultancy and migration costs directly associated with the sale.

11.5 Assets and liabilities of disposal group and non-current assets classified as held for sale

			2025
		Note	£m
Non-current assets classified as held for sale
ATM assets			1
Assets of disposal group classified as held for sale
Unsecured balances			2,512
Intangible assets	a)	16	—
			2,512
Total assets of disposal group and non-current assets classified as held for sale		22	2,513
Liabilities of disposal group classified as held for sale
Customer deposits			(3,109)
Provisions for costs of disposal			(27)
Total liabilities of disposal group classified as held for sale			(3,136)
Net liabilities held for sale associated with discontinued operations			(623)

Represents the cost and associated accumulated amortisation and impairment of £38 million for goodwill and £39 million for acquired intangibles deemed directly attributable to the disposal group.

11.6 Discontinued operations cash flow statement

		2025	2024
Net cash flows from:		£m	£m
Operating activities		579	(148)
Investing activities	a)	750	446
		1,329	298

a) Net cash flows generated from investing activities primarily relate to proceeds received from the disposal of AFS cards and cash receipts from the sale of a debt instrument that formed

part consideration under the arrangement. Inflows of £446 million in 2024 relate to the disposal of the mortgage portfolio.

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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 total profit

after tax attributable to shareholders before non-underlying items which are set out in note 5.

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
		2025	(restated*)
	Note	million	million
Weighted average number of shares in issue for calculating basic earnings per share		2,330.6	2,334.8
Weighted average number of dilutive share options		43.5	59.2
Weighted average number of shares in issue for calculating diluted earnings per share		2,374.1	2,394.0

		£m	£m
Underlying profit after tax attributable to ordinary shareholders of the parent		539	516
Adjustment for non-underlying items net of tax	5	(297)	(379)
Profit after tax attributable to ordinary shareholders of the parent – continuing operations		420	308
Loss after tax from discontinued operations	11	(178)	(171)
Profit after tax attributable to ordinary shareholders of the parent		242	137

		Pence
	Pence	per share
Earnings per share	per share	(restated*)
Basic	10.4	5.9
Diluted	10.2	5.7
Basic – discontinued operations	(7.6)	( 7. 3)
Diluted – discontinued operations	(7.5)	( 7. 2)
Basic – continuing operations	18.0	13.2
Diluted – continuing operations	17.7	12.9
Basic - underlying	23.1	22.1
Diluted - underlying	22.7	21.6

* Comparative periods have been re-presented to separately disclose discontinued operations.Refer to note 11 for further details.

13 Dividends

	2025	2024
	pence	pence	2025	2024
	per share	per share	£m	£m
Amounts recognised as distributions to ordinary shareholders
Final dividend for financial year ended 4 March 2023	—	9.2	—	215
Interim dividend for financial year ended 2 March 2024	—	3.9	—	91
Final dividend for financial year ended 2 March 2024	9.2	—	217	—
Interim dividend for financial year ended 1 March 2025	3.9	—	91	—
	13.1	13.1	308	306
Proposed final dividend at financial year-end	9.7		223

The proposed final dividend was approved by the Board on 16 April 2025 and is subject to shareholders’ approval at the Annual General Meeting. If approved,

it will be paid on 11 July 2025 to shareholders on the register as at 6 June 2025. No amount for the proposed final dividend has been recognised at the balance

sheet date.

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Notes to the consolidated financial statements continued

14 Property, plant and equipment

			2025			2024
		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		11,154	4,919	16,073	9,865	5,029	14,894
Acquisition		—	—	—	1,021	—	1,021
Additions		280	349	629	274	360	634
Disposals		(26)	(730)	(756)	(1)	(470)	(471)
Transfer to assets held for sale	22	(27)	(33)	(60)	(5)	—	(5)
At end of financial year		11,381	4,505	15,886	11,154	4,919	16,073
Accumulated depreciation and impairment
At beginning of financial year		3,347	3,444	6,791	3,153	3,540	6,693
Depreciation expense		203	329	532	186	353	539
Impairment loss	17	1	5	6	8	21	29
Disposals		(22)	(727)	(749)	—	(470)	(470)
Transfer to assets held for sale	22	(21)	(31)	(52)	—	—	—
At end of financial year		3,508	3,020	6,528	3,347	3,444	6,791
Net book value		7,873	1,485	9,358	7,807	1,475	9,282
Capital work-in-progress included above		202	56	258	115	56	171

Transfers to assets held from sale in the year relate to Retail non-current assets held for sale and do not form part of the disposal group.

14.1 Security

	2025		2024
		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	51	1.2
Other	—	—	6	0.1
	99	2.1	105	2.2

15 Leases

15.1 Group as a lessee

a) Right-of-use assets

			2025			2024
		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		3,976	320	4,296	5,032	313	5,345
New leases and modifications		487	189	676	334	104	438
Impairment loss	17	(16)	—	(16)	(6)	—	(6)
Depreciation expense		(392)	(109)	(501)	(353)	(97)	(450)
Derecognised as part of asset acquisition		—	—	—	(1,031)	—	(1,031)
At end of financial year		4,055	400	4,455	3,976	320	4,296

b) Lease liabilities

		2025	2024
	Note	£m	£m
At beginning of financial year		5,354	6,489
New leases and modifications		627	414
Derecognised as part of asset acquisition		—	(1,042)
Interest expense	9	272	264
Payments		(759)	(771)
At end of financial year		5,494	5,354

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15 Leases continued

15.1 Group as a lessee continued

c) Maturity analysis

	2025	2024
	£m	£m
Contractual undiscounted cash flows
Less than 1 year	758	703
1 to 2 years	721	660
2 to 3 years	657	619
3 to 4 years	620	562
4 to 5 years	598	534
Total less than 5 years	3,354	3,078
5 to 10 years	2,665	2,467
10 to 15 years	1,688	1,779
More than 15 years	2,654	2,770
Total undiscounted lease liability	10,361	10,094
Lease liability in the balance sheet	5,494	5,354
Analysed as:
Current	590	515
Non-current	4,904	4,839

d) Undiscounted future rental payments not currently included within the reported lease liability

	2025	2024
	£m	£m
Extension options expected to not be exercised	4,591	4,498
Lease breaks expected to be exercised	341	400

e) Sensitivity to changes in discount rate

	2025
	Increase/(decrease)
	in lease liability
	additions/modifications
	£m
Increase in IBR of 3pts	(80)
Decrease in IBR of 3pts	79

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)

	2025	2024
	£m	£m
Inflation-linked rentals	2,913	2,862
Subject to rent reviews	207	225

g) Lease cash flows

	2025	2024
	£m	£m
Total cash outflow for leases (excludes sublet income)	(791)	(803)

15.2 Group as lessor

a) Maturity analysis of lease receivables classified as finance leases

	2025	2024
	£m	£m
Contractual undiscounted cash flows
Less than 1 year	11	10
1 to 5 years	12	21
More than 5 years	7	10
	30	41
Lease receivable included in the balance sheet
Current	9	9
Non-current	15	24
	24	33

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Notes to the consolidated financial statements continued

15 Leases continued

15.2 Group as lessor continued

b) Maturity analysis of lease receivables classified as operating leases

	2025	2024
	£m	£m
Less than 1 year	17	20
1 to 2 years	15	17
2 to 3 years	13	15
3 to 4 years	12	12
4 to 5 years	10	11
5 to 10 years	32	37
10 to 15 years	7	7
More than 15 years	20	11
Total undiscounted lease payments receivable	126	130

16 Intangible assets

			Computer	Acquired	Customer
		Goodwill	software	brands	relationships	Total
	Note	£m	£m	£m	£m	£m
Cost
At 3 March 2024		384	1,235	229	32	1,880
Additions		—	208	—	—	208
Disposals		(24)	(93)	—	—	(117)
Transfer to assets held for sale	22	(38)	—	(39)	—	(77)
At 1 March 2025		322	1,350	190	32	1,894
Accumulated amortisation and impairment
At 3 March 2024		77	780	185	32	1,074
Amortisation expense		—	164	18	—	182
Disposals		—	(92)	—	—	(92)
Transfer to assets held for sale	22	(38)	—	(39)	—	(77)
At 1 March 2025		39	852	164	32	1,087
Net book value at 1 March 2025		283	498	26	—	807
Capital work-in-progress included above Cost		—	63	—	—	63
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		—	44	—	—	44

Following the agreement to sell Core Banking portfolios announced during the year, the cost and associated accumulated amortisation and impairment

of £38 million for goodwill and £39 million for acquired brands has been transferred to the disposal group classified as held for sale. A further £24 million

of goodwill previously allocated to the Home Retail Group CGU has been derecognised following the disposal of AFS cards.

Disposal of goodwill in the prior year relates to the disposal of the mortgage book.

16.1 Analysis of goodwill balances by CGU

	2025	2024
	£m	£m
Jacksons Stores Limited	18	18
Home Retail Group	95	119
Nectar	147	147
Bells Stores Limited	5	5
Other	18	18
	283	307

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17 Impairment of non-financial assets

17.1 Impairment testing

Cash Generating Units

For the purpose of impairment testing, cash generating units are determined by reference to the smallest identifiable group of assets that generates cash

flows independent from other assets or group of assets. These have been assessed as:

• Individual assets

• Individual stores representing the collective assets directly attributable to each respective store

• Group of stores representing local fulfilment centres and hub-stores within Argos where each site serves a defined set of hub-stores

• Corporate level covering the principal brands of the Group: Sainsbury’s, Argos, Nectar and Sainsbury’s Bank

Central assets and associated cash flows are allocated to the respective corporate level CGU to which they relate and are attributed to the lowest level CGU

to the extent that they are reasonably and consistently allocable, estimated by reference to store sales.

For the purpose of impairment, goodwill acquired is allocated to the CGU that is expected to benefit from the synergies of the combination.

Recoverable amount

The recoverable amount of individual assets, stores and group of store CGUs is measured as the higher of fair value less cost to dispose and the value-in-use

of cash flows expected to be independently generated. The recoverable amount for corporate level CGUs is measured as the value-in-use.

In measuring the value-in-use, cash flow projections are based on the latest management approved forecast covering a four-year period, and beyond four

years the final year forecast is extrapolated based on the estimated average long-term growth rate. Long-term sales and cost projections consider the

outlook for addressable markets, competitor behaviour, estimation on inflation and market rates, the prevailing macro and microeconomic climate and

committed initiatives. In forming these projections, management draws on past experience as a basis of forecasting future performance. Cash flows are

then adjusted to remove the impact of estimated future cash flows expected to arise from strategic capital expenditure not yet incurred. For the purpose

of store-level and group of store-level CGUs, base cash flows are derived from the relative current year performance and extrapolated by reference to the

adjusted operating profit growth approved by management.

Climate change considerations

The Group’s scenario analysis performed as part of the Task Force on Climate-related Financial Disclosures (TCFD) report (page 31) 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 £400 million to £500 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.

Key assumptions

• Long-term growth rate: measured by reference to average historical GDP growth

• Discount rates: Representing the weighted average cost of capital (WACC), calculated using the capital asset pricing model, the inputs of which include

a 20-year average risk-free rate for the UK, a UK equity risk premium, levered debt premium and risk adjustment and an average beta for the Group

• Cash flow length: where the useful economic life exceeds management’s cash flow projects, the final year is extrapolated out to the sooner of perpetuity

using a terminal value and contractually committed tenure. Properties identified for closure will be assessed by reference to the committed exit date

The value attributed to each assumption in measuring the recoverable amount of components with attributed goodwill are as follows:

			2025			2024
		Pre-tax	Post-tax	Long-term	Pre-tax	Post-tax	Long-term
		discount rate	discount rate	growth rate	discount rate	discount rate	growth rate
Home Retail Group		11.0%	8.3%	2%	8.9%	6.6%	2%
Nectar UK		9.1%	6.8%	2%	8.9%	6.6%	2%
Jacksons Stores Limited		9.1%	6.8%	2%	8.9%	6.6%	2%
Bells Stores Limited		9.1%	6.8%	2%	8.9%	6.6%	2%
Other		9.1%	6.8%	2%	8.9%	6.6%	2%
Sainsbury’s Bank	a)	—	—	—	14.7%	11.0%	2%

a) Following the announced restructuring of the Financial Services business in January 2024, a full impairment review was undertaken in the prior year resulting in a £212 million impairment

being recognised over non-financial assets, inclusive of £38 million goodwill as further disclosed in note 11. For Financial Services products not directly impacted by the phased withdrawal,

the assumed growth rate of 2% was applied to extrapolate future cash flows beyond management’s four-year forecast.

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Notes to the consolidated financial statements continued

17 Impairment of non-financial assets continued

17.2 Non-financial assets

a) Impairment charges

In line with the assumptions noted above, the Group assessed whether an indicator of impairment existed at the reporting date. Given Argos trading

performance was below expectations, it was determined that an indicator of impairment existed over the Group’s Argos assets and therefore a full

impairment review was undertaken. £2 million of impairment was recognised as a result of this review.

Separate to the indicator of impairment assessment, the Group recognised £4 million of impairment as part of retail restructuring programmes, and

£16 million of impairment in relation to non-trading sites reflecting rent reviews.

			2025			2024
			Financial			Financial
		Retail	Services	Total	Retail	Services	Total
	Note	£m	£m	£m	£m	£m	£m
Balance sheet
Property, plant and equipment		6	—	6	20	9	29
Right-of-use assets		16	—	16	3	3	6
Intangible assets		—	—	—	—	200	200
Total impairment loss		22	—	22	23	212	235
Income statement
Comprising
Within non-underlying items
Restructuring programmes	5.1	4	—	4	4	212	216
Non-restructuring programmes	5.1	16	—	16	19	—	19
Within underlying items
Argos store assets		2	—	2	—	—	—
Total impairment loss		22	—	22	23	212	235
Discontinued operations		—	—	—	—	190	190
Continuing operations		22	—	22	23	22	45

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

Following the disposal of AFS cards (refer to note 11 for more details), goodwill of £24 million was reallocated from the Home Retail Group CGU and subsequently

derecognised on disposal. The remaining £95 million of goodwill continues to be attributed to the Home Retail Group that comprises operations related to the

Argos brand. There was no impairment of the remaining goodwill associated with Home Retail Group.

a) Impairment charges

The following impairment charges are included within the intangible assets impairment presented in note 17.2.

	2025	2024
	£m	£m
Sainsbury’s Bank plc	—	38

Value-in-use calculations used to derive the recoverable amount of the CGU to which the respective goodwill has been allocated are measured as outlined

above with discount rate and cash flow projections representing the key measurement assumptions.

b) Sensitivities

Sensitivity analysis on the impairment tests for each group of CGUs to which goodwill has been allocated has been performed.

				Headroom
			Discount rate		Cash flows
		Headroom	-2pts	+2pts	-25%	+25%
		£m	£m	£m	£m	£m
Home Retail Group	a)	22	132	(51)	(57)	100
Nectar UK	a)	1,534	2,203	1,160	1,109	1,959
Jacksons Stores Limited	b)	79	98	66	51	107
Bells Stores Limited	b)	29	33	27	18	39
Other		49	79	32	25	74

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% as a corporate level CGU.

b) Goodwill balances are allocated to individual store CGUs to which they relate.

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18 Other financial assets

		2025			2024
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
At fair value through other comprehensive income
Equity: other financial assets	—	—	—	17	—	17
Debt: other financial assets	757	612	1,369	744	17	761
At fair value through profit and loss
Debt: other financial assets	12	—	12	—	—	—
	769	612	1,381	761	17	778

19 Inventories

	2025	2024
	£m	£m
Gross finished goods	2,039	2,039
Inventory provision	(93)	(112)
	1,946	1,927

20 Trade and other receivables

20.1 Trade and other receivables

		2025			2024
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Trade receivables	—	158	158	—	126	126
Other receivables	27	192	219	65	253	318
Accrued income	—	29	29	—	13	13
Prepayments	15	193	208	43	190	233
	42	572	614	108	582	690

Trade and other receivables include £119 million (2024: £95 million) relating to supplier arrangements where there is no right of offset. In addition, current

other receivables include £85 million (2024: £160 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.

			2025
	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	133	27	—	1	161
Other receivables	224	1	2	9	236
Gross carrying amount – Trade and other receivables	357	28	2	10	397
Allowance for expected credit losses	(7)	(2)	(2)	(9)	(20)
Net carrying amount	350	26	—	1	377

			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

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Notes to the consolidated financial statements continued

21 Amounts due from Financial Services customers and other banks

		2025			2024
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Loans and advances to customers	—	—	—	1,525	3,227	4,752
Allowance for expected credit losses	—	—	—	(58)	(177)	(235)
	—	—	—	1,467	3,050	4,517

Following the announced withdrawal from Financial Services, amounts in relation to AFS cards have been derecognised following its sale and amounts

related to the Core Banking portfolios have been transferred to assets held for sale. Please refer to note 11 for further details.

22 Assets and liabilities of disposal group and non-current assets held for sale

As described in note 11, in the period the Group announced the sale of its Core Banking Business and ATM estate, which are due to complete in the first half

of the calendar year 2025. Consequently, assets and liabilities of £2,512 million and £3,136 million, of the core banking disposal group are classified as held

for sale and measured at fair value through profit and loss by reference to the pricing mechanism within sale agreement and reflects the market conditions

prevailing at the balance sheet date. As such, amounts classified as held for sale for the core banking disposal group during the period are reported net of

any portfolio unwind and fair value movements between the point of initial classification and the reporting date.

Non-current assets of £15 million comprise £1 million of ATM assets and £14 million of retail related assets. Proceeds from disposals of non-current assets

held for sale for continuing operations have been presented within proceeds from disposal of property, plant and equipment in the Group cash flow statement.

22.1 Assets of disposal group and non-current assets held for sale

	2025	2024
	£m	£m
Opening balance	10	8
Acquisitions	—	63
Classified as held for sale in the year	2,521	15
No longer classified as held for sale	—	(10)
Sold in the year	(4)	(66)
Closing balance	2,527	10
Of which Assets of disposal group held for sale	2,512	—
Non-current assets classified as held for sale	15	10
	2,527	10

22.2 Liabilities of disposal group held for sale

	2025	2024
	£m	£m
Opening balance	—	—
Classified as held for sale in the period	(3,136)	—
Closing balance	(3,136)	—

As disclosed in note 3.12, assets held for sale are stated at the lower of the carrying amount and fair value less costs to dispose. The fair value of non-current

assets held for sale are based on independent market valuations of the assets and the fair value of assets of disposal group held for sale are based on

contractually committed pricing mechanisms.

Acquisitions in the prior year relate to the asset acquisition of four properties, which were sold to a third party for £61 million. The fifth and final property

acquired as part of the asset acquisition was sold to a third party in the 52 weeks ended 1 March 2025.

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.

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23 Trade and other payables

		2025			2024
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Trade payables	—	3,903	3,903	2	3,764	3,766
Other payables	—	533	533	2	538	540
Accruals	8	501	509	6	456	462
Deferred income	16	341	357	1	333	334
	24	5,278	5,302	11	5,091	5,102

	2025	2024
Analysis of deferred income	£m	£m
Opening balance	334	342
Revenue deferred	323	289
Revenue recognised which has previously been deferred	(300)	(297)
Closing balance	357	334

£299 million (2024: £303 million) of deferred income relates to deferred Nectar points.

23.1 Sensitivity of deferred income in respect of Nectar points to breakage estimates

		(Increase)/decrease in
		deferred points liability
Key assumption	Sensitivity	£m
Breakage estimate	1pts	53
	(1)pts	(53)

23.2 Foreign currency risk

The Group has net euro-denominated trade payables of £93 million (2024: £98 million) and US dollar-denominated trade payables of £140 million

(2024: £136 million).

23.3 Supplier financing arrangements

The Group has supply chain finance programmes in place for a total of £1,135 million (2024: £1,053 million). The programmes are funded by seven of the

Group’s relationship banking partners.

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 between the Group and 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.

a) Carrying amount of liabilities

	2025	2024
	£m	£m
Presented within trade and other payables	1,230	1,168
– of which is drawn under the supply chain finance programmes	693	547

b) Range of payment due dates

	2025	2024
Liabilities that are part of the arrangement	7-90 days after invoice date	7-90 days after invoice date
Comparable trade payables that are not part of an arrangement	0-120 days after invoice date	0-120 days after invoice date

24 Amounts due to Financial Services customers and banks

		2025			2024
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Customer accounts	—	—	—	183	3,981	4,164
Other deposits	13	1,955	1,968	23	1,534	1,557
	13	1,955	1,968	206	5,515	5,721

Included within the balance are £1,066 million (2024: £518 million) of deposits obtained via deposit aggregators where the ultimate depositors are retail

customers. The remaining £902 million (2024: £1,039 million) relates to deposits from wholesale counterparties of which £nil (2024: £610 million) are from

the Bank of England’s TFSME and ILTR schemes which were repaid in the year.

Following the announced withdrawal from financial services, amounts related to customer accounts have been transferred to liabilities held for sale.

Refer to note 11 for further details.

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Notes to the consolidated financial statements continued

25 Provisions

			Retail		Financial Services
	Property	Insurance	Restructuring	Other	Onerous	Restructuring	Other
	provisions a)	provisions b)	programmes c)	provisions	contracts d)	programmes c)	provisions e)	Total
	£m	£m	£m	£m	£m	£m	£m	£m
At 3 March 2024	120	59	51	11	17	—	22	280
Additional provisions	18	28	50	9	84	36	12	237
Unused amounts released	(20)	—	(7)	(1)	(3)	—	(11)	(42)
Utilisation of provision	(14)	(24)	(31)	(9)	(3)	(4)	(1)	(86)
Amortisation of discount	1	—	1	—	—	—	—	2
Transfer to assets held for sale	—	—	—	—	—	—	(4)	(4)
At 1 March 2025	105	63	64	10	95	32	18	387
Current	30	12	40	5	95	30	18	230
Non-current	75	51	24	5	—	2	—	157
At 5 March 2023	114	59	58	13	—	—	28	272
Additional provisions	77	22	42	—	18	—	—	159
Unused amounts released	(19)	—	(8)	(2)	—	—	(6)	(35)
Utilisation of provision	(52)	(22)	(42)	—	(1)	—	—	(117)
Amortisation of discount	—	—	1	—	—	—	—	1
At 2 March 2024	120	59	51	11	17	—	22	280
Current	45	13	28	5	—	—	22	113
Non-current	75	46	23	6	17	—	—	167

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) Restructuring programme provisions comprise mainly redundancies as described in note 5.1, and for Financial Services, note 11.3.

d) Onerous contract provisions comprise onerous contracts recognised as a result of the phased withdrawal from Financial Services as described in notes 5.1 and 11.3.

e) Financial services other provisions comprise contractually committed costs related to the disposal of AFS cards and potential customer redress payable arising from the historic sale

of Payment Protection Insurance. Amounts released in the current year primarily relate to off balance sheet expected credit loss provisions following the disposal of AFS cards.

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.

26 Called up share capital and merger reserve

	2025	2024	2025	2024
	million	million	£m	£m
Called up share capital
Allotted and fully paid ordinary shares 28 4/7p	2,339	2,371	669	678

			2025				2024
	Number of	Ordinary	Share	Merger	Number of	Ordinary	Share	Merger
	shares	shares	premium	reserve	shares	shares	premium	reserve
	million	£m	£m	£m	million	£m	£m	£m
At the beginning of the financial year	2,371	678	1,430	568	2,352	672	1,418	568
Allotted in respect of share option schemes	42	12	18	—	19	6	12	—
Cancellation of own shares	(74)	(21)	—	—	—	—	—	—
Transfer to retained earnings	—	—	—	(395)	—	—	—	—
At the end of the financial year	2,339	669	1,448	173	2,371	678	1,430	568

During the period, 73.6 million of the Company’s own shares, representing 3.14% of the called up share capital as at 1 March 2025, were purchased, and subsequently

cancelled, for total consideration of £200 million inclusive of £6 million directly attributable costs. £200 million has been transferred from the investment in

own shares reserve to retained earnings and £21 million of share capital has been transferred to the capital redemption reserve owing to the cancellation.

The merger reserve as at 3 March 2024 amounted to £568 million and was created following the issuance of 261 million shares in 2016 as part consideration for

the acquisition of Home Retail Group plc. During the year, £395 million has been transferred to retained earnings and classified as available for distribution to

shareholders in accordance with ICAEW Technical Release 02/17BL section 3.9 following an impairment being recognised in J Sainsbury’s plc over its

subsidiary’s investment in the acquisition holding company. The related impairment has no impact on Group results.

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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 3 March 2024	—	(73)	376	(28)	275	680
Transfer to retained earnings	—	—	(355)	—	(355)	(680)
Financial assets at fair value through other comprehensive income	—	—	1	—	1	—
Transferred to carrying value of inventory	—	—	—	18	18	—
Cash flow hedges effective portion of fair value movements	—	—	—	14	14	—
Items reclassified from cash flow hedge reserve	—	—	—	2	2	—
Purchase of own shares for share schemes	—	(63)	—	—	(63)	—
Allotted in respect of share schemes	—	37	—	—	37	—
Purchase of own shares for cancellation	—	(200)	—	—	(200)	—
Cancellation of own shares	—	200	—	—	200	21
Deferred tax	—	—	—	(4)	(4)	—
At 1 March 2025	—	(99)	22	2	(75)	21

	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 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

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

		2025			2024
	Market Value	Nominal Value	Number	Market Value	Nominal Value	Number
	£m	£m	m	£m	£m	m
Investment in own shares	102	11.2	39.3	75	8.6	30.1
Maximum number of shares held during the period	103	11.3	39.7	105	11.8	41.3

During the period, the ESOT acquired 23.9 million of the Company’s ordinary shares via market purchase for cash consideration of £63 million (2024: 6.8 million

shares via market purchase for cash of £18 million). The disposal of 14.8 million (2024: 14.0 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.

In the prior period, the Group derecognised its financial asset relating to its beneficial interest in a commercial property investment pool. 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. Following this, during the current period, £355 million was transferred from financial asset

reserves to retained earnings. This amount represented the cumulative gains and losses on this financial asset, and therefore as it has been derecognised,

there is no longer a legally separable reserve for these fair value gains and losses and as such the amount has been transferred to retained earnings.

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Notes to the consolidated financial statements continued

27 Capital redemption and other reserves continued

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 capital redemption reserve as at 3 March 2024 amounted to £680 million. This 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. Following approval by the High Court registered on 31 July 2024, this £680 million was reclassified as available for

distribution to shareholders in accordance with ICAEW Technical Release 02/17BL section 2.8A and as a result was transferred to retained earnings.

Separately, as part of the share buyback completed during the period (as detailed in note 27.2), £21 million of share capital has been transferred to the capital

redemption reserve.

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 Liquidity 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.

Encumbered assets

		2025	2024
		£m	£m
Loans and advances to customers		—	1,444
Assets of the disposal group	a)	485	—
Debt securities		—	25
Cash and balances with central banks		—	14
Other assets		18	76

a) Assets of the disposal group comprise Sainsbury’s Bank plc’s personal loans which were classified as loans and advances to customers in the prior year. As described in note 11 and 22,

in June 2024 the Group announced the sale of its Core Banking Business and subsequently classified the assets as held for sale.

The Group has an unsecured committed facility which consists of a £1,000 million Revolving Credit Facility as set out in note 33.3.

As detailed in note 23.3, 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 £1,135 million (2024: £1,053 million) across a number of banks and platforms with an amount utilised of £693 million

(2024: £547 million). The level of utilisation is dependent on the individual supplier requirements and varies significantly over time.

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28 Financial risk management continued

28.1 Liquidity risk continued

Encumbered assets continued

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

				2025
		Less than	One to	Two to	More than
		one year	two years	five years	five years	Total
		£m	£m	£m	£m	£m
Non-derivative financial liabilities	a)
Secured loan: Loan due 2031	b)	(87)	(91)	(292)	(65)	(535)
Bank overdraft		(1)	—	—	—	(1)
Trade and other payables		(4,937)	(6)	(2)	—	(4,945)
Liabilities of the disposal group	g)	(3,158)	(47)	(66)	—	(3,271)
Amounts due to Financial Services customers and banks	c)	(1,994)	(5)	(9)	—	(2,008)
Tier 2 subordinated debt		(13)	(13)	(133)	—	(159)
Unsecured bond		(29)	(30)	(89)	(641)	(789)
Derivative contracts – net settled
Commodity contracts		—	—	—	—	—
Interest rate swaps in hedging relationships	b), d)	—	—	—	—	—
Other interest rate swaps – Sainsbury’s Bank	f)	(1)	(2)	(4)	—	(7)
Derivative contracts – gross settled
Foreign exchange forwards – outflow	e)	(1,045)	(174)	—	—	(1,219)
Foreign exchange forwards – inflow	e)	1,041	174	—	—	1,215
Commodity contracts – outflow		(23)	(19)	(45)	(132)	(219)
Commodity contracts – inflow		33	27	55	138	253

				2024
		Less than	One to	Two to	More than
		one year	two years	five years	five years	Total
		£m	£m	£m	£m	£m
Non-derivative financial liabilities	a)
Secured loans: 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

a) Maturity of non-derivative financial liabilities in respect of lease liabilities is set out in note 15.1.

b) Cash flows relating to debt and swaps linked to inflation rates have been calculated using an RPI of 4.9 per cent for the year ended 1 March 2025, 3.6 per cent for the year ending

1 March 2026 and 3.6 per cent for future years (2024: 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).

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. For the year

ended 1 March 2025, retail deposits have been classified as held for sale. Amounts reported comprise deposits obtained via deposit aggregators where the ultimate depositors are retail

customers.

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) Under IAS 39 rules for macro portfolio hedging, some of the Bank’s hedging derivatives do not qualify, or prove too onerous, to be designated into an effective hedged relationship. In those

instances, the interest rate swaps are viewed as trading derivatives under IFRS 9 with any movements in fair value recognised in the income statement, without offset.

g) Liabilities of the disposal group comprise retail deposit portfolios previously classified within amounts due to Financial Services customers and banks. Following the agreement to sell

related liabilities to NatWest, as outlined further in note 11, financial liabilities have been reclassified as held for sale.

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Notes to the consolidated financial statements continued

28 Financial risk management continued

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

2025 2024

Counterparty		Long-term rating	£m	£m
Cash and cash equivalents
Financial institutions – Money market funds	a)	AAA/Aa3	1,154	263
Financial institutions – Money market deposits		AA+/Aa1 to A/A2	141	232
Deposits at central banks		AA+/Aa3	1,043	886
Derivative financial assets
Interest rate swaps		AA+/Aa1 to A/A2	5	62
Foreign exchange forward contracts		AA+/Aa1 to A/A2	13	4
Commodity forward contracts		AA+/Aa1 to A/A2	3	1

a) Excludes bank balances, store cash, cash in transit and cash at ATMs.

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

	2025	2024
Credit exposure	£m	£m
On balance sheet items
Loans and advances to customers and other banks	—	4,517
Assets of the disposal group	2,512	—
Cash and balances with central banks	2,777	1,987
Derivative financial instruments (excludes level 3 instruments)	21	67
Investment securities	1,381	761
Other assets	377	444
Off balance sheet items
Loan commitments	—	6
	7,068	7,782

The exposures are shown gross, before the effect of mitigation through the use of collateral agreements.

Assets of the disposal group comprise Sainsbury’s Bank plc’s personal loans and credit card portfolios, AFS monthly payment plan portfolio and a small

residual AFS card portfolio which fell out of perimeter of the sale to NewDay Group. These assets were classified as loans and advances to customers in the

prior year. As described in note 11 and 22, in June 2024 the Group announced the sale of its Core Banking Business and subsequently classified the assets as

held for sale.

Sainsbury’s Bank has no off-balance sheet commitments to extend credit to customers (2024: £6 million). These commitments do not include undrawn limits

on credit cards of £4,089 million (2024: £5,072 million) and AFS cards of £nil (2024: £2,619 million). These are not considered contractual commitments but, in

practice Financial Services does not expect to withdraw these credit limits from customers.

For the comparative period, loans and advances to customers and other banks include AFS cards which have been disposed of during the period.

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28 Financial risk management continued

28.2 Credit risk continued

e) Impairment of financial assets

IFRS 9 requires the Company to record an allowance for ECL for all loans and other debt financial assets not held at fair value through the profit and loss (FVPL).

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 AFS cards) from the date when it last met the definition of default.

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.

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Notes to the consolidated financial statements continued

28 Financial risk management continued

28.2 Credit risk continued

e) Impairment of financial assets continued

Loans and advances to customers per ECL stage

		2025				2024
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Unsecured lending	3	—	27	30	4,154	398	207	4,759
Allowance for expected credit losses
Expected credit loss on gross balance	—	—	(22)	(22)	(46)	(50)	(139)	(235)
Undrawn commitments impairment	—	—	—	—	(10)	(4)	(1)	(15)
	—	—	(22)	(22)	(56)	(54)	(140)	(250)
Coverage	0.0%	0.0%	81.5%	73.3%	1.3%	13.6%	67.6%	5.3%

Unsecured lending represents Sainsbury’s Bank credit cards and personal loan lending in addition to AFS cards and monthly payment plan. The Group has no

secured lending (2024: no secured lending).

Loans and advances to customers per ECL stage – split by exposure and ECL movement

		2025				2024
	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	—	—	27	27	—	—	207	207
Past due but not impaired	—	—	—	—	8	47	—	55
Neither past due nor impaired	3	—	—	3	4,146	351	—	4,497
	3	—	27	30	4,154	398	207	4,759
Allowance for expected credit loss
Opening loss allowance	(56)	(54)	(140)	(250)	(57)	(58)	(144)	(259)
Transfers between stages	(16)	23	(7)	—	(12)	24	(12)	—
Additional allowance less
amounts recovered	3	1	7	11	(4)	1	(2)	(5)
Write-offs	1	5	30	36	1	6	69	76
Changes in credit risk during the year	20	(16)	(38)	(34)	16	(27)	(51)	(62)
Remeasurement on move to FVPL	25	21	108	154	—	—	—	—
Derecognition on sale	23	20	18	61	—	—	—	—
Closing loss allowance before undrawn
commitments impairment	—	—	(22)	(22)	(56)	(54)	(140)	(250)
Undrawn commitments impairment	—	—	—	—	10	4	1	15
Closing loss allowance	—	—	(22)	(22)	(46)	(50)	(139)	(235)
Net exposure	3	—	5	8	4,108	348	68	4,524
Hedging fair value adjustment				—				(7)
				8				4,517

As described in note 11, the agreement to sell the personal loan and credit card portfolios within Sainsbury’s Bank triggered a change in business model in

accordance with IFRS 9 ‘Financial Instruments’ as the objective is to sell financial assets and no longer to hold for the collection of contractual cash flows.

As a result, the portfolios have been reclassified from being measured at amortised cost to be measured at fair value through profit and loss and fall outside

the scope of impairment provisioning. The previously recognised ECL against these portfolios has subsequently been released and recognised as within the

loss on disposal. Amounts in the previous year also related to AFS cards disposed in the period resulting in the derecognition of related provisions.

Unsecured lending and expected credit loss balances for the year ended 1 March 2025 relate to lending balances classified as held for sale in the second half

of the year. As such, the underlying portfolios within the disposal group continue to be measured at amortised cost in accordance with IFRS 9 ‘Financial

Instruments’ whilst the disposal group is measured at fair value in accordance with IFRS 5 ‘Non-current assets held for sale and discontinued operations’

as outlined in note 11.5 and 22.

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%

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28 Financial risk management continued

28.2 Credit risk continued

e) Impairment of financial assets continued

Credit quality – unsecured lending

		2025				2024
	Stage 1	Stage 2	Stage 3	Total	Stage 1	Stage 2	Stage 3	Total
	£m	£m	£m	£m	£m	£m	£m	£m
High quality	2	—	—	2	3,387	81	—	3,468
Satisfactory quality	1	—	—	1	704	186	—	890
Low quality	—	—	—	—	63	131	—	194
Credit impaired	—	—	27	27	—	—	207	207
Total	3	—	27	30	4,154	398	207	4,759

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 (2024: base scenario 40%; upside, downside and severe downside scenarios weighted 30%, 25%, and 5% respectively).

Key macro-economic assumptions (five-year forecast averages)

		2025
				Severe
	Base	Upside	Downside	downside
	%	%	%	%
Unemployment rate	4.2	3.8	5.1	6.3
Consumer price growth	2.2	1.4	3.2	4.1
GDP	1.6	2.2	0.9	0.2
Mortgage debt as a percentage of household income	90.2	87. 5	95.5	100.1
Real household disposable income	1.3	2.1	0.6	(0.2)
Probability weighting (%)	40	30	25	5

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) 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

		2025			2024
		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	50	1.9	68.5	53	1.1	6 7.2

Unsecured gross amounts subject to forbearance programmes comprise loans and advances classified as held for sale. In the current year £48 million of gross

amounts relate to the Core Banking portfolios measured at FVPL, as such no ECL is recognised on these balances.

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Notes to the consolidated financial statements continued

28 Financial risk management continued

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 uncontracted, 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)

	2025		2024
	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	1/(1)	(78)/96	7/(8)	(88)/108
EUR/GBP	— / —	(31)/38	2/(3)	(33)/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.

Mix of financial assets and liabilities

		2025
			Variable
	Fixed	Floating	capped	Total
	£m	£m	£m	£m
Other financial assets at fair value through other comprehensive income	738	631	—	1,369
Other financial assets at fair value through profit and loss	—	12	—	12
Assets of the disposal group	1,506	1,006	—	2,512
Cash and cash equivalents	1,262	1,515	—	2,777
Bank overdraft	—	(1)	—	(1)
Borrowings	(674)	—	(447)	(1,121)
Liabilities of the disposal group	(715)	(2,393)	—	(3,108)
Amounts due to Financial Services customers and banks	(1,968)	—	—	(1,968)
Derivative effect:
Interest rate swaps	(703)	703	—	—
Inflation-linked swaps	(281)	—	281	—
	(835)	1,473	(166)	472

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28 Financial risk management continued

28.3 Market risk continued

b) Interest rate risk continued

Mix of financial assets and liabilities continued

		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	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

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 £447 million of capped inflation-linked borrowings (2024: £496 million) of which £126 million (2024: £155 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:

• Repricing gap risk: the risk arising from timing differences in the interest rate changes of bank assets and liabilities (for example, 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 (for example, 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.

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.

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 1 March 2025.

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Notes to the consolidated financial statements continued

28 Financial risk management continued

28.4 Capital risk management continued

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

	2025		2024
	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	(51)	(51)	48	48
Regulatory adjustments	(9)	(9)	—	(1)
Tier 1 capital	641	641	749	748
Tier 2 capital (loan notes – listed)	64	64	100	100
Total capital	705	705	849	848

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 11.5% exceeds the minimum Basel

leverage ratio of 3.0%.

				2024
	2025			(restated*)
	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)	6,400	6,400	6,746	6,746
Movement on consolidation of the subsidiary undertaking	(209)	(209)	64	64
Exposure value for derivatives and securities financing transactions	7	7	30	30
Off balance sheet exposures: unconditionally cancellable (10%)	411	411	769	769
Off balance sheet: other (100%)	—	—	1	1
Other adjustments	(13)	(13)	(77)	(78)
Central Bank claims	(1,043)	(1,043)	(886)	(886)
	5,553	5,553	6,647	6,646
Tier 1 capital	641	641	749	748
Leverage ratio	11.5%	11.5%	11.3%	11.3%

* The prior year has been re-presented on the basis of Sainsbury’s Bank plc producing solo financial statements in the current year. The movement on consolidation of subsidiary

undertakings represents the consolidation of Home Retail Group Cards Services Limited into the regulatory consolidated group.

29 Financial instruments

	2025	2024
	£m	£m
Held at amortised cost
Financial assets
Cash and cash equivalents	2,777	1,987
Trade and other receivables	377	444
Amounts due from Financial Services customers and other banks	—	4,517
Financial liabilities
Trade and other payables	(4,945)	(4,768)
Borrowings	(1,114)	(1,195)
Amounts due to Financial Services customers and banks	(1,968)	(5,721)
Lease liabilities	(5,494)	(5,354)
Held at fair value through other comprehensive income (OCI)
Investment securities	1,369	778
Held at fair value through profit or loss
Other financial assets	12	—
Derivative financial instruments	24	(11)
	(8,962)	(9,323)

The table excludes assets and liabilities of the Core Banking disposal group classified as held for sale. At the balance sheet date, the underlying financial

assets of the disposal group were measured at FVPL as outlined in note 11 following a change in business model.

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29 Financial instruments continued

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.

		2025		2024
		Carrying		Carrying
		amount	Fair value	amount	Fair value
		£m	£m	£m	£m
Financial assets
Amounts due from Financial Services customers	a), b)	—	—	4,517	4,381
Financial liabilities
Loans due 2031		(447)	(440)	(496)	(494)
Term loan		—	—	(581)	(575)
Unsecured bond		(550)	(552)	—	—
Tier 2 Capital due 2028		(124)	(142)	(122)	(136)
Amounts due to Financial Services customers and other banks	c)	(1,968)	(1,990)	(5,721)	(5,733)

a) Included within a portfolio fair value hedging relationship with £nil (2024: £2,312 million) of interest rate swaps.

b) Amounts due from Financial Services customers have been reclassified to assets of the disposal group in the current financial year. See note 22 for further details.

c) Retail customer deposits within amounts due to Financial Services customers have been reclassified to liabilities of the disposal group in the current financial year as described in note 22.

The remaining balance comprises deposits obtained via aggregators and wholesale counterparties. Refer to note 24 for further details.

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)

		2025				2024
	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
Investment securities	1,189	180	—	1,369	761	—	—	761
Financial instruments at fair value through profit and loss
Other financial assets	12	—	—	12	—	—	—	—
Derivative financial assets	—	21	29	50	—	67	9	76
Derivative financial liabilities	—	(26)	—	(26)	—	(87)	—	(87)

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
	2025	2024
	£m	£m
At beginning of financial year	9	131
Charged to income statement – cost of sales	2	(46)
Charged to other comprehensive income	18	(76)
At end of financial year	29	9

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Notes to the consolidated financial statements continued

29 Financial instruments continued

29.3 Level 3 financial assets continued

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:

	2025
	Change in	Change in
	output	forward
	volume	pricing
	+/-20.0%	+/-20.0%
	£m	£m
Not in a hedge relationship	2/(2)	7/(7)
Designated in a cash flow hedge relationship	4/(4)	31/(31)

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

			2025
				Cash
	Gross			collateral
	amounts	Amounts	Net amounts	pledged	Net
	recognised	offset	recognised	(not offset)	amounts
	£m	£m	£m	£m	£m
Assets
Derivative financial assets	50	—	50	—	50
Trade and other receivables	403	(26)	377	—	377
Cash and cash equivalents	2,777	—	2,777	—	2,777
	3,230	(26)	3,204	—	3,204
Liabilities
Derivative financial liabilities	(26)	—	(26)	18	(8)
Trade and other payables	(4,971)	26	(4,945)	—	(4,945)
	(4,997)	26	(4,971)	18	(4,953)

			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)

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 (2024: £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 £18 million has been pledged/provided

(2024: £56 million) against the derivatives and collateral has been received of £nil (2024: £10 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 £1 million

(2024: £nil) under this facility.

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30 Derivative financial instruments and hedge accounting

30.1 Effects of hedge accounting on the Group’s financial position and performance

			2025				2024
	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	1	120	—	—	62	1,249	(56)	1,063
Cash flow hedges
Inflation rate swaps	—	—	—	281	—	—	—	155
Interest rate swaps	—	—	—	—	—	150	—	—
Foreign exchange forward contracts	13	590	(13)	616	4	296	(30)	1,062
Commodity contracts	3	26	(5)	45	1	22	(1)	24
Power Purchase contracts	20	14	—	—	3	14	—	—
Derivatives not in a formal
hedging relationship
Interest rate swaps	4	510	(8)	780	—	—	—	—
Cross-currency swaps	—	14	—	6	—	23	—	20
Foreign exchange forward contracts	—	—	—	2	—	—	—	2
Power Purchase contracts	9	11	—	—	6	11	—	—
Total	50	1,285	(26)	1,730	76	1,765	(87)	2,326

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:

	2025		2024
		Average		Average
	Notional	interest	Notional	interest
	amount	received	amount	received
	£m	%	£m	%
Less than 1 month	—	—	—	—
1 – 3 months	—	—	—	—
3 months – 1 year	—	—	—	—
1 – 5 years	281	4.91%	305	4.94%
More than 5 years	—	—	—	—

Impact of change in value of hedged items on cash flow hedge reserve

		2025			2024
			Cumulative			Cumulative
			impact on			impact on
			cash flow			cash flow
	Hedged	Hedging	hedge	Hedged	Hedging	hedge
	item	instrument	reserve	item	instrument	reserve
	£m	£m	£m	£m	£m	£m
Cash flow hedges
Foreign exchange forward contracts	(1)	1	—	67	(67)	(19)
Commodity contracts	5	(5)	(2)	6	(6)	—
Power Purchase Agreements	(18)	18	20	76	(76)	3

There are no amounts remaining in the hedging reserve for which hedge accounting is no longer applied.

187

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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 continued

Analysis of fair value movements in cash flow hedge reserve by risk category

				2025
			Movements		Reallocation
			recognised	Amounts	within
		Opening	in OCI	reclassified	reserves	Closing
	Reclassification recognised in	£m	£m	£m	£m	£m
Foreign exchange forward contracts	Inventory	(19)	1	18	—	—
Commodity contracts	Cost of sales	—	(5)	3	—	(2)
Power purchase agreements	Cost of Sales	3	18	(1)	—	20
Tax		(12)	(4)	—	—	(16)
		(28)	10	20	—	2

				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)

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, being

borrowings in relation to Tier 2 capital for the year ended 1 March 2025 and also personal loans for the year ended 2 March 2024. 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.

Following the announced exit of Core Banking activities in June 2024, interest rate swap derivatives previously classified in a hedge relationship with these

portfolios were deemed ineffective with changes in fair value recognised immediately in the income statement from this date. Refer to note 30c for further details.

Maturity profile of instruments used in non-dynamic hedging strategies of interest rate risk

	2025		2024
		Average		Average
	Notional	fixed interest	Notional	fixed interest
	amount	rate	amount	rate
	£m	%	£m	%
Less than 1 month	—	—	—	—
1 – 3 months	—	—	17	0.60%
3 months – 1 year	—	—	231	0.70%
1 – 5 years	120	10.5%	956	3.90%
More than 5 years	—	—	1,109	2.19%

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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 hedged items (all via interest rate swaps) on financial statements

			2025
			Change in
			fair value used		Cumulative fair value
			for measuring		hedge adjustments included
	Carrying amount		ineffectiveness		in carrying amount
	Assets	Liabilities		Assets	Liabilities
Line item in financial statements	£m	£m	£m	£m	£m
Borrowings	—	(124)	(2)	—	1

			2024
			Change in
			fair value used		Cumulative fair value
			for 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

Impact of the hedging instruments (all via interest rate swaps) on financial statements:

			2025
			Carrying amount		Change in
					fair value
		Notional			for measuring
		amount	Asset	Liability	ineffectiveness
Line item in financial statements	Hedged Item	£m	£m	£m	£m
Derivative financial liabilities	Tier 2 capital	120	1	—	1

2024

			Carrying amount		Change in
					fair value
		Notional			for 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)

Hedge ineffectiveness recognised in cost of sales

	2025	2024
Change in value for calculating hedge ineffectiveness	£m	£m
Hedged items	(2)	36
Hedging instruments	1	(41)
	(1)	(5)

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 and CPI linked price 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 £9 million (2024: £6 million) is not within a hedging relationship with fair value gains of

£2 million (2024: loss of £46 million) having been recognised in the income statement for these arrangements.

As a result of the strategic change and agreement to sell Core Banking portfolios to NatWest announced June 2024, personal loan hedging derivatives

recognised within the Bank no longer qualify into an effective hedging relationship. The interest rate swaps are viewed as trading derivatives under IFRS 9:

‘Financial Instruments’ with movements in fair value recognised immediately within in the income statement, without offset.

189

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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

c) Derivatives not in a hedge relationship continued

Maturity profile of instruments used in non-dynamic hedging strategies of interest rate risk

	2025		2024
		Average		Average
	Notional	interest	Notional	interest
	amount	received	amount	received
	£m	%	£m	%
Less than 1 month	—	—	—	—
1 – 3 months	67	3.64%	—	—
3 months – 1 year	532	3.71%	—	—
1 – 5 years	686	4.22%	—	—
More than 5 years	5	3.58%	—	—

Impact of the interest rate risk derivatives not in hedging relationships

			2025
			Carrying amount
					Fair value loss
		Notional			recognised in the
		amount	Asset	Liability	income statement
Line item in financial statements	Hedged Item	£m	£m	£m	£m
Derivative financial assets/liabilities	Loans	1,056	4	(8)	(6)
Derivative financial liabilities	Deposits/ capital	234	—	—	—
		1,290	4	(8)	(6)

31 Cash and cash equivalents

31.1 Reconciliation of operating profit to net cash generated from operations

			2024
		2025	(restated*)
	Note	£m	£m
Operating profit		904	744
Depreciation	14, 15	1,033	988
Amortisation	16	182	172
Net impairment loss on non-financial assets	14, 15, 16	22	45
Profit on sale of non-current assets and early termination of leases		(53)	(16)
Non-underlying fair value movements	5	(2)	46
Share-based payments expense	35	75	85
Defined benefit scheme expense	34.4	8	7
Cash contributions to defined benefit scheme	34.4	(45)	(44)
Operating cash flows before changes in working capital		2,124	2,027
Changes in working capital
Decrease in inventories		—	5
Increase in financial assets at fair value through other comprehensive income		(603)	(135)
Decrease in trade and other receivables		15	3
Decrease in amounts due from Financial Services customers and other deposits		—	103
Increase in trade and other payables		247	163
Increase in amounts due to Financial Services customers and other deposits		—	345
Decrease in provisions		(7)	(1)
Cash generated from operating activities – continuing operations		1,776	2,510

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

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31 Cash and cash equivalents continued

31.2 Balance sheet

	2025	2024
	£m	£m
Cash in hand and bank balances	439	606
Money market funds	1,154	263
Money market deposits	141	232
Deposits at central banks	1,043	886
Cash and cash equivalents	2,777	1,987
Bank overdrafts	(1)	—
Net cash and cash equivalents	2,776	1,987
Restricted amounts included above Held as a reserve deposit with the Bank of England	—	14
For insurance purposes	3	7
	3	21

31.3 Cash flow statement

2025

• Amounts due from Financial Service customers and other banks: £4,517 million balance sheet movement explained by £2,512 million transferred to assets

held for sale on the balance sheet (Note 11.5) and £2,005 million cash inflows presented within discontinued operations in the cash flow statement

(Note 11.6).

• Amounts due to Financial Service customers and other deposits: £3,573 million balance sheet movement explained by £3,109 million transferred to

liabilities held for sale on the balance sheet (Note 11.5) and £644 million cash outflows presented within discontinued operations in the cash flow

statement (Note 11.6).

• Trade and other receivables: £76 million balance sheet movement mainly explained by cash inflows presented within discontinued operations in the cash

flow statement (Note 11.6).

• Provisions: £107 million balance sheet movement mainly explained by cash outflows presented within discontinued operations in the cash flow statement

(Note 11.6).

2024

• Amounts due from Financial Service customers and other banks: £875 million balance sheet movement explained mainly by £775 million cash inflows

presented within discontinued operations in the cash flow statement (Note 11.6) and £103 million cash inflows presented within continuing operations

(Note 31.1).

• Amounts due to Financial Service customers and other deposits: £225 million balance sheet movement explained mainly by £570 million cash outflows

presented within discontinued operations in the cash flow statement (Note 11.6) offset by £345 million cash inflows presented within continuing operations

(Note 31.1).

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.

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Notes to the consolidated financial statements continued

32 Analysis of net debt continued

32.1 Reconciliation of opening to closing net debt

			Cash Movements		Non-Cash Movements
		Cash flows	Net interest		Other
	3 March	excluding	(received)/	Accrued	non-cash	1 March
	2024	interest	paid	interest	movements	2025
	£m	£m	£m	£m	£m	£m
Retail
Net derivative financial instruments	—	—	(1)	—	—	(1)
Borrowings (excluding overdrafts)	(1,077)	79	76	(67)	—	(989)
Lease liabilities	(5,354)	487	272	(272)	(627)	(5,494)
Purchase of own shares – share buyback	—	200	—	—	(200)	—
Arising from financing activities	(6,431)	766	347	(339)	(827)	(6,484)
Cash and cash equivalents	877	(150)	—	—	—	727
Bank overdrafts	—	(1)	—	—	—	(1)
Less: Purchase of own shares – share buyback	—	(200)	—	—	200	—
Retail net debt	(5,554)	415	347	(339)	(627)	(5,758)
Financial Services
Net derivative financial instruments	—	—	—	—	(2)	(2)
Borrowings (excluding overdrafts)	(122)	—	12	(12)	(2)	(124)
Lease liabilities	—	—	—	—	—	—
Arising from financing activities	(122)	—	12	(12)	(4)	(126)
Financial assets at fair value through other comprehensive income	761	609	—	—	(1)	1,369
Cash and cash equivalents	1,110	940	—	—	—	2,050
Financial Services net debt	1,749	1,549	12	(12)	(5)	3,293
Group
Net derivative financial instruments	—	—	(1)	—	(2)	(3)
Borrowings (excluding overdrafts)	(1,199)	79	88	(79)	(2)	(1,113)
Lease liabilities	(5,354)	487	272	(272)	(627)	(5,494)
Purchase of own shares - share buyback	—	200	—	—	(200)	—
Arising from financing activities	(6,553)	766	359	(351)	(831)	(6,610)
Financial assets at fair value through other comprehensive income	761	609	—	—	(1)	1,369
Cash and cash equivalents	1,987	790	—	—	—	2,777
Bank overdrafts	—	(1)	—	—	—	(1)
Less: Purchase of own shares - share buyback	—	(200)	—	—	200	—
Group net debt	(3,805)	1,964	359	(351)	(632)	(2,465)

Other non-cash movements relate to new leases and foreign exchange.

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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
	5 March	excluding	(received)/	Accrued	non-cash	2 March
	2023	interest	paid	interest	movements	2024
	£m	£m	£m	£m	£m	£m
Retail
Net derivative financial instruments	—	—	(1)	1	—	—
Borrowings (excluding overdrafts)	(539)	(534)	60	(64)	—	(1,077)
Lease liabilities	(6,488)	505	264	(264)	629	(5,354)
Arising from financing activities	(7,027)	(29)	323	(327)	629	(6,431)
Cash and cash equivalents	683	194	—	—	—	877
Retail net debt	(6,344)	165	323	(327)	629	(5,554)
Financial Services
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)

33 Borrowings

		2025			2024
	Current	Non-current	Total	Current	Non-current	Total
	£m	£m	£m	£m	£m	£m
Loan due 2031	64	383	447	54	442	496
Term loan due 2026	—	—	—	6	575	581
Unsecured bond	3	547	550	—	—	—
Sainsbury’s Bank Tier 2 Capital	6	118	124	6	116	122
Bank overdrafts	1	—	1	—	—	—
	74	1,048	1,122	66	1,133	1,199
Transaction costs	(2)	(6)	(8)	(1)	(3)	(4)
	72	1,042	1,114	65	1,130	1,195

33.1 Loan due 2031

The loan is secured against 48 (2024: 48) supermarket properties (note 14.1). This is an inflation-linked amortising loan from the finance company Longstone

Finance plc with an outstanding principal value of £438 million (2024: £486 million) fixed at a real rate of 2.36 per cent where the principal and interest rate

are uplifted annually by RPI subject to a cap at 5 per cent and a floor at 0 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 £126 million (2024: £155 million) from RPI-linked interest to fixed rate interest.

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 Term loan due 2026

The Group entered into a £575 million unsecured term loan in December 2022, with maturity of March 2026. The term loan was repaid in full in January 2025

(2 March 2024: fully drawn) and all associated interest rate swaps terminated.

33.3 Undrawn facilities

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. This is

the second extension resulting in revised maturity dates of December 2029 for Facility A and December 2028 for Facility B. As at 1 March 2025, the Revolving

Credit Facility was undrawn.

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Notes to the consolidated financial statements continued

33 Borrowings continued

33.4 Unsecured bond

In January 2025 the Group issued £550 million of bonds split in two tranches, a £250 million five-year tranche maturing June 2030 and a £300 million ten-year

tranche maturing January 2035. The bonds pay interest on the principal amount at a rate of 5.125 per cent per annum on the 5-year tranche and 5.625 per cent

per annum on the ten-year tranche. Interest is payable in equal instalments semi-annually in arrears.

33.5 Sainsbury’s Bank Tier 2 Capital

The Group has £120 million of fixed rate reset callable subordinated Tier 2 notes in issuance (2024: £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 within a six-month window from 12 September 2027 to 12 March 2028.

33.6 Bank overdrafts

Bank overdrafts are repayable on demand and bear interest at a spread above Bank of England base rate.

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. An updated triennial funding valuation of the Scheme is

currently being carried out with an effective date of 30 September 2024.

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) which stopped from December 2024

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.

The Argos section (stream 2) reached its funding target on 31 December 2024 and so the second payment stream has been permanently switched off.

The switching stream (stream 3) was initially paid to the Sainsbury’s section until it reached the funding target on 31 December 2021, when it switched to the

Argos section. Now that the Argos section has reached the funding target, this stream will switch back to the Sainsbury’s section. Payments continue until

2038 or until both sections have reached their funding targets, if earlier.

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34 Retirement benefit obligations continued

34.1 Background continued

Triennial valuation continued

The level of security 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

		2025	2024
		£m	£m
Excluded from underlying profit before tax:
Interest cost on pension liabilities	a)	(293)	(290)
Interest income on plan assets		329	341
Total included in finance income		36	51
Defined benefit pension scheme expenses		(8)	(7)
Total (excluded from underlying profit before tax)		28	44

a) Includes interest of £1 million for the unfunded pension scheme (2024: £1 million).

34.3 Remeasurements included in other comprehensive income

		2025	2024
		£m	£m
Return on plan assets, excluding amounts included in interest		(448)	(335)
Actuarial gains/(losses) arising from changes in Finance assumptions		402	(34)
Demographic assumptions		3	116
Experience		10	(136)
Total actuarial gains/(losses)	a)	415	(54)
Total remeasurements		(33)	(389)

a) Includes £1 million remeasurement gain for the unfunded pension scheme (2024: £nil).

34.4 Balance sheet

The retirement benefit surplus and the associated deferred income tax balance are shown within different line items on the face of the balance sheet.

		2025			2024
	Sainsbury’s	Argos	Group	Sainsbury’s	Argos	Group
	£m	£m	£m	£m	£m	£m
Present value of funded obligations	(4,820)	(755)	(5,575)	(5,172)	(816)	(5,988)
Fair value of plan assets	5,418	911	6,329	5,777	925	6,702
Retirement benefit surplus	598	156	754	605	109	714
Present value of unfunded obligations	(13)	(10)	(23)	(14)	(10)	(24)
Retirement benefit surplus	585	146	731	591	99	690

Movements in net defined benefit surplus

		2025			2024
	Assets	Obligations	Net	Assets	Obligations	Net
	£m	£m	£m	£m	£m	£m
As at the beginning of the financial year	6,702	(6,012)	690	6,934	(5,945)	989
Interest income/(cost)	329	(293)	36	341	(290)	51
Remeasurement (losses)/gains	(448)	415	(33)	(335)	(54)	(389)
Pension scheme expenses	(8)	—	(8)	—	(7)	(7)
Employer contributions	45	—	45	44	—	44
Benefits (paid)/received	(291)	292	1	(282)	284	2
As at the end of the financial year	6,329	(5,598)	731	6,702	(6,012)	690

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Notes to the consolidated financial statements continued

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 for the Sainsbury’s Section and gilts +0.25% p.a. basis for the Argos Section, 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 2029 for

the Sainsbury’s section and the Argos section.

On 25 July 2024, the Court of Appeal upheld the High Court’s decision in Virgin Media v NTL Pension Trustees. This case found that changes made between 1997

and 2016 to pension benefits from a contracted-out salary related scheme could be void where trustees do not have written Section 37 confirmation from the

scheme actuary. The case also confirmed that retrospective confirmation would not be permissible. This judgement is relevant for the Sainsbury’s Pension

Scheme as it was contracted out of the State Second Pension (formerly SERPS) and there were changes to the Scheme during the relevant period. Based on a

review of the changes made to the Scheme during this period and associated documentation, the Group does not consider any adjustments to the financial

statements are required in respect of this matter. Both the Trustee and the Company have taken legal advice and are following any developments closely.

Risks associated with achieving the strategy

Risk	Description	Mitigation
Investment strategy	Misalignment of the investment strategy relative to	Using an FCA-regulated market-leading investment adviser, a
and implementation	changes in liabilities reduces the future resources available	liability-driven investment (LDI) framework has been adopted
	to meet pension obligations.	to generate excess asset returns aligned to liabilities by largely
		removing interest and inflation uncertainties.
	The strategy also includes addressing sustainability and
	ESG related risks for the Scheme.	ESG and related risks are incorporated into the Statement of
	Poor execution, attention to regulation or	Investment Principles (SIP), and an annual TCFD report and
	underperformance in applying the strategy could lead	Implementation Statement are published covering relevant risk
		management and goals.
	to lower funding levels.
		Investment managers have signed up to international ESG 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 cash flow requirements to	The Scheme adopts a collateral sufficiency framework to ensure
	make collateral top up requests to manage the Scheme’s	tha sufficient liquid assets are maintained and imposes limits on
	derivative positions and member benefit payments.	short-term maturing repurchase contracts.
		The Investment 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, so a	The Scheme’s LDI portfolio and inflation-linked investments reduce
	higher-than-expected long-term inflation rate leads	inflation risk by aligning assets movements to changes in inflation
	to higher liabilities.	expectations. Inflation increases are subject to maximum caps.
Interest rate	Scheme liabilities are determined using discount rates	The Scheme’s LDI portfolio reduces this risk on a funding basis.
	linked to corporate bond for accounting and gilt yields for	Whilst the accounting basis may differ because of divergence
	funding purposes. 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	procedures in place to identify ESG risks and opportunities.	Statement of Investment Principles. The Trustee publishes an annual
and climate	A broad range of these risks exists across the activities of	TCFD report and an Implementation Statement which details how
	the entities in which the Scheme ultimately invests which	climate risks are managed. Day-to-day management of ESG risks is
	include exposure to climate transition, a lack of diversity,	delegated to investment managers who are requested to confirm
		alignment with the Trustee’s policies.
	equity and inclusion, or poor corporate governance.
		A net zero carbon emission goal by 2050 has been adopted by the
		Trustee 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 funding
	members living longer than assumed.	levels which take account of the potential for increased life expectancy.
Cyber risk	The increasing threat of cyber-attack leads to data	Robust cybersecurity measures have been implemented by the
	breaches and financial losses.	Trustee’s custodian and administrators, including regular security
		assessments, employee training, and advanced IT systems. These
		measures aim to protect sensitive data and ensure the integrity and
		confidentiality of member information.

Since 2024, cyber risk has been separately reported for presentational purposes.

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34 Retirement benefit obligations continued

34.6 Analysis of plan assets

		2025		2024
		Quoted	Unquoted	Quoted	Unquoted
		£m	£m	£m	£m
Liability matching assets		3,432	1,617	3,620	1,374
Growth assets
Equity	a)
– Private		—	272	—	332
Alternatives
– Real estate		—	107	—	255
– Private debt		—	442	—	602
– Diversified growth		—	288	—	313
Cash and Cash equivalents		171	—	206	—
		3,603	2,726	3,826	2,876

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.

Included within liability matching assets are Government Bonds totalling £5,282 million (2024: £5,192 million), Corporate Bonds totalling £2,237 million

(2024: £2,052 million), and Fixed income derivatives totalling £328 million (2024: £342 million), offset by repurchase agreements totalling £2,799 million

(2024: £2,592 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, £6,144 million are denominated in pound sterling and £185 million are denominated in overseas currencies.

The valuation of many private market assets is based on valuations provided at 30 September 2024. A roll-forward of these valuations to 1 March 2025,

adjusting for cash received or paid and applying the changes seen in relevant liquid indices, increased the valuation of illiquid assets by £13 million.

Index return from 30 September 2024 to 1 March 2025

Asset class	Returns
Global equity USD return	2.6%
Global high yield Debt USD return	2.2%
US loans USD return	3.1%
UK REITS GBP return	-14.2%

An increase/decrease of 1 per cent in the indices used would have caused a £9 million increase/decrease in the adjustment.

34.7 Actuarial assumptions for measuring liabilities

Principal actuarial assumptions

	2025	2024
	%	%
Discount rate	5.45	5.00
Inflation rate – RPI	3.15	3.20
Inflation rate – CPI	2.55	2.55
Future pension increases	1.95–2.95	1.95–3.00

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

0.60% p.a. up to 2030 (2024: 1.00% p.a.).

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Notes to the consolidated financial statements continued

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 updated 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 2025 year-end are CMI 2023 projections with a long-term rate of

improvement of 1 per cent p.a. Future mortality improvements for the 2024 year-end were CMI 2022 projections with a long-term rate of improvement of 1 per

cent p.a.

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 2023 which was released in April 2024. The calibration process for CMI 2023 differs from previous years as the CMI have moved

to a single calibration parameter which applies weighting to only the most recent years of post-pandemic mortality experience.

As such, zero per cent weighting is applied to 2020 and 2021 data and 100% weighting applied to 2023 data, to reflect the view that the sustained and less

volatile mortality experience provides greater evidence of a change to future mortality trends.

The CMI has proposed significant and complex changes to CMI 2024 on which it is currently consulting. Our advisers have reviewed the consultation working

paper and confirmed that the same mortality improvement assumption is retained for FY25 as it remains within a reasonable range for ‘best estimate’

purposes.

Life expectancy at age 65

		2025			2024
		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	19.8	18.9	22.2	19.7
Female pensioner	22.8	23.5	22.9	22.8	23.4	22.8
Members aged 45 at balance sheet date
Male pensioner	19.9	23.1	20.7	19.8	23.1	20.7
Female pensioner	24.0	24.6	24.0	23.9	24.6	24.0

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
Discount rate	+/- 0.1%	(67)	68	(12)	12	(79)	80
Discount rate	+/- 1.0%	(609)	746	(107)	134	(716)	880
Inflation rate	+/- 0.1%	42	(35)	7	(11)	49	(46)
Inflation rate	+/- 1.0%	368	(359)	90	(84)	458	(443)
Inflation rate for future pension increases	+/- 0.1%	24	(17)	3	(7)	27	(24)
Inflation rate for future pension increases	+/- 1.0%	173	(194)	45	(47)	218	(241)
Demographic sensitivities
Life expectancy	+/- 1 year	(149)	147	(21)	23	(170)	170

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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 £26 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)

	2025	2024
	£m	£m
Within the next 12 months (next annual reporting period)	262	254
Between 2 and 5 years	1,209	1,172
Between 6 and 15 years	3,897	3,910
Between 16 and 25 years	3,784	3,966
Beyond 25 years	4,598	5,106
	13,750	14,408

35 Share-based payments

	2025	2024
	£m	£m
Share-based payment expense	80	89
Discontinued operations	5	4
Continuing operations	75	85

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.

	2025		2024
		Weighted		Weighted
	Number of	average	Number of	average
	options	exercise price	options	exercise price
	million	pence	million	pence
Outstanding at beginning of year	59.1	188	59.4	177
Granted	17.1	200	16.1	213
Lapsed / forfeited	(8.2)	197	(7.6)	179
Exercised	(12.6)	168	(8.8)	165
Outstanding at end of year	55.4	195	59.1	188
Exercisable at end of financial year	9.6	210	13.2	170
Exercisable Range	161	to 228	161	to 260
Weighted average share price at date of exercise		263		266
Weighted average remaining contractual life		2.2 years		2.1 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.

	2025	2024
Share price at grant date	275p	300p
Exercise price	200p	213p
Expected volatility	24.1%	25.2%
Option life	3.2 years	3.2 years
Expected dividend yield	4.8%	4.9%
Risk-free interest rate	4.9%	5.3%
Fair value per option	57p	66p

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.

199

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Notes to the consolidated financial statements continued

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 years ended 2 March 2024 and 1 March 2025, 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.

	2025	2024
	million	million
Outstanding at beginning of year	29.3	19.0
Conditionally allocated	65.8	21.4
Released to participants	(29.7)	(9.4)
Lapsed	(4.6)	(1.7)
Outstanding at end of financial year	60.8	29.3
Weighted average remaining contractual life	3.8 years	3.1 years
Weighted average share price at date of exercise (release to participants)	268p	281p

No performance conditions were included in the fair value calculations.

Options granted in the year 2025		2024
Share price at grant date	278p	273p
Option life	3 years	3 years
Fair value per option	278p	273p

35.3 Nil-Cost Share Award

The nil-cost share schemes include Bonus Share Awards and other Conditional Awards.

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 longer 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 except for certain colleagues who are

unable to receive dividend equivalents due to financial services regulations.

	2025	2024
	million	million
Outstanding at beginning of year	27.1	28.1
Awarded	15.6	14.0
Released to participants in financial year	(14.8)	(14.0)
Lapsed	(0.7)	(1.0)
Outstanding at end of financial year	2 7.2	27.1
Weighted average remaining contractual life	1.8 years	1.8 years
Weighted average share price at date of exercise (release to participants)	254p	262p

36 Commitments

	2025	2024
	£m	£m
Capital commitments contracted, but not provided for	179	140
Leases that have been signed but not yet commenced	32	73

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37 Contingent liabilities

The Group has a number of contingent liabilities in respect of disposed or exited businesses and guarantees in relation to disposed assets, which may expose

the Group to a material liability. For disposed property assets, this could be if the current tenant and their ultimate parents become insolvent. No historical

guarantees are expected to materialise.

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 17,700 equal pay claims from circa 12,100 claimants, in which 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 centres, and the equalisation of wages and terms and conditions on an ongoing basis. The Group believes further claims will be served.

There are three stages in the tribunal procedure for equal pay 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 similar

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. Whilst there is at present no definitive timetable for the litigation the Group anticipates judgement from the Tribunal in respect of

the second stage will be given in the course of 2027. This judgement is very likely to be subject to appeal proceedings.

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

material factor defences relating to non-discriminatory reasons for any pay differential. Both outstanding stages will involve contested 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.

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. No provision has therefore been recognised on the Group’s balance sheet. There are substantial factual and legal

defences to these claims and the Group intends to continue to defend them vigorously.

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:

	2025	2024
	£m	£m
Short-term employee benefits	16	15
Post-employment employee benefits	1	1
Share-based payments	8	8
	25	24

Five key management personnel had credit card balances with Financial Services (2024: three). These arose in the normal course of business and were

immaterial to the Group and the individuals. Two key management personnel held saving deposit accounts with Financial Services (2024: one). 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:

	2025	2024
	£m	£m
Rental expenses paid	(8)	(8)

Year-end balances arising from transactions with joint ventures and associates are as follows:

	2025	2024
	£m	£m
Other payables	(2)	(1)

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.

39 Post-balance sheet events

On 16 April 2025, the High Court approved the transfer of the personal loans, credit cards and retail deposit portfolios to NatWest Group concluding the Part

VII process. Following this approval, the transaction is expected to complete in May 2025 at which point legal title of these portfolios will transfer from

Sainsbury’s Bank to NatWest Group.

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Notes to the consolidated financial statements continued

40 Related undertakings

All companies listed below are owned by the Group and all interests are in ordinary share capital, except where otherwise indicated. All subsidiaries have

been consolidated.

40.1 Wholly owned subsidiary undertakings

The Group holds a majority of the voting rights of the following undertakings:

Entity	Country of incorporation	Interest	Holding	Registered office address a)
Argos Business Solutions Limited	UK	100%	Indirect	33 Holborn
Argos Card Transactions Limited	UK	100%	Indirect	33 Holborn
Argos Distributors (Ireland) Limited	Ireland	100%	Indirect	6th Floor, South Bank House
Argos Holdings Limited	UK	100%	Indirect	33 Holborn
Argos Limited	UK	100%	Indirect	33 Holborn
Argos (N.I.) Ltd	UK	100%	Indirect	Forestside Shopping Centre
Argos Surbs Investments Limited	UK	100%	Indirect	33 Holborn
Avenell Property Limited	UK	100%	Indirect	33 Holborn
Barleygold Limited	UK	100%	Indirect	50 Bedford Street
Bells Stores Limited	UK	100%	Direct	33 Holborn
BLSSP (PHC 7) Limited	UK	100%	Indirect	33 Holborn
Cliffrange Limited	UK	100%	Indirect	33 Holborn
Coolidge Investments Limited	UK	100%	Indirect	33 Holborn
Cornerford Limited	UK	100%	Indirect	33 Holborn
Financial Recovery Services Limited	UK	100%	Indirect	33 Holborn
First Stop Stores Limited	UK	100%	Indirect	33 Holborn
Global (Guernsey) Limited	Guernsey	100%	Indirect	PO Box 33, Dorey Court
Habitat Retail Limited	UK	100%	Indirect	33 Holborn
Hobart Property Limited	UK	100%	Indirect	33 Holborn
Holborn UK Investments Limited	UK	100%	Direct	33 Holborn
Home Retail Group Limited	UK	100%	Indirect	33 Holborn
Home Retail Group (Finance) LLP	UK	100%	Indirect	33 Holborn
Home Retail Group (Guernsey) LP	Guernsey	100%	Indirect	PO Box 33, Dorey Court
Home Retail Group (Jersey) Limited	Jersey	100%	Indirect	44 Esplanade
Home Retail Group (UK) Limited	UK	100%	Indirect	33 Holborn
Home Retail Group Card Services Limited	UK	100%	Indirect	33 Holborn
Home Retail Group Holdings (Overseas) Limited	UK	100%	Indirect	33 Holborn
Home Retail Group Insurance Services Limited	UK	100%	Indirect	33 Holborn
Home Retail Group Nominees Limited	UK	100%	Indirect	33 Holborn
Home Retail Group UK Service Company Limited	UK	100%	Indirect	33 Holborn
Horndrift Limited	UK	100%	Indirect	33 Holborn
J Sainsbury Common Investment Fund Limited	UK	100%	Indirect	33 Holborn
J Sainsbury Distribution Limited	UK	100%	Direct	33 Holborn
J Sainsbury Pension Scheme Trustees Limited	UK	100%	Direct	33 Holborn
J Sainsbury Trustees Limited	UK	100%	Indirect	33 Holborn
Jacksons Stores Limited	UK	100%	Direct	33 Holborn
Jacksons Stores 2002 Limited	UK	100%	Indirect	33 Holborn
JS Information Systems Limited	UK	100%	Direct	33 Holborn
JS Insurance Limited	Isle of Man	100%	Direct	Third Floor, St George’s Court
JSD (London) Limited	UK	100%	Indirect	33 Holborn
Jungle Online	UK	100%	Indirect	33 Holborn
Jungle.com Limited	UK	100%	Indirect	33 Holborn
Jungle.com Holdings Limited	UK	100%	Indirect	33 Holborn

a) See full addresses on page 204.

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40 Related undertakings continued

40.1 Wholly owned subsidiary undertakings continued

Entity	Country of incorporation	Interest	Holding	Registered office address a)
Nash Court (Kenton) Limited	UK	100%	Indirect	33 Holborn
Nectar 360 Limited	UK	100%	Indirect	33 Holborn
Nectar 360 Services LLP	UK	100%	Indirect	33 Holborn
Nectar EMEA Limited	UK	100%	Indirect	33 Holborn
Nectar Loyalty Holding Limited	UK	100%	Direct	33 Holborn
Ramheath Properties Limited	UK	100%	Direct	33 Holborn
Sainsbury Bridgeco Holdco Limited	UK	100%	Direct	33 Holborn
Sainsbury Holdco A Limited	UK	100%	Direct	33 Holborn
Sainsbury Holdco B Limited	UK	100%	Direct	33 Holborn
Sainsbury Propco A Limited	UK	100%	Indirect	33 Holborn
Sainsbury Propco B Limited	UK	100%	Indirect	33 Holborn
Sainsbury Propco C Limited	UK	100%	Direct	33 Holborn
Sainsbury Propco D Limited	UK	100%	Direct	33 Holborn
Sainsbury Property Investments Limited	UK	100%	Direct	33 Holborn
Sainsbury’s Argos Asia Limited	Hong Kong	100%	Indirect	Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia Commercial Limited	Hong Kong	100%	Indirect	Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia Sourcing Limited b)	Hong Kong	100%	Indirect	Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia Technical Limited b)	Hong Kong	100%	Indirect	Unit 904, 9/F, Tower 2
Sainsbury’s Argos Commercial Consulting (Shanghai) Limited	China	100%	Indirect	26/F, Tower 1
Sainsbury’s Bank plc	UK	100%	Direct	33 Holborn
Sainsburys Corporate Director Limited	UK	100%	Direct	33 Holborn
Sainsbury’s Corporate Healthcare Trustee Limited	UK	100%	Indirect	33 Holborn
Sainsbury’s Corporate Secretary Limited	UK	100%	Direct	33 Holborn
Sainsbury’s Group Holdings Limited	UK	100%	Direct	33 Holborn
Sainsbury’s Heather GP Limited	UK	100%	Indirect	4th Floor, 1 New Park Square
Sainsbury’s Intermediate Holdings Limited	UK	100%	Direct	33 Holborn
Sainsbury’s Manor GP Limited	UK	100%	Direct	4th Floor, 1 New Park Square
Sainsbury’s Manor Property Limited	UK	100%	Direct	4th Floor, 1 New Park Square
Sainsburys (NI) Ltd	UK	100%	Indirect	Forestside Shopping Centre
Sainsbury’s Rose LP Limited	UK	100%	Indirect	33 Holborn
Sainsbury’s SL Limited	UK	100%	Indirect	33 Holborn
Sainsbury’s Supermarkets Ltd	UK	100%	Direct	33 Holborn
Sainsbury’s Thistle Scottish Limited Partnership	UK	100%	Indirect	3 Lochside Avenue
Sainsbury’s Tyne Property Holdings Limited	UK	100%	Indirect	33 Holborn
Smartcharge Limited	UK	100%	Direct	33 Holborn
Software Warehouse Holdings Limited	UK	100%	Indirect	33 Holborn
Stamford House Investments Limited	UK	100%	Direct	33 Holborn
Stamford Properties One Limited	UK	100%	Direct	33 Holborn
Stamford Properties Three Limited	UK	100%	Direct	33 Holborn
Stamford Properties Two Limited	UK	100%	Direct	33 Holborn
Stanhope Finance Limited	UK	100%	Indirect	33 Holborn
Town Centre Retail (Bicester) Limited	UK	100%	Indirect	33 Holborn

a) See full addresses on page 204.

b) An application has been made to deregister this company.

40.2 Associated undertakings

The Group has an interest (as shown), direct or indirect, in the ordinary share capital of the following joint ventures and associates.

Entity	Country of incorporation	Interest	Holding	Registered office address a)
BL Sainsbury Superstores Limited 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

a) See full addresses on page 204.

b) An application has been made to deregister this company.

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Notes to the consolidated financial statements continued

40 Related undertakings continued

40.3 Overseas branches

The Group has the following branches overseas:

Entity	Country of incorporation	Holding	Registered office address a)
Sainsbury’s Argos Asia Limited – Bangladesh Liaison Office	Bangladesh	Indirect	Level 10, Simpletree Anarkali
Sainsbury’s Argos Asia Limited – India Branch Office	India	Indirect	Ambience Corporate Tower-II, 1st Floor

a) Full addresses in note 40.5 below.

40.4 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	Entity	Company registered number
Argos (N.I.) Ltd	NI674996	Nash Court (Kenton) Limited	3447714
Argos Card Transactions Limited	04229056	Nectar EMEA Limited	05821446
Argos Holdings Limited	5860214	Nectar Loyalty Holding Limited	06436907
Argos Surbs Investments Limited	5716474	Ramheath Properties Limited	01762921
Avenell Property Limited	03817411	Sainsbury’s Bridgeco HoldCo Limited	5644629
Barleygold Limited	NI032407	Sainsbury Holdco A Limited	05644636
Bells Stores Limited	01476345	Sainsbury Holdco B Limited	05644633
BLSSP (PCH 7) Limited	04104076	Sainsbury Propco A Limited	05644620
Cliffrange Limited	1967242	Sainsbury Propco C Limited	05676364
Coolidge Investments Limited	07697101	Sainsbury Propco D Limited	05676370
Cornerford Limited	03871316	Sainsbury Property Investments Limited	02184043
Financial Recovery Services Limited	01279774	Sainsbury’s Corporate Healthcare Trustee Limited	02256123
First Stop Stores Limited	03061483	Sainsbury’s Corporate Secretary Limited	13368643
Habitat Retail Limited	7445750	Sainsbury’s Group Holdings Limited	11833110
Hobart Property Limited	03978071	Sainsbury’s Intermediate Holdings Limited	10125892
Holborn UK Investments Limited	06482903	Sainsbury’s Manor GP Limited	SC453278
Home Retail Group (Finance) Limited	OC361082	Sainsbury’s Manor Property Limited	SC453263
Home Retail Group (UK) Limited	5844516	Sainsbury’s Rose LP Limited	11837174
Home Retail Group Holdings (Overseas) Limited	0872776	Sainsbury’s SL Limited	13361881
Home Retail Group Limited	5863533	Sainsburys (NI) Ltd	NI674962
Home Retail Group Nominees Limited	05733108	Sainsburys Corporate Director Limited	06246904
Home Retail Group UK Service Company Limited	05844489	Sainsbury’s Heather GP Limited	SC621875
Horndrift Limited	03871243	Sainsbury’s Thistle Scottish Limited Partnership	SL033628
J Sainsbury Common Investment Fund Limited	02789936	Sainsbury’s Tyne Property Holdings Limited	11733455
J Sainsbury Distribution Limited	02653788	Smartcharge Limited	15004383
J Sainsbury Pension Scheme Trustees Limited	02721178	Software Warehouse Holdings Limited	03776853
J Sainsbury Trustees Limited	00974484	Stamford House Investments Limited	01970437
Jacksons Stores 2002 Limited	04455255	Stamford Properties One Limited	03896034
Jacksons Stores Limited	03974443	Stamford Properties Three Limited	03896030
JSD (London) Limited	03780122	Stamford Properties Two Limited	03896032
Jungle Online	03782113	Stanhope Finance Limited	4288193
Jungle.com Holdings Limited	03929744	Town Centre Retail (Bicester) Limited	5564905
Jungle.com Limited	00301793

40.5 Full registered office addresses

Address		Full address
4th Floor, 1 New Park Square		4th Floor, 1 New Park Square, 1 Airborne Place, Edinburgh, EH12 9GR, United Kingdom
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 a)
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		Ambience Corporate Tower-II, 1st Floor, Plot No. 3, Ambience Island, NH-8, Gurgaon, Haryana – 122001, India
45 Gresham Street			45 Gresham Street, Gresham Street, London, EC2V 7BG

a) It is expected that, within the next financial year all Companies associated with this address will move registered office to 33 Charterhouse Street, London, EC1M 6HA, United Kingdom.

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Company balance sheet

1 March 2025 2 March 2024

Note £m £m

Non-current assets

Investments in subsidiaries, joint ventures and associates C2 6,592 7, 2 96

Trade and other receivables C3 845 847

Derivative financial assets — 1

7,437 8,144

Current assets

Trade and other receivables C3 222 70

Derivative financial assets 1 2

Cash and cash equivalents 406 510

629 582

Total assets 8,066 8,726

Current liabilities

Trade and other payables C4 (1,878) (1,295)

Borrowings C6 (1) (5)

Taxes payable (32) (10)

(1,911) (1,310)

Net current liabilities (1,282) (728)

Non-current liabilities

Borrowings C6 (542) (572)

Derivative financial liabilities (1) (1)

Deferred income tax liability C5 (19) (19)

Provisions (1) (1)

(563) (593)

Total liabilities (2,474) (1,903)

Net assets 5,592 6,823

Equity

Called up share capital C7 669 678

Share premium 1,448 1,430

Merger reserve 173 568

Capital redemption and other reserves C7 21 681

Retained earnings 3,281 3,466

Total equity 5,592 6,823

The loss after tax for the Company for the financial year was £822 million (2024: profit after tax of £725 million). The notes on pages 207 to 209 form an

integral part of these financial statements.

The financial statements were approved by the Board of Directors on 16 April 2025, and are signed on its behalf by:

Simon Roberts Bláthnaid Bergin

Chief Executive Chief Financial Officer

Company registered number: 00185647

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Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Company statement of changes in equity

Called up

share capital

premium

account

Merger

reserve

Capital

redemption

and other

reserve

Retained

earnings

Total

equity

Note £m £m £m £m £m £m

At 3 March 2024 678 1,430 568 681 3,466 6,823

Loss for the year — — — — (822) (822)

Other comprehensive loss — — — (1) — (1)

Total comprehensive loss — — — (1) (822) (823)

Transactions with owners:

Transfer between reserves C7 — — (395) (680) 1,075 —

Dividends — — — — (308) (308)

Allotted in respect of share option schemes C7 12 18 — — 70 100

Purchase of own shares for cancellation C7 — — — (200) — (200)

Cancellation of own shares C7 (21) — — 221 (200) —

At 1 March 2025 669 1,448 173 21 3,281 5,592

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

The notes on pages 207 to 209 form an integral part of these financial statements.

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Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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 1 March 2025 (2024: 52 weeks to 2 March 2024).

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 fair value less costs 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 cash flows 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 Intermediate Holdings Limited, the intermediate holding company of the Home Retail Group sub-group, trading performance in

Argos was below expectations and therefore an indicator of impairment existed. A conclusion has been reached that the Company’s investment is impaired

and significant estimates have been made by management of future profitability. 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.

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Notes to the Company financial statements continued

C2 Investments in subsidiaries, joint ventures and associates

2025 2024

£m £m

Subsidiaries

At the beginning of the financial year 7,295 7,67 7

Additions 80 88

Impairment (784) (470)

At the end of the financial year

6,591 7, 295

Joint ventures and associates 1 1

6,592 7, 296

Rates used in value-in-use calculations

2025 2024

Pre-tax discount rate 9%–15% 9%–15%

Long-term growth rate – weighted average used 2% 2%

The Company considers significant trading performance 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.

Given Argos trading performance was below expectations, this has been identified as an indicator of impairment of the Company’s investment in Sainsbury’s

Intermediate Holdings Limited, the intermediate holding company of the Home Retail Group sub-group. In addition, at 1 March 2025, the market

capitalisation of the Group was 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 Intermediate Holdings Limited 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 Intermediate Holdings Limited, value-in-use has been derived from the Board-approved cash flow projections for four years, with an

assumed growth rate of 2% beyond the four-year forecast period. The pre-tax discount rate used of 11.0% was derived from the Home Retail Group’s weighted

average cost of capital. Following the assessment, the Company has determined that the recoverable amount of its investment in Sainsbury’s Intermediate

Holdings Limited is £344 million and as a result has recognised an impairment charge of £784 million. The calculation is sensitive to management’s forecast

of future cash flows, as well as the discount rate applied to these cash flows.

Sensitivity

2025

Discount rate Cash flows

-2pts +2pts -25% +25%

£m £m £m £m

Decrease/(increase) in impairment charge 209 (105) (125) 125

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

2025 2024

Non-current Current Total Non-current Current Total

£m £m £m £m £m £m

Amounts owed by Group companies 845 222 1,067 847 70 917

C4 Trade and other payables

2025 2024

Non-current Current Total Non-current Current Total

£m £m £m £m £m £m

Amounts owed to Group entities — 1,876 1,876 — 1,292 1,292

Other payables — 2 2 — 3 3

— 1,878 1,878 — 1,295 1,295

C5 Taxation

Deferred income tax liability

Capital

losses

Rolled over

capital gains Total

£m £m £m

At 4 March 2023, 2 March 2024 and 1 March 2025 13 (32) (19)

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Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

C6 Borrowings

2025 2024

Current Non-current Total Current Non-current Total

£m £m £m £m £m £m

Unsecured bond 3 547 550 — — —

Term loan due 2026 — — — 6 575 581

Transaction costs (2) (5) (7) (1) (3) (4)

1 542 543 5 572 577

Refer to note 33 of the Group financial statements for further details.

C7 Share capital and reserves

C7.1 Called up share capital and merger reserve

2025

million

2024

million

2025

£m

2024

£m

Called up share capital

Allotted and fully paid ordinary shares 28 4/7p 2,339 2,371 669 678

2025 2024

Number of

Ordinary

premium

Merger

reserve

Number of

Ordinary

premium

Merger

reserve

million £m £m £m million £m £m £m

At the beginning of the financial year 2,371 678 1,430 568 2,352 672 1,418 568

Allotted in respect of share option schemes 42 12 18 — 19 6 12 —

Cancellation of own shares (74) (21) — — — — — —

Transfer to retained earnings — — — (395) — — — —

At the end of the financial year 2,339 669 1,448 173 2,371 678 1,430 568

C7.2 Capital redemption and other reserves

Investment in

own shares

£m

Other

reserves

£m

Capital

redemption

reserve

£m

Total capital

redemption

and other

reserves

£m

At 3 March 2024 — 1 680 681

Transfer to retained earnings — — (680) (680)

Purchase of own shares for cancellation (200) — — (200)

Cancellation of own shares 200 — 21 221

Cash flow hedges effective portion of fair value movements — (1) — (1)

At 1 March 2025 — — 21 21

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.

During the period, 73.6 million of the Company’s own shares were purchased, and subsequently cancelled, for total consideration of £200 million inclusive

of£6 million directly attributable costs. £200 million has been transferred from the treasury share reserve (within capital redemption and other reserves)

toretained earnings and £21 million of share capital has been transferred to the capital redemption reserve owing to the cancellation.

The capital redemption reserve as at 3 March 2024 amounted to £680 million. This 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. Following approval by the High Court registered on 31 July 2024, this £680 million was reclassified as

available for distribution to shareholders in accordance with ICAEW Technical Release 02/17BL section 2.8A and as a result was transferred to retained earnings.

C7.3 Merger reserve

The merger reserve as at 3 March 2024 amounted to £568 million and was created following the issuance of 261 million shares in 2016 as part consideration

forthe acquisition of Home Retail Group plc. During the year, £395 million has been transferred to retained earnings and classified as available for

distribution to shareholders in accordance with ICAEW Technical Release 02/17BL section 3.9 following the impairment recognised in Sainsbury’s

Intermediate Holdings Limited, as detailed in note C2.

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 40.4 of

theGroup financial statements sets out details on subsidiary undertakings exempt from audit.

209

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

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

2025 2024

Retail like-for-like (exc. fuel, inc. VAT) 3.2% 7.5%

Underlying net new space impact (0.1)% (0.7)%

Retail sales growth (exc. fuel, inc. VAT) 3.1% 6.8%

Fuel impact (1.6)% (3.6)%

Total retail sales growth (inc. fuel, inc. VAT) 1.5% 3.2%

VAT impact 0.2% 0.4%

Total retail sales growth 1.7% 3.6%

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

2025 2024

Note £m £m

Retail underlying operating profit 6.1 1,036 966

Retail sales 6.1 32,630 32,084

Retail underlying operating margin 3.17% 3.01%

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.

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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

2025 2024

Note £m £m

Retail underlying operating profit 6.1 1,036 966

Add: Retail underlying depreciation and amortisation A2.1 1,156 1,112

Retail underlying EBITDA 2,192 2,078

Retail sales 6.1 32,630 32,084

Retail underlying EBITDA margin 6.72% 6.48%

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 9 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, and cash flows

from joint ventures and associates. Excludes capital injections to, dividends from, and any other exceptional cash movements with or on behalf of Sainsbury’s

Bank and its subsidiaries. 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.

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A2 Cash flows and borrowings continued

A2.1 Retail cash flows (Closest IFRS equivalent: Group cash flows) continued

Reconciliation

2025

2024

(restated*)

Retail

Financial

Services Group Retail

Financial

Services Group

Note £m £m £m £m £m £m

Operating profit/(loss) – continuing 822 82 904 790 (46) 744

Depreciation and amortisation – Underlying 1,156 — 1,156 1,112 14 1,126

– Non-underlying 59 — 59 34 — 34

1,215 — 1,215 1,146 14 1,160

Net impairment charge/(reversal)

onnon-financial assets

– Underlying b) 2 — 2 — — —

– Non-underlying 20 — 20 23 22 45

22 — 22 23 22 45

(Profit)/loss on sale of non-current assets

and early termination of leases

– Underlying b) (6) — (6) (5) — (5)

– Non-underlying (47) — (47) (11) — (11)

(53) — (53) (16) — (16)

Non-underlying fair value movements (2) — (2) 46 — 46

Share-based payments expense b) 71 4 75 83 2 85

Defined benefit scheme expenses 8 — 8 7 — 7

Cash contributions to defined benefit scheme (45) — (45) (44) — (44)

Operating cash flows before changes in working capital 2,038 86 2,124 2,035 (8) 2,027

Movements in working capital – Underlying 98 (461) (363) 262 215 477

– Non-underlying 105 (90) 15 6 — 6

203 (551) (348) 268 215 483

Cash generated from operations – continuing a) 2,241 (465) 1,776 2,303 207 2,510

Interest paid a) (347) (12) (359) (323) (13) (336)

Corporation tax paid a) (89) 36 (53) (58) (3) (61)

Cash flows from investing activities – continuing 1,805 (441) 1,364 1,922 191 2,113

Purchase of property, plant and equipment – Additions a) (617) — (617) (649) (1) (650)

– Acquisitions c) — — — (731) — (731)

Purchase of intangible assets a) (208) — (208) (165) (13) (178)

Capital expenditure (825) — (825) (1,545) (14) (1,559)

Initial direct costs on new leases a) (34) — (34) (6) — (6)

Proceeds from disposal of property, plant

and equipment

– Core disposals a) 45 — 45 16 — 16

– Acquisitions

related c) — — — 61 — 61

Interest received a) 27 — 27 27 — 27

(787) — (787) (1,447) (14) (1,461)

Cash flows from financing activities – continuing

Proceeds from issuance of ordinary shares 20 — 20 15 — 15

Purchase of own shares for share schemes (63) — (63) (18) — (18)

Other share related transactions (43) — (43) (3) — (3)

Purchase of own shares for cancellation (200) — (200) — — —

Proceeds from borrowings 544 — 544 575 — 575

Repayment of borrowings (623) — (623) (41) — (41)

Net (repayment)/drawdown of borrowings (79) — (79) 534 — 534

Capital repayment of lease obligations a) (487) — (487) (505) (2) (507)

Dividends paid on ordinary shares (308) — (308) (306) — (306)

(1,117) — (1,117) (280) (2) (282)

Net increase/(decrease) in cash and cash equivalents

–continuing (99) (441) (540) 195 175 370

Net (decrease)/increase in cash and cash equivalents

–discontinued operations 2024: a) (52) 1,381 1,329 (1) 299 298

(151) 940 789 194 474 668

* Comparative periods have been re-presented to separately disclose discontinued operations. Refer to note 11 for further details.

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.

Alternative performance measures (APMs) continued

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A2 Cash flows and borrowings continued

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

2025 2024

Note £m £m

Cash contribution to defined benefit scheme A2.1 (45) (44)

Non-underlying cash movements:

Financial services model — (5)

Retail restructuring programmes (71) (67)

Operating cash flows (71) (72)

Effect on retail cash generated from operations (116) (116)

Sum of the items marked a), b) and c) in note A2.1 as they appear in the financial review

2025 2024

£m £m

Retail free cash flow a) 531 639

Share based payments and other b) 67 78

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 FVOCI, 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 33 to the financial statements.

A3.2 Net debt/underlying EBITDA (Closest IFRS equivalent: None)

Definition and purpose

Net debt divided by Group underlying EBITDA.

Helps management measure the ratio of the business’s debt to operational cash flow.

Reconciliation

2025 2024

Note £m £m

Retail net debt 32 5,758 5,554

Group underlying EBITDA A4.2 2,222 2,139

Net debt/Group underlying EBITDA 2.6x 2.6x

Group underlying EBITDA is reconciled within the fixed charge cover analysis in note A4.2.

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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.

2025 2024

Note £m £m

Return (Group underlying operating profit) 6.1 1,066 995

£m £m

Group net assets Balance sheet 6,651 6,868

Less: Pension surplus Balance sheet (731) (690)

Deferred tax on pension surplus 10.3 218 244

Less: Net debt 32 5,758 5,554

Effect of in-year averaging (42) 42

Capital employed 11,854 12,018

Return on capital employed 9.0% 8.3%

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

2025 2024

Note £m £m

Group underlying operating profit 6.1 1,066 995

Add: Group underlying depreciation and amortisation expense A2.1 1,156 1,144

Group underlying EBITDA 2,222 2,139

Capital repayment of lease obligations A2.1 (487) (507)

Underlying finance income 9 31 30

Underlying finance costs 9 (336) (324)

Fixed charges (792) (801)

Fixed charge cover 2.8x 2.7x

Alternative performance measures (APMs) continued

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Additional shareholder information

Managing your shares

Our share register is managed by Equiniti, our share registrar. The quickest and most environmentally friendly way for shareholders to manage their

shareholding is electronically via www.shareview.co.uk:

Go online. Go paperless. It’s simple.

If you need to contact Equiniti

help.shareview.co.uk

+44 (0) 333 207 6557

Please use the country code when

contacting us from outside the UK. For

deaf and speech impaired customers, we

welcome calls via Relay UK. Please see

www.relayuk.bt.com for more

information.

Equiniti, Aspect House,

Spencer Road, Lancing,

West Sussex, BN99 6DA, UK

(1) Lines are open 8:30am to 5:30pm (UK time), Monday to Friday

(excluding public holidays in England and Wales). Calls from a

landline are charged at national rates, calls from a mobile device

may incur network extras.

Keep your dividend payment

instruction up to date

Change your address

Submit your proxy voting

instructions

Elect to receive shareholder

communications

electronically

Scan the QR code below for access to

Shareview, a free, online secure service

that enables you to manage and

monitor all of your shares in one place.

Please contact Equiniti for assistance

with the QR code or the Shareview

service.

To register online and set up your

Shareview Portfolio, go to:

www.shareview.co.uk/info/register

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. Check the

charges that apply before dealing in shares as the dealing fees vary between

brokers. Alternatively, you may consider using Equiniti. For more

information on Equiniti’s share dealing service, visit 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.

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.

(2)

Lines are open 9.00am to 5.00pm Monday to Friday (excluding UK public holidays).

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.

To register, you will need your 11-digit Shareholder Reference Number, which can be found on your share certificate and dividend confirmation. For each

shareholder who registers to manage their shareholding online, a donation will be made to the Woodland Trust, the UK’s leading woodland conservation

charity. Alternatively, shareholders can contact Equiniti using the details in the useful contacts section on page 217.

Financial calendar 2025/26

1 March 2025

Financial year-end 2024/25

1 July 2025

Q1 trading statement

11 July 2025

Payment date of final dividend

January 2026

Q3 trading statement

3 July 2025

Annual General Meeting

6 November 2025

Interim (half-year)

results announcement

April 2026

Preliminary (full-year)

results announcement

3 Provisional dates.

215

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Shareholders

Shareholder information as at 1 March 2025

2025 2024

Number of shareholders 92,786 96,196

Number of shares in issue 2,339,424,088 2,370,612,927

Annual General Meeting (AGM)

The 2025 AGM will be held at Leonardo Royal Hotel London St Paul’s ,

10Godliman St, London, EC4V 5AJ at 11.00am on Thursday, 3 July 2025 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.

Dividends

An interim dividend of 3.9 pence per ordinary share was paid on 20December

2024. Shareholders will be asked to approve a dividend of 9.7 pence per

ordinary share for the year ended 1 March 2025 at this year’s AGM.

Ifapproved, this will be paid on 11 July 2025 to all shareholders who are

onthe register of members on 6 June 2025. Dividends will be made directly

to your nominated bank or building society account by direct credit.

Pleasevisit www.shareview.co.uk for further details, and to provide your

account details.

For more information on dividends, please see pages 48 and 51 and note 13

onpage165.

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

21,000 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 security and share fraud

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?

• 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.co.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.

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: sharerelations@bnymellon.com

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.

Additional shareholder information continued

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Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Useful contacts

Registered office

J Sainsbury plc

33 Holborn

London EC1N 2HT

Registered number 00185647

Shareholder communications website

www.about.sainsburys.co.uk

For the latest results and reports, share price data, business strategy and

corporate governance.

It also contains information for investors, our sustainability report,

regulatory and news releases, and current issues.

Investor Relations

Investor Relations Department

J Sainsbury plc

33 Holborn, London EC1N 2HT

InvestorRelations2@sainsburys.co.uk

Registrars

Equiniti

Aspect House

Spencer Road

Lancing BN99 6DA

Company Secretary

Nick Grant

Independent auditor

Ernst & Young LLP

1 More London Place

London SE1 2AF

Solicitors

Linklaters LLP

Stockbrokers

UBS

Shore Capital

General contact details

For any customer enquiries, please visit our websites:

Sainsbury’s

www.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

1 Please note, the Company’s registered office is currently at 33 Holborn, London, EC1N 2HT.

However, it is expected that, during the period between the date of this Notice and the AGM,

the Company’s registered office will change to 33 Charterhouse Street, London, EC1M6HA.

The Company will publish an announcement through a Regulatory News Service

announcing the change in registered office on the date that the change is effective.

217

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Annual General Meeting (AGM) – This year the AGM will be held on

3July2025 at 11:00am at the Leonardo Royal Hotel London St Paul’s, 10

Godliman Street, London, EC4V 5AJ.

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.

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.

FVPL – Fair value through profit or loss. Method of valuing a financial

instrument where changes in fair value are recognised directly in the

incomestatement.

FVOCI – 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 absorbs infrared

radiation emitted from Earth’s surface creating a ‘greenhouse effect’.

Group – The Company and its subsidiaries.

GSCOP – Groceries 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) / Nielsen Global Solutions (Nielsen) –

Independent third parties providing data on the UK Grocery Market.

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.

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.

OCI – Other comprehensive income.

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

218

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

Notes

219

Strategic Report Governance Report Financial Statements J Sainsbury plc Annual Report and Financial Statements 2025

Notes

220

Strategic Report Governance Report Financial StatementsJ Sainsbury plc Annual Report and Financial Statements 2025

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