Good food for all of us

Annual Report and

FinancialStatements 2026

Strategic Report

Contents

Strategic Report

1 Our purpose

4 Chair’s letter

5 Market context

6 Business model

7 Business overview

8 Chief Executive’s statement

10 Our purpose in action

12 Strategy overview

13 Delivering on our outcomes

18 Key performance indicators

20 Our people and culture

24 Engaging with our stakeholders

30 Plan for Better

34 Financial review

40 Principal risks and uncertainties

48 Statement of viability

50 Non-financial and sustainability information

statement

Governance Report

53 Introduction to the governance report

54 Governance at a glance

56 Board of Directors

58 Board roles and responsibilities

59 Governance framework

61 Board leadership and Company purpose

64 Section 172 statement

65 Board stakeholder engagement

66 Board effectiveness review

67 Nomination and Governance

Committeereport

71 Corporate Responsibility and Sustainability

Committee report

73 Audit Committee report

81 Annual statement from the Remuneration

Committee Chair

83 Summary of 2025/26 remuneration

84 Summary of 2026/27 remuneration

85 Remuneration in context

87 Remuneration Policy

94 Annual report on remuneration

104 Climate change and Task Force on Climate-

related Financial Disclosures (TCFD)

116 Climate Transition Plan

120 Directors’ report

Financial Statements

126 Statement of Directors’ responsibilities

127 Independent auditor’s report to the

membersof J Sainsbury plc

135 Consolidated income statement

136 Consolidated statement of comprehensive

income/(loss)

137 Consolidated balance sheet

138 Consolidated statement of changes inequity

139 Consolidated cash flow statement

140 Notes to the consolidated financial statements

198 Company balance sheet

199 Company statement of changes in equity

200 Notes to the Company financial statements

203 Alternative Performance Measures (APMs)

207 Additional shareholder information

209 Useful contacts

210 Glossary

When John James and Mary Ann Sainsbury opened the

first Sainsbury’s in 1869, they set out to bring customers

high quality food at great value.

For more than 150 years, we’ve stayed true to these values. People who shop with us

know that Sainsbury’s stands for quality, value and service and we are incredibly proud

of the business we have built with our colleagues and partners.

Today, good food sits at the heart of all that we do. Our purpose is to make good food

joyful, accessible and affordable for everyone, every day. It is also our brand promise:

good food for all of us.

At Sainsbury’s we believe good food means thinking about how food is grown,

produced, bought, sold, distributed, cooked and enjoyed in communities across the

UK. We want to inspire people to fall in love with cooking and eating good food by

making it easy, affordable and joyful.

Financial highlights

Retail sales growth

4.3%

(excl. fuel) versus the 2024/25 financial year.

Including fuel, sales increased 2.8%

Total underlying profit before tax

£718m

up 1.3% versus the 2024/25 financial year

Total underlying basic earnings per share

22.3p

up 3.2% versus 21.6p in the 2024/25 financial year.

Basic earnings per share 17.3p versus 10.9p in the

2024/25 financial year

Retail free cash flow

£574m

up 8.1% versus £531 million in the 2024/25 financial

year. Statutory net cash generated from operating

activities from continuing operations was

£1,774million, versus £802 million in the 2024/25

financial year

Retail underlying operating profit

£1,025m

down 1.1% versus the 2024/25 financial year

Statutory profit after tax

£393m

up 55.3% versus the 2024/25 financial year

Return on capital employed

8.9%

down 10 basis points versus the 2024/25

financialyear

Joyful

Accessible

Affordable

Good food for all of us

Strategic Report

We have a real passion for innovation and good quality,

affordable food is the foundation of all our Sainsbury’s

own brand ranges. It’s food that’s well sourced, grown

sustainably and offers great value.

Now 25 years old, our premium Taste the Difference

range is more popular than ever, with customers choosing

it for exciting new flavours and the feeling of dining out

at home. We’ve recently expanded the range with our

new Taste the Difference Discovery collections that offer

expertly created, restaurant-quality meals and premium

speciality ingredients.

1,200

new own brand products, around 50 per cent

in our premium Tastethe Difference range

£2bn+

in Taste the Difference sales,

a milestone for the brand

69%

of customers shopped both Aldi Price Match

andTastethe Difference in the same trolley

overthecourseof theyear

See our purpose in action on page 10 for more information

on how we’re making good food joyful

Joyful

Our purpose

Whether it’s the big weekly shop, a quick bite to

eat or a special occasion, our customers choose

us for good food that is trusted on quality and

delivers on taste.

Strategic Report

1 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsGovernance ReportStrategic Report

See our purpose in action on page 10

We’re opening new supermarkets and convenience

storesin key locations and are increasing food space in

many of our existing stores, so that more customers can

access more of our good food, more often. Alongside this,

our convenience formats, online grocery, rapid delivery

and same-day fulfilment give customers even more

flexibility – supporting everything from larger planned

shops to quick top-ups when time is tight.

We also recognise that good food isn’t shared equally.

We’ve partnered with Comic Relief for over 25 years

andsince 2022 we’ve refocused our relationship to tackle

the issue of food poverty. To date, we’ve donated over

60million meals, raised more than £26 million and

supported more than 2.4 million people. We’ve funded

food clubs, holiday programmes and community support,

while also rallying partners, government and industry

todrive wider change.

40+

new supermarkets and Local stores in key locations

£30m

goal to be raised by 2030 for Comic Relief

1,320

schools supported through our partnership with the

Department for Education’s breakfast clubs programme

Our purpose continued

Accessible

Through our largest investment

in store expansion in over a decade,

we’re bringing more choice,

convenience and quality to more

communities across the UK.

2 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsGovernance ReportStrategic Report

Affordable

See our purpose in action on page 10

Our purpose continued

Championing good food means

making sure great quality is

affordable for everyone, every

timethey shop with us. We know

customers want food they can trust,

enjoy and feel good about – without

worrying about the price – and we

are committed to offering great value

on the products they buy most often.

We’ve invested around £1.3 billion to keep prices low

andmake good food affordable for everyone, whether

that’s through our Low Everyday Prices, Aldi Price Match,

Nectar Prices, personalised Your Nectar Prices or Stamford

Street, our lowest priced range – offering great value on

everyday essentials.

In 2024, we became the first retailer to extend Aldi Price Match

across our supermarkets, convenience stores and online and

the offer contains at least 75 per cent Healthy and Better for

you products. Customers are now saving more than £450 on

average a year with Nectar, as well as collecting over £170 of

Nectar Points through our well-established value proposition

of Nectar Prices, Your Nectar Prices and Nectar Points earned

across a coalition of partners.

£1.3bn

invested in keeping prices low over the past five years

£5.5bn

saved by customers since the launch of

Nectar Prices in April 2023

£450

on average a year saved by households using

Nectar Prices and Your Nectar Prices

10,000+

products available on Nectar Prices

3 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsGovernance ReportStrategic Report

Chair’s letter

Sainsbury’s plays an important role in the UK. Every week, millions

of customers choose us for good food at great prices. Thousands of

suppliers work with us as trusted, long-term partners and around

140,000 colleagues build their careers with us. When Sainsbury’s is

thriving, the impact is felt well beyond our stores, in communities

across the country.

Over the past year, customers have continued to make careful

choices, with value firmly front of mind. Against this backdrop, our

priorities remain clear: supporting colleagues, staying close to what

customers are telling us and delivering great value on the products

they buy most often, while making balanced choices that protect

the long-term strength of our business.

Making balanced choices

Through disciplined execution, a sharper focus on value and

astronger financial position, we have built a business that is more

focused and better placed to serve customers and communities

across the UK over the long term.

Central to this progress is our focus on food, where we can have

thegreatest impact. By prioritising value, quality, availability

and service and investing carefully where it matters most, we

are better able to support our customers today while continuing

to strengthen the business for the long term. By making balanced

choices, we have strengthened Sainsbury’s position as a stable

and trusted UK plc.

Delivering with purpose

We are committed to delivering for everyone who relies on

us.Over the past year, this has meant prioritising value for

customers, continuing to invest in colleagues and working in

partnership with suppliers to strengthen our food supply chain.

Our purpose – making good food joyful, accessible and affordable

for everyone, every day – shapes the choices we make. Through our

Plan for Better, we support healthier and more sustainable diets,

while engaging constructively with government on issues such as

affordability, supply chain resilience and regulatory reform.

Long-term partnerships are essential in our food supply chain.

I recently visited a farm growing salad crops where the challenges

facing British agriculture were clear. I came away with a strong

sense that resilience increasingly depends on farmers having the

confidence – and the capability – to plan and invest for the long

term. Extreme weather is increasing complexity but long-term

agreements give farmers the confidence to invest in solutions

such as water storage and irrigation – a practical example of how

Sainsbury’s is supporting the future of UK food production.

A thriving Sainsbury’s is good for

the UK – for the customers and

communities we serve every day

and for the shareholders who rely on

us for sustainable long-term value.

Martin Scicluna

Chair

Creating long-term

value for the UK

Creating sustainable returns

forshareholders

We are committed to creating long-term value for shareholders.

This year, we returned over £800 million to shareholders through

aprogressive dividend, a £250 million share buyback and a special

dividend from the disposal of our banking operations. This

transaction marked the conclusion of Sainsbury’s ownership of

the Bank’s Core Banking business. I would like to thank Bláthnaid

Bergin, Robert Mulhall and their teams for making this happen.

Looking ahead, we are focused on serving customers’ evolving

financial services needs through a simpler proposition, building

on the strength of our customer relationships while keeping our

core emphasis firmly on food retail. This focus allows us to keep

investing in value, quality, availability and service for customers,

alongside investment in colleagues, stores and technology.

Looking ahead with confidence

I would like to thank colleagues across Sainsbury’s for the

exceptional leadership and commitment they have shown

thisyear. Whether serving customers in our stores, supporting

our supply chains or driving progress behind the scenes, your

contribution is fundamental to the strength of our business.

I am also grateful to Simon and the Operating Board for their

leadership and I am pleased to acknowledge Simon’s CBE in the

2026 New Year Honours, recognising his outstanding contribution

to retail and our business. Under his leadership, colleagues,

customers and shareholders can have confidence in Sainsbury’s

ability to make the right long-term choices.

We welcomed Katie Bickerstaffe and Steve Hare to the Board

following their appointments at the 2025 AGM. They have

brought valuable experience and perspective. I would also

liketo acknowledge Adrian Hennah in his first year as Senior

Independent Director and the counsel he continues to offer.

A thriving Sainsbury’s is good for the UK - for the customers and

communities we serve every day and for the shareholders who

rely on us for sustainable long-term value. With a clear strategy,

disciplined execution and a continued focus on value, quality,

availability and service, Sainsbury’s is well placed to navigate an

increasingly uncertain external environment in the years ahead.

Martin Scicluna

Chair

22 April 2026

Financial StatementsStrategic Report Governance Report4 J Sainsbury plc Annual Report and Financial Statements 2026

Market context

Customers are shopping with intent. Value remains

avery important factor in decision-making but it is

increasingly defined by a balance of price, quality

and trust. Customers are making more considered

decisions, favouring retailers and products that offer

transparency, reassurance and consistency

alongside competitive pricing.

Shopping habits continue to evolve as customers

spread spend across different missions. At the same

time, customers are visiting fewer shops since the

pandemic, placing greater value on getting everything

they need in one place and on a more effortless shop.

The main shop remains critical – particularly for

families and older households who plan ahead and

manage spend carefully.

Customers are also continuing to enjoy food at

home. More meals at home are being treated as

special occasions, with customers increasingly

celebrating and recreating restaurant-quality

experiences in their own kitchens, while still relying

on simple, affordable ways to make everyday meals

feel special. This is supporting demand for products

that combine quality, taste and value, reinforcing

theimportance of strong own label ranges, reliable

availability and clear value cues.

Across all missions, customers expect retailers to

make shopping straightforward and dependable

– through clear pricing, simpler choices and

confidence that what they need will be available

when they shop.

Longer term demographic trends continue to shape

customer needs. The UK population is ageing and

households are becoming smaller. These shifts

influence how people shop, the missions they

prioritise and the products they choose.

Younger generations are accounting for a growing

share of grocery spend, as more of their purchasing

power shifts into grocery and their habits shape

where growth is emerging. These customers are

digitally confident, move easily between channels

and expect joined up, relevant experiences - whether

in store, online, or on their phone.

Health is playing a growing role in food choices

across all age groups. As cultural diversity increases

and the population ages, health needs are becoming

more varied and more people are living longer with

multiple co-existing chronic conditions - adding to

the complexity of the health landscape. Customers

want food that supports healthier lifestyles without

added cost or complexity. Interest in nutrition, balance

and functional benefits is growing, alongside awareness

of topics such as ultra processed foods and emerging

trends like GLP 1 usage. Together, this reinforces a longer

term shift towards fresh food and balanced diets.

Alongside this, customers increasingly expect brands

to do good - from cutting food waste and reducing

packaging to supporting more sustainable diets and

playing an active role in local communities.

Technology is playing an increasingly important role

in shaping customer expectations. Customers expect

retailers to use digital tools and data to make shopping

simpler, quicker and more relevant – from personalised

offers and inspiration to smoother online journeys

and better availability.

For retailers, continued investment in data, technology

and infrastructure is a key differentiator. Those with

the scale and financial strength to invest are well

placed to improve efficiency, unlock productivity and

deliver intuitive and tailored customer experiences.

Technology is also creating new opportunities through

loyalty, retail media and emerging AI-enabled services,

increasing the value of trusted customer relationships

and high-quality data. In a competitive market, the

ability to combine great food, strong value and digital

capability remains central to long-term success.

Physical stores continue to play a central role in

theUK grocery market. The weekly shop remains

especially important for households planning ahead

and managing budgets, reinforcing the importance

of well-located stores and customer service.

Growth is also being driven by customers having

more ways to shop. Convenience formats, online

grocery, rapid delivery and same-day fulfilment are

helping customers meet different needs across the

week. While these channels still represent a smaller

share of total grocery spend, digital channels in

particular are contributing a significant share of

growth and are shaping expectations around

speed,ease and availability.

Across the market, retailers are responding by

takinga more disciplined approach to investment:

maximising value from their existing store estates –

maintaining standards, improving availability and

delivering a consistently good customer experience

– while also increasing spend on technology,

automation, supply chain capability, data and AI.

Together, these investments are designed to drive

efficiency and productivity in operations, while

improving (and increasingly digitising) the customer

shopping experience.

Customer discovery is also changing. Marketplaces,

aggregators and emerging AI-enabled tools are

influencing how people find products and make

choices. Over time, this will increase the importance

of strong digital capability, high quality data and

trusted, direct relationships with customers.

The UK grocery market remains highly competitive, withcustomers facing an increasing

amount of choice on where and how they shop. People are making deliberate choices

about the retailers they rely on, looking for confidence that they can get good quality

and value anda stress-free experience.

This environment is being shaped by a mix of factors: the continued importance of physical stores, the growing role of digital channels and changing expectations

around ease, availability, service and speed of fulfilment. At the same time, retailers are tightly focusing investment on the areas that matter most to customers, with

technology playing a growing role in supporting both customer experience and productivity. Together, these dynamics are influencing how customers shop today and

where growth is emerging across the market.

Where growth is coming from How customers are shopping today Changing lives, changing needs

Making shopping simpler

through technology

5 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

J Sainsbury plc Annual Report and Financial Statements 20266

Our business

at a glance

Sainsbury’s is the country’s second largest

grocer, serving customers online and in

ourmore than 600 supermarkets and

885convenience stores. Our colleagues bring

our purpose tolife in the communities we serve

– making good food joyful, accessibleand

affordable for everyone, every day.

We create value for stakeholders by building on the heritage and scale of our food

business and strong customer offer, enhancing our competitive advantage.

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 on page 30

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

6 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Business overview

Our strategy for Next Level Sainsbury’s

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

plan, building on the momentum of our successful

Food First strategy.

It’s our ambition to be the UK’s first choice for food.

We are focused on attracting many more people to

choose Sainsbury’s as the place they come to for

good food and playing a leading role in creating

amore sustainable food system in the UK.

Next Level Sainsbury’s sets out how we will deliver

that ambition. Our ability to combine great value,

trusted quality and leading service is the winning

combination that sets us apart and makes us

uniquely placed to help shape the future of

foodretail.

Over the past two years, we have made strong progress,

strengthening our competitive position and building

real momentum across the plan. We have expanded

and enhanced our world-leading Nectar loyalty

platform, sharpened value, accelerated food

innovation and improved availability and service.

Underpinning all of this is our programme to deliver

another £1 billion of cost savings which will help us to

continue to invest to transform our capabilities and

support sustainable growth in Year 3 and beyond.

Our brands work together toprovide

added value forour customers

Our brands - Sainsbury’s, Argos, Nectar, Nectar360, Habitat, Tu,

Sainsbury’s Bank and Smart Charge - each play a part in delivering

our purpose and giving customers more reasons to shop with us,

while building strong, sustainable growth for our shareholders.

Whether it’s stylish homeware from Habitat, great value fashion

from Tu or the convenience and breadth of choice that Argos offers,

we bring customers more of what they need, all in one place.

Our market-leading retail media and data capabilities are powered

by Nectar360 and our world-class Nectar loyalty platform. Together

with a strong coalition of partner brands, they help us really

understand our customers, enabling us to tailor value and rewards.

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

Sainsbury’s Argos Nectar Nectar360

Tu Habitat Smart Charge Sainsbury’s Bank

Next Level Sainsbury’s strategy

Our investment case

Food volume growth

SG&A/sales reduction

Measured reinvestment in the

customer proposition

Profit leverage from sales growth

Delivering profit leverage

from salesgrowth

Robust profitability

Disciplined capital investment

Strong sustained cash flows

and higher return on capital

Sustainable and reliable

cash generation

Strong sustained cash flows

Focused capital allocation

Enhanced shareholder returns

Enhanced returns to shareholders

Discover more about investing in Sainsbury’s

atInvestment case | J Sainsbury plc

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

This last year, every conversation with our

customers, colleagues, farmers and suppliers has

reinforced just how much people are weighing up

every decision they make. Against a backdrop of

increasing pressure on the cost of living and

changing shopping habits, it’s a constant reminder

that we must do everything we possibly can to earn

people’s trust and loyalty.

We are focused on making sure our food is great

value, high quality and sourced in partnership with

farmers and producers. As global uncertainty around

us continues, this must remain our absolute priority.

For 157 years, Sainsbury’s has worked in partnership

across our supply chain to make good food joyful,

accessible and affordable for everyone, every day.

It’s a responsibility we take seriously and one that I

believe will continue to setus apart.

By staying true to this purpose and focusing relentlessly

on what matters most to our customers, we’ve delivered

strong results over the last year. We grew food volumes,

gained market share and performed well in a highly

competitive market. We have also delivered enhanced

cash returns to shareholders through dividends and

share buybacks.

Value customers rely on

When I became Chief Executive five years ago,

customers told us we were too expensive and too

often we were inconsistent. We really listened and

set out a clear plan to put food first and at the heart

of everything we do at Sainsbury’s. We committed to

deliver outstanding value without compromising on

the quality and service customers always expect

from us.

Since then, we’ve invested around £1.3 billion

bringing prices down for customers while continuing

to deliver leading quality, welfare and sustainability.

With household budgets remaining under pressure,

we’ve kept greatvalue very firmly at the centre of our

strategy. That’s why more customers are choosing

products from Aldi Price Match alongside Taste the

Difference in their weekly shop – confident they’re

getting great value on everyday essentials and

quality food for special occasions.

We have a strong

plan powered by a clear

purpose. Good food guides

everything we do and we will

keep using our scale, our

reach and our capabilities to

make good food joyful,

accessible and affordable

for everyone, every day.

Simon Roberts

Chief Executive

Putting good food at

theheart of all we do

This year we took Nectar loyalty to the next level,

rolling out Your Nectar Prices across all supermarket

checkouts, giving more customers access to

personalised savings wherever and however they

shop, while continuing to invest in Aldi Price Match

on the products they buy most often. Together,

Nectar Prices and Your Nectar Prices now help

millions of households save around £450 a year.

Food that’s affordable, accessible

and joyful

We want to inspire more people to enjoy cooking and

eating good food. This means adding more fibre and

flavour to everyday favourites and celebrating fresh,

seasonal cooking that is always tasty, exciting and

accessible. Alongside this, I am proud to say that we

continue to lead on transparency, supporting clearer

food standards and mandatory reporting, so that

customers can make confident, informed decisions

for themselves and their families.

Supporting thousands of communities right across

thecountry is at the core of who we are. Through our

partnership with Comic Relief, we’ve provided more

than 60 million meals since 2022. I’ve seen first-hand

how much this matters, including recently at a local

food club in South London where volunteers told me

that reliable, long-term support makes the biggest

difference. No child or family should go without the

essentials they need to thrive and we’re committed

to playing our part in reducing food poverty across

the UK. This year we have donated £8.7 million through

the partnership with Comic Relief and through Alliance

Food Sourcing we’re working with the retail industry to

find new ways to rescue surplus food in supply chains

and ensure it reaches those that most need it.

Chief Executive’s statement

Financial StatementsStrategic Report Governance Report8 J Sainsbury plc Annual Report and Financial Statements 2026

Farming in partnership

We believe food resilience matters more now than ever

and that’s why our long-term partnerships with farmers

and suppliers are so vital, securing good food for the

future and building a more sustainable UK food system.

This important work starts with understanding the real

challenges our farming partners face. Successive

periods of volatility in an already tough market are

making it harder for farmers to plan, invest and

innovate with confidence.

This March, we announced that we’re further expanding

our long-term partnership model, to create one of the

UK’s most extensive networks of multi-year farming

agreements. More than 2,500 British and Irish farms

will be backed by long-term contracts of between five

and ten years, giving farmers real confidence in what

we will buy from them and the profit they can expect

to make, with a long-term commitment to work

together. This represents over £5billion of committed

investment over the lifespan of these agreements

and will secure 3.1 million tonnes of homegrown

fresh food.

Jobs, skills and opportunity

With around 140,000 colleagues across the UK,

wecreate opportunities in every community we

serve. Iregularly meet colleagues across Sainsbury’s

and Argos who began their career in weekend roles

and now lead teams. Starting work with a weekend

job provides such a positive start to working life and

we are committed to doing all we can to provide

thebest opportunities for young people, including

through the relaunch of our graduate programme

this year.

We continue to prioritise significant investment

incolleague pay because it is the right thing to do,

supporting the wellbeing and success of our people

through competitive rates of pay and a strong

benefits package. We have increased pay for our

hourly paid colleagues by more than 40 per cent in

the last five years and our market leading benefits

include a competitive pension scheme, colleague

share plans, free food during shifts and leading

levelsof colleague discount.

Looking ahead

We continue to deliver strong momentum and

progress through our Next Level plan, building a

Sainsbury’s that is better for today and well placed

for the future. We’re doing this through continuing

to invest in what matters most for our customers,

championing good food by supporting our colleagues

and working in partnership with farmers and suppliers.

This disciplined approach allows us to make balanced

choices, strengthening our business and creating

long term, sustainable value for shareholders.

We are well placed to navigate the challenges of

uncertain global events and the potential for volatility

around us. We have a strong plan powered by a clear

purpose and an experienced and capable leadership

team energised and focused for the yearahead.

A huge thank you to our entire Sainsbury’s team for

their hard work, commitment and care. It’s our team

who make everything we achieve possible and it’s

each and every one of our colleagues who make the

difference, doing the right thing for our customers

every time they shop with us.

Simon Roberts

Chief Executive

22 April 2026

Learn about how we’re bringing more of our range to more customers on page 13

Learn how our long-term agreements

with farmers are helping to deliver our

purpose on page 10

Discover how we’re delivering

outstanding value on page 13

Chief Executive’s statement continued

9 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our purpose in action

We recently announced a renewed commitment to

long-term partnerships with British and Irish farmers,

expanding our long-term partnership model to create

one of the UK’s most extensive networks of multi-year

farming agreements. More than 2,500 farms will be

backed by long-term contracts, representing over

£5billion of committed investment over the lifespan

of these agreements, securing 3.1 million tonnes

ofhomegrown fresh food.

These long-term partnerships are essential to protecting

the future of good food for customers today and for

generations to come, because the only way to secure

more British food and deliver value for customers is

togive farmers certainty over what we’ll buy, at what

price and for how long. Genuine collaboration, shared

ambition and long-term commitment across the system

are essential and customers want to buy produce which

supports farmers across the UK and Ireland.

Read more about how we’re

strengthening the future of good

food in the UK on our website

To keep our business resilient, we need the

confidence to invest in our future. That’s why

long-term partnerships, like the one we have had

with Sainsbury’s for many years, are so important

and vital to securing the future of the food system

and British farming.

Charlie Burgoyne

Dairy farmer,

Holmbush Farm,

whohassupplied

Sainsbury’s milk for

over 15 years

Good food starts here!

At Sainsbury’s we believe good food should be

good quality, well sourced and produced responsibly,

taste delicious and offer great value – something

everyone can enjoy in communities across the UK.

2,500

British and Irish farms

supported with

long‑termagreements

£5bn+

committed investment

in British and Irish agriculture

Good food is something

peopledepend on every day.

Inuncertain times our focus is

on keeping food great value for

customers while giving farmers

the reassurance and certainty

they need to plan ahead.

Simon Roberts

Chief Executive

Supporting UK farming

10 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

We want to inspire people to fall in love with cooking

and eating good food by making it easy, affordable

and taste delicious. This is why we’re passionate about

making sure that everyone can enjoy good food and

have long-supported efforts to help customers eat

well. We have a decades-long heritage of helping

make nutritious food tastier, simpler and easier

foreveryone, from offering more transparency on

product packs by being the first UK supermarket to

introduce traffic light labelling to rewarding customers

who eat well through Nectar challenges.

But we know eating well remains a challenge for

many people. Stretched budgets, busy lives and

conflicting advice all get in the way.

Read more about how we’re resetting our healthy

diets strategy in our Plan for Better report – this

isakey step in helping customers overcome

thesechallenges

Launching new products to

givecustomers convenient and

delicious ways to eat well

As part of our continued focus on food innovation,

every year we launch new products – created in close

collaboration with our expert nutritionists and packed

with the essentials our diets need – to give customers

convenient and tasty ways to eat well.

This year, we launched our new Small But Mighty range.

It features nutrient dense meals, each designed to be

less than 400 kcals, high in protein, asource of fibre

and one of your five a day. Alongside this we’re

launching a selection of High Protein products

including yoghurts, bread and ready meals.

We understand people have

different nutritional needs,

appetites and tastes and that

continues to guide how we develop

our products. From protein packed

breakfasts and ready-to-go lunches to smaller,

nutrient rich meals, our new High Protein and

Smallbut Mighty ranges are designed to offer

people convenient, delicious food that they can

enjoy withconfidence, day in and day out.

James Campbell

Sainsbury’s Director of Fresh Product Innovation

No child or family should go

without the food they need to

thrive. Yet too many parents are

making impossible choices and too

many plates are empty. At Sainsbury’s,

we believe everyone should have access to good

foodand no child should go hungry. Since 2022,

ourpartnership with Comic Relief has helped deliver

millions of meals and vital community support. And

with our renewed commitment, we’re determined

tokeep going, together.

Ruth Cranston

Sainsbury’s Director of Sustainability

For some of us, food and mealtimes

sit at the heart of our happiest

moments, but for so many across

the UK they remain the source of

enormous worry. Comic Relief’s

partnership with Sainsbury’s is focused

on ensuring that no one has to make difficult

choices when it comes to feeding themselves

or their family and that everyone can experience

thecomfort and connection often associated

with good food.

Samir Patel

CEO of Comic Relief

Our purpose in action continued

Our focus is on ensuring no child or family goes

hungry, helping them access the good food they

need to grow – today and for the long-term.

Partnering with the Department for Education on

their free breakfast club programme in October, we

supported up to 180,000 school children across the

UK. The initiative provided 750 early adopter schools

with access to £200 gift cards to help them take their

free breakfast club offer further - increasing their

funding for healthy, affordable and nutritious food.

We also committed to supporting over 570 additional

schools from April 2026 onwards.

Over the festive period, we also raised over £3.9 million

for Comic Relief. This included donating every penny

from the sales of by Sainsbury’s and Free From classic

mince pies in December to provide over five million

meals to families over Winter in 2025/26.

£8.7m

donated to Comic Relief this year

120,000

holiday club places funded with Comic Relief

through the UK Government’s Holiday Activities

andFood (HAF) programme

1,320

schools supported through our partnership with

theDepartment for Education’s breakfast club

programme, reaching 280,000 children

25+ years

of partnership with Comic Relief

Helping our customers find the joy of good food Tackling food poverty in partnership

11 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

We’ve invested to support our customers, our

colleagues, our farmers and our suppliers and we

have sustained our strong competitive position in an

intensely competitive market

. More customers are

trusting us to deliver our winning combination of

value, quality, availability and service. As a result, we

have delivered food volume growth ahead of the

market for the sixth consecutive year, reaching our

highest volume market share in ten years

The underlying profit leverage from this volume

outperformance was offset by investment in our

competitive position and by unusually high levels of

operating cost inflation, only partially mitigated

through the delivery of a further £330 million of

structural cost savings. We delivered Retail free cash

flow of £574 million, ahead of our expectations and

we remain on track to exceed £1.6 billion over the

three-year plan. Whilst maintaining that cash flow

commitment, we’re investing for future growth and

to further strengthen our competitive advantage. We

have also delivered enhanced cash returns to

shareholders, with more than £800 million returned

this year through dividends and share buybacks.

Our progress against the commitments is driven by

four strategic outcomes: First choice for food, Loyalty

everyone loves, More Argos, more often and Save and

invest to win.

Strategy overview

Consistently delivering for customers, colleagues, suppliers

andshareholders

Outcomes What this means

First choice forfood

Read more page 17

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

Across the business, we are focused on delivering the eight

commitments that we made at the launch of Next Level Sainsbury’s:

Reflecting on our progress two years into the plan, our balanced choices helped us make good

progress against these commitments.

12 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Delivering on our outcomes

First choice for food

In a year where we faced an unusually high level

ofexternal cost pressures and a more competitive

market, we were clear that our key objective was to

sustain our strong competitive position and continue

to outperform the market. We delivered on this,

making balanced choices throughout the year to

maintain our strong value position against all key

competitors

and deliver volume outperformance

inevery quarter

Customers trust us to deliver good food and they

relyon our winning combination of value, quality,

availability and service with more and more shoppers

choosing us for their big weekly shop

. We now have

around 1.2 million more big trolley primary customers

than five years ago

and we continue to benefit from

switching gains from competitors across the

wholemarket

Customers want to access more of our food range

inmore locations, and we are investing to grow our

food footprint by rebalancing space towards fresh

food in existing stores and opening new stores in key

target locations. At the same time, we are going

further to amplify the points of difference in our

customer proposition, with a clear focus on

delivering greater personalisation, improving the

shopping experience both in-store and online and

championing fresh food and innovation.

Our brand and heritage in fresh food set us apart.

Ascustomers increasingly look for healthy and

sustainable options, our reputation for fresh,

nutritious, high quality and well sourced food

meanswe are well placed to be first choice for more

customers. Our consistent delivery of great value at

the centre of the plate continues to drive outperformance

versus the market in key fresh food categories

supported by our continued focus on innovation

andquality.

We are using our scale, reach and capabilities to drive

positive change across the food system and are

working closely with farmers and suppliers to

strengthen the supply of good food, help tackle

climate, nature and labour challenges and raise

animal welfare standards. We are expanding our

long-term partnership model so that by 2027 we will

be supporting more than 2,500 British and Irish

farms with long-term contracts. We have committed

to invest more than £5 billion in British and Irish

farming over the coming years.

c.£1.3 billion invested over the last

five years to deliver consistently

great value

Throughout the year, we maintained our strong value

position against all key competitors

, supported by

the biggest Aldi Price Match in the market, more than

10,000 Nectar Price offers every week, personalised

Your Nectar Prices and Nectar Points offers.

Our value investment continues to focus on centre of

the plate items customers buy most often, including

produce, dairy, meat, fish and poultry, with 17 per cent

more centre of the plate Aldi Price Match products

year on year. This consistent approach to value is

resonating strongly with customers and continues to

drive outperformance in fresh food categories

, where

fresh food sales were up eight per cent.

Championing quality, innovation

and fresh food

Our brand heritage and leadership in fresh food set

us apart. Taste the Difference is now the fastest

growing Premium Own Label in the market

, with

sales ahead of our £2 billion target and Fresh food

sales up 16 per cent. More customers are shopping

bigger Taste the Difference baskets more frequently

and 69 per cent of customers shopped both Aldi Price

Match and Taste the Difference in the same trolley

during the year

We launched more than 1,200 new Own Brand

products during the year, around half of which were

Taste the Difference, including our new restaurant

quality Discovery range. We are increasingly helping

customers make healthier choices, with a growing

focus on fibre rich and higher protein diets. Aldi Price

Match now contains at least 75 per cent healthy and

better for you products.

Investing in colleagues and

customer service

Our commitment to customers is underpinned by

our commitment to colleagues. We continue to lead

the market on overall customer satisfaction in

supermarkets

, with improvements across key

metrics including value for money, product range,

quality and availability

We have invested further in colleague wellbeing,

development, pay and benefits, increasing colleague

pay by more than 40 per cent over the last five years

and continue to achieve high colleague

engagementscores.

Expanding our food footprint

Customers want to access more of our food range in

more locations. We are investing to grow our food

footprint by rebalancing space towards food in

existing stores and opening new stores in key

targetlocations.

During the year we opened ten new supermarkets,

including two Co-op conversions and three

Homebase conversions. Sales to date are ahead of

forecast and we continue to expect strong returns.

We also opened 33 new convenience stores, with

some standout stores delivering sales more than 50

per cent ahead of expectations. In the year ahead,

we expect to open around ten new supermarkets and

at least 20 new convenience stores, adding around

0.5 per cent to sales growth in 2026/27.

Alongside this, our three year ‘More for More’ plan

continues to deliver good progress. Over the last two

years we have invested selectively in 70 supermarkets,

reallocating space towards food and enabling

customers to shop more of our range both in-store

and online. Invested stores are performing ahead of

the rest of the estate, delivering two per cent food

volume growth outperformance in the second half

and improving total trading intensity by more than

five per cent. We will invest in a further 30 stores in

the year ahead.

Delivering for customers however

they want to shop with us

Groceries Online sales increased by almost 13 per cent

supported by rapid growth in OnDemand, where

sales rose 69 per cent to more than £700 million and

we now cover 70 per cent of the UK population. We are

improving the digital journey for our customers by

bringing Groceries Online, Chop Chop and SmartShop

into a single coherent app, creating the foundation

for future personalisation and AI led experiences.

Convenience store sales grew three per cent,

supported by outperformance of new space and

invested stores and improved customer satisfaction

across key metrics, including value for money and

product range

13 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Delivering on our outcomes continued

In focus

Taste the Difference

celebrates £2bn milestone

For 25 years, Taste the Difference has redefined

supermarket food, focusing on products grown and

made with extra care, trusted ingredients and fuller

flavour. That promise still stands today, inspiring

customers to discover new favourites and enjoy

restaurant-quality meals at home.

This year, Taste the Difference passed a major

milestone, exceeding £2 billion in annual sales for the

first time – proof that customers want outstanding

quality at prices that still feel affordable prices.

The shift towards dining out at home continues

togather momentum as going out becomes more

expensive. Worldpanel by Numerator suggests that

over half of all grocery spend is on own label and

Taste the Difference is leading the way as the

fastest growing premium range in the market

InOctober 2025, we launched Discovery, a new

premium collection from Taste the Difference to

help customers enjoy more special occasions at

home, with even more choice.

For more than 25 years,

Taste the Difference has

brought quality and

flavour to households,

earning its place as

atrusted favourite

inBritish homes.

Rhian Bartlett

Chief Commercial and Sustainability Officer

All of our

recipes are rooted

back to authentic

flavours, provenance and

quality ingredients. I am

so proud of how Taste the

Difference has evolved

over the decades.

Viresh Singh

Pilgrim’s Food Masters,

Our supplier partner on the development of our

new modern Indian ready meals, part of the new

Taste the Difference Discovery range

Playing a leading role in a

sustainable food system

We are using our scale and influence to strengthen

the supply of good food and drive positive change

across the food system. By early 2027 we will support

more than 2,500 British and Irish farms through long

term partnerships, with more than £5 billion of

committed investment. By the end of 2026, 60 per

cent

of our own brand produce, meat, fish, dairy

and poultry will be sourced through long

termagreements.

Since 2022, our partnership with Comic Relief has

raised more than £26 million, funding over 60 million

meals and supporting more than two million people.

We have also almost doubled the tonnage of edible

surplus food being donated to local communities,

preventing 11,030 tonnes of surplus food going to

waste, a 49 per cent increase year-on-year.

We have refreshed our Plan for Better commitments

for packaging and human rights. Our new packaging

targets reflect rapid regulatory and structural change

in the UK packaging sector, with a focus on improving

recyclability and circularity. We refreshed our Human

Rights Policy and Saliency Assessment and delivered

training to over 100 colleagues and more than

700supplier representatives. We also launched a new

international programme with Comic Relief to help

strengthen climate adaptation, food security and

resilience in sourcing regions most vulnerable to

climate impacts.

Improving performance in the

products and services that sit

alongside our food offer

Elevated style credentials

and stronger availability

delivered six per cent Tu Clothing volume growth, with

clothing sales up 4.8 per cent and online sales growth

of more than 20 per cent. Tu has outperformed the

Clothing market for seven consecutive quarters

Sainsbury’s General Merchandise sales were down

3.2per cent, primarily reflecting expected volume

decline driven by our strategic choice to allocate

more space to food. We now have an easier-to-shop

customers offer with better everyday value and

product availability, alongside higher trading

intensity at a lower cost to serve.

Our Smart Charge proposition also continued to grow

strongly. We now have 661 ultra rapid electric vehicle

charging bays across 80 stores, with five new locations

added during the year. Sales growth of 136 per cent

was driven primarily by very strong like for like growth,

with more customers shopping with Sainsbury’s while

they charge, shopping more often and benefiting from

using Nectar with Smart Charge.

Use the QR code to read more

about this major milestone

14 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Delivering on our outcomes continued

Loyalty everyone loves

Customers can save more than £450 a year with

Nectar, as well as collecting over £170 of Nectar

Points through our well established value proposition

of Nectar Prices, personalised Your Nectar Prices,

Nectar Offers and Nectar Points earned across a

coalition of partners. Nectar participation reached

itshighest ever level during the year, with digital

engagement strengthening in particular, as

customers recognise the benefits of personalised,

rewarding and integrated loyalty and value when

they shop at Sainsbury’s.

The resulting growth of our loyal, primary customer

base is central to the success of the Nectar360 Retail

Media business, which now supports over 900 clients

and media agencies. We are increasingly well placed

to capitalise on the strong forecast growth of Retail

Media in the UK through the high-returning investments

we are making in our capabilities, and we remain ahead

of plan to deliver at least £100 million of incremental

profit over the three years to March 2027.

Since the launch of Nectar Prices in April 2023,

customers have saved more than £5.5 billion. During

the year, customers saved an average of £15.50 on

an£80+ big weekly shop. Your Nectar Prices is now

available across all supermarket checkouts, having

previously been available only through Online and

SmartShop. This expansion has been a key driver of

record Nectar digital engagement, with a 35 per cent

increase in digitally active users

Setting the standard in retail

media and loyalty services

Brands want to work with fewer, high-quality

networks. We are a partner of choice with reputation

for scaled first-party data, omnichannel reach,

sophisticated closed-loop measurement capabilities

and leading client service.

During the year we launched Nectar360 Pollen,

theUK’s most advanced unified Retail Media

platform, connecting audience insight, planning,

activation, optimisation and measurement in

asingle, easy-to-use platform that facilitates

omnichannel advertising in-store, onsite and offsite.

Client onboarding is well underway, particularly

among our largest grocery suppliers, with excellent

early feedback on the intuitive and forward-thinking

nature of the platform. Clients are benefiting from

real-time audience building AI tools, efficiency gains

from a more streamlined creative compliance process

and market-leading measurement tools that enable

clearer ROI tracking and smarter decision making.

Our connected digital screen network now consists

ofalmost 3,000 screens in supermarkets and

convenience stores, with plans to install a further

3,000 screens during the next year. We are continuing

to develop our Retail Media capabilities, including

exploring further opportunities within SmartShop.

We are also growing the Nectar Coalition, launching

partnerships with Marriott Bonvoy, FareShare and

Deliveroo, alongside reward partnerships with Uber

and Uber Eats, broadening the range of rewards

available to customers and strengthening the

everyday relevance of Nectar.

Personalised value at every

Sainsbury’s checkout

Around 8.5 million more customers can now

accesspersonalised savings when they shop in

oursupermarkets. In July 2025, we rolled out Your

Nectar Prices across all Sainsbury’s supermarket tills

nationwide, taking tailored offers beyond digital

channels so customers can benefit wherever and

however they choose to shop.

How do Your Nectar Prices work?

Your Nectar Prices give customers personalised

discounts on the things they love to buy each week,

chosen just for them based on how they shop at

Sainsbury’s. The more you shop with us, the more

relevant these offers are.

Customers are increasingly trusting us for great

valueon the products that matter most to them,

which is creating greater loyalty and even more

bigtrolley shops – contributing to our ambition

tobecome Firstchoice for food.

In focus

What really sets us apart is

our investment in making

loyalty personal. Shoppers

want to feel recognised and

rewarded and while Nectar

Prices are for everyone, we

know our customers love an

offer that is made just for

them. That’s exactly what

Your Nectar Prices delivers

– it’s about giving

customers those extra

savings on the products

they love and buy most.

Mark Given

Chief Technology, Marketing and Data Officer

I’m really impressed by

how tailored it is to me.”

I know it’s a cliché, but it

makes me feel special.”

£450

annual customer savings

with Nectar

35%

increase in digital

active Nectar users

following this roll‑out

What are customers saying?

15 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Delivering on our outcomes continued

More Argos, more often

We have taken determined action to accelerate the

transformation of Argos, balancing our objective to

improve the customer proposition with structural cost

reduction and greater efficiency in our supply chain.

We continue to invest in strategic initiatives to

strengthen choice, availability and service for

customers and to build a stronger digital proposition,

alongside the launch of Argos Pay, our new flexible

financial services offer. Customer satisfaction

regarding value and range

and brand consideration

both improved

during the year, helping to deliver

growth in customer numbers and volumes. In a highly

competitive and subdued general merchandise

market, this volume growth was largely offset by

pricing pressure and a higher participation of lower

ticket items.

We have also established a dedicated Argos

management team to help accelerate the pace of

change and drive cost reduction, supporting

investments in infrastructure and technology

platforms for Argos.

Encouraging volume performance

offset by lower average selling price

Argos sales increased by 0.7 per cent in the year.

Astrong summer performance was offset by more

subdued consumer spending over the peak Black Friday

and Christmas period. Sales volumes increased by

3.7per cent, driven by higher customer numbers and

bigger baskets but this was largely offset by a three

per cent decline in average selling price, reflecting

competitive pricing pressure and higher participation

oflower ticket items.

Profits were broadly in line with last year, with

thebenefit from higher volumes and operating cost

savings offset by lower Average Selling Price (ASP),

higher cost of driving online traffic and higher wage

inflation. Profits increased year on year in the

firsthalf, reflecting strong Summer seasonal

volume growth but declined in the peak third quarter,

impacted by lower ASP.

Expanding breadth and depth

ofranges

We continued to expand the breadth and depth

ofour ranges to improve customer choice and

relevance. During the year, we added 13,000 new

Supplier Direct Fulfilled products, with a particular

focus on Beauty, Toys and Electricals, driving strong

sales growth. The planned launch of a marketplace

inthe year ahead will further expand choice

forcustomers.

At the same time, we are simplifying and

strengthening our own brand offer by rationalising

Argos owned private label brands from 27 to seven

core brands. The relaunch of Chad Valley and our

design led collaborations within Habitat delivered

positive market share performances across toys and

homewares

, with a 21 per cent improvement in sales

growth in Chad Valley following relaunch.

Investing in efficiency, digital

capabilities and services

We continued to invest in digital capabilities and

added value services to support growth in a highly

competitive digital market. Improvements to the

Argos app are delivering personalised recommendations,

app-only offers and a smoother account set up and

purchasing journey. These changes supported higher

conversion and increased visits, with app visits up

24per cent year on year.

During the year we launched Argos Pay, a flexible

credit solution in partnership with NewDay.

We also delivered significant cost savings across

stores, depots and warehouses, supported by

investments in AI and automation to improve vehicle

routing, stock management and customer targeting.

We are streamlining and modernising our store

estate by right sizing standalone stores, improving

signage and technology in Argos stores within

Sainsbury’s, and opening new collection points,

helping to improve efficiency while maintaining

Argos’ market leading convenience for customers.

In focus

Introducing Nectar360

Pollen: a simpler, smarter

way for brands to connect

with customers

Retail media is changing the way brands connect

with shoppers, bringing together digital and

in-store experiences and reaching customers when

they are most likely to act.

In the Autumn, we launched Nectar360 Pollen

(Pollen): a game-changing retail media platform

designed to make it simpler for brands to reach

customers in more meaningful, relevant ways.

Pollen brings campaign planning, activation, and

measurement into one place. From real-time

creative optimisation to intelligent audience

building, it uses generative AI to accelerate

campaign activation and effectiveness.

Using Sainsbury’s first-party Nectar insight, it helps

brands understand what’s working and optimises

campaigns while they are live. It connects media

across stores and online, giving a transparent view

of performance and impact.

Nectar360 has delivered

agenuinely

user-experience-first

platform, seamlessly

bringing together its suite

of media capabilities with

generative AI and

sophisticated real-time

multi-touch attribution.

Having all of this in one

platform is transformative

for marketers.

Charlotte Murphy

Head of Retail Media at Unilever

and one of our first clients to test

andfeedintotheuser experience

ofNectar360Pollen

16 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Save and invest to win

As we enter the final year of our Next Level plan, we

remain on track to deliver £1 billion of cost savings,

having delivered around £680 million since February

2024 and nearly £2 billion over the past five years.

Our savings programme helped us sustain the

strength of our competitive position in a year in

which we navigated high levels of operating cost

inflation, including significantly higher National

Insurance costs and the introduction of the Extended

Producer Responsibility scheme. We continue to

invest to improve colleague safety, enhance loss

prevention measures and accelerate the use of

technology to drive efficiency, resilience and

sustainable long-term value creation.

Technology and automation investments are

improving availability, reducing waste and driving

efficiency. SmartShop is now available in the

majority of supermarkets, machine learning

forecasting is embedded across all food products

and we have launched an AI Centre of Excellence to

drive responsible, scalable and value led adoption of

AI. These tools are improving colleague productivity,

customer service and supply chain optimisation,

enabling colleagues to focus more time on

customer-facing and value-adding work.

We are taking a targeted, data-led approach to

strengthening colleague and customer safety and

improving loss prevention. Trials of facial recognition

technology with Facewatch in two stores showed an

almost 50 per cent reduction in logged incidents and

more than 90 per cent of identified offenders not

returning, with the technology extended to additional

London stores and plans to introduce the technology

in more stores nationwide. We continue to additionally

invest in targeted shrink measures, including

self-checkout video analytics and enhanced

shelf-edge protection in convenience stores.

In April 2026, we announced a new partnership with

NatWest to provide loans, savings products and a

new NatWest Nectar credit card, with products

expected to be available in the second half of 2026.

We expect to complete the final stage of the bank

exit and surrender the banking licence by July 2026.

Net proceeds from the bank exit enabled the

returnof £300 million to shareholders, with a further

£100 million to be returned through incremental

share buybacks in 2026/27.

The operating profit outcome was breakeven,

representing a £22 million improvement versus the

prior year, supported by cost reduction measures

and effective treasury management.

Delivering on our outcomes continued

We are also simplifying the business to deliver

sustainable cost savings. Changes to in store

operations have reallocated 170,000 square feet of

space to improved food ranges, delivering nearly

£50million of savings. We are continuing to automate

our logistics operations, including at Argos’ Daventry

warehouse, and have introduced automated mobile

robots at our Northampton site, driving greater

efficiency and capacity and supporting long term

value creation.

Financial Services

We are creating a simpler, more focused Financial

Services model, fully integrated into our retail

business. As a result, following completion of the exit

from core banking, Financial Services will no longer

be reported as a separate operating segment. The

ongoing Financial Services contribution will be

generated from Argos Care, commission income

from Insurance, Travel Money, ATMs and white label

banking products, alongside income from the

NewDay Argos Pay partnership.

We continue to make good progress with our plan

toexit core banking services and streamline the

Financial Services proposition. In June 2024, we

announced the sale of Sainsbury’s Bank personal

loan, credit card and retail deposit portfolios to

NatWest Group, with the successful migration of

customers completed across October and

November2025.

In September 2024, we announced the sale of the

ATM business to NoteMachine, which completed

inMay 2025.

In October 2024, we announced the sale of the Argos

store card portfolio to NewDay and the launch of a

new partnership to create an Argos-branded digital

credit proposition. Argos Pay went live in February

2026, with the migration of existing customers

expected to complete during 2026/27.

In July 2025, we agreed an arrangement with

AllianzUK for car and home insurance, which

completed in August 2025 and agreed the sale of

theTravel Money business to Fexco Group, which

completed in January 2026.

a) Value Reality, February 2026 vs February 2025; Acuity,

internal modelling

b) Worldpanel by Numerator Panel (Kantar), Universe: City read

Grocery, Volume market share, 2016/17 to 2025/26, 52 weeks

to 1 March 2026

c) Worldpanel by Numerator Panel (Kantar), Total FMCG exc.

Kiosk & Tobacco, Volume growth YoY, Total Market and

Sainsbury’s, 2025/26 quarters

d) Worldpanel by Numerator Panel (Kantar), Total Fresh &

Grocery exc. Kiosk & Tobacco, Main Shop Buyers, 52 weeks to

1 March 2026

e) Worldpanel by Numerator Panel (Kantar), Total Fresh &

Grocery exc. Kiosk & Tobacco, Primary shopper number

growth (actual) 2020/21 to 2025/26, 52 weeks to 22 February

2026. Primary shopper is defined as any shopper who

bought 40% or more of their groceries at particular retailer

within the time period indicated

f) Worldpanel by Numerator Panel (Kantar), Total Fresh &

Grocery exc. Kiosk & Tobacco, Retailer to/from Volume net

switching gains/losses, 52 weeks to 22 February 2026

g) NielsenIQ EPOS, Total FMCG excl. Kiosk & Tobacco, Fresh

categories (Sainsburys defined category hierarchy) volume

growth YoY, 52 weeks to 28 February 2026

h) Worldpanel by Numerator Panel (Kantar), Total Fresh & Grocery

exc. Kiosk & Tobacco, Premium Own Label tier (excl. Premium

Plus tier), Volume growth YoY, 52 weeks to 1 March 2026

i) Worldpanel by Numerator Panel (Kantar), Total Fresh &

Grocery exc.Kiosk, Premium Own Label tier (excl. Premium

Plus tier), Basket size – number of Taste the Difference items

per basket, Frequency and Buyers YoY growth, 52 weeks to

1st March 2026

j) Nectar / Groceries Online customers shopping both Aldi Price

Match and Taste the Difference at least once during 2025/26

k) CSAT Supermarket Competitor Benchmarking data – Overall

Supermarket Satisfaction 2025/26 vs full-choice grocers and

2025/26 vs 2024/25 year-on-year improvement in key

metrics: value for money, product range, quality and

availability. Note: March 2025 data unavailable

l) Groceries Online includes sales through Sainsburys.co.uk

and sales through OnDemand channels serviced by

supermarket and convenience locations

m) CSAT Convenience Competitor Benchmarking data –2025/26 vs

2024/25 year-on-year improvement in key metrics: value for

money and product range. Note: March 2025 data unavailable

n) Based on Cost Of Goods Sold (COGS) from suppliers (Dairy,

Meat, Fish, Poultry, Produce) with minimum five year

long-term agreements in place or planned, divided by total

COGS of these categories

o) Brand Tracking – Style (H2 2025/26 vs H2 2024/25)

p) Worldpanel by Numerator Panel (Kantar), Total Clothing,

Footwear and Accessories. YoY retailer spend growth vs the

market – from 12 weeks to 23 June 2024 to 12 weeks to

1March 2026

q) Increase in digitally active Nectar users February 2026

vsFebruary 2025

r) Argos CSAT Survey – value for money and product range

– February 2025/26 vs February 2024/25

s) YouGov Brand Tracking – Consideration – YoY improvement,

2025/26 vs 2024/25

t) GFK (Home) & Circana (Toys) market share data, 12 months

to the end of February 2026

17 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Key performance indicators

Operational

Plan for Better commitment

Definition

Key sustainability focus areas across GHG emissions,

plastic packaging, food waste and healthy and

sustainable diets.

2025/26

2024/25

2023/24

2022/23

2021/22

2025/26

2024/25*

2023/24*

2022/23

2021/22

2025/26

2024/25

2023/24

2022/23

2021/22

Food volume growth (%)

Ahead of the market

Definition

Growth in Sainsbury’s Grocery volume market share

over 52 weeks as measured by Kantar.

+46 bps

vs 2023/24 base

Customer satisfaction

(score)

Definition

The percentage of ‘highly satisfied’ answers out of

the

total sample in response to the following question:

“Based on your most recent visit or online order to

thisSainsbury’s,

how satisfied were you with your

overall experience?”

(60) bps

vs 2023/24 base

Colleague engagement

(score)

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”.

Maintained

vs 2023/24 base

Reason

Measures our success in becoming the first choice

forfood for more customers and a key driver of

operating leverage.

Reason

Measures performance on key drivers of customer

satisfaction, helping us gauge whether we are making

the right balanced choices.

Reason

Measures colleague motivation and satisfaction,

recognising that our colleagues are crucial to our

success as we build a right-sized organisation set up

to win.

12.22

12.21

12.48

12.82

12.94

Carbon Scope 1 and 2 – ahead of SBTi 1.5 °C

trajectory to be net zero by 2035

Carbon Scope 3 – achieved 2025/26 targets

forsuppliers with any SBTi 1.5 °C

targetsapproved

Plastic – missed 2025 CY target for plastic

packaging reduction

Food waste – on track for 50% reduction by 2030

Healthy and sustainable diets – missed 2025/26

target for Healthy and Better for you sales tonnage

Reason

Measures progress against our Plan for Better to

support a resilient and sustainable food system in

the UK.

In the absence of targets aligned to Next Level

Sainsbury’s, assessment is based on progress

towards either interim or long-term targets.

* Kantar universe restated data. 2021/22 data from the previous programme; adjusted to align

with current methodology.

18 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Financial

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 206

forreconciliation.

+60 bps

vs 2023/24 base

Reason

Vital to ensuring that our investments in food

space,technology and efficiency generate strong

long-term returns.

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 204 for reconciliation.

£1,105 million

cumulative cash

Reason

Measures whether we are balancing the need to

invest in the business while also delivering strong

cash returns for shareholders.

Profit leverage from sales

growth (%)

Retail underlying operating margin

versus 2023/24 base

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.

(6) bps

vs 2023/24 base

Reason

Measures whether our volume growth and cost

savings delivery are converting sales growth into

stronger profit delivery.

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.

£680 million

cumulative savings

Reason

Recognises cost savings are a vital source of fuel to

reinvest in value, quality and service by creating a

more efficient, automated and simplified business.

2025/26

2024/25

2023/24

2022/23

2021/22

2025/26

2024/25

2023/24

2022/23

2021/22

2025/26

2024/25

2023/24

2022/23

2021/22

2025/26

2024/25

2023/24

2022/23

2021/22

Key performance indicators continued

553

363

347

349

331

503

645

639

531

574

8.4

7.6

8.3

9.0

8.9

19 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our people and culture

Developing an inclusive culture

Our vision is to be the most trusted

retailer, where people love to work

andshop. That means developing and

growing our talent and maximising

the creativity and diversity of

colleagues in an environment

whereeveryone can thrive.

Our colleagues are integral to delivering our Next

Level Sainsbury’s strategy and we are committed to

creating a truly inclusive workplace where everyone

is treated fairly and with respect and supported to

grow their skills and realise 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 is expected of them to enhance

thecolleague and customer experience. Our valued behaviours are reflected in policies, incentive and

recognition schemes such as ‘Love It’ and decision-making to help us embed our desired culture.

Aligned with our valued behaviours, we have set performance expectations for our colleagues and defined

leadership expectations for our leaders to role model. These provide a framework for everyone to understand

how delivery in their roles translates into performance. These expectations underpin our approach to

managing and incentivising performance and supporting career and development conversations.

• 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

Own It

Human

Make It

Better

Investing in colleagues

Our colleagues are the beating heart of our business and

we believe that happy, healthy and engaged colleagues

deliver great customer service. To support our frontline

customer-facing colleagues, we rewarded their

exceptional contribution with an above inflation pay rise

earlier this year. We have increased pay by 42 per cent

in the last five years, reflecting our commitment

tosupport colleagues’ wellbeing and success with

competitive rates and a strong benefits package.

We offer a competitive pension scheme contributing

up to 7.5 per cent of salary and colleagues also benefit

from support on their everyday spending through

our uncapped colleague discount. We offer 10 per

cent discount at Sainsbury’s and Argos all year

round, with discount increasing to 15 per cent at

Sainsbury’s every Friday and Saturday, alongside

additional discount uplifts at key moments such as

Easter and Christmas. This year we celebrated our

Christmas peak period by giving colleagues a

£10voucher towards their festive shopping.

We continue to provide practical, day-to-day support

for colleagues across our operations, including free

food for store and depot colleagues during their

shifts and free sanitary products for colleagues

across all our locations.

All colleagues have the opportunity to become

shareholders in Sainsbury’s through our Sharesave

and Share Purchase Plan. To further support financial

resilience, we partner with Salary Finance, giving

colleagues greater flexibility to access a proportion

of 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.

In addition, we continue to make an annual

contribution to GroceryAid, a charity that supports

grocery workers across a range of areas, including

financial support.

20 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

leaders and ethnic minority future leaders. During

the last financial year, ten colleagues from different

levels of the organisation participated in these

programmes, supporting our commitment to

building a leadership team that reflects the

communities we serve.

Health, safety and wellbeing

Alongside our focus on development and growth,

weare equally committed to ensuring that colleagues

are safe, supported and able to perform at their best.

The health, safety and wellbeing of our colleagues and

customers is a fundamental priority and is central

toour Safer and Healthier Sainsbury’s strategy.

Thisstrategy strengthens our proactive approach

tomanaging risk and ensures clear oversight of our

key controls, which are now monitored and assured

through our Group Safety Committee.

We continue to respond to rising retail crime through

a combination of preventative measures, including

strengthening local communication, enhancing

colleague training and development and trialling

new solutions. In September 2025, we trialled facial

recognition technology with Facewatch in two of our

stores to help keep our colleagues and customers

safe. The results were encouraging, with a 46 per

cent reduction in logged incidents of theft, harm

andaggression and anti-social behaviour and

92percent of offenders did not return to our stores.

Due to the success of the trial, in January 2026, we

extended thetechnology to five additional London

supermarkets and as the rollout to more stores

progresses, we will continue to learn from it and

refine our approach as we go.

Our independent Health and Safety team

providesspecialist support across all areas of the

organisation, using risk mapping and data insight

toidentify sites needing targeted intervention,

maintain strong compliance and reduce harm.

Thisyear, we achieved a 13 per cent reduction in

accidents and incidents and a 31 per cent reduction

in major recoverable incidents, driven by a number

oftargeted interventions introduced by the Health

and Safety team. This performance significantly

exceeded our targets.

Ensuring our

colleagues stay

healthy, safe and

well is fundamental

to our people centred

approach to business.

Tracey Clements

Chief Retail, Logistics and Supply Chain Officer

andOperating Board Sponsor for Wellbeing

As part of the Safer and Healthier Sainsbury’s

strategy, we are broadening our focus on colleague

health through proactive measurement and

management of psychosocial risk, musculoskeletal

health and occupational disease. This work builds on

regulatory expectations and emerging best practice,

strengthening our preventative approach and

long-term health outcomes.

We maintain strong governance processes, with

regular Board and union engagement, supported by

a well-established Primary Authority partnership

across health, food, fire and petroleum safety. These

relationships ensure continued regulatory alignment

and confidence.

Supporting the wellbeing of our colleagues is equally

important to us. Our holistic wellbeing approach

isembedded into every aspect of our employees’

experience and is underpinned by our three pillars:

mental, physical and financial wellbeing. We have

adedicated Wellbeing team which is responsible for

developing and driving our wellbeing strategy, which

is overseen by our Wellbeing Steering Committee

and Tracey Clements, Operating Board Sponsor for

Wellbeing. Our network of colleague Wellbeing

Champions plays a vital role in promoting awareness

of available help and support and ensuring colleague

voices are heard across the organisation.

We aim to ensure that every colleague will have

access to mental, physical and financial health

andwellbeing support that enables them to make

positive and proactive choices, to thrive in all aspects

of life. We offer a range of wellbeing programmes,

initiatives and education, such as our partnerships

with the Employee Assistance Programme, Salary

Finance, Wellhub and Wellbeing pages on our intranet.

Our Mental Health Policy affirms our commitment

toproviding a working environment which supports

and respects colleagues experiencing mental health

problems, including access to line manager support,

workplace adjustments, occupational health and the

Employee Assistance Programme where required.

97per cent of line managers completed our Mental

Health Awareness training, strengthening their

capability to support our colleagues’ mental wellbeing.

Our people and culture continued

Opportunities to develop and grow

We offer a wide variety of development programmes

and opportunities for colleagues at every stage of their

career. These include personal development toolkits,

apprenticeships, graduate programmes and leadership

programmes including Leading@Sainsbury’s. Colleagues

also have access to a comprehensive learning platform

which hosts mandatory training, online courses and

range of personal development courses.

Over the last year, we have upskilled retail colleagues

across a series of core skills to better serve our

customers, enabled by simplified learning that

prioritises on the job learning. Within six months,

thepercentage of colleagues with all four core skills

had increased from 6 per cent to 39 per cent, unlocking

flexibility and capability across the shop floor. Through

this multiskilling initiative, colleagues have more

earning potential, with the number of colleagues

regularly completing overtime up 25 per cent. We have

developed 605 colleagues into first line manager

roles via our Retail Trainee Manager Programme,

strengthening our internal talent pipeline and

supporting progression from within. For our existing

managers, we ran a Retail Leadership Capability

Programme, with over 11,000 retail managers

completing upskilling in Leading Change, Inclusive

Leadership and Planning andPrioritisation.

We have also significantly strengthened our

corporate capability to deliver human centred change

at scale. Through our Leading Change upskilling

programmes, more than 1,000 leaders across retail

and our store support centres built the confidence

and capability to anticipate and address resistance to

change, accelerate adoption, improve consistency of

outcomes and enhance the experience of change for

our colleagues. Alongside this, we evolved the role of

our Make It Better Together representatives, enabling

over 80 Change Champions to actively role model

change and support their functions as early adopters.

Together, these investments have materially

improved our ability to land change with greater

pace, empathy and impact across the organisation.

In January 2026, we opened applications for a new

graduate programme, FutureMaker, designed to

support early career professionals in developing

theessential skills all future retail leaders will need.

Thetwo-year programme provides experience at the

heart of Sainsbury’s, developing critical skills in four

key areas identified as the skills shaping the future

of retail: digital and AI; data and analytics; change

and transformation; and business decision-making.

Our leadership offer provides the opportunity to

participate in a range of development programmes,

including coaching designed to support colleagues

to build both functional and leadership skills and

capabilities. To strengthen a diverse leadership and

talent pipeline, we provide opportunities for our

diverse talent to participate in programmes

delivered by Diversity in Retail for women future

21 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our people and culture continued

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 Financial Officer.

This year, the EnAble network hosted a Disability Week which focused on how line managers can support colleagues with disabilities

andlong-term chronic conditions, including those with neurodiverse conditions, and focused on celebrating the successes of those living

with disabilities.

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 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. A particular highlight was an event called Courage as a Collective in Race

Equality Week which focused on how everyone can take responsibility for ensuring racial equality in the workplace.

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.

This year, as well as a four-week-long celebration of International Women’s Day which highlighted the inspirational career stories of

leading women at Sainsbury’s and in the grocery industry, the network was instrumental in the implementation of the Little Book of

Women’s Health and the Women’s Health Series.

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 Technology, Marketing

and Data Officer.

This year, the Proud@Sainsbury’s team and allies were a visible presence at more than 30 Pride events across the country, including

UKBlack Pride, emphasising the importance of allyship and cross-organisational working. They also continued to mark 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, Retail, Omnichannel and Logistics

Transformation Director.

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, during which it was instrumental in the launch of the Carer’s Passport, including a video and a guide which help

managers and colleagues to use the Carer’s Passport well.

Health, safety and wellbeing

continued

We have also empowered our colleagues to work

differently in ways that support both performance

and wellbeing. The launch of our Next Level Ways

ofWorking initiative marked a significant step

forwardin how we operate across our store support

centre. The initiative has four clear pillars: Customer

Closeness, Outcome-Based Working, Smart Weeks,

and Meaningful Meetings – designed to maximise

performance, productivity and flexibility.

Smart Weeks provide colleagues with greater

flexibility in how they structure their working time,

recognising that workload and personal commitments

vary across the year, while continuing to meet

theneeds of a seven-days-a-week business. By

embedding these principles, we have empowered

every store support centre colleague to work more

flexibly, connect more closely with customers across

our 40 store hubs and three store support centres, and

ensure our meetings are purposeful and productive.

This approach supports a thriving workplace culture

while strengthening our ability to deliver for customers

and frontline colleagues.

Colleagues who told us they feel

comfortable being themselves at work

79%

(We’re Listening, August 2025)

Rated

Tier 1

in the 2025 CCLA Mental Health benchmark – the

first and only food retailer to achieve this ranking

two years in a row

22 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Total colleagues

Women (68,707) 49.4%

Men (70,380) 50.6%

2028 target: 50% women 2028 target: 15% ethnically diverse

Diversity and inclusion targets

Senior leadership positions (the top 180 leaders)

2025/26 2025/26

43.2% 7.7%

2024/25 2024/25

48.4% 8.9%

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)

2025/26 2025/26

41.4% 12.5%

2024/25 2024/25

41.4% 11.7%

2 Excluding Bank and Asia colleagues.

Building a diverse

workforce is our best way

of representing and serving

our communities across the UK.

We’recommitted to ensuring that we

represent our customers today and

meet the needs of our customers

tomorrow in the most relevant

andengaging ways.

Graham Biggart

Managing Director Argos and Chief Strategy Officer

Diversity, equity and inclusion

Our diversity, equity and inclusion (DEI) strategy,

aligned to Sainsbury’s purpose, is focused on embedding

inclusion and equity into how we work and creating an

environment that reflects the communities we serve. We

build inclusive practice into our talent and performance

processes from the point a colleague joins us, including

new Inclusion training at onboarding, which encourages

everyone to be comfortable being themselves at work

and emphasises the importance of supporting one

another. We’ve identified a number of moments that

matter across the colleague lifecycle where we’re

ensuring that managers know the importance of

inclusion and equity when evaluating performance.

We listen closely to colleague feedback through our

annual engagement survey, regular pulse surveys

and ongoing listening, using these insights to drive

action at team level and continuously improve the

colleague experience.

We continue to concentrate on equal representation

and transparency across the business, and this year

marks our ninth gender pay gap report and the sixth

year of voluntarily reporting on our ethnically diverse

pay gap. In our most recent report, our mean gender

pay gap decreased further from 7.5 per cent to 6.6 per

cent in favour of men, while our median gender pay

gap has increased from 6.1 per cent to 6.5 per cent. This

pay gap continues to exist due to more senior positions

held by men, and men occupying a greater number

of certain hourly paid roles that attract a premium.

Our mean ethnicity pay gap has decreased by

0.1percent to -3.3 per cent, and the median ethnicity

pay gap has grown by 0.2 per cent to -6.0 per cent,

meaning the gap favours our ethnically diverse

colleagues. Although all retail hourly paid colleagues

receive the same base rate of pay, stores in London

attract a location premium which drives this outcome.

Ethnically diverse retail hourly paid colleagues are

significantly more likely to work in London stores,

with around 48 per cent based there compared to

only 7 per cent of White hourly paid colleagues.

As we continue to navigate organisational change, our

focus remains on improving diverse representation at

all levels of the business. We have a stretching ambition

to achieve 50 per cent women and 15 per cent ethnically

diverse representation at senior levels by 2028. These

targets, covering the period from 2024 to 2028, were

informed by a detailed analysis of our workforce

demographics alongside national benchmarks,

ensuring they are both ambitious and relevant to

ourbusiness context. Progress against these targets

is setout on on the graphs on the left of this page.

Each division receives a quarterly update of progress

against these targets, allowing our People partners

to work closely with their business leaders in order

toensure that they keep a focus on building a talent

pipeline that supports our inclusive ambitions.

We are committed to being an inclusive employer

with diverse representation at all levels of our

business. Senior managers involved in recruitment

are trained to make inclusive decisions and actively

manage bias throughout the process. Our recruitment

dashboard enables us to assess how effectively we

attract diverse talent across our store support centre,

retail and logistics roles, and to identify any adverse

impact within the recruitment process. Using these

insights, we work closely with our Talent partners

across the business to agree and implement targeted

interventions that support our inclusivity objectives.

We are proud that our diversity, equity and inclusion

initiatives have been recognised at a national level,

being recognised as a ‘Leading Edge’ employer in the

Women in Hospitality & Leisure/Diversity in Retail

Inclusion Maturity Curve and scoring 7.2 against an

industry average of 4.8 in the Diversity in Grocery

Maturity Model.

Further information can be found in the Better for

everyone section of our corporate website and

inourGender and Ethnicity Pay Report at

https://corporate.sainsburys.co.uk/

Our people and culture continued

23 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Engaging with our stakeholders

Why they matter

Customers trust us to deliver good food and they rely

on our winning combination of great value, outstanding

quality, excellent availability and leading service.

Their insight shapes a great value, high quality and

innovative food-led offer that delivers for more

households and is central to our ambition to be first

choice for food. Engaging with our customers is

fundamental to everything we do and crucial to our

purpose as a business. By listening to what matters

most and responding with care, we’re able to create

more personalised, meaningful experiences, build

trust and strengthen loyalty. By responding to our

customer needs we ensure our products and services

continue to meet evolving desires and needs, both

today and in the future.

What matters to them

• Value

• Availability

• Service

• Product quality and range

• Convenience and location

• More range in more locations

• Channel mix including On Demand

• Speed of Groceries Online delivery

• Responsible sourcing and sustainability

• Commitment to ethical business practices

• Minimising food waste

How we engaged

We engaged with our customers through a range

ofchannels, helping us to improve our products and

services. Through our customer satisfaction surveys,

we collected customer feedback across Sainsbury’s,

Tu and Argos. To provide a view of changing behaviours,

loyalty drivers and sentiment we used Nectar data,

customer analytics and brand tracking, along

withfocus groups and product panels to test new

initiatives. Social media monitoring highlighted

emerging needs and concerns in real time to

enableus to respond to customer needs quickly.

The Board’s decisions are guided by our purpose,

culture and values, with a clear focus on the

long-term success of the Group. In making decisions,

the Board considers the benefits and risks involved,

the financial implications for the business, and the

impact on those who are connected to Sainsbury’s.

The Board believes that understanding our stakeholders,

and what matters most to them, is fundamental

todelivering sustainable performance over

thelongterm.

The Group’s key stakeholder groups are identified

below, with details of the engagement that the Group

has undertaken during the year. Further information

on how the Directors have had regard to stakeholder

interests and examples of how feedback from this

engagement has informed decision-making and

actions taken by the Board when carrying out their

duties are set out in the section 172 statement in the

Governance report on page 64 of this Annual Report.

Engagement outcomes

Customer insight guided improvements across value,

quality and the shopping experience. We strengthened

our value offer through Nectar Prices and focused

price investment, refreshed and expanded our fresh

food and own brand ranges and improved availability

through the year, including our best ever Christmas

availability. Customer insights led to the development

of more than 1,200 new Own Brand products during

the year, of which around 50 per cent were Taste the

Difference. Our store refit programme created additional

space which enabled us to bring a greater product

range to customers. As well as the expansion of our

Taste the Difference Discovery range, we rolled out

our Discovery Meal Deals to meet customer demand

for modern Indian and comfort food and, in response

to growing consumer demand, we introduced a new

range of high protein and nutrient-rich meals. We

strengthened our value proposition across the year

with the biggest Aldi Price Match in the market, more

than 10,000 Nectar Price offers every week, personalised

Your Nectar Prices and Nectar points offers.

We enhanced digital journeys across Sainsbury’s

andArgos, helping more customers shop with us

inthe way that suits them best. We have 24 million

active Nectar users and this year we have seen Nectar

digital engagement reaching record highs as more

customers access both weekly bonus points and

personalised pricing through the Nectar app. This

year, over two thirds of UK retail shoppers shopped

with Sainsbury’s with more customers choosing

Sainsbury’s for their big trolley shops. We’re also

attracting a younger demographic as well as more

families. In Argos, we added 13,000 new supplier

direct fulfilled products to our range and now have

19.6 million active Argos customers.

Customers

Section 172 statement

The Directors have had regard to their duties

under section 172 of the Companies Act 2006

throughout the year. The Board considers the

long-term consequences of its decisions and

theinterests of the Group’s key stakeholders,

inpromoting the long-term success of the

Company. The Board reviews stakeholder

engagement mechanisms regularly and ensures

that stakeholder perspectives are understood

andtaken into account in Board discussions

anddecision-making.

Further details of stakeholder engagement,

sustainability matters, risk management and

theBoard’s governance and decision-making

framework are set out on pages 30 to 33, 40 to 47,

59 to 65 and 71 to 72 of this Annual Report

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Trialling facial recognition technology

The safety and wellbeing of our colleagues, and

thosewho work and shop with us, is paramount.

When colleagues tell us they’re worried about their

physical safety, we have a responsibility to act. A safe

environment for colleagues helps ensure customers

feel safe too – no one should feel at risk simply going

about their day. In September, we began trialling

facial recognition technology in two of our stores.

Early results showed a reduction in logged incidents

of almost 50 per cent, with over 90 per cent of

identified offenders not returning. In January we

extended the technology to five further London

stores. This expansion is intentional and transparent.

It helps us understand how facial recognition works

when several stores in the same area adopt it at the

same time, while giving colleagues and customers

confidence in how it’s being introduced.

Read more online at We must put safety first

inour stores | J Sainsbury plc

Moving to 33 Charterhouse

In 2025, we moved our head office to 33 Charterhouse

Street, a space designed to support inclusive ways of

working, collaboration and sustainability. Colleagues

were engaged early to support a smooth transition

and embed our ways of working, with strong senior

leadership sponsorship throughout. Colleague

feedback helped ensure the office works for a

diverse workforce and enables different working

styles and needs. Features include quiet areas such

as a library space, accessible toilets across multiple

floors, a dedicated contemplation room for prayer

and reflection, standing desks on every floor and

‘toilets for all’. Feedback was acted on through a

clear ‘you said, we did’ approach, contributing to

increased attendance, reduced booking no-shows

and positive colleague feedback

Why they matter

Our colleagues include everyone who is employed

bythe business. They bring our purpose to life and

play a vital role in delivering great food, service and

availability every day. Their insight and commitment

shape how we invest in our business and help us

build on our strong momentum.

What matters to them

• Pay and financial wellbeing

• Training, development and career progression

• Effective communication

• Health, safety and wellbeing

• Inclusion, respect and belonging

• Sustainability

How we engaged

We engaged colleagues through Operating

Boardlistening sessions, internal social platforms,

large-scale surveys and targeted sentiment checks.

Colleague feedback was consolidated and presented

regularly to the Board, alongside updates on culture,

talent, succession, safety and diversity, equity and

inclusion. Our national Make It Better Together

colleague contribution panels provided Board-level

insight into frontline experiences, ensuring the voice

of the workforce was embedded in decision-making.

Engagement outcomes

Colleague feedback supported decisions to increase

pay and enhance wellbeing support, including financial

guidance and education on share plans. We also

expanded our development programmes across

apprenticeship and graduate routes, including the

launch of our FutureMaker graduate programmes

designed to support early career professionals in

developing the essential skills all future retail leaders

will need (see pages 20 to 23 for details). We celebrated

our Christmas peak period by giving colleagues

a£10voucher towards their festive shopping and

anuplifted colleague discount of 20 per cent for

sixdays over the festive period.

Colleagues

Engaging with our stakeholders continued

Engagement in action

Engagement in action Engagement in action

Supporting Bank

customers and colleagues

through transformation

As Sainsbury’s Bank progressed its phased

withdrawal from core banking, early and

transparent engagement with stakeholders

wasessential. From the outset, the Bank was

clear about what the changes would mean

andwhen they would happen, recognising

theimpacton customers, colleagues,

suppliersandregulators.

A Customer Experience Plan developed with

NatWest, and overseen by the Bank Board,

ensured customers were supported through

thechange and that they experienced good

outcomes, including those with vulnerable

characteristics. A dedicated helpline was set

upand customer feedback and complaints were

monitored closely, ensuring good customer

outcomes throughout the transition.

The Bank Board recognised that this period

oftransformation would be a difficult time

forcolleagues and a potential attrition risk.

Colleagues were supported through regular

leadership communications, enhanced

wellbeinginitiatives and access to learning,

development and outplacement support.

Between March 2024 and February 2026,

Bankcolleague engagement increased by

eightpoints.

Suppliers were kept informed throughout,

withhonest open conversations helping to

manage risk and maintain service continuity.

This collective, proactive approach supported

anorderly transition and helped protect

customers, colleagues and suppliers during

aperiod of significant change.

25 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Why they matter

Access to capital is vital to the long-term performance

of our business. We have over 89,000 shareholders,

including large institutional investors and smaller

individual shareholders. 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

• Clear strategy and sustained delivery

• Competitive performance and grocery volume

market share

• Industry growth outlook, including inflation,

costpressures and consumer spending trends

• Changes in competitive behaviour and

industrydynamics

• Argos trading performance and outlook

indiscretionary and online general

merchandisemarkets

• Cost savings to offset operating cost inflation

• Growth opportunities from Nectar and retail

media, including Nectar360

• Disciplined capital investment delivering

improved returns

• Cash flow delivery and capital allocation,

includingdividends and share buybacks

• Progress against our Plan for Better

sustainabilitycommitments

Shareholders

How we engaged

Throughout 2025/26, we engaged investors in

roadshow activity in London, Paris, the United States,

Canada, Dubai, Abu Dhabi, Singapore and Australia

and maintained open and transparent communication

with shareholders through one-to-one and small

group meetings with our Chair, Chief Executive, Chief

Financial Officer and Director of Investor Relations.

Individual investors and shareholder groups also

engaged with our Operating Board or other subject

matter experts across the business, particularly onkey

sustainability topics, retail media and technology

investments. We also hosted a number of investors

at store visits to supermarkets which have recently

undergone investment as part of our More for

Morestrategy.

We communicate regularly with investors through

formal reporting channels, such as our results

presentations, analyst Q&A calls and our corporate

website as well as engaging with shareholders through

our Annual General Meeting (AGM), retail

shareholder presentations and attendance at key

investor conferences. We continue to benefit from

real-time feedback from investors after meetings and

the Board strategy sessions were supported by

shareholder sessions that provided insight on

themarket’s perspective and opinion of our

investmentcase.

Engagement outcomes

Our shares re-rated significantly throughout

thecourse of the year. Against the backdrop of

amore competitive grocery market and unusually

high operating cost inflation, this reflected growing

confidence in our ability to maintain the strength

ofour competitive position and continue to deliver

grocery volume market share gains without

significant margin erosion. This re-rating came

despite a significant placing of shares by the QIA in

December 2025 and reflected a healthy appetite for

our shares from both existing and new investors.

Engaging with our stakeholders continued

Engagement in action

Engaging with shareholders at our AGM

Insight

Shareholders value meaningful access to the Board

and Operating Board members, clear opportunities

to ask questions, and a better understanding of

how the business creates long-term value and

contributes to local communities. Feedback also

highlighted the importance of making engagement

accessible to all shareholders, regardless of location.

Board consideration

The Board considered how the AGM could be used

not only to meet statutory requirements, but also

to strengthen dialogue with shareholders, improve

inclusivity and provide deeper insight into the

Group’s strategy, heritage and impact.

Decision

For the 2025 AGM, the Board enhanced the format

and supporting content by:

• making Board and Operating Board members

available to engage with shareholders informally

and answer questions

• showcasing an interactive impact tool to help

shareholders understand Sainsbury’s contribution

to their local communities

• using the Sainsbury’s Archive and a dedicated

gallery to showcase the Group’s heritage and

continued focus on quality, value and innovation

• holding the AGM in a hybrid format to maximise

accessibility and participation

• encouraging questions and discussion through

alive Q&A during the meeting

Outcome

The enhanced AGM format supported open and

constructive dialogue with shareholders, improved

accessibility and participation, and strengthened

understanding of the Group’s long-term approach

to value creation.

A strong, well-run

Sainsbury’s will

deliver long-term value

creation and strong,

reliable returns for

shareholders.

Martin Scicluna

Chair

26 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Why they matter

Our partnerships with suppliers and farmers underpin

our ability to deliver quality, value and availability for

customers. We can only build resilience in our supply

chain and deliver on our strategic outcomes by working

in partnership with our suppliers. Long-term partnerships

and close collaboration enable us to invest, innovate

and build resilience together across our food system.

Through our supplier relationships we’re able to develop

solutions to the food supply challenges that we face

from climate change and geopolitical instability to

rising costs and widening health inequalities.

What matters to them

• Long-term partnerships

• Clear expectations

• Consistent communication

• Fairness and transparency

• Collaborative opportunities for innovation

• Responsible sourcing

• High sustainability standards

How we engaged

This year, we implemented a comprehensive supplier

engagement programme, combining virtual updates

with targeted in-person events. Our Supplier Trade

Briefing reached over 2,000 delegates and reflected on

progress against our strategy and the important role

our suppliers have played. We engaged directly with

suppliers through visits to supplier sites by members

of our Board, Operating Board and seniormanagers

todeepen understanding of supply chain challenges.

This was complemented by category-specific and

results briefings held throughout the year. We organised

face-to-face networking sessions for smaller suppliers

and held a senior update and dinner for key partners,

alongside ongoing engagement through Fresh, Grocery

and category newsletters. Wealso engaged with

suppliers through structured feedback mechanisms,

including the annual Advantage Survey, which gathered

input from over 1,200 suppliers. The feedback was

reviewed by the Corporate Responsibility and

Sustainability Committee to inform priorities

andareas for improvement.

Suppliers

Engaging with our stakeholders continued

Engagement in action

Respecting and protecting human rights

Respecting and protecting human rights are core

toour business, and fundamental to building a fair

and resilient food system.

This year the Board considered the outcomes

oftheGroup’s latest human rights due diligence

review, which highlighted risks in several higher risk

sourcing countries and raw materials. The Corporate

Responsibility and Sustainability Committee

challenged management on these findings and

oversaw the actions being taken in response,

including strengthening supplier screening and

expanding deep-dive assessments in at-risk

supplychains.

As part of this review, we explored progress within

our Fairtrade partnership, including the Resilience

Building Initiative designed to reinforce environmental

and human rights resilience in key sourcing

communities. We also examined priorities for

supporting improvements in UK human rights

legislation, ensuring the Group remains well

positioned for future due diligence and

reportingexpectations.

Read more about our Corporate Responsibility

andSustainability Committee on pages 70 to 72

Working in long-term

partnership with farmers and

suppliers is how we’ll secure

good food for the future

andbuild a sustainable

UKfoodsystem.

Simon Roberts

Chief Executive

Engagement outcomes

Supplier insight informed discussions on our

innovation pipeline, supported progress against

oursustainability priorities and contributed to

improvedavailability for customers throughout

theyear. Our supplier engagement strengthened

collaboration across categories and reinforced

mutual trust and momentum to build on our

important supplier relationships. Our supplier

engagement events created clear, consistent

communication on a large scale, strengthened

seniorrelationships and gave suppliers greater

clarityand confidence in our strategy and priorities.

Sainsbury’s was rankednumber one bysuppliers for

use of technology and fresh food innovation in the

2025 Advantage Survey and the feedback also

highlighted improvements in the overall supplier

experience. The insight from suppliers also helped

usto inform our areas of focus, including embedding

sustainability moredeeply into category agendas,

strengthening collaboration and co-creation

withsuppliers and providing greater support

forinnovation.

27 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Engaging with our stakeholders continued

Why they matter

We want everyone to have access to good food

andwe support communities which face barriers

tothis. We believe that everyone deserves access

toaffordable and nutritious food to help them

thriveand we have a long heritage of ensuring that

everyone can access the joy that good food brings.

With one in seven families in the UK experiencing

food insecurity and 2.1 million children living in food

poverty in the UK, our long-standing partnerships

and local programmes help families and children

access nutritious food and strengthen community

resilience at a time of growing need. Nurturing

resilient communities is at the heart of our brand so

we actively support the communities that we serve.

Communities

What matters to them

• Access to affordable, nutritious food

• Support for families and children

• Tackling food poverty

• Engagement and community presence

• Support during emergencies and times of need

How we engaged

We continued to work with Comic Relief and

supported local communities through our ‘Good

foodfor all of us’ grant scheme and store-based

Community Champions. Our involvement in the

Holiday Activities and Food programme enabled

direct support for children and families at risk

offoodinsecurity. Fundraising initiatives and

redistribution partnerships further strengthened

ourcommunity impact.

Engagement outcomes

This year, we donated £8.7 million to Comic Relief to

help tackle food poverty in UK communities. Through

our partnerships, we helped redistribute 26.8 million

meals to communities in need. We supported 697 local

good causes this year through our ‘Good food for all of us’

community grant scheme, donating over £5.3million

to initiatives supporting local communities since 2021.

With Comic Relief, we helped to fund more than

120,000 additional Holiday Activities and Food holiday

club places during school holidays across the UK.

More information on our communities can

befoundon in our Plan for Better Report on

https://corporate.sainsburys.co.uk/

28 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Why they matter

Government bodies and regulators shape the

policylandscape that we operate within, from food

standards and sustainability to employment and

taxation. As a UK-based business and a major

employer of around 140,000 colleagues, we engage

transparently and responsibly with government

andregulators. Non-governmental organisations

provide challenge and partnership that support

progress on sustainability, climate transition

anddata transparency.

What matters to them

• Openness and transparency

• Compliance with regulation and ethical standards

• Action on sustainability matters

• Insight into industry issues and operational realities

• Commitment to diversity, equity and inclusion

Government, parliamentarians, regulators and non-governmental organisations

How we engaged

We participated in consultations, roundtables

andindustry-wide forums, contributing expertise

across policy areas including food systems,

circularity, sustainability regulation and business

taxation. Weengaged directly with ministers,

officials and non-governmental organisations to

enable constructive dialogue on emerging issues

andlegislative developments. We also engaged

directly with MPs and Peers through our annual

parliamentary events and presence at

politicalconferences.

Engagement outcomes

Our engagement contributed to progress in

recyclingand packaging policy, informed national

discussions on employment and health, food systems

and sustainability, and strengthened collaboration

across the industry. We continued to work transparently

with regulators, government and NGOs to support

responsible, long-term policy development. In October,

we announced our partnership with the Department

for Education’s free breakfast club programme,

donating £200 gift cards to 750 schools, to support

healthy, nutritious breakfast provision for up to

180,000 children across theUK.

Every child deserves

accessto affordable and

nutritious food to help

them thrive. That’s why we

are proud to be partnering

with the Department for

Education on its free

breakfast clubs.

Simon Roberts

Chief Executive

Engaging with our stakeholders continued

29 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our plan for better

Good food depends on a food system that’s set up to

thrive for the future. Our Plan for Better is our

roadmap for how we’ll play our part in securing that

future and is central to our ambition to play a leading

role in creating a more sustainable UK food system.

It brings together the priority areas we’re focused on,

the targets we’ve set and the actions we’re taking to

deliver meaningful progress.

With two connected pillars – Better for the planet

and Better for everyone – Plan for Better underpins

everything we do. It guides how we support people,

protect the planet and partner with those who grow

and make our food. By embedding this approach into

the way we work, across our business and supply

chains, we’re building the long-term resilience

needed to ensure good food for generations to come.

In 2025, our Sustainability team moved into our

Commercial function, highlighting the further

integration of sustainability within our strategic and

commercial decision-making processes.

Teams from many functions around the Sainsbury’s

business support the delivery of the goals in Plan for

Better, with progress against sustainability

targets included as part of our Executive Long-term

Incentive Plan (read more on page 96).

We are pleased to have made good year-on-year

progress across many of our Plan for Better metrics.

At the same time, we know there is still work to do,

particularly in areas such as deforestation and

conversion free sourcing, supply chain emissions and

health. These remain challenging areas, shaped by

market-wide supply chain dynamics, gaps in viable

innovation and technology and the complexity of

driving long-term behavioural change.

Creating a more resilient food system for generations to

come requires collaborative action across our industry.

That means aligning on how we measure and share data,

advocating for effective, evidence-based policy change

and working collaboratively across our supply chain and

sector partners to build the innovations we need.

Address food poverty

in our communities

Healthy &

sustainable diets

Champion

human rights

Animal health

& welfare

Diversity, equity

& inclusion

Opportunities

to develop

& grow

Colleague

health &

wellbeing

Reduce Scope

1 & 2 emissions

Reduce Scope

3 emissions

Water

stewardship

Nature

positive

Reduce waste Circular

packaging

Responsible sourcing and business practices

Transparency

Robust corporate governance

Collaboration and partnership

For more information on how we are driving an

inclusive culture, please see pages 20 to 23

Plan for Better

We’re looking forward to the year ahead and driving

progress in key areas that further our ambition and

purpose. We know eating well remains a challenge, so

we will be launching our new health strategy (read

more in our Plan for Better Report). We will continue to

progress our work to tackle food poverty to help make

sure no child or family goes hungry.

As we strive towards our net zero ambitions, we aim

tocontinue to reduce carbon emission in our own

operations, as well as engage with suppliers and

collaborate with industry to help reduce our Scope 3

emissions.

We will focus on enhancing supply chain resilience

and responsible sourcing across climate, nature,

human rights and animal welfare to help build a

resilient food system. We also aim to accelerate

action to reduce food waste, continuing to

redistribute food to people and communities in need

through our charity partners and setting up

infrastructure to increase the volume of unsold

produce diverted to animal feed.

Strategic Report

30 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Performance dashboard

Most material issue Existing targets Progress against target this year Progress details

Healthy and

sustainable diets

At least 85% Healthy and Better for you

sales tonnage sold by 2025

82.2% of our sales are Healthy and Better for you

Up 0.4% year-on-year

Up 0.2% versus baseline

88.5% of our own brand sales are Healthy and Better

for you

Our ambition remains to help more households achieve a diet in line with the

UK’s dietary guidelines for health (the NHS’ Eatwell Guide). We have delivered

modest improvement against our challenging baseline, focusing our health

efforts on awareness, affordability, incentivisation, availability and

advocacy. We acknowledge that working to a 2021/22 baseline for our target

has been challenging. It reflects purchasing patterns during COVID-19, when

customers spent more time at home and purchased more scratch cooking

foods for home cooking. Subsequent inflationary pressures and changes to

shopping habits have further influenced progress.

Reducing carbon

emissions

Reduce Scope 1 and 2 greenhouse gas

emissions from our own operations to net

zero by 2035

441,017 tCO

e of absolute greenhouse gas (GHG)

emissions from our own operations

Down 1.7% year-on-year

Down 53.6% versus baseline

Through our Graphite investment programme, we invested £18 million in

energy efficiency this year, installing voltage optimisation, metering controls

and additional AirDoors, while over 280 of our stores across the UK are now

Reduce absolute Scope 3 greenhouse gas

emissions in line with 1.5

C trajectory

51.6% of our Scope 3 emissions are covered by

suppliers that have had any 1.5

C targets approved by

the SBTi

Measuring Scope 3 emissions remains an industry-wide challenge. To

strengthen our approach we have partnered with two strategic data

providers to support Scope 3 reporting and model significantly more specific

emission factors, at the product and ingredient level for our own brand

products and electrical products (Argos only).

Reducing

food waste

Reduce food waste by 50 per cent by 2030 0.503% of food handled sent to anaerobic digestion

Down 18.4% year-on-year

Down 30.9% versus baseline

This year we have redistributed 26.3 million meals. We also nearly doubled

the tonnage of edible surplus food being donated to local communities,

preventing 11,030 tonnes of surplus food going to waste, a 49.3 per cent

increase year-on-year.

Circular

packaging

Reduce our own brand plastic packaging

by 50 per cent by 2025, increase recycled

content and recyclability

57,305 tonnes of own brand plastic packaging

Up 2.7% relative year on year

Down 17.3% relative versus baseline

On an absolute basis, our own brand plastic packaging tonnage reduced

by 3.9 per cent year-on-year and declined by 17.9 per cent versus our

baseline.

Championing

human rights

Respect human rights across our value

chain and ensure our businesses’ transition

to net zero is just and equitable for the

communities we source from

Implementation of HRDD action plan, commercial

integration, investment in on-the-ground

programmes in high risk sourcing areas

We continue to embed human rights due diligence and processes into our

technical, commercial and procurement practices. This year we refreshed

our Human Rights Policy and Saliency Assessment and conducted in-depth

risk assessments for high risk raw materials and sourcing countries to assess

our sourcing resilience. We also delivered training to over 100 colleagues and

over 700 supplier representatives to help increase awareness of human rights

risks and strengthen due diligence.

For more information on our sustainability goals

andperformance this year, see our

Plan for Better Report

See our corporate website for more information

Plan for Better continued

31 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Net zero carbon

Protecting and

regenerating nature

Circular packaging Reducing waste

Plan for Better continued

Better for the planet

• Rated ‘A’ in CDP climate change disclosure for

year in a row

• We continue to trial electric vehicles across our

Groceries Online (GOL) operations, with over 200

electric vans servicing 22 stores across the UK.

Upgrades to our routing software and wider fleet

management improvements have reduced planned

miles per GOL order by 20.2 per cent since 2022

• We continue to engage with our suppliers to

understand and support their journey to net zero.

51.6 per cent of our emissions now come from

suppliers that have any 1.5°C target approved by

the SBTi, a 29.6 per cent increase year-on-year

• We’re working with our suppliers to help realise

opportunities to lower the carbon intensity of our

products. This year, we launched La Celia Colombian

Ground Coffee with coffee beans sourced from

female farmers using a new growing model that

has successfully reduced total on farm emissions

by 30 per cent compared to a 2022 baseline

• We are making progress on transitioning our shell

eggs from brown to white eggs, aiming towards

100 per cent in our own brand core ranges.

Through a lifecycle assessment with three of our

egg suppliers, white eggs were found to have a

12.7per cent

lower carbon footprint than our

brown eggs

• We are rolling out conventional mushrooms grown

without peat to our full range of mushrooms,

which will remove 20,465 tonnes of peat a year

from our supply chain

Read more in our TCFD disclosures on pages 104 to 120

• We reduced water usage in our own operations by

6.3 per cent year-on-year, to 2,401,772m³ through

better management of water in our estate and a

focus on leak prevention. Our CDP water security

rating remained at A- for the third year in a row

• In collaboration with WRAP, we’ve continued to

co-fund ten collective action projects globally to

support landscape-level sustainable water

management, including projects to reduce water

scarcity, improve water-use efficiency and

regenerate agriculture

• We have celebrated over 21 years of partnership with

the Woodland Trust, planting over 5.4 million trees

since 2004 and raising over £15.8 million to

support the planting of trees and protection of

woodland in the UK

• We were a top ranked supermarket in the WWF’s

UK Supermarket Soy Policy Scorecard. Across our

own brand products, we source 100 per cent

deforestation and conversion free (DCF) beef and

coffee and our palm oil is 100 per cent

independently certified. Despite sustained efforts

and sector collaboration, we have not yet achieved

full DCF sourcing in our own brand products

• We were awarded the ASC UK Retailer of the

Yearaward for the fourth consecutive year and as

of March 2025 offer the largest range of MSC-

labelled products of any UK retailer

• The UK packaging sector is navigating a period of

rapid regulatory and structural change. In June

2025 we refreshed our packaging targets to reflect

these changes, focusing on the recyclability of

materials to help improve circularity:

– 100 per cent recyclable or reusable packaging

– 30 per cent post-consumer recycled content in

own brand primary plastic packaging

– 100 per cent recycled or certified virgin paper

and pulppackaging by 2025

– Reduction across all packaging materials,

removing unnecessary packaging and reducing

packaging weight across the business

• We continue to improve the recyclability of our

packaging, including moving our Taste the

Difference pastainto recyclable plastic and our

pouched olives into recyclable pouches

• We have reduced the weight of various glass jars

and bottles, including selected by Sainsbury’s

chutneys and our 789 Mondelli Prosecco

Spumante bottles, removing 373 tonnes ofglass

• We also moved our So Organic passata from glass

bottles to cartons, reducing the weight of

packaging by 126 tonnes

• We have trialled diverting unsold fresh produce

that cannot be redistributed through our food

charities into animal feed in 337 stores, helping us

divert 325.6 tonnes of additional fresh produce.

This initiative is being rolled out to all available

stores. We continue to send surplus bread to be

made into animal feed, this year diverting

1,704.2tonnes

• As part of the IGD-led Alliance Food Sourcing

initiative, we took part in the Let’s make a meal of

it campaign alongside other retailers to encourage

customers to donate online or in store and help

unlock more surplus food to be redistributed to

charities through FareShare

• To help our customers save money and reduce

waste, we repaired 20,493 products and

refurbished over 192,476 electrical items

purchased at Argos. We also supported our

Argoscustomers dispose of over 1,200 items of

unwanted furniture responsibly through our

partnership with Clearabee

• In partnership with Newlife, we donated over

130tonnes of unsellable clothing returns and

faulty garments

32 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Better for everyone

Healthy and

sustainable diets

Addressing food poverty in

our communities

Championing

human rights

Animal health

and welfare

• We help make healthier choices easier and more

affordable for customers, with at least 75 per cent

of products in our Aldi Price Match being Healthy

or Better for you choices

• Over 1,250 products with our Healthy Choice Logo

were made available to our customers this year

• To encourage customers to make healthier

choices, we piloted an evolution of our Fruit and

Veg Challenge in June and January, extending this

challenge to Healthy Choice badged lines. Across

the two challenge periods, 959,000 additional

products with the logo were sold as part of this

promotion. The Summer and Winter challenges

saw sales uplifts of 9 per cent and 6 per cent

respectively in Healthy Choice products purchased

• We continue to provide support for low income

families by offering an additional £3 for their next

shop, this year expanding this support from

spending on fruit and vegetables to all products

with our Healthy Choice logo

• We launched several new product ranges to help

customers make healthier choices, including a

high protein range, our Small but Mighty nutrient

rich meals, healthy breakfast cereals and new

fruitsnacking and pre-prepared frozen

vegetablesoptions

• We have introduced 28 new product filters on

Groceries Online, making it clearer and easier for

our online shoppers to find products that match

their lifestyle

• Our Chief Executive, Simon Roberts, through his

role on the UK Food Strategy Advisory Board,

played an active part in advising the government

on the development of the Good Food Cycle

• This year, we’ve raised over £53 million through

acombination of corporate giving as well as

colleague, customer and supplier fundraising for

charitable causes

• Since 2022, we have raised over £26 million for

Comic Relief, allowing us to donate over 60 million

meals to help tackle food poverty in UK

communities. This year alone we donated

£8.7million to Comic Relief

• With Comic Relief, we supported the UK

Government’s Holiday Activities and Food (HAF)

programme, helping to fund more than 120,000

additional holiday club places during the school

holidays across the UK

• In October, we announced our partnership with

the Department for Education’s free breakfast club

programme, donating £200 gift cards to 750

schools, to support healthy, nutritious breakfast

provision for up to 180,000 children across the UK.

We also committed to supporting over 570

additional schools from April 2026 onwards

• Through our ‘Good food for all of us’ community

grant scheme, we supported 697 local good causes

this year, donating over £5.3 million to initiatives

supporting our local communities since 2021

• This year we switched all our by Sainsbury’s black

tea to Fairtrade, making us the biggest UK grocery

retailer of Fairtrade tea. Tea farmers and workers

will receive a guaranteed minimum price and an

estimated £1 million a year in Fairtrade Premiums.

To improve pay for banana plantation workers, we

paid an additional contribution on top of the

Fairtrade Minimum Price and Premium, which was

paid out as a bonus to 4,776 workers

• We continued our commitment to 100 per cent

Fairtrade sourcing of bananas and 100 per cent of

our own brand roast and ground coffee is also

Fairtrade sourced

• We were rated Number 1 of FTSE 100 companies in

the 2025 CCLA Modern Slavery Benchmark and

ranked Number 1 supermarket in the 2024/25

Platform for Living Wage Financials Benchmark

• In partnership with Fairtrade, we launched a

Resilience Building Initiative with our key tea,

coffee and banana producers, to strengthen

human rights and environmental resilience of our

supply chains and build closer relationships

between producers and Sainsbury’s

• We launched a new international Anticipatory

Social Protection programme with Comic Relief to

proactively help strengthen climate adaptation,

food security and resilience in key sourcing

regions that are highly vulnerable to climate

impacts

• We have introduced two new human rights

metrics relating to discrimination and grievance

mechanisms, to provide transparent reporting

against our targets in these areas

• We have improved or maintained our performance

across four of our five animal health and

welfaremetrics

• Our Dairy Development Group has agreed a new

financial model in response to rising costs and

upcoming environmental regulation, including

over £9 million of investment from Sainsbury’s

tosupport 150 dairy farms

• We are making progress on transitioning our shell

eggs from brown to white eggs, aiming towards

100 per cent in our own brand core ranges.

Alongside the eggs being less carbon intensive

than our brown eggs

, the white hens are also less

prone to feather pecking, resulting in higher

animal welfare outcomes

• With the introduction of these white hens, we are

running a two-year trial with a select group of our

Sainsbury’s egg farmers trialling intact beaks. We

are providing tailored expert advice for their flocks

to reduce feather pecking, with the goal of reducing

the need for intervention, to enhance animal

welfare while maintaining optimal feather cover

• From February 2026, our supplier Cranswick

transitioned to supplying 100 per cent of our

British pork, sausages, premium bacon and

gammon, and cooked meats. Under the new

agreement, our core range will be supported by an

aligned contract from our progressive Sainsbury’s

pork supplier group, with all pigs produced

through flexible farrowing by 2028, which provides

extra space for the sows and piglets during the

birthing process

a) Lifecycle Assessment on white eggs conducted by SCA

Consulting in 2025. See our website for more information.

Plan for Better continued

33 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

We delivered a resilient operating profit

performance despite significant cost

inflation,whilst generating strong free

cashflow and returningmore than

£800million to shareholders.

Financial review

We made balanced choices in the year to maintain the strength of our competitive position, delivering

consistently strong volume growth and a resilient operating profit outcome, despite a high level of externally

driven operating costinflation in a very competitive market. We continued our relentless focus oncash,

generating strong cash flows which reflected disciplined capital investment and robust working capital

management. Together with the partial return of proceeds from the exit of our Financial Services businesses,

this allowed us to return £816 million of cash to shareholders through dividends and share buybacks.

Underlying measures are reconciled to IFRS on the income statement, with further detail in note 3. OtherAPMs

are set out in notes A1 to A4 (pages 203–206).

Summary income statement

52 weeks to

28 February

2026

£m

52 weeks to

1 March

2025

£m

Change

Underlying Group sales (excluding VAT) 33,647 32,772 2.7

Underlying operating profit

Retail 1,025 1,036 (1.1)

Financial Services — (22) 100.0

Total underlying operating profit 1,025 1,014 1.1

Underlying net finance costs (307) (305) (0.7)

Underlying profit before tax 718 709 1.3

Items excluded from underlying results (99) (102) 2.9

Profit before tax 619 607 2.0

Income tax expense (205) (186) (10.2)

Profit after tax – continuing operations 414 421 (1.7)

Loss after tax – discontinued operations (21) (168) 87.5

Profit for the financial period 393 253 55.3

Underlying basic earnings per share 22.3p 21.6p 3.2

Basic earnings per share 17.3p 10.9p 58.7

Interim dividend per share 4.1p 3.9p 5.1

Final dividend per share 9.6p 9.7p (1.0)

Total dividend per share 13.7p 13.6p 0.7

Special dividend per share 11.0p — —

Discontinued operations were previously included in underlying measures whilst the associated trading activities remained ongoing.

Following completion of the NatWest, NewDay and NoteMachine disposals, these activities are substantially ceased and have therefore

been reclassified to non-underlying so as to only reflect ongoing trading performance within underlying results. In July 2025, we agreed

the sale of the Travel Money business to Fexco Group, with the sale completing in January 2026. The Travel Money business is presented as

a discontinued operation in both the current and comparative periods. Further details can be found in note 2.1 on page 140.

Note that the comparative period has been restated to reflect the deferred tax impact of an increased proportion of assets qualifying for

tax allowances. Further details can be found in note 2 on page 140.

Financial StatementsStrategic Report Governance Report34 J Sainsbury plc Annual Report and Financial Statements 2026

Group sales

Group sales (excluding VAT) increased by 2.7 per cent year-on-year, with a 4.3 per cent increase in retail sales

(excluding VAT, excluding fuel) offset by an 8.2 per cent decrease in fuel sales (excluding VAT).

Total sales (excluding VAT) performance by category

52 weeks to

28 February

2026

£m

52 weeks to

1 March

2025

£m

Change

Sainsbury’s 25,875 24,658 4.9

Grocery 24,256 23,060 5.2

General merchandise (Sainsbury’s) and clothing 1,619 1,598 1.3

Argos 4,125 4,096 0.7

Retail (exc. fuel)

29,992 28,754 4.3

Fuel sales

3,559 3,876 (8.2)

Retail (inc. fuel) 33,551 32,630 2.8

Financial Services 96 142 (32.4)

Group sales 33,647 32,772 2.7

a) Total Retail sales are reported after the elimination of intra-segmental revenues.

b) Fuel sales represent sales of fuel from our Petrol Filling Stations (PFS) and sales from our Ultra Rapid Electric Vehicle charging

business, Smart Charge.

Retail like-for-like sales performance

52 weeks to

28 February

2026

52 weeks to

1 March

2025

Like-for-like sales (exc. fuel) 3.9% 3.4%

Like-for-like sales (inc. fuel) 2.5% 1.8%

Grocery sales increased by 5.2 per cent, reflecting both inflation and consistently strong volume growth,

outperforming the market. Customers continue to respond positively to the strength of our grocery

proposition, including the ongoing innovation across our Taste the Difference range and value driven through

Nectar Prices, Aldi Price Match and Your Nectar Prices. These propositions are helping to attract and retain

more big basket primary customers.

General Merchandise and Clothing sales in Sainsbury’s stores were up 1.3 per cent, with clothing delivering a

particularly strong performance. Childrenswear led the growth, supported by improved ranges across

essentials and womenswear and a strongest ever back to school event. This was partially offset by lower

general merchandise sales, reflecting a deliberate reduction of store space allocated to general merchandise

categories in favour of food and a focus on lower priced everyday general merchandise items.

Argos sales increased by 0.7 per cent, driven by volume growth. Average selling price decreased, reflecting a

highly competitive market with higher participation of lower ticket items.

Fuel sales decreased by 8.2 per cent as a result of reduced demand and lower forecourt prices. This was partly

offset by Smart Charge EV charging, where performance continued to strengthen. We added five new EV sites

during the year, bringing our total to 80 locations with 661 ultra-rapid charging bays.

Total sales growth (excluding VAT) performance by channel

52 weeks to

28 February

2026

52 weeks to

1 March

2025

Supermarkets (inc. Argos stores in Sainsbury’s) 3.1 3.3

Groceries Online (inc. OnDemand)

13.3 12.2

Convenience 3.0 1.9

a) Grocery Online includes sales through Sainsburys.co.uk and sales through OnDemand channels serviced by supermarket and

convenience locations.

Sales in our supermarkets increased 3.1 per cent. We have continued to reallocate space in our supermarkets to

increase our food offer; giving customers greater choice from a broader range, particularly in fresh food.

Groceries Online sales grew by 13.3 per cent, driven by very strong OnDemand growth, higher order numbers,

larger average basket sizes, stronger availability and increased household coverage.

Convenience sales grew 3.0 per cent, supported by new store openings and improved layouts across our estate,

ensuring ranges are better tailored to its customers’ needs.

Retail underlying operating profit

Retail underlying operating profit Note

52 weeks to

28 February

2026

52 weeks to

1 March

2025 Change

Retail underlying EBITDA (£m) A1.2 b) 2,211 2,192 0.9%

Retail underlying EBITDA margin (excl. VAT) (%) A1.2 b) 6.59 6.72 (13)bps

Retail underlying operating profit (£m) A1.2 b) 1,025 1,036 (1.1)%

Retail underlying operating margin (excl. VAT) (%) A1.2 b) 3.06 3.17 (11)bps

a) Note references for reconciliations refer to the Alternative Performance Measures on pages 203 to 206.

Retail underlying EBITDA increased to £2,211 million (2024/25: £2,192 million), with retail underlying EBITDA

margin decreasing to 6.59 per cent (2024/25: 6.72 per cent). This reflects strong volume growth in Sainsbury’s

and ongoing cost efficiencies, partly offset by significant operating cost inflation alongside continued

investment in colleagues and sustained price investment to deliver value.

Retail underlying operating profit decreased by 1.1 per cent to £1,025 million (2024/25: £1,036 million) and retail

underlying operating margin decreased to 3.06 per cent (2024/25: 3.17 per cent). Retail underlying EBITDA

increased while retail underlying operating profit decreased due to higher depreciation year-on-year.

In 2026/27, we expect a retail underlying depreciation and amortisation charge of around £1.2 billion (2025/26:

£1.2 billion), including £0.5 billion right-of-use asset depreciation.

We expect to deliver total underlying operating profit of between £975 and £1,075 million in 2026/27.

Financial review continued

35 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Space

Store numbers and retailing space

As at

1 March

2025 New stores

Disposals/

closures

Reclassifications/

extension)

As at

28 February

2026

Supermarkets 599 10 — — 609

Supermarkets area ’000 sq ft 20,930 163 — 46 21,139

Convenience 855 33 (3) — 885

Convenience area ’000 sq ft 2,054 78 (13) 1 2,120

Sainsbury’s total store numbers 1,454 43 (3) — 1,494

Argos stores 203 1 (3) — 201

Argos stores in Sainsbury’s 461 5 — — 466

Argos total store numbers 664 6 (3) — 667

Argos collection points 443 31 (8) — 466

During the year, we opened ten new supermarkets (including two Co-Op conversions and three Homebase

conversions) and 33 new convenience stores. We opened one new standalone Argos store, five new Argos stores

in Sainsbury’s and 31 new collection points.

As at 28 February 2026, Argos had 201 standalone stores, 466 stores in Sainsbury’s and 466 collection points,

giving a total of 1,133 points of presence.

Subject to final planning consent, we expect to open around ten supermarkets in 2026/27, complementing our

existing organic supermarket growth pipeline. In addition, we expect to open around 20 more convenience

stores. Overall, we expect a net space growth impact on retail sales of around 0.5 per cent in 2026/27.

Financial Services

During the year we successfully completed the sale and migration of our Core Banking Products, migrated the

ATM business and sold our Travel Money operations. Together with the previously sold Argos Financial Service

and Mortgage businesses, these divestments have been classified as discontinued operations and are now

reported as items excluded from underlying results. Together they form part of the single, co-ordinated

strategy to transition towards a distributed financial services model which was announced in January 2024.

The prior year has been restated to reflect this.

We also completed the sale of our Car and Home insurance businesses. These continue to be reported within

continuing operations as we still earn commission income, alongside our wider insurance offering across Pet,

Life and Travel.

Financial Services results

12 months to 28 February 2026 2026 2025

Change

Underlying revenue (£m) 96 142 (32.4)

Underlying operating profit / (loss) (£m) — (22) 100.0

Financial Services underlying revenue decreased by 32.4 per cent, primarily due to reduced treasury assets

interest, linked to the strategic exit from core banking services.

Underlying operating loss decreased by £22 million to break-even, reflecting reduced wholesale funding and

deposit platform cost as we move to a distributed Financial Services model.

Following completion of the exit from core banking, Financial Services will no longer be reported as a separate

operating segment. The ongoing Financial Services contribution will be generated from Argos Care,

commission income from Insurance, Travel Money, ATMs and white label banking products, alongside income

from the NewDay Argos Pay partnership.

Underlying net finance costs

52 weeks to

28 February

2026

£m

52 weeks to

1 March

2025

£m

Change

Non-lease interest costs (64) (76) 15.8

Non-lease interest income 23 29 (20.7)

Net finance costs on lease liabilities (266) (258) (3.1)

Total underlying net finance costs (307) (305) (0.7)

Underlying net finance costs increased slightly to £307 million (2024/25: £305 million). This includes £41 million

of net non-lease cost (2024/25: £47 million); with the reduction primarily driven by lower interest costs incurred

on our inflation-linked amortising loan due in 2031. This was partly offset by a decline in interest income,

driven by lower interest rates.

Net financing costs on lease liabilities rose to £266 million (2024/25: £258 million), reflecting higher costs

associated with equipment leases and property regears and rent reviews, which increased lease liabilities.

We expect underlying net finance costs in 2026/27 to be around £320 million.

Financial review continued

36 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Items excluded from underlying results before tax

Items excluded from underlying results Note

52 weeks to

28 February

2026

£m

52 weeks to

1 March

2025

£m

Continuing operations:

Retail restructuring programmes (74) (128)

IAS 19 pension income

33 28

Other

(50) 14

Financial Services phased withdrawal

(8) (16)

Items excluded from underlying results – continuing operations 5 (99) (102)

Discontinued operations:

Financial Services phased withdrawal 11.1 (41) (82)

Financial Services gain/(loss) on disposal 11.2 12 (141)

Items excluded from underlying results – discontinued

operations

(29) (223)

Total items excluded from underlying results

(128) (325)

Items recognised in reported profit before tax which, by virtue of their size and/or nature, do not reflect the underlying performance are

excluded from the underlying results and shown in the table above.

We recognised retail restructuring programme costs of £74 million in the year, with £41 million associated with

the Sainsbury’s Next Level strategy, launched in February 2024. These Next Level Sainsbury’s strategy costs

include redundancy costs associated with updating our central management structures and costs associated

with the closures of food counters and conversions of cafes and bakeries.

Other items include £17 million of brand amortisation, £8 million of non-underlying finance costs, a £7 million

loss on fair value movements on fixed-price power purchase arrangements and a £2 million loss on

property-related transactions. Other costs also include impairment of non-trading sites, reflecting rent reviews

at these sites, and consultancy costs relating to corporate transaction activity, partially offset by income from

a legal case relating to European truck manufacturers. In the prior year, other items included £57 million of

gains on property-related transactions, predominantly driven by the completion of the Hendon mixed-use

development site, together with a £2 million gain on fair value movements on fixed-price power purchase

arrangements, offset by £17 million of brand amortisation and £12 million of non-underlying finance costs.

Discontinued operations consist of phased withdrawal which includes pre-tax operating loss of £16 million as

well as restructuring costs and impairment of £25 million. A pre-tax gain on disposal of £12 million was

recognised in relation to Financial Services.

Taxation

The tax charge for continued operations is £205 million (restated 2024/25: £186 million). The underlying tax rate

was 29.2 per cent (restated 2024/25: 28.9 per cent) and the effective tax rate was 33.1 per cent (restated 2024/25:

30.6 per cent).

The underlying tax rate for the year is higher than the headline corporation tax rate of 25 per cent primarily due

to the impact of depreciation on assets which do not qualify for capital allowances.

We expect the underlying tax rate in 2026/27 to remain at around 29 per cent. This rate is expected to be higher

than the standard rate of corporation tax due to the ongoing impact of depreciation on assets which do not

qualify for capital allowances.

Note that the comparative period has been restated to incorporate the deferred tax impact arising from a

misclassification of assets between those impacting deferred tax and those which do not and an omission of

the tax effects of prior year impairments and disposals. As a result, deferred tax now reflects an increase in the

proportion of depreciation relating to assets qualifying for tax allowances. Further details can be found in note

2 on page 140.

Earnings per share

Statutory and underlying basic and diluted EPS increased, driven by higher earnings and areduction in the

weighted average number of shares as a result of the share buyback programme. Statutory basic EPS increased

to 17.3 pence (restated 2024/25: 10.9 pence) and diluted EPS to 16.9 pence (restated 2024/25: 10.7 pence).

Underlying basic EPS increased to 22.3 pence (restated 2024/25: 21.6 pence), while underlying diluted EPS

increased to 21.9 pence (restated 2024/25: 21.2 pence).

Dividends and share buyback

The Board has recommended a final dividend of 9.6 pence per share (2024/25: 9.7 pence). This will be paid on 10

July 2026 to shareholders on the Register of Members at the close of business on 5 June 2026. In line with the

policy to pay a progressive dividend, the proposed full-year dividend is 13.7 pence per share, an increase of 0.7

per cent (2024/25: 13.6 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 19 June 2026.

In 2025/26, we completed a £250 million share buyback programme, comprised of a £200 million core buyback

and a £50 million incremental buyback to return bank disposal proceeds. We also paid a special dividend of

£250 million (11.0 pence per share), with a total of £300 million of bank disposal proceeds returned to

shareholders during the year. For the financial year 2026/27 we will buy back £300 million of shares, including a

£200 million core buyback and an additional return of £100 million of net bank disposal proceeds. We will

continue to review the level of cash return to shareholders through buybacks on an annual basis.

Financial review continued

37 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Net debt and retail cash flows

Summary retail cash flow statement

Note)

52 weeks to

28 February

2026

£m

52 weeks to

1 March

2025

£m

Retail underlying operating profit 6 1,025 1,036

Adjustments for:

Retail underlying depreciation and amortisation 1,186 1,156

Share-based payments and other

81 67

Adjusted retail underlying operating cash flow before changes

in working capital

2,292 2,259

Decrease in underlying working capital

128 98

Retail non-underlying operating cash flows (excluding pensions)

(80) (71)

Pension cash contributions

(27) (45)

Retail cash generated from operations

2,313 2,241

Interest paid

(336) (347)

Corporation tax paid

(112) (89)

Retail net cash generated from operating activities

1,865 1,805

Cash capital expenditure

(843) (825)

Repayments of lease liabilities

(504) (487)

Initial direct costs on right-of-use assets

(8) (34)

Proceeds from disposal of property, plant and equipment

41 45

Interest income

23 27

Retail free cash flow

574 531

Dividends paid on ordinary shares

(316) (308)

Special dividend paid (250) —

Purchase of own shares – share buyback

(251) (200)

Net repayment of borrowings

(59) (79)

Other share-related transactions

(37) (43)

Dividend received from Sainsbury’s Bank 400 —

Financial Services strategic review

(59) (52)

Net increase/(decrease) in cash and cash equivalents

2 (151)

Decrease in debt

563 566

Other non-cash and net interest movements

(550) (619)

Movement in net debt 31 15 (204)

Opening net debt 31 (5,758) (5,554)

Closing net debt 31 (5,743) (5,758)

Of which:

Lease liabilities 31 (5,540) (5,494)

Net debt excluding lease liabilities

(203) (264)

a) For reconciliation refer to Alternative Performance Measures in notes A2.1 and A2.2 on pages 204 to 205. Net debt is defined as

Retail net debt. Refer to note A3.1 on page 206.

b) Other non-cash movements relate to new leases and lease modifications, foreign exchange, the cancellation of own shares once

purchased and fair value adjustments relating to derivatives.

Retail free cash flow increased by £43 million year-on-year to £574 million (2024/25: £531 million), driven by

improved working capital inflow and higher underlying EBITDA. We have generated £1.1 billion of retail free

cash flow over the last two years and we expect to generate more than £500 million of retail free cash flow in

2026/27, in line with our commitment to generate at least £1.6 billion of retail free cash flow over the three

years to 2026/27.

Adjusted retail underlying operating cash flow before changes in working capital increased by £33 million

year-on-year to £2,292 million (2024/25: £2,259 million), driven by higher underlying EBITDA.

Cash inflow from reduced working capital of £128 million (2024/25: £98 million working capital reduction) was

driven by an increase in payables, primarily due to improved payment terms, more than offsetting higher

inventory. Retail non-underlying operating cash costs were £80 million. £73 million relates to retail

restructuring cash costs, with £13 million related to the multi-year programme announced in November 2020

and £60 million associated with the Next Level Sainsbury’s strategy launched in February 2024. We continue to

expect total cash costs relating to the three-year Next Level Sainsbury’s strategy of around £150 million, with

£91 million incurred to date.

Pension cash contributions of £27 million (2024/25: £45 million) reduced £18 million year-on-year due to a

funding level event occurring in 2024/25, leading to reduced contributions under the Asset Backed

Contributions scheme. We expect cash contributions in 2026/27 to be around £27 million.

We paid corporation tax of £112 million in the year (2024/25: £89 million). The £23 million increase in tax

payable year on year is mainly due to reduced levels of tax deductible non-underlying expenses and timing of

deductions related to share based payments.

Cash capital expenditure was £843 million (2024/25: £825 million). The year-on-year increase was primarily

driven by continued investment in new space and space rebalancing as well as increased investment in

technology, automation, personalisation and retail media. We expect core retail cash capital expenditure in

2026/27 to be between £800 million and £850 million.

Proceeds from the disposal of property, plant and equipment were £41 million (2024/25: £45 million), of which

£13 million related to the Hendon mixed use development site which completed in 2024/25. The remaining

proceeds resulted from disposals, in line with our property strategy.

As at 28 February 2026, net debt was £5,743 million (1 March 2025: £5,758 million), a decrease of £15 million.

Excluding the impact of lease liabilities, non-lease net debt reduced by £61 million in the year to £203 million

(1March 2025: £264 million), benefitting from £100 million of net cash proceeds arising from the phased

withdrawal from Financial Services which will not be returned to shareholders until 2026/27.

Net debt includes lease liabilities of £5,540 million, up £46 million (1 March 2025: £5,494 million).

Financial review continued

38 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Financial ratios

Key financial ratios

As at

28 February

2026

As at

1 March

2025

Return on capital employed 8.9% 9.0%

Net debt to EBITDA 2.6x 2.6x

Fixed charge cover 2.7x 2.8x

a) Reconciliations are set out in notes A4.1, A3.2 and A4.2 of the APMs on page 206.

Return on capital employed (ROCE) declined 10 basis points year on year, primarily driven by lower total

underlying 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 also stable.

Defined benefit pensions

At 28 February 2026, the net defined benefit surplus under IAS 19 for the Group was £525 million (excluding

deferred tax). This marks a decrease of £206 million from the prior year-end date of 1 March 2025. This is

primarily due to higher liabilities arising from adoption of the latest CMI mortality forecasts, higher forecast

inflation and model updates required following completion of the 2024 triennial valuation, partially offset by a

10 bps increase in the discount rate driven by widening AA credit spreads.

The latest triennial valuation as at 30 September 2024 (the 2024 triennial) was completed on 20th March 2026

and showed a surplus of £171 million, including the estimated value of the Scheme’s entitlements under the

asset backed contribution (ABC) structure. Excluding these entitlements, the surplus was £15 million. The 2024

triennial, among other actuarial updates, assumes higher inflation volatility, which has the effect of reducing

expected liabilities. This may result in an earlier end to contributions under the ABC structure. To provide

additional assurance to the Scheme in that context, the Group has established an escrow account in favour of

the Scheme, which will expire no later than 2048. Funds will be deposited into the escrow account, and either

be released to the Group, or contributed to the Scheme, depending on agreed funding triggers. This

arrangement, coupled with the ABC arrangement, will act to protect the Scheme’s access to funds while

reducing the risk that the Company might overfund the Scheme. There are no funds deposited in the escrow

arrangement as at 28 February 2026.

We expect total defined benefit pension scheme cash contributions to be around £27 million in 2026/27

(2025/26: £27 million).

Retirement benefit obligations

Sainsbury’s

as at

28 February

2026

£m

Argos

as at

28 February

2026

£m

Group

as at

28 February

2026

£m

Group

as at

1 March

2025

£m

Present value of funded obligations (5,049) (774) (5,823) (5,575)

Fair value of plan assets 5,454 917 6,371 6,329

Pension surplus 405 143 548 754

Present value of unfunded obligations (23) — (23) (23)

Retirement benefit surplus 382 143 525 731

Deferred income tax liability (158) (36) (194) (218)

Net retirement benefit surplus 224 107 331 513

Bláthnaid Bergin

Chief Financial Officer

22 April 2026

Financial review continued

39 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Principal risks and uncertainties

We are a resilient, values-led business. Managing risk is both part of how we operate and recognised as key

toachieving our ambitions.

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 and internal control framework, the principal risks at year-end, ongoing mitigations and how these align to our strategy. The Operating Board

monitorsthese principal risks on an ongoing basis, considering our risk appetite and amending mitigations where appropriate.

Our approach to risk management

• 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, for example change delivery or the

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

1. Risk identification

• Operating Board

• Governance forums

• Divisional leadership teams

• Audit and Risk team

• 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

2. Risk assessment

• Operating Board

• Governance forums

• Divisional leadership teams

• Audit and Risk team

• Manage risks by implementing mitigation plans and controls aligned with our risk appetite and tolerances

• The implementation of the risk management and internal control 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

3. Risk response

• Operating Board

• Governance forums

• Divisional leadership teams

• Audit and Risk team

• Monitor and report to the relevant governance forums on risks, key risk indicators, associated mitigation and management

plans, material control effectiveness and changes to the internal/external environment

4. Monitoring

andreporting

• Board

• Audit Committee

• Operating Board

• Business leaders

• Audit and Risk team

Key activities Stakeholder input

40 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

The Board has overall responsibility for risk management, the system of internal control and reviewing the

effectiveness of these at least annually. The Board has carried out a robust assessment of the Company’s

emerging and principal risks, including those that would threaten its business model, future performance,

solvency or liquidity. As such, it has approved our principal risks disclosure, as set out on pages 42 to 47. Certain

responsibilities have been delegated to the Audit Committee, as outlined on page 76.

Board

Approval of riskdisclosures

• Annual assessment of system of internal control

• Principal risk and uncertainty disclosures

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 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 (including

material controls) 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. 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, 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,

and that they also attest to the operating

effectiveness of material controls; 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 team

isinvolved in each process. It provides the Audit

Committee with a risk management update at least

twice a year to support its fulfilment of 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.

The Audit and Risk teams 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 to allow 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. 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:

• Consumer expectations are rapidly shifting due to

demographic change, evolving health priorities

and new shopping behaviours, creating both

risksand opportunities for innovation and

marketgrowth

• Continued national and global uncertainty can

impact the communities we serve as well as our

suppliers, operations andcolleagues

• Technology acceleration – including the emergence

of agentic AI – presents both risks and opportunities

across our customer proposition, operations,

transformation programmes and wider market

sector, creating new exposures while offering

potential to enhance productivity and impact

customer experience

Audit Committee

Corporate risk updates, deep dives

andreviewofriskframework

• Assessment and review of corporate and emerging

risks

• Risk deep dives received

• Risk policy and framework approved

• Internal Audit reporting

Operating Board

Corporate risk updates and deep dives

• Corporate risk map updated and actions monitored

• Risk deep dives received

• Emerging risk map reviewed

Governance forums

Risk identification and monitoring

• Divisional risks relevant to forums’ area of scope

received

• Governance forum risk map reviewed

Divisional leadership teams

Bottom-up risk identification

• Divisional risk maps reviewed and challenged

• Divisional emerging risk map reviewed

• Monitor risk actions

Principal risks and uncertainties continued

41 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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.

Overall, the principal risks are consistent with last year, with four changes to note. The net risk exposures

for ‘Data Security’ and ‘Political and Regulatory Environment’ have increased due to incidents in the retail

sector in 2025 and the evolving regulatory landscape respectively. Two principal risks have been removed,

including Sainsbury’s Bank, reflecting changes to the financial services business model. ‘Financial and

Treasury’ is no longer considered a principal risk to the Group due to the status of the Group balance sheet,

investment grade credit rating and access to diverse funding options.

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 18 to 19) and continue to highlight the link with the strategy of the business, as follows:

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 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, 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

• 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

Link to key performance

indicators: N/A

Movement:

First choice forfood

Loyalty everyoneloves

More Argos, moreoften

Save and invest towin

Principal risks and uncertainties continued

42 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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

Link to key performance

indicators: All metrics

Movement:

Principal risks and uncertainties continued

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

as part of 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 and governance 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 that robust governance and

control frameworks are implemented. This includes 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

bi-monthly 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

Link to key performance

indicators: N/A

Movement:

43 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 UK

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

• The Plan for Better Acceleration Squad 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

• Sainsbury’s has disclosed against the Task Force on Climate-

related Financial Disclosures since 2021 and in 2024 signed up to

become an adopter of the Taskforce on Nature-related Financial

Disclosures. This framework will be utilised to build an

understanding of climate and nature-related risks and

opportunities, which are utilised to inform strategy and

decision-making processes

Direct oversight: Corporate

Responsibility and Sustainability

Committee, Plan for Better

Acceleration Squad

Link to strategy

Link to key performance

indicators: Plan for Better

commitments

Movement:

Principal risks and uncertainties continued

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.

Rising levels of retail crime and

growing threats to colleagues and

the security of assets reinforce the

need for robust controls, a strong

culture of safety and vigilance

across all our operations.

• 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

• The Colleague Safety and Total Loss Steering Committee was introduced

this year to provide strategic oversight and direction on colleague

safety, retail crime and asset protection, ensuring a coordinated

approach to reduce harm and prevent loss across the business

• 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

• 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, CCTV and trials of facial recognition

technology. 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

Link to key performance

indicators: N/A

Movement:

44 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Principal risks and uncertainties continued

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, for example, class actions

such as the ongoing equal value claim.

Key regulatory risks impacting our business operations include

the Competition Act 1998, 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.

• 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

• 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

Link to key performance indicators: N/A

Movement:

45 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Product safety and sourcing

Risk Mitigations

Failure to manage safety and

sourcing risks for both food and

non-food products can lead to

injury or loss of life, breach of

regulation and/or reputational

damage.

• The Group Safety Committee receives regular reports on product safety from the

Director of Food Technical and the Director of Commercial Operations and Development

– General Merchandise and on operational food safety risks from the Director of

Occupational Health, Safety and Insurance. In addition, the Corporate Responsibility

and Sustainability Committee discusses 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

• Safety processes are in place in our depots and stores covering refrigeration and quality

management controls to ensure the safety and integrity of 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 product 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 launch 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

products from sale if required

Direct oversight: Group Safety

Committee, Plan for Better

Acceleration Squad, Corporate

Responsibility and Sustainability

Committee

Link to strategy

Link to key performance

indicators: N/A

Movement:

Principal risks and uncertainties continued

46 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Trading environment and customer expectations

Risk Mitigations

We operate in a highly competitive

market during a time of higher

economic and geopolitical

uncertainty. The business, across

all brands, must continue to

ensure it remains competitive

and evolves 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, and Nectar, 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 service,

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 geopolitical

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

Link to key performance

indicators: Food volume growth

Movement:

Principal risks and uncertainties continued

Colleague engagement, retention and capability

Risk Mitigations

The business employs around

140,000 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 (such as AI) is a

key area of focus, given the

challenging labour market.

The macroeconomic environment

and regulatory changes, such as

the Employee Rights Bill, require a

focus on efficient operations, which

may include change initiatives that

could impact trust or engagement

with our colleagues.

• 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

with above inflation pay rises for hourly paid colleagues. 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

• 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 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 national,

regional and local Make It Better Together forums and leader

listening sessions. 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

• There are a wide range of opportunities available to colleagues to

develop with specific talent programmes in place across

operational, early careers, professional and executive roles

• An impact assessment of the Employee Rights Bill has been

completed and specific actions have been developed to address

the identified areas of impact. These actions are now being

progressed positively in collaboration with unions and

employeerepresentatives

Direct oversight: Operating Board

Link to strategy

Link to key performance

indicators: Colleague

engagement

Movement:

47 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 51. The financial position of the Group, its cash flows and liquidity are highlighted in the financial

review on pages 34 to 39. Details of financial covenants are set out in note 27.4 on page 176.

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 typically over three years, with a further year of indicative movements. As part of the corporate

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 with the level of committed facilities over the planning

period.

The most recent corporate plan was approved in March 2026, 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, model and principal risks.

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 is expected to deliver further grocery

market volume share gains.

• 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 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 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. The committed

Revolving Credit Facility, which enables the Group to maintain sufficient levels of contingent funding, has

two £500 million facilities. Facility A has a maturity of December 2029 and Facility B has a maturity of

December 2028. As at 28 February 2026, the Revolving Credit Facility was undrawn. 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 2024/25 of £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

and remain in issuance. In addition, the Group has in place an inflation-linked amortising loan with a

principal of £378 million outstanding as at 28 February 2026 and a final repayment date of April 2031.

Previously, additional consideration was given to the credit, liquidity and capital adequacy of the Bank given

the phased withdrawal from Financial Services and transition to a distributed model. Following the completed

transactions with NatWest, NewDay, NoteMachine, Allianz and Fexco in the current and prior year, the current

capital position and the progress made on transition, the Directors no longer deem this a material

consideration in making an assessment of the Group’s viability.

2. The assessment period

The Directors have determined that the three years to February 2029 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 typically 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 have 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 40 – 47). The scenarios were overlaid into

the corporate plan to assess the potential impact on net debt and the Group’s financial covenants of one or

more of these crystallising over the assessment period and were 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. Mitigating actions to maintain funding headroom were considered as part of the assessment as

required. These include reducing any non-essential capital and operating expenditure, 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 40 – 47 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.

In performing the below analysis, the Directors have made certain assumptions around the availability and

effectiveness of the mitigating actions available to the Group.

The scenarios on the next page 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 first two years of the plan period. In the final year, headroom is

eroded on an isolated occasion at the end of the review period when all scenarios are modelled in combination

prior to any mitigating actions by management. However, management does have significant controllable

mitigating actions available as detailed above with which to respond to ensure that the Group maintains

sufficient headroom and remains viable.

48 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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,

particularly given recent escalation in geopolitical pressures. This has the potential to impact consumer confidence and disposable incomes, contributing to a reduction in consumer spend

on discretionary items across our general merchandise and clothing business and downtrading in food.

Assumptions:

• Sales – volume losses more severe than the 2008 recession phasing have been applied to forecast sales.

• Trading environment and

customer expectations

Scenario 2 - Data and legal breaches and regulatory changes

Cyber incidents suffered by competitors within the retail industry have caused significant operational disruption. It is plausible that the Group could suffer a similar incident requiring

additional and rapid expenditure to maintain operations as best as possible while simultaneously suffering a sales decline due to impacted operations.

Further, the impact of any regulatory fines has been considered. Examples considered include the General Data Protection Regulation (GDPR) fine for data breaches and fines levied by the

Groceries Supply Code of Practice (GSCOP).

Assumptions:

• Sales – volume losses due to implementation of a major incidence response plan resulting from a cyber attack

• Costs – amount paid for regulatory fines

• Data security

• Product safety and sourcing

• Political and regulatory

environment

• Business continuity,

operational resilience and

major incidence response

Scenario 3 - Failure to deliver sustainable cost savings

We considered delays in delivering the Save and invest to win programme and delivering further savings beyond the current strategy cycle, modelling impacts of c. £100 million in the first

two years of the assessment period and c. £200 million in the final year.

Assumptions:

• Costs – additional costs as result of failure to deliver cost savings

• Business strategy

andchange

Scenario - Reverse stress test

In addition to the severe but plausible scenario modelling detailed above, the incremental level of forecast sales decline required before the Group fully utilises its available funding and mitigations, or breaching its financial

covenants, was considered. The required reduction was considered extreme and implausible.

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 February 2029.

The impact of geopolitical events was considered, specifically the conflict in the Middle East which has escalated subsequent to the Group’s balance sheet date. The Group has an incident response team in place which monitors

the situation and performs scenario modelling. Severe operational impacts are considered unlikely due to limited sourcing from the region, our use of hedging and the Group’s ability to prioritise fuel for our own operations.

Therefore, the primary impact of the conflict is expected to be increased oil price leading to potentially inflated logistic and supply chain costs. Inflationary pressures are already modelled in Scenario 1 documented above and at

a higher level than the current expected impact of this conflict. Thus it was concluded that the impact of conflict in the Middle East does not impact the conclusions reached over going concern and viability.

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

202.

Statement of viability continued

49 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 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 30

• Our people and culture on page 20

• Engaging with our stakeholders on page 24

• Section 172 statement on page 64

• Operational KPIs on page 18

• Nomination and Governance Committee report on page 67

• Annual statement from the Remuneration Committee Chair on page 81

• Gender and Ethnicity Pay Reports on corporate.sainsburys.co.uk

Environment

Our sustainability plan, Plan for Better, is integrated across our business to ensure that we achieve

our sustainability goals. Our Better for the planet pillar includes our environmental targets,

ambitions and priority areas of focus. Progress against these targets is described in this Annual

Report and Accounts and in our standalone Plan for Better Report.

• Plan for Better report on page 30

• Task Force on Climate-related Financial Disclosures on page 104

• Engaging with our stakeholders on page 24

• Section 172 statement on page 64

• Corporate Responsibility and Sustainability Committee Report on page 71

• Updated Streamlined Energy and Carbon Reporting on page 121

Further information, including the following disclosures and policies, can be found at

https://corporate.sainsburys.co.uk/sustainability

Climate-related

Financial

Disclosures

We have embedded the recommendations of the Task Force on Climate-related Financial

Disclosures (TCFD) within our Plan for Better to strengthen our climate resilience. Climate-related

Financial Disclosures (CFD), in accordance with Companies (Strategic Report) (Climate-related

Financial Disclosure) Regulations 2022 are included within our TCFD report.

• Task Force on Climate-related Financial Disclosures on page 104

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 UK and our Better for everyone pillar aims to

help positively impact those in need through fundraising, volunteering, donations and raising

awareness.

Alongside our community investment, we make positive economic contributions through our

responsible approach to tax. We contributed approximately £2.5 billion in cash taxes borne and

collected this year.

• Chair’s letter on page 4

• Plan for Better report on page 30

• Engaging with our stakeholders on page 24

• Section 172 statement on page 64

• Corporate Responsibility and Sustainability Committee report on page 71

• Groceries Supply Code of Practice

• Policy on Whistleblowing

Further information can be found at

https://corporate.sainsburys.co.uk/Addressing-food-poverty

All our public policies, reports and standards are available at

https://corporate.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.

50 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our commitment Our approach Where to find more information and outcomes

Human rights

At Sainsbury’s, we fully recognise our responsibility as a company to respect and protect human

rights throughout all our operations. We have a long history of setting high standards and working

collaboratively with our suppliers to ensure they are met, and we work hard to embed respect for

human rights and ethical practices throughout our business.

We are committed to respecting human rights across our value chain to ensure the people who

make or grow our products are not being exploited or exposed to unsafe working conditions. We

also ensure that our business’s transition to net zero is just and equitable for the communities we

source from. We have identified and prioritised our key human rights risks and set ambitious

commitments to drive forward progress in these priority areas: forced labour, sustainable

livelihoods, safe and healthy working environments, discrimination and grievance mechanisms.

Through our due diligence processes, we seek to identify, prevent and, where needed, mitigate

and remediate adverse human rights risks that are linked to our operations, products or services.

• Chair’s letter on page 4

• Plan for Better report on page 30

• Engaging with our stakeholders on page 24

• Section 172 statement on page 64

• Corporate Responsibility and Sustainability Committee report on page 71

• Modern Slavery Statement

• Policy on Ethical Sourcing

• Policy on Human Rights

• Policy on Whistleblowing

• Policy on Home Work

• Policy on Prison Labour

Further information can be found at

https://corporate.sainsburys.co.uk/Championing-human-rights

Anti-bribery

and

corruption

Our values form the framework which guides the behaviours of all colleagues and suppliers across the

business. We expect all our colleagues, contractors and suppliers to act with honesty and integrity

and never to engage in any activity which could be considered as accepting or giving a bribe.

Our Policy on Anti-Bribery and Corruption provides guidance and expectations on our colleagues’

responsibilities and behaviour, and our expectations to prevent bribery and fraud. We have a

Disciplinary and Appeals Policy to help encourage everyone to maintain our rules and standards

of conduct, attendance, capability and performance.

Our Policy on Whistleblowing covers how to report wrongdoing when honesty and integrity

arecompromised.

• Audit Committee report on page 73

• Compliance with the Grocery Supply Code of Practice on page 120

• Policy on Anti-Bribery and Corruption

• Policy on Whistleblowing

Other

information

Other information to support this statement can be found on the following pages: • Business model on page 6

• Strategy overview on page 12

• Operational KPIs on page 18

• Principal risks and uncertainties on page 40

• Statement of viability on page 48

• Governance framework on page 59

• Audit Committee report on page 73

The Strategic Report was approved by the Board of Directors and signed on its behalf by:

Bláthnaid Bergin

Chief Financial Officer

22 April 2026

Non-financial and sustainability information statement continued

51 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

53 Introduction to the governance report

54 Governance at a glance

56 J Sainsbury plc – Board of Directors

58 Board roles and responsibilities

59 Governance framework

61 Board leadership and Company purpose

64 Section 172 statement

65 Board stakeholder engagement

66 Board effectiveness review

67 Nomination and Governance Committeereport

71 Corporate Responsibility and Sustainability Committee report

73 Audit Committee report

81 Annual statement from the Remuneration Committee Chair

83 Summary of 2025/26 remuneration

84 Summary of 2026/27 remuneration

85 Remuneration in context

87 Remuneration Policy

94 Annual report on remuneration

104 Climate change and Task Force on Climate-related Financial Disclosures

(TCFD)

116 Climate Transition Plan within the TCFD section

120 Directors’ report

Governance Report

52 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report Financial StatementsStrategic Report Governance Report

Introduction to the governance report

Dear Shareholder

Purpose, culture and strategy

Over the year, the Board has continued to oversee the

disciplined execution of the Next Level Sainsbury’s

strategy. In doing so, we have remained focused on

the areas that matter most to the long-term success

of our business, including our customer proposition,

engagement with our colleagues, operational resilience

and financial discipline. Significant strides have been

made to develop a distinctive and high impact

sustainability agenda, which underpins our strategy.

This has delivered meaningful outcomes across

carbon reduction, responsible sourcing and health

andnutrition.

The Board is clear that consistent performance at

Sainsbury’s is supported by clear accountability,

effective controls and a strong culture. We monitor

culture and behaviours across Sainsbury’s through our

colleague engagement surveys, structured listening

forums and direct engagement with our colleagues.

The Board discusses culture regularly and considers

these insights when making decisions and providing

oversight of management.

Corporate governance and

riskoversight

Effective governance underpins the delivery of our

strategy and our long-term performance. The Board’s

role is to provide clear oversight, maintain high

standards of governance and ensure that the Group

remains resilient, well managed and focused on

delivering sustainable value.

During the year, we continued to review and update

our governance framework to ensure it aligns with

the principles of the UK Corporate Governance Code

2024. The updated framework has now been

implemented and reinforces our commitment to

maintaining highstandards of governance and

oversight acrossSainsbury’s.

The Board, supported by the Audit Committee,

maintains close oversight of our risk management

framework and material controls. The Board received

updates from the Audit Committee Chair which

included insight into cyber risks and the mitigation

Two years into our Next Level

Sainsbury’s strategy, we

areproud of how we have

delivered for our customers,

colleagues, suppliers and

shareholders. With continued

outperformance in our food

business, more customers

are shopping more of our

offer, more frequently and

inmore locations.

Martin Scicluna

Chair

A thriving Sainsbury’s

is good for the UK

measures the Group has implemented in response

toan evolving threat landscape. Further detail is

provided in the Audit Committee report and principal

risks and uncertainties section of this Annual Report.

Board effectiveness

As Chair, I am responsible for ensuring that the Board

remains effective, well balanced and appropriately

skilled. I am pleased to report that an externally

facilitated review of the Board and its Committees

confirmed that we have a high calibre and effective

Board, operating in line with first-class corporate

governance. The findings from this review are

informing our ongoing focus on strategy, Board

performance and succession planning.

Remuneration Policy

As part of our normal three-year cycle, the Directors’

Remuneration Policy is being put to shareholders for

approval at this year’s Annual General Meeting. The

Board and the Remuneration Committee have reviewed

the policy to ensure it continues to support the delivery

of Sainsbury’s strategy, aligns executive reward with

long-term performance and the experience of our

colleagues, and reflects the views of shareholders

and wider stakeholders. Further detail on the policy

and the Committee’s approach is set out in the

remuneration section of this report.

Year ahead

As we go into 2026/27, the Board remains focused

oneffective oversight of strategy delivery, risk and

resilience at Sainsbury’s, while continuing to engage

constructively with shareholders and other stakeholders.

I would like to thank my fellow Board members for

their commitment and contribution during the year,

including those who have stepped down and those

who have joined the Board.

Martin Scicluna

Chair

Financial StatementsStrategic Report Governance Report53 J Sainsbury plc Annual Report and Financial Statements 202653 J Sainsbury plc Annual Report and Financial Statements 2026

Our governance helps the Board make clear decisions, challenge effectively and keep a close link between

our purpose, culture and strategy. During the year, the Board focused on keeping our customer offer strong

while managing inflationary pressures and making disciplined choices on capital allocation and returns to

shareholders, whilst continuing to deliver for our colleagues and suppliers.

Governance at a glance

Key Board

decisions

• Approved capital allocation

decisions to return over £800

million net proceeds to

shareholders through a

progressive dividend, a £250

million share buyback and a

special dividend from the exit of

banking operations

• Approved an above inflation

investment in colleague hourly

pay

• Renewed the £5 billion Euro

Medium Term Note (EMTN)

Programme which provides a

platform for accessing the public

bond markets

• Explored the potential sale of

Argos to JD.com and made the

decision to end the negotiation,

in the interest of our

shareholders, colleagues and

broader stakeholders

• Approved accelerated investment

in Nectar360 as part of the

Loyalty Everyone Loves

strategicpillar

• Approved roll out of Your Nectar

Prices across all shopping channels

Highlights

24.8p

per share paid to shareholders

in 2025/26 including 11.0p as a

special dividend

Read more on pages 56 to 57

What we bring to the Board

The Board benefits from a wide range of backgrounds and strengths. The charts on this

page provide an overview of the Board members’ specific skills, experience and diversity.

Board tenure (Non-Executive Directors and Chair)

0-3 years 4-6 years 7-9 years

Board composition

Board gender diversity

Men Women

Board ethnic diversity

White Ethnically diverse Not specified/ prefer not to say

Board balance

Non-Executive Directors Executive Directors

As at 28 February 2026 As at 28 February 2026

As at 28 February 2026

As at 1 March 2025 As at 1 March 2025

As at 1 March 2025

Board and Committee attendance

(scheduled meetings)

The Board and Committees were well attended throughout the year.

Board Audit CR&S Nom & Gov Remuneration

Martin Scicluna

9/9 – 3/3 1/1 –

Bláthnaid Bergin 9/9 – – – –

Jo Bertram 9/9 – 3/3 2/2 –

Katie Bickerstaffe

4/5

– 1/1

– –

Steve Hare

5/5 2/2

– – –

Brian Cassin

4/4 2/2

– 1/1 –

Jo Harlow 9/9 – 3/3 2/2 2/2

Adrian Hennah 9/9 4/4 – 2/2 2/2

Tanuj Kapilashrami

8/9 – – 1/2 2/2

Simon Roberts 9/9 – 3/3 – –

Keith Weed 9/9 4/4 3/3 2/2 –

Attendance disclosure: Attendance figures show the number of meetings attended during the financial

year out of the total number of scheduled meetings that the Director was eligible to attend. Only

formally scheduled meetings of the Board and its Committees are included. Strategy days, Board calls

and meetings outside the reporting period are excluded.

a) Martin recused himself from the January 2026 Nomination and Governance Committee meeting.

b) Katie Bickerstaffe joined the Board in July 2025. Katie was unable to attend the December Board meeting

due to prior business commitments.

c) Steve Hare joined the Board in July 2025.

d) Brian Cassin resigned from the Board in July 2025.

e) Tanuj Kapilashrami was unable to attend the December Board meeting due to prior business commitments.

37.5%

37. 5%

25%

Board skills matrix as at 22 April 2026

During the year, the Board continued to strengthen its capability in digital and data,

supported by targeted training and external briefings.

Skills

Number of Directors

with this as a skill

As a top 5 skill As a skill

Corporate transactions

7 3 4

Sustainability

8 3 5

Ecommerce/technology

8 3 5

Operations/general retailing experience

6 2 4

Risk management/internal audit

9 6 3

Remuneration

7 4 3

Finance/accounting/audit

7 4 3

Financial Services

4 4 0

Consumer/customer services

7 5 2

HR/people

9 7 2

Current or recent CEO experience

5 3 2

Brand/marketing

7 1 6

Digital/online

6 2 4

Strategy development/implementation

10 9 1

AI/cyber security

5 1 4

Governance at a glance continued

5 5

Financial StatementsStrategic Report Governance Report55 J Sainsbury plc Annual Report and Financial Statements 2026

Board of Directors

Martin Scicluna

Chair

Date appointed:

November 2018 (Chair from March 2019)

Key competencies: 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. 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.

External appointments: None.

Previous roles:

• Chairman, RSA Insurance Group plc

• Chairman, Great Portland Estates plc

• Senior Independent Director and Chair of

the Audit Committee, Worldpay Inc.

• Non-Executive Director and Chair of the

Audit Committee, Lloyds Banking Group plc,

• Chairman, Deloitte LLP

• Partner, Deloitte LLP

Tenure: 7–9 years

Simon Roberts

Chief Executive

Date appointed:

June 2020

Key competencies: Simon has over 35 years’

retail sector experience, having started his

career on the shop floor. Since joining

Sainsbury’s in 2017 as Retail & Operations

Director, Simon has championed a people-first,

purpose-driven approach, placing colleagues,

customers, and communities at the heart of

the business. A passionate advocate for UK

farmers and suppliers, Simon is focused on

creating long term partnerships with the

people who make our food. Under Simon’s

leadership, Sainsbury’s has also doubled down

on its commitment to tackling food poverty

through impactful partnerships with charities

including Comic Relief and Fareshare.

External appointments:

• President of IGD

• Member of the Government’s Food Strategy

Advisory Board

• Advisory Board Member of Diversity

in Retail

• Member of the Government’s Retail

Sector Council

Previous roles:

• Executive Vice President, Walgreens

Boots Alliance

• President, Boots UK and Ireland

• Chair, Institute of Customer Service

Tenure: 4–6 years

Bláthnaid Bergin

Chief Financial Officer

Date appointed:

March 2023

Key competencies: Bláthnaid brings strong

financial leadership and international

experience to the Board. She supports the

development and execution of the Group’s

strategy through disciplined capital allocation,

robust financial control and effective risk

management. Her background in complex,

global organisations and her audit committee

experience enhance the Board’s oversight of

financial performance, reporting and investor

engagement. Bláthnaid’s background includes

significant experience in financial services,

audit and internal control, supporting

disciplined risk management and high quality

financial reporting in complex organisations.

External appointments: Non-Executive

Director of Haleon plc.

Previous roles:

• Senior finance leadership roles,

Aviva and RSA

• Senior finance roles, GE (working across

Europe, Asia and Australia)

• Non-Executive Director, Chair of the Audit

Committee and Senior Independent Director

for Artemis Alpha Investment Trust

Tenure: 1–3 years

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

Date appointed:

July 2022

Key competencies: Jo is a highly talented

strategic business leader with significant

experience leading transformation and change.

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.

External appointments:

• CEO, O2 Daisy

• Director of O2 Daisy subsidiary companies

Previous roles:

• Managing Director, Business & Wholesale,

Virgin Media O2

• Senior leadership roles, O2

• Regional General Manager, Northern

Europe, Uber

• Various roles at McKinsey & Company

and Accenture

Tenure: 1-3 years

Katie Bickerstaffe

Non‑Executive Director

Date appointed:

3 July 2025

Key competencies: Katie is a highly regarded

retail and consumer business leader, bringing

strong perspectives on digital business models

and transformation programmes. Katie’s

strong perspectives on digital transformation

will greatly contribute to our strategic

direction.

External appointments:

• Non-Executive Director of Aberdeen Group plc

• Non-Executive Director of Barratt Redrow plc

• Non-Executive Director and Senior

Independent Director of Diploma plc

Previous roles:

• Co-CEO of Marks and Spencer Group plc

• Executive Chair and CEO Designate at SSE

• CEO, UK & Ireland at Dixons Carphone

• Various senior roles at Somerfield Stores

group, Dyson, PepsiCo and Unilever

Tenure: Less than one year

More information about the skills,

experience and competencies of our

Board and Operating Board can be found

at https://corporate.sainsburys.co.uk/

Tenures are as at 28 February 2026

56 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Board of Directors continued

Jo Harlow

Non‑Executive Director

Date appointed:

September 2017

Key competencies: Jo brings a wealth of

experience in consumer-facing

businesses and the telecoms and

technology industries, both in the UK and

internationally. Jo has broad experience

from executive and nonexecutive roles.

Jo was previously Chair of the Corporate

Responsibility and Sustainability

Committee and has helped the business

deliver and evolve its sustainability

strategy.

External appointments:

• Senior Independent Director and

Chair of the Remuneration

Committee of Halma plc

• Senior Independent Director and

member of the Remuneration and

Nominations Committees at

Centrica plc

• Director of Chapter Zero

Previous roles:

• Non-Executive Director and Chair of

the Remuneration Committee,

InterContinental Hotels Group plc

• Corporate Vice President, Phones

Business Unit, Microsoft Corporation

• Executive Vice President, Smart

Devices, Nokia

• Senior management roles, Nokia

• Marketing, sales and management

roles, Reebok International Limited

and Procter & Gamble

Tenure: 7–9 years

Steve Hare

Non‑Executive Director

A N

Date appointed:

3 July 2025

Key competencies: Steve is a very

experienced leader of digital and tech

businesses. Steve built over 10 years’

experience leading the finance

function for three listed UK

companies, 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. Steve’s

expertise in leading tech businesses

will greatly contribute to our strategic

direction.

External appointments: CEO of Sage

Group plc

Previous roles:

• Operating Partner and Co Head of

the Portfolio Support Group,

Apax Partners

• Chief Financial Officer, Invensys plc

• Group Finance Director, Spectris plc

• Chief Financial Officer, Marconi plc

Tenure: Less than one year

Adrian Hennah

Senior Independent Director

(appointed 3 July 2025)

Date appointed:

April 2021

Key competencies: Adrian has

significant financial and strategic

expertise from leading the performance

and strategy of many large companies.

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

External appointments:

• Non-Executive Director of Oxford

Nanopore Technologies plc

• Non-Executive Director of Unilever plc

• Trustee of Our Future Health

Previous roles:

• Non-Executive Director and Chair of

the Audit Committee, RELX plc,

• Chief Financial Officer, Reckitt

Benckiser plc

• Chief Financial Officer, Smith &

Nephew plc

• Chief Financial Officer, Invensys plc

• Finance and operations roles,

GlaxoSmithKline

• Audit and consultancy roles, PwC

and Stadtsparkasse Köln

Tenure: 4–6 years

Tanuj Kapilashrami

Non‑Executive Director

Date appointed:

July 2020

Key competencies: Tanuj is an

international banker with significant

experience in strategy, transformation,

talent and change management, both

in the UK and globally. Tanuj is a

valuable member of the Board as the

business continues to adapt and

support its colleagues in a rapidly

changing marketplace

External appointments:

• Chief Strategy and Talent Officer

ofStandard Chartered Bank

• Member of Standard Chartered

Foundation Board of Trustees

• Member of the Asia House Board

of Trustees

• Director of Mindbeat Global Limited

Previous roles:

• Director, Financial Services Skills

Commission Limited

• Chief Human Resources Officer,

StandardChartered

• Senior HR leadership roles across

global andregional markets, HSBC

• Board member of Vault22

• Associate Non-Executive Director

of the Board of NHS England

Tenure: 4–6 years

Keith Weed CBE

Non‑Executive Director

Date appointed:

July 2020

Key competencies: 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 plays an important role

in Sainsbury’s plan to become First

choice for food and delivering on our

Plan for Better. He has an excellent

understanding of both sustainability

and digital, and the ways that

technology is transforming businesses

External appointments:

• Non-Executive Director of WPP plc

• Independent Non-Executive

Director of i-Genie

• Trustee Director of Business in

the Community

• Trustee Director of the

Leverhulme Trust

• President of the Royal

Horticultural Society

• Trustee of Grange Park Opera

Previous roles:

• Chief Marketing and

Communications Officer,

Unilever plc

• Senior leadership roles across

multiple businesses, Unilever plc

• Leadership of the global

sustainability programme,

Unilever plc

Tenure: 4–6 years

Nick Grant

General Counsel and

Company Secretary

Date appointed:

July 2024

Key competencies: 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. Prior to this appointment Nick

was 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.

Changes in the year

Brian Cassin

Brian retired from the Board at

the 2025 AGM

until July 2025

Date appointed:

April 2016 (Senior Independent

Director fromJuly 2022 to July 2025)

Key competencies: Brian

contributed significant experience of

running a FTSE 100 company,

alongside deep expertise in data,

analytics and regulated markets. He

provided strong independent

challenge and counsel during

hisnine-year tenure.

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Board roles and responsibilities

Chair Chief Executive

Chief Financial

Officer

Senior Independent

Director

Independent

Non‑Executive

Directors

Company Secretary

Martin Scicluna

As Chair, Martin is responsible for

leading the Board and ensuring

its overall effectiveness. This

includes promoting high

standards of corporate

governance, encouraging open

and constructive debate and

ensuring that the views of

shareholders and other key

stakeholders are understood

bythe Board.

The Chair also oversees the

annual evaluation of the

performance of the Board, its

Committees and individual

Directors and ensures that the

outcomes are acted upon.

Simon Roberts

As Chief Executive, Simon is

responsible for the day-to-day

management of the business

andfor leading the delivery of

thestrategy approved by the

Board. This includes proposing

strategy and business plans,

leading and motivating senior

management and ensuring the

effective implementation of

Boarddecisions.

As Chief Executive, Simon is also

responsible for maintaining the

effectiveness of the Group’s risk

management and internal

controlframework.

Bláthnaid Bergin

As Chief Financial Officer,

Bláthnaid supports Simon in

developing and delivering the

Group’s strategy and is

responsible for the Group’s

financial management

andperformance.

This includes oversight of

financial policies and practices,

risk management and key

financial functions, including

Pensions, Tax, Treasury and

Internal Controls.

Adrian Hennah (appointed

3July2025)

Brian Cassin (retired 3 July 2025)

As Senior Independent Director,

Adrian acts as a sounding board

for Martin and is available to

engage with shareholders where

required. The Senior Independent

Director also leads the annual

appraisal of the Chair.

Jo Bertram

Jo Harlow

Adrian Hennah

Tanuj Kapilashrami

Keith Weed CBE

Katie Bickerstaffe (appointed

3July 2025),

Steve Hare (appointed 3 July 2025)

The independent Non-Executive

Directors bring external

perspective, independence and

constructive challenge to Board

discussions. They support the

Executive Directors while holding

them to account and monitor

delivery of the agreed strategy

within the risk framework set by

the Board.

Nick Grant

As Company Secretary, Nick

advises the Board and the Chair

on governance matters and

supports the effective operation

of the Board. This includes

ensuring that Board procedures

are followed, the governance

framework remains effective and

Directors receive accurate, timely

and clear information.

The Board comprises the Chair, two Executive Directors and seven independent Non-Executive Directors, supported by the Company Secretary. The respective roles of the Chair and the Chief Executive are set out in writing

andagreed by the Board. Our Board and Committee meetings were held in person and remotely during the year, enabling agile and effective decision-making. Between meetings, the Chair also held regular calls 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. In addition to scheduled meetings, during the year, the Chair and Non-Executive Directors met without the Executive Directors present, and the Senior Independent Director met with

theNon-Executive Directors without the Chair or Executive Directors present. Further details of the specific skills and experience of the Board are set out on pages 55 to 57. The Board is supported by the Company Secretary.

58 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Board Committees

The Board is supported by a number of committees, each with clearly defined roles and responsibilities. The Board has delegated specific responsibilities to its Committees, each of which operates under agreed Terms of

Reference. The Committee Chairs provide regular updates to the Board on Committee meetings and activities. Whilst the committees have authority to consider specific matters in detail, responsibility for decisions

remains with the Board as a whole.

Audit

Chair: Adrian Hennah

Corporate Responsibility and

Sustainability

Chair: Keith Weed

Nomination and Governance

Chair: Martin Scicluna

Remuneration

Chair: Jo Harlow

Supports the Board in overseeing the integrity of the

Group’s financial reporting and metrics, including

climate-related metrics, the effectiveness of internal

controls and risk management, and the relationship

with the external auditor.

Supports the Board in overseeing the Group’s

sustainability strategy, monitoring progress and

performance against our targets and ambitions, as

well as the business’s engagement with stakeholders

on sustainability and corporate responsibility

matters.

Supports the Board on matters relating to Board

composition, succession planning, evaluation and

broader governance arrangements, helping to ensure

the Board has the right balance of skills, experience

and independence.

Supports the Board in setting remuneration policy

and determining remuneration outcomes for

Executive Directors and senior management,

including sustainability targets. The remuneration

policy is aligned with strategy, performance and

long-term shareholder value.

The Board is kept informed of the work of its Committees through reports from Committee Chairs following each meeting. Non-Committee members may attend Committee meetings where this supports Board oversight and

decision-making. Where a Director is unable to attend a Board meeting, the Chair engages with the Director in advance to ensure their views are considered and provides an update on the outcomes.

Further information on attendance is set out on page 55

The principal role and responsibilities of each of the Committees and their respective terms of reference, which are reviewed annually,

can be found on our corporate website at: https://corporate.sainsburys.co.uk/investors/corporate-governance/

Governance framework

Our governance framework supports the Board in promoting the long-term success of J Sainsbury plc

It is designed to ensure clear accountability, effective decision-making and strong oversight, while enabling the business to deliver its strategy in line with our purpose, culture and values. The framework reflects the principles

of the UK Corporate Governance Code 2024 and supports the Board in meeting its governance responsibilities.

Through this framework, the Board seeks to balance effective oversight with appropriate delegation. This enables the Board to focus on the most important issues facing the Group, while allowing management to operate with clarity

and accountability. The framework underpins the governance disclosures in this Annual Report and is kept under review to ensure it continues to reflect best practice and the evolving needs of the business.

Board of Directors

The Board is responsible for the overall leadership of the Group. It sets strategy, oversees performance and risk, and ensures that the interests of shareholders and wider stakeholders are taken into account in

decision-making. The Board and its Committees operate to a forward programme of meetings, ensuring sufficient time is allocated to key matters and that Board time is used effectively. Agendas remain flexible so that

emerging issues can be considered at the appropriate time.

The Board is accountable for risk management, strategy and target setting of our principal environmental risk, 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 has adopted a formal schedule of matters reserved for its attention. It is reviewed annually to ensure it remains appropriate and effective. This can be viewed on our corporate website: https://corporate.

sainsburys.co.uk/investors/corporate-governance.

59 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Governance framework continued

Operating Board

The Operating Board is responsible for the day-to-day management of the Group and for implementing the strategy approved by the Board. This includes oversight of the sustainability strategy, adapting to new regulatory requirements

and trends and approving major investments, including capital allocation. Matters not reserved to the Board are delegated in accordance with the governance framework.

Simon Roberts

Chief Executive

Bláthnaid Bergin

Chief Financial Officer

Rhian Bartlett

Chief Commercial and Sustainability Officer

Graham Biggart

Managing Director Argos and Chief Strategy Officer

Tracey Clements

Chief Retail, Logistics and Supply Chain Officer

Patrick Dunne

Chief Property and Procurement Officer,

andMDSmartCharge

Mark Given

Chief Technology, Marketing and Data Officer

More details about our Operating Board members

canbe found at: https://corporate.sainsburys.co.uk

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

Group Data

Governance Committee

Group Safety

Committee

Plan for Better

Acceleration Squad

Customer, Commercial and

Channels Forum

• 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

• 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 Chief

Information Security Officer and

Director of Data Governance, to the

Operating Board, Audit Committee and

Board

• 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

• Leads operational execution of our

Plan for Better strategy

• Oversees Plan for Better activities in

relation to this strategy to ensure

delivery

• Reviews climate-related risks and

mitigations

• Provides assurance to the Operating

Board and Board Committees, with

cross-divisional representation at the

senior leadership level

• 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

Operating Board changes

In September, Tracey Clements joined the Operating Board as Chief Retail, Logistics and Supply Chain Officer, Sainsbury’s a role that brought together, under one leader, Sainsbury’s Retail, Digital, Customer Experience,

Supply Chain and Logistics.

In addition, Mark Given became Chief Technology, Marketing and Data Officer to bring our Technology, data and insights and Nectar 360 Loyalty business together, and Rhian Bartlett become Chief Commercial and

Sustainability Officer to fully integrate commercial and sustainability outcomes.

To ensure Sainsbury’s and Argos have the focus they need to succeed, in May 2026, Graham Biggart’s role will change from Managing Director Argos and Chief Strategy Officer to being fully focused on leading Argos as

Managing Director, with a dedicated leadership team.

60 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Matters considered

bytheBoard

1. Strategy

Outcome

• Considered progress against the strategic plan and the

impact of inflationary pressures, increased costs and

interest rate changes 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

• Considered and approved the key strategic choices,

investments and organisational changes proposed to

support delivery of the Next Level Sainsbury’s strategy

• Considered external market developments and their

impact on customer needs and behaviours

• Assessed how the Next Level Sainsbury’s strategy was

delivering for shareholders and wider stakeholders

• Considered key investment choices including people,

technology and value

• 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

• Oversaw the phased withdrawal from core banking and

changes to the Group’s financial services offering

• Used learnings from external cyber incidents to support

the continued strengthening of the Group’s cyber

security and resilience

Benefits and consideration

• These matters enabled the Board to confirm that the

Group’s strategic direction remained appropriate and

supported long-term sustainable value creation

• Staying connected to our shareholders has enabled the

Board to make deliberate decisions on value investment,

colleague pay and ensuring the longevity of our

supply chain

Further information on the Group’s strategy can be

found on page 12

Board leadership and Company purpose

Strategy update

Next Level Sainsbury’s

The Board structured its agenda to support

effective oversight of strategy execution across

the year. Dedicated strategy discussions were

held in June, supported by regular progress

updates throughout the year. These sessions

focused on the key choices required to deliver the

Next Level Sainsbury’s strategy, including where

to invest, where to simplify and how to

strengthen execution pace. This approach

enabled the Board to maintain a balanced focus

across strategic planning, execution and oversight,

while retaining flexibility to respond to emerging

issues

Focus areas

The Board discussed the short and long-term

goals and the choices that the business would

need to make to achieve them, including:

• 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 the

final year of the strategy

• Restructuring key teams 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

• Future strategic options will be presented at

the strategy review day in June

• Supporting colleagues through a continued focus on

pay, safety, leadership capability and succession

• Ensuring that sustainability considerations,

including Plan for Better, were embedded within

core strategic and commercial decision-making

rather than treated as standalone activity

• Oversight of risk management, including key risk

areas such as cyber security and data governance

These priorities shaped the Board’s agenda,

discussions and decisions throughout the year.

How the Board makes decisions

The Board’s role is to provide clear leadership,

challenge and oversight, and to make decisions that

support the long-term success of the Group. During

the year, the Board considered a number of complex

matters where there were multiple potential courses

of action and differing stakeholder impacts.

In reaching its decisions, the Board sought to

understand the relevant insight and evidence, tested

assumptions and options presented to them, and

considered the implications for customers, colleagues,

suppliers, communities and shareholders. Where

appropriate, the Board requested further analysis or

alternative proposals before reaching a decision.

Further detail on how stakeholder views informed

the Board’s discussions is set out in the s.172

statement on pages 64 to 65

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.

Board activities

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.

The table on the following pages sets out the key

focus areas that the Board reviewed, discussed and

debated during the year.

The timeline of Board activities during the year

can be found on page 63

Board priorities during the year

During the year, the Board focused its time and

attention on a number of key priorities which it

considered critical to the long-term success of the

Group. In particular, the Board prioritised:

• Delivering the second year of the Next Level

Sainsbury’s strategy, including agreeing the key

choices, investments and organisational changes

required to support execution

• Strengthening the resilience of the Group, with

aparticular focus on capital allocation, balance

sheet strength and financial flexibility

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

61 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

2. Chief Executive report and

financial updates

Outcome

• The Board considered operational and financial

performance updates from the Chief Executive and Chief

Financial Officer at each meeting

• Periodic updates on sales, underlying retail operating

profit, retail free cash flow, working capital, stakeholders

and progress against KPIs

• Considered the Group’s financial position, including

liquidity, going concern and viability

• Monitored progress against the long-term plan

and budget

• Discussed balance sheet strength and leverage targets

• Considered funding and liquidity arrangements

• Approved the capital allocation framework, including the

approach to shareholder returns

• Monitored progress against the plan to exit core banking

services and streamline the Financial Services

proposition

• Considered the management of Group financing

activities, including debt refinancing and pension plans

• Continued its Euro Medium Term Note Programme

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

• Board oversight supports the strategic direction and

long-term viability and ensures that future liabilities

can be met

Further information can be found on pages 4 and 34

3. Risk

Outcome

• Considered the effectiveness of the Group’s risk

management and internal control framework

• 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

• Received updates from the Audit Committee Chair on the

maturity of the Group’s cyber security capabilities,

including the outcome of cyber testing and assurance

activity during the year, including learnings from these

activities and external cyber incidents

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

Further information on the Group’s internal control

and risk management framework can be found on

pages 73 to 80

Board leadership and Company purpose continued

4. Culture, diversity and inclusion

Outcome

• Considered and approved further investment in retail

colleague pay, taking account of affordability

and retention

• Approved changes to the workforce strategy to

strengthen leadership capability and support the

desired culture

• Maintained focus on culture and development as a

critical enabler of our longer-term success

• Considered succession planning for pivotal roles,

including Board and Operating Board appointments

• Approved leadership capability initiatives 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 and

inclusive 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

• Our vision is to be the most trusted retailer, where people

love to work and shop. Assessment and monitoring of the

Group’s culture is a key factor which supports effective

decision-making

• Supporting colleagues with leading pay and benefits is a

key part of our strategy to drive outstanding service

Further information on our people and culture can be

found on pages 20 to 23

Strategy update

Board oversight of culture

The Board recognises that culture is a critical

enabler of long-term performance and sustainable

growth. During the year, culture was a regular

feature of Board discussions, both as a standalone

topic and as part of wider strategic, operational

and people-related decisions.

The Board considered a range of qualitative and

quantitative insights to assess whether the

desired culture was being embedded across the

business. These included colleague engagement

feedback, insights from the Make It Better

Together panel, interactions with colleagues

during site visits and

updates on leadership

capability, succession and reward.

The Board also considered how its decisions

wouldreinforce the behaviours and ways of

working needed to deliver the Group’s strategy. In

particular, discussions on colleague pay,

leadership development and organisational

structure reflected the Board’sfocus on

accountability, inclusivity and

continuousimprovement.

The Board is mindful of the importance of leading

by example. Ongoing engagement and feedback,

including through the Board effectiveness review,

reinforced the importance of clear expectations,

open dialogue and constructive challenge in

setting the tone from the top.

62 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

5. Plan for Better

Outcome

• Reviewed our approach to Scope 1 and 2 decarbonisation

and approach to measurement in Scope 3

• Reviewed our community partnership strategy to

maximise impact

• Considered the future packaging strategy, including 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

Further information on our Plan for Better strategy

can be found on pages 30 to 33

6. 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 two of

the Next Level Sainsbury’s strategy

• Delivered enhanced shareholder returns through payment

of a progressive dividend, a £250 million share buyback

programme and a special dividend from the exit of

banking operations

Benefits and consideration

• Ensures shareholder sentiment is understood and

considered when making decisions

Further information on the Group’s investment case

can be found on page 7

7. Safety and wellbeing

Outcome

• Reviewed major safety incidents and the safety strategic

plan, including updates on trends and the Group’s

safety culture

• Discussed food safety, including the impact of macro

events on the global food supply chain

• Considered the impact of increasing retail crime and the

adequacy of proposed actions to protect colleagues

and customers

• Supported continued investment in physical, mental and

financial wellbeing support, including access to wellbeing

programmes and resources

Benefits and consideration

• The Board places significant importance on looking after

the safety of colleagues, customers and anyone else

impacted by our business

• Wellbeing support helps colleagues to perform at their

best and in an environment where everyone can thrive

Further information on health, safety and wellbeing

can be found on pages 21 to 22

8. Governance matters

Outcome

• Updates from the Chairs of the Committees to ensure

alignment across the Board

• Review of regulatory and legislative reforms and

implications for Sainsbury’s

• Considered the findings of the Board effectiveness review

and agreed actions to enhance performance and oversight

• Legal and governance updates, including material

litigation and Modern Slavery

• Review and approval of statutory reporting and

shareholder documentation

• Ensured compliance with the UK Corporate Governance

Code 2024 and preparations for adoption of Provision 29

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

Board leadership and Company purpose continued

Board activities during the year

March

July

April

September

December

June

October

January

Deep dive: Updates on people and technology strategy

Discussions:

• Full-year trading performance, competitive environment and outlook for 2026

• Considered capital allocation priorities, including dividend policy and potential

share buyback

Approvals:

• Updates to the Matters Reserved for the Board in line with the 2024 UK Corporate

Governance Code

• Change of the Company’s registered office

Event: Annual General Meeting

Approval: Modern Slavery Policy

Discussion: Working with our partners on sourcing resilience and value chain

Announcement: Publication of 2024/25 full-year results and launch of share

buyback programme

Approval: Termination of discussions in relation to the sale of Argos

Discussion: Next phase of share buyback and return of Bank proceeds to

shareholders via a special dividend

Discussion:

• Reviewed plans for Christmas trading

• 2026/27 budget

Event: Held a strategy session reviewing year one of the Group’s strategy, including

market, customer and shareholder perspectives and reviewed strategic priorities

for years two and three

Deep dive: Review of cyber security, including external events and key learnings

Discussion:

• Half-year trading performance and updated outlook

• Interim and special dividends and share buyback programme

• Update on core banking services exit and future financial services proposition

Announcement: Publication of the 2025/26 half-year results

Approval:

• Group’s corporate plan and budget

• Triennial pension valuation and sponsoring employer changes

• Renewal of the EMTN programme and updates to the Treasury Policy

Announcement: Publication of the 2025/26 Christmas trading results

63 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Section 172 statement

How the Board engages with stakeholders

During the year ended 28 February 2026, our Board has acted in accordance with section 172 of the Companies Act 2006 with each Director acting in the way they considered, 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, our Directors had regard to the interests of other stakeholders, whilst maintaining high standards of business conduct. Examples of how our

Directors applied these matters in their decision-making are included throughout this Annual Report.

More information on the Group’s engagement with

stakeholders can be found in Engaging with our

stakeholders on pages 24 to 29

Section 172 duties Relevant disclosure and page number

The likely consequences of

Board decision‑making in

thelong term

• Business model on page 6

• Chair’s letter on page 4

• Our purpose in action on page 10

• Chief Executive’s statement on page 8

• Strategy overview on page 12

• Delivering on our outcomes on page 13

• Plan for Better report on page 30

• Our people and culture on page 20

• Engaging with our stakeholders on page 24

• Key performance indicators on page 18

• Financial review on page 34

• Principal risks and uncertainties on page 40

• Statement of viability on page 48

• Introduction to the governance report on page 53

• Governance framework on page 59

• Board leadership and Company purpose on page 61

• Annual report on remuneration on page 94

The interests of our colleagues

• Business model on page 6

• Chair’s letter on page 4

• Our purpose in action on page 10

• Chief Executive’s statement on page 8

• Plan for Better report on page 30

• Our people and culture on page 20

• Engaging with our stakeholders on page 24

• Key performance indicators on page 18

• Introduction to the governance report on page 53

• Governance framework on page 59

• Board leadership and Company purpose on page 61

• Annual report on remuneration on page 94

The need to foster our business

relationships with suppliers,

customers and others

• Business model on page 6

• Our purpose in action on page 10

• Chief Executive’s statement on page 8

• Strategy overview on page 12

• Delivering on our outcomes on page 13

• Engaging with our stakeholders on page 24

• Key performance indicators on page 18

• Introduction to the governance report on page 53

• Governance framework on page 59

• Board leadership and Company purpose on page 61

• Corporate Responsibility and Sustainability Committee report

on page 71

The impact of our operations

on the community and

theenvironment

• Our purpose in action on page 10

• Chief Executive’s statement on page 8

• Strategy overview on page 12

• Delivering on our outcomes on page 13

• Plan for Better report on page 30

• Climate change and Task Force on Climate-related Financial

Disclosures (TCFD) on page 104

• Principal risks and uncertainties on page 40

• Governance framework on page 59

• Board leadership and Company purpose on page 61

• Nomination and Governance Committee report on page 67

• Corporate Responsibility and Sustainability Committee report

on page 71

The desirability of maintaining

a reputation for high standards

of business conduct

• Strategy overview on page 12

• Delivering on our outcomes on page 13

• Engaging with our stakeholders on page 24

• Key performance indicators on page 18

• Principal risks and uncertainties on page 40

• Non-financial and sustainability information statement

on page 50

• Introduction to the governance report on page 53

• Board leadership and Company purpose on page 61

• Governance framework on page 59

• Nomination and Governance Committee report on page 67

• Annual report on remuneration on page 94

The need to act fairly

betweenshareholders

• Engaging with our stakeholders on page 24

• Introduction to the governance report on page 53

• Board leadership and Company purpose on page 61

• Audit Committee report on page 73

64 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Board stakeholder engagement

How the Board engages with stakeholders

The Board receives regular updates on each of our stakeholder groups during the year, enabling a

deep understanding of risks andopportunities aligned to the Group’s strategy.

Decision in action

With colleagues:

Throughout the year, the Board engaged closely withcolleagues through regular meetings with our workforce advisory panel, the National Make It

BetterTogether group, providing direct insight into colleague experience across the business. These insights informed Board discussions on culture,

leadership capability and colleague priorities.

Workforce panel feedback and sentiment tracking highlighted ongoing cost of living pressures and demand for frontline skills development. The Board

approved a sector-leading pay increase and investment in wellbeing and capability programmes, supporting stronger colleague retention and continued

delivery of high quality customer service.

Colleague pay

The Board approved an above inflation pay increase for hourly paid retail

colleagues for the year ahead, reflecting its continued focus on

supporting colleagues and maintaining a competitive reward

proposition. In reaching its decision, the Board considered colleague

feedback, cost of living pressures, productivity, affordability and the

long-term sustainability of the business.

With customers:

Board members spent time in stores during the year, engaging directly with customers and observing customer journeys. These visits provided

first-hand insight into how customers shop, what matters most to them and how value, quality and availability are experienced in practice, informing

Board discussions on strategic priorities.

Customer dashboards and Nectar insight highlighted sustained sensitivity to essential-item pricing and friction in checkout journeys. In response, the

Board approved price investment to bring prices down for customers and prioritised digital improvements to support value, availability and ease of

shopping, contributing to improved availability during peak trading and stronger customer loyalty, supporting volume growth and market share gains.

Trends in the health space

The Board received updates on the trends and external factors

shaping the health and nutrition space, prompted by shifting

customer behaviour towards healthy options, particularly fibre and

high protein diets. Insights from the discussions supported

management in developing initiatives that help customers make

healthier and more sustainable choices.

With suppliers:

During the year, members of the Board met with a number of suppliers, including a supplier dinner and site visits. This facilitated the Board’s

understanding of the challenges faced and support that can beprovided.

Supplier surveys, including the GSCOP and Advantage Surveys, provided key insights and underlined the need to prioritise investment in logistics

capability and to extend long-term agricultural and supplier partnerships. These actions strengthened supply chain resilience and supported progress on

sustainability collaborations and security of supply. See Plan forBetter report on page 30 for more details.

Supplier visit

In April 2025, the Board visited Pilgrim’s, one of the Group’s farming

partners which has been supplying chicken to Sainsbury’s for over 60

years. The visit explored how our suppliers are delivering on the

sustainability agenda, as well as the challenges they face to achieve

this.

With shareholders:

Throughout the year, the Board engaged extensively with our shareholders to ensure their understanding of investor viewpoints and to discuss

performance, strategy and industry dynamics. Members of the Board also engage with shareholders through formal reporting channels which ensure

equal access to information, such as our results presentation webcasts, Analyst Q&A calls and our corporate website, as well as engaging with

shareholders at our hybrid Annual General Meeting.

The Board’s discussions on returns to shareholders took into consideration shareholder feedback alongside the Group’s long-term investment needs. The Board

approved the continuation of the share buyback programme and a special dividend. Adecision was taken not to pursue a share consolidation on the basis

that this would not be in the best interests of all of the Group’s shareholders. The Board considered the interests of all shareholders when setting dividend and

buyback parameters, including the timing and method of returning capital so that retail and institutional investors could participate equitably.

More information on the Group’s engagement with stakeholders can be found in Engaging with our stakeholders on pages 24 to 29

Strategic review ofArgos

During the year, the Board considered an external approach relating

to a potential sale of Argos. In line with its responsibilities, the Board

assessed the strategic rationale for the proposal, the long-term

implications for the Group and the potential stakeholder impact.

Following further engagement and a material change in the terms

proposed, the Board concluded that the proposal was not in the best

interests of the Group’s shareholders, colleagues and broader

stakeholders. Accordingly, the Board terminated the discussions.

This decision reflected the Board’s disciplined approach to capital

allocation and its commitment to protecting the strength, heritage

and future potential of the Argos brand.

65 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

The Board monitors its performance and effectiveness through an annual evaluation

of the Board as a whole, its Committees and individual Directors.

Progress made against 2024/25

actions

Actions identified through the 2024/25 internal

review were embedded into the Board and

Committee forward agendas and monitored during

the year to ensure they translated into practical

changes in how the Board operates.

2024/25 focus area Action taken during the year

Customer voice Board visibility of customer

insight was broadened by

introducing regular updates on

customer sentiment and

feedback into ourmeetings.

Colleague

engagement

Members of the Board provide

mentorship to senior leaders and

rising talent within the business.

In addition, senior management

at the layer below the Operating

Board regularly present agenda

items to the Board.

Skills and

experience

Katie Bickerstaffe and Steve Hare

joined the Board in 2025,

strengthening both retail and

technology expertise on the

Board.

Succession

planning

To increase the Board’s focus on

succession planning and talent

development of senior

management, the number of

Nomination and Governance

Committee meetings was

increased to four per year. Talent

and succession planning was

added as a standing agenda

item for the Committee.

Board effectiveness review

The Chair and Board work throughout the year to

strengthen and enhance the performance of the

Board, ensuring that the Board’s skills and

capabilities are aligned to the Group’s strategy.

In 2025/26, the Board undertook an externally

facilitated Board effectiveness review. The review

took a forward-looking perspective, focusing on how

the Board needs to continue evolving to support the

Group’s strategic priorities, both in the final year of

the Next Level Sainsbury’s strategy and over the

coming years. These effectiveness reviews operate

on a three-year cycle as shown below. An externally

facilitated Board effectiveness review provides the

Board with an independent assessment of the

performance of the Board.

In 2025/26 the Board engaged Elaine Sullivan and

Andrew Lowenthal of Manchester Square Partners to

carry out the review. Neither Manchester Square

Partners nor the individual facilitators has any other

material connection with the Company or its

Directors and the Board was satisfied as to their

independence. Individual contributions were treated

as confidential and non-attributable. During 2026/27,

an internal effectiveness review will be undertaken.

2025/26

Externally facilitated review

2023/24

Internal review

Building on themes from the previous

externally facilitated evaluation

2024/25

Internal effectiveness review

Building on themes from the previous review

2025/26 Effectiveness review

An overview of the external effectiveness review is

set out below:

Focus of the review

• Strategy development and strategic priorities

• Operational challenges, perceived risks and

riskmanagement

• Finance and key performance indicators

• Relationship with stakeholders

• Talent management and succession planning

• Purpose, values and culture

• Board role and dynamics

• Board composition, succession and engagement

Findings of the review

The review concluded that the Board is a strong, high

calibre and effective Board, with strong and effective

leadership by the Chair. It noted that there were high

levels of engagement, trust and collaboration

between Executive and Non-Executive Directors,

enabling robust challenge and effective

decision-making. The Board’s culture was positive

and aligned with the Group’s values, characterised by

openness, respect and a shared commitment to

long-term success. The Directors were found to have

a well-balanced mix of skills and experience around

the Board table, with recent appointments further

strengthening retail and technology capability.

Overall, the review confirmed that the Board is well

placed to support delivery of the final year of the

Group’s Next Level Sainsbury’s strategy, while

identifying clear areas of focus to ensure it continues

to evolve and remain effective over the longer term.

Actions for 2026/27:

• Ensure sufficient time in the Board agenda for

forward-looking, exploratory discussion as the

Board supports development of the next phase

of the Group’s strategy

• Maintain focus on people, talent and succession

planning to ensure future leadership capability

remains aligned with the Group’s evolving needs

• Continue to refine Board agendas and ways

ofworking to balance early engagement on

emerging topics with effective challenge once

proposals are sufficiently developed

• Strengthen the prominence of customer

insight and customer experience in Board

discussions

• Continue to ensure that risk management and

risk appetite are explicitly considered in

prioritisation and decision-making

September 2025

Selection of external effectiveness review

provider. Discussions with Chair and Company

Secretariat on scope and deliverables

October 2025

Reviewed Board and Committee papers for the

preceding 12 months

October 2025 – January 2026

Conducted individual interviews with all Board

members, the General Counsel and Company

Secretary, and the Deputy Company Secretary

October 2025 – January 2026

Observed meetings of the Board and Committees

March 2026

Discussed findings with the Chair and presented

the report to the Board

April 2026

Developed action plan to measure progress

against key findings

66 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Priorities for next year

• Implementation of actions arising from

theexternally facilitated Board effectiveness

review

• Continued oversight of the business’s diversity,

equity and inclusion strategy

• Review of talent and succession planning for

the Board and senior management

• Ensuring continued compliance with the UK

Corporate Governance Code 2024

Key activities in 2025/26

In addition to the matters referred to above, the Nomination and Governance Committee has carried out all

activities in accordance with its Terms of Reference, including the following activities:

Committee activity Outcome

Reviewed talent and succession planning

for the Operating Board and senior

management

Provided the Board with assurance that appropriate

succession plans are in place to support leadership continuity.

Reviewed and approved the Directors’

Ensured appropriate processes are in place for the

identification, disclosure and management of actual and

potential conflicts of interest.

Reviewed the Company’s governance

framework

Confirmed continued alignment with the UK Corporate

Governance Code 2024 and relevant best practice.

Considered the performance and

independence of Directors and

recommended annual election and

re-election at the AGM

Supported Board accountability to shareholders and

compliance with applicable legal and regulatory requirements.

Reviewed and approved the Board

DiversityPolicy

The Committee confirmed that the Board Diversity Policy

remains appropriate and that progress against the Board’s

diversity objectives will continue to be monitored on a

regular basis.

Dear Shareholder

On behalf of the Board, I am pleased

to present the Nomination and

Governance Committee’s report

for2025/26, which sets out the

Committee’s work during the year

and how we have supported the

Board in maintaining the right

balance of skills, experience and

governance oversight.

Board composition, succession

andtalent

Board composition and succession planning

remained a key focus for the Committee this year,

with the Group entering the final year of the Next

Level Sainsbury’s strategy and starting to plan for

our next phase of growth. In July 2025, Katie

Bickerstaffe and Steve Hare joined the Board as

Non-Executive Directors following a rigorous and

transparent appointment process and the

Committee oversaw their onboarding and tailored

induction to support their early and effective

contribution. Further detail on their induction

programmes is set out later in this report.

I am pleased to announce that Katie and Steve

joinedthe Nomination and Governance Committee

this year. Their experience and perspectives

havebeen welcomed and have supported the

Committee’sdiscussions.

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.

Board effectiveness review

The Committee also oversaw an externally facilitated

Board and Committee effectiveness review during

the year and I am pleased to confirm that the review

found that the Board and all of its Committees were

operating effectively. The process and outcomes of

the review are discussed in more detail later in this

report and on page 66.

Looking ahead

We will continue to focus on succession planning and

Board composition, ensuring effective decision-

making and the right set of skills and capabilities as

we move into the next phase of our strategy.

Martin Scicluna

Chair, Nomination and Governance Committee

Nomination and Governance Committee report

Committee governance

The Committee consists of the Chair of the Board and

the seven independent Non-Executive Directors.

The Chair of the Board isalso the Chair of the

Committee, and the Company Secretary or his

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 a number of ad hoc meetings for the

Committee to discuss succession planning.

Attendance at the scheduled Nomination and

Governance Committee meetings can be found

on page 55.

67 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

oversaw the tailored induction programmes for

KatieBickerstaffe and Steve Hare, shaped around

their respective experience and the perspectives

they bring to the Board.

Katie Bickerstaffe

Katie Bickerstaffe brings deep experience in

consumer-focused businesses, digital transformation

and organisational leadership. Her induction was

therefore shaped to support her understanding of

how Sainsbury’s strategy is delivered day to day in a

large-scale retail and supply chain environment, and

how sustainability and stakeholder considerations

are built into commercial decision-making. The

programme focused on engagement with senior

leaders across Commercial, Strategy, Sustainability,

Data and Risk teams, alongside site visits to build

first-hand insight into the Group’s operations. This

approach supported her early contribution to Board

discussions and to her roles on the Nomination and

Governance Committee and the Corporate

Responsibility and Sustainability Committee.

Steve Hare

Steve Hare joined the Board with significant

experience as a listed company chief executive and

finance leader. His induction therefore focused on

building a detailed understanding of Sainsbury’s

operating model and customer proposition and the

practical drivers of performance and risk in a

complex retail business. Alongside meetings with

senior leaders responsible for finance, audit, risk

andgovernance, the programme included extensive

exposure to stores, depots, suppliers and customer

journeys. This helped Steve build on his existing

board and financial expertise by developing a clear

understanding of how the Next Level Sainsbury’s

strategy is delivered in practice, supporting his

contributions to the Board and his work on the

AuditCommittee and the Nomination and

Governance Committee.

Nomination and Governance Committee report continued

Committee effectiveness review

An independent external evaluation of the

effectiveness of the Board and its Committees was

conducted during the year in line with the UK

Corporate Governance Code. The review was

facilitated by Manchester Square Partners.

Thereview concluded that the Nomination and

Governance Committee operates effectively and

plays an important role in supporting the Board’s

governance, composition and succession planning

responsibilities. The Committee was seen as well

chaired, with all Non-Executive Directors engaged

inits work. The review highlighted confidence in the

Committee’s oversight of Board composition and its

thoughtful approach to maintaining an appropriate

balance of skills, experience and diversity. Overall,

the Committee was viewed as making a strong

contribution to the ongoing effectiveness and

stability of the Board. Further details can be found

onpage 66

Continuing professional

development andtraining

The Committee supported ongoing Board

effectiveness through a focused programme of

training, business engagement and external insight.

Key training and development activities during the

year are summarised on the right-hand side.

Succession planning

Talent development

The Committee oversees the development of a strong

and diverse pipeline for senior leadership roles across

the short, medium and longer term. Throughout the

year, we reviewed succession plans at executive and

senior management level, monitored the progress of

future leaders and assessed the depth of talent

across the Group to ensure we continue to build a

resilient and diverse management pipeline.

Members of the Board provide mentorship to senior

leaders and rising talent within the business and we

continue to invest in leadership development programmes.

Appointments to the Board

The Committee follows a formal, rigorous and

transparent process for Board appointments,

informed by the Board skills matrix, succession

planning priorities and the need to maintain an

appropriate balance of skills, experience,

independence and diversity. Egon Zehnder was

engaged by the Committee as the external executive

search consultant. It 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.

Induction

Induction programmes for new Directors during the

year were tailored to reflect their experience and

backgrounds, combining briefings with senior

leaders, governance and risk deep dives and

operational site visits to support early and

effectivecontribution.

New Director inductions

The Committee recognises the importance of

supporting new Non-Executive Directors as they

jointhe Board and begin contributing to the delivery

of our strategy. During the year, the Committee

Spotlight

Key Training and

Development for Board

in2025/26

• Mandatory governance and conduct

training: Equipped Directors with essential

regulatory, ethical and information security

knowledge to support compliant and

responsible Board level decision making.

• Safety teach in: Strengthened the Board’s

oversight of colleague/customer safety,

criticalincident preparedness and food safety

governance to enhance risk management.

• Supplier site visit: Provided operational

insight into sourcing practices and risks to

reinforce supply chain oversight and

understanding of supplier standards.

• Sourcing resilience and supply chain risk:

Enhanced the Board’s understanding of

structural and operational supply chain risks,

strengthening its ability to challenge and

support management on sourcing vulnerabilities,

business resilience and upcoming

transformation and strategic decisions.

• Technology and workforce strategy

development sessions: Built Board

understanding of key strategic enablers –

technology, data literacy and workforce

capability – to support robust challenge

andoversight.

68 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Governance framework and

regulatory developments

To ensure continued compliance with the UK

Corporate Governance Code 2024 and evolving best

practice, the Committee reviewed the Group’s

governance framework during the year. This included

the Matters Reserved for the Board, Committee

Terms of Reference and the role descriptions of the

Chair, Chief Executive Officer and Senior Independent

Director. The Committee recommended a number of

updates to the Board to ensure continued alignment

with best practice. The Committee also monitored

compliance with legal and regulatory requirements

and considered the impact of emerging regulatory

developments, including the Economic Crime and

Corporate Transparency Act.

To support more effective oversight, the Committee

agreed to increase the number of its scheduled

meetings from two to four per year.

Independence, conflicts

andtime commitment

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.

The Committee reviewed Directors’ conflicts of

interest and external commitments and was satisfied

that appropriate processes remain in place to identify,

manage and disclose any actual or potential conflicts,

and that Directors continue to have sufficient time to

discharge their responsibilities effectively.

Nomination and Governance Committee report continued

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 review process. The Committee

concluded that there were no reasons identified

toprevent any Director from being recommended

forre-election at the 2026 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.

In 2025 we 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 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. Our progress

towards these targets is supported by regular

monitoring and talent interventions designed to

support the progress of women and those from

ethnically diverse backgrounds.

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: corporate.sainsburys.co.uk.

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 we serve.

Monitoring and reporting

As at 28 February 2026, 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 50 per cent.

As at 28 February 2026, 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.

More information on the Board’s diversity targets

canbe found on page 120

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 23, including

diversity information of our senior leadership and

management positions

Board diversity objectives

The Board aims to maintain a level of at least 50 per

cent female representation on the Board and in

senior management

. It is recognised that there may

be periods of change on the Board when this number

may be smaller while the Board is refreshed.

However, it is the Board’s longer-term intention to

maintain this balance.

The Board supports the recommendations set out in

the Parker Review and intends to maintain at least

one Director who identifies as ethnically diverse.

Five of our ten Board Directors are women (50 per cent)

and one identifies as ethnically diverse. In making its

recommendations to the Board, the Committee has

due regard to the UK Corporate Governance Code 2024

and other best practice and will consider the balance

of skills, experience, independence and knowledge of

the Board, its diversity in the broadest sense, how the

Board works together as a team and other factors

relevant to its effectiveness.

69 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Diversity, equity and inclusion continued

The Board continues to review the development of the pipeline of both ethnically diverse and female senior management within the business. Three of the seven members of our Operating Board are women.

The Board supports and encourages initiatives thatstrengthen the pipeline of talent in the Company,including:

• A comprehensive talent management review which is presented and discussed by the Board

• Highly personalised plans and initiatives 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 management mentoring schemes sponsored by Board and Operating Board members

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

Through our in-house executive team and selected partnerships with executive search firms and market

intelligence organisations, we deliver adiverse range of candidates for all Director roles

As at 28 February 2026, five

ofour ten Board Directors

arefemale (50 per cent)

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

Through our in-house executive team and selected partnerships with executive search firms and market

intelligence organisations, we deliver adiverse range of candidates for all Director roles

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

Through our in-house executive team and selected partnerships with executive search firms and market

intelligence organisations, we deliver a diverse range of candidates for all Director roles

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

Three of the seven members

of our Operating Board

arewomen

a) The definition of ‘senior management’ in the UK 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 180

senior management 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 approx. 180 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.

Nomination and Governance Committee report continued

70 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

standards. The Committee’s visit to Pilgrim’s, one of

the Group’s chicken suppliers, provided valuable

first-hand insight into how our partners are

delivering high welfare and sustainability standards

and reinforced the importance of long-term

relationships in supporting resilience across the food

system.

Committee changes

We were pleased to welcome Katie Bickerstaffe

tothe Committee this year, bringing further

commercial and stakeholder insight that has

strengthened our discussions.

Committee effectiveness

Following the externally facilitated effectiveness

review, I am pleased to report that the Committee

was found to operate effectively, with strong

oversight and constructive challenge.

I would like to thank my Committee colleagues,

JoBertram, Katie Bickerstaffe, Jo Harlow, Simon

Roberts and Martin Scicluna and all the members of

management who attend, report to and support the

Committee for their commitment and engagement,

which has enabled the Committee to operate

effectively over the year.

Keith Weed

Chair, Corporate Responsibility and

SustainabilityCommittee

Corporate Responsibility and Sustainability Committee report

Dear Shareholder

It has been a busy and purposeful

year for the Committee as we

continued to oversee the delivery of

our Plan for Better commitments.

Our focus remained on ensuring that sustainability is

firmly embedded in the delivery of the Group’s

strategy by using our scale, influence and resources

to drive positive change across the food system.

The Committee’s work this year has focused on the

sustainability foundations that underpin this –

climate transition planning, long-term supplier

partnerships and food system resilience, healthier

choices and community impact.

The Committee oversaw strong progress across our

community programmes, including an uplift in food

redistribution and more than £8.7 million raised for

Comic Relief, reinforcing our ambition to tackle food

poverty and support families across the UK.

During the year we reviewed progress across

thesustainability priorities most material to the

business. Deep dive discussions strengthened our

understanding of how customers, investors, suppliers

and communities experience our sustainability

agenda and helped shape the areas of focus in the

year ahead. We also continued to monitor emerging

regulation to ensure the Group remains well prepared

for future reporting requirements.

This year, the Committee has overseen our work with

farmers and suppliers to strengthen the supply of

good food, help tackle the climate, nature and labour

challenges the sector faces and raise animal welfare

Key activities in 2025/26

Committee activity Outcome

Approved the year-end results and

reporting for2024/25

Provided assurance to the Board on the integrity, balance and

completeness of the Group’s 2024/25 sustainability-related

disclosures, including approval of year-end Corporate

Responsibility and Sustainability reporting forpublication.

Reviewed the Plan for Better metrics and

targets, including priorities for 2025/26

Confirmed that the proposed Plan for Better priorities,

metrics and targets were appropriately aligned to the Group’s

strategy and long-term value creation and endorsed the

suitability of proposed sustainability-related measures for

inclusion in executive incentive arrangements.

Received regular updates on key

stakeholders and how they align to our

sustainability agenda

Enhanced the Committee’s understanding of progress, risks

and opportunities across the value chain, including climate

transition, health, responsible sourcing and human rights,

and supported the challenge and assurance the Committee

provided to the Board.

Approved updates to the Committee’s

Terms ofReference

Approved updates to the Committee’s Terms of Reference,

ensuring continued clarity of remit, responsibilities and alignment

with evolving governance and regulatory expectations.

Received updates on the Group’s packaging

strategy, Scope 1, Scope 2 and Scope 3 carbon

emissions reduction, animal health and

welfare and the Group’s work on human rights

The Committee has clear oversight of the Plan for Better

strategy, gaining clarity on priority areas of focus for the future.

Received updates on changes to UK

sustainability reporting requirements,

including on readiness and future approach

Considered changes in UK sustainability reporting requirements

and received assurance on the Group’s preparedness and planned

approach to future regulatory and disclosure developments.

Committee governance

The Committee consists of the Chair of the Board,

four Non-Executive Directors and the Chief

Executive. The Committee is chaired by Keith

Weed, and the Company Secretary or his

nominee acts as the Secretary of the Committee.

Other attendees include the Chief Commercial

and Sustainability Officer, Director of Corporate

Affairs and Director of Sustainability.

The Committee held four meetings in the year.

Attendance at the Corporate Responsibility and

Sustainability Committee meetings can be found

on page 55.

Further information on the Group’s sustainability

agendacan be found on pages 30 to 33 andon

https://corporate.sainsburys.co.uk/

Priorities for next year

• Oversight of delivery of the Group’s

sustainability strategy, including progress

towards net zero across Scope 1, 2 and 3

• Monitoring of regulatory and stakeholder

developments, including packaging and

extended producer responsibility

• Oversight of human rights and supply chain

due diligence

• Consideration of health and resilience priorities

relevant to the Group’s strategy

• Oversight of sustainability-related

performance and reporting, including year-end

disclosures and forward priorities

71 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 104 to 115.

The Committee reviewed the Plan for Better results

which included the performance, targets and

priorities for the upcoming year.

In addition, the Committee received deep dive

presentations across a number of material issues,

which support the Committee in overseeing and

challenging management in the delivery of our

sustainability targets.

These sessions enhanced the Committee’s

understanding of progress, risks and opportunities

across the value chain, including climate transition,

health, responsible sourcing and human rights,

and supported the challenge and assurance the

Committee provided to the Board.

Corporate Responsibility and Sustainability Committee report continued

Specific topics considered are set out below:

Updates on the Group’s community and partnership work, including an

update on the future ambition of the Group’s Comic Relief partnership

Provided oversight of the Group’s community and partnership activity, including

endorsement of the strategic ambition and long-term direction of the Comic Relief

partnership to maximise social impact. This work continues to reinforce the Group’s

commitment to making good food accessible to everyone and supporting families

across the UK.

Discussed the approach, progress and priorities of the Group’s human rights

work

Reviewed the Group’s approach to human rights, gaining assurance over progress

to date and clarity on priority areas of focus to support responsible business

practices across the value chain.

Further information can be found on page 24 to 29.

Received updates on our approach to achieving net zero, including

challenges, climate transition planning and emissions reduction plans

androadmaps for Scope 1, 2 and 3 emissions

Provided oversight of the Group’s climate strategy, including net zero planning,

emissions reduction roadmaps and transition challenges, and considered the

robustness of the approach to Scope 3 emissions reporting and disclosure.

Further information can be found on pages 104 to 115.

Reviewed the Group’s revised packaging strategy and targets Reviewed and provided challenge on the Group’s updated packaging strategy and

targets, ensuring they were credible, clearly articulated and aligned with wider

sustainability commitments.

Received upskill on trends and external factors in the health and nutrition

space, discussing the implications of these on our future health strategy

Enhanced the Committee’s understanding of emerging health and nutrition trends

and external drivers including shifting customer expectations, supporting informed

oversight of the Group’s future health strategy.

Oversaw the Group’s approach to responsible sourcing

Provided understanding of how the strengthening of long-term supplier

partnerships support availability, resilience and high welfare standards across the

food system.

Stakeholder engagement

The Committee considers the impact of the Plan for

Better strategy on our key stakeholders, including

customers, 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.

Further details on the stakeholder updates are set out below:

Discussed the Group’s engagement with suppliers, including the results of

the Groceries Code Adjudicator report and the 2025 Advantage Survey

Gained insight into stakeholder perceptions of the Group’s sustainability

performance and identified priority areas of focus to inform future engagement

and Plan for Better activity.

More information on our engagement with suppliers can be found on page 27.

Received updates on the government relations engagement strategy for

2025/26, including key focus areas on health, food strategy, circular

economy and engagement with key government figures and departments

Reviewed the Group’s government relations priorities and engagement approach

for the year ahead, providing oversight of how external policy developments and

political change are being managed and addressed.

Updated on the investor feedback on sustainability themes, the Group’s

strategy for future engagement with investors on sustainability and Plan

for Better communication

Provided oversight of the Group’s approach to communicating sustainability

progress to investors, ensuring messaging was clear, consistent and aligned with

the Group’s strategic priorities and disclosures.

Reviewed customers’ expectations and perceptions across key

sustainability topics including health, food waste, animal welfare, plastics

and recycling

Developed an improved understanding of customer expectations and perceptions

across the Plan for Better pillars, helping to inform the ongoing focus and evolution

of the Group’s sustainability priorities.

Further information on stakeholder engagement can be found on pages 24 to 29

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Audit Committee report

Dear Shareholder

I am pleased to present the

Committee’s report for the

year ended 28 February 2026.

This report summarises

themain matters the

Committee considered

andhow we discharged

our responsibilities during

the year.

The Committee has delegated authority from the Board

to oversee the integrity of the Group’s financial

reporting, the risk management framework and internal

control environment. This includes an assessment of

financial reporting to confirm 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

strengthening the risk management and internal

controls framework, overseeing the transition to the

Group’s new external auditor, and key risk areas

including cyber security and data governance.

Risk management and internal

controls framework

The Committee reviews the effectiveness of the

Group’s risk management and internal controls

systems on at least an annual basis. This review

covers all material controls, including financial,

operational and compliance controls. The revised

Provision 29 of the UK Corporate Governance Code

2024 (the Code), which will be applicable for the Group

from 2026/27, expands on the previous requirement for

Boards to annually review the effectiveness of the

Company’s risk management and internal control

systems to review the effectiveness of the risk

management and internal control framework. The

revised provision stipulates additional reporting

requirements, including a description of how the

Board has monitored and reviewed the effectiveness

of the framework. During the year, the Committee

oversaw the Group’s preparation for the revised

Provision 29, including the expansion of the scope of

material controls to include reporting controls and

overseeing a structured dry run of internal controls

assurance. The Committee received regular updates

on progress and reviewed the outcomes of the dry

run exercise in April 2026.

The following timeline summarises the key activities

undertaken during the year to prepare for the revised

Provision 29 requirements and highlights the Audit

Committee’s oversight at each stage.

Further information can be found on page 74

Cyber security

Cyber security remained an important area of focus

for the Audit Committee throughout the year, given

its relevance to the Group’s operational resilience

andinternal control environment. The Committee

received regular updates from the Chief Information

Security Officer and the Director of Data Governance

and Information Security on the evolving threat

landscape and the Group’s approach to managing

cyber risk.

Using the National Institute of Standards and

Technology framework, the Committee monitored

the maturity of the Group’s cyber security capabilities

to consider areas of vulnerability, mitigations in place

and residual risk. The Committee also reviewed the

outcomes of cyber testing and assurance activity

during the year, including penetration testing and

simulation exercises, and considered lessons learned

from these activities and from external cyber incidents

affecting in particular the retail sector. The Committee

provided oversight and challenge to management

onprogress against agreed actions, supporting the

continued strengthening of the Group’s cyber

security and resilience.

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 Committee oversaw the progress on the strategic

changes to the Group’s Financial Services business.

This included the migration of Bank customers to

NatWest Group and NewDay, the sale of the travel

money business to Fexco Group, the transition of Bank

ATMs to NoteMachine and the establishment of a new

arrangement with Allianz UK for the provision of

insurance products. The Committee was satisfied that

the changes were subject to appropriate governance,

risk management and financial reporting oversight.

External auditor

Following its formal appointment at our AGM in July

2025, I am pleased to report that there has been a

smooth transition to PricewaterhouseCoopers (PwC)

as the Group’s auditor for the year ended 28February

2026. The Committee oversaw a well-planned

transition to PwC, ensuring effective handover

arrangements, continuity of audit quality and robust

oversight throughout the process. Ernst & Young has

remained in role as external auditor of Sainsbury’s

Bank, which continues to be subject to the same

oversight by the Committee.

Committee changes

I am pleased to announce that Steve Hare joined the

Audit Committee this year, following Brian Cassin’s

retirement from the Board in July 2025. Since joining

the Committee, Steve has been an active contributor,

bringing valuable insights and challenge.

Committee effectiveness

I am pleased to confirm that following Manchester

Square Partners’ review, the Committee was found to

be operating effectively, with robust oversight of

financial reporting, audit and risk. The Committee

was seen as providing effective assurance to the

Board, supported by strong engagement with

management, internal audit and the external

auditor.

Looking ahead

The Committee will continue in the coming year to

focus on strengthening the risk management and

internal controls framework, and on key risk areas

including cyber security, data governance and

technology adoption.

I would like to thank my Committee colleagues,

Steve Hare 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

73 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Timeline for Provision 29 preparation

Apr

Outcomes and next steps

(April 2026)

The Audit Committee reviewed

the dry run results and agreed

next steps in the continued

evolution of the internal

controls framework.

Audit Committee report continued

24/25 25/26 25/26 25/26

Foundations

(2024/25)

Embedded the internal controls

over financial reporting (ICFR)

programme and continued

development oftheGroup’s

internal controlsframework.

Scope and design

(early 2025/26)

Expanded controls to cover

material operational, compliance

and non-financial reporting

risksand strengthened

ITgeneral controls.

Oversight and challenge

(2025/26)

The Audit Committee received

regular updates and oversaw

improvements to control

documentation, testing

andeffectiveness.

Testing readiness

(2025/26)

A structured dry run of internal

controls assurance was

undertaken to assess readiness

for revised Provision 29.

Key activities in 2025/26

Committee activity Outcome

Reviewed the integrity of the Group’s financialreporting

Advised the Board on the integrity and clarity of financial reporting, confirming that significant accounting

judgements

and related disclosures were appropriate and applied consistently and that the Annual Report and

Financial Statements were fair, balanced and understandable.

Oversaw the continued development of the Group’s internal control environment Monitored and challenged management’s enhancements to the internal control framework, reviewed dry run

assurance results and confirmed to the Board that visibility over key and material controls had improved in

preparation for reporting on the revised Provision 29 in 2026/27.

Received updates on risk management of cyber security and data governance as principal risks, including

reviews of cyber resilience, testing activity and lessons learned.

Provided assurance over the Group’s cyber risks and mitigating measures.

Oversaw the transition to PwC as the Group’s external auditor Oversaw and scrutinised the transition plan and independence safeguards, reviewed the resignation

statement and handover arrangements and reported to the Board that audit quality and continuity of

assurance were maintained through the change in auditor.

Reviewed the effectiveness, independence and objectivity of the external auditor

Reviewed the audit plan, findings and non-audit services, and confirmed to the Board that the external

auditor remained independent, objective and effective.

Received regular reports from Internal Audit on audit activity, key findings and the status of

management actions, and assessed the effectiveness of the internal audit function.

Concluded that the Internal Audit function operated effectively, with actions appropriately tracked toclosure.

Reviewed management’s assessment of the status of ongoing regulatory investigations andlitigations Considered management’s assessments and was satisfied that material matters were appropriately governed

and reflected in financial reporting and disclosures.

Considered the Group’s principal risks and uncertainties and reviewed the implications for viability and

going concern.

Reviewed principal and emerging risks, scenarios and stress testing, and supported the Board’s viability and

going concern assessments and related disclosures.

Received updates on the Group’s compliance with the Groceries Supply Code of Practice (“GSCOP”) Approved the annual GSCOP compliance statement. Further information on the Group’s compliance with

GSCOP can be found on page 121.

Received updates on the internal and external assurance programmes over Plan for Better metrics

anddisclosures

Supports the Board in overseeing the integrity of the Group’s reporting of climate-related metrics.

74 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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. Following his appointment

in July 2025, we welcomed Steve Hare to the

Committee. 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 56 to

57.

All our Non-Executive Directors have an open

invitation to attend Committee meetings.

The Committee is 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 Group Finance, Director of Internal

Audit, Risk and Resilience, General Counsel and

Company Secretary, Deputy Company Secretary,

Chief Technology Officer, Chief Information Security

Officer, and representatives of Sainsbury’s Bank and

the external auditor. Other members of management

and specialists attend by invitation depending on

the matters under discussion. The Committee held

four scheduled meetings in the year.

Details of attendance at scheduled Audit Committee

meetings can be found on page 55

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.

Committee meetings are generally scheduled close

to Board meetings to facilitate effective and timely

reporting. Committee members regularly hold

private sessions following Committee meetings with

each of the Director of Group 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 Group 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.

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 disposal of banking operations.

Treasury funding and liquidity

The Committee assessed the business’s secured and

unsecured borrowing facilities and their appropriateness

in tenure and amount to Group requirements.

Assumptions and qualifications in

support of the viability and going

concern statements

The Committee assessed the financial projections

over three years, which continues to be an

appropriate timeframe for the statement of viability

as approved by the Board.

More information can be found in the statement of

viability on page 48

Audit Committee report continued

Assessment of whether the

AnnualReport is fair, balanced

andunderstandable

One of the Committee’s roles is to advise the Board

that it is satisfied that the Annual Report

andFinancial Statements are fair, balanced and

understandable and provide the information

necessary for shareholders to assess the Company’s

position, performance, business model and strategy.

The external auditor supports this process.

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

• 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,

position and performance, business model and

strategy.

75 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Risk management, internal

controls and principal risks

and uncertainties

An effective risk management and internal control

framework is central to the delivery of the Group’s

strategy and the protection of long-term value. The

Board is responsible for overseeing the Group’s

approach to risk management and internal controls,

with the Audit Committee acting on its behalf.

Principal risks and uncertainties

The Group’s risk management process identifies

andreviews the principal risks and uncertainties,

together with emerging risks and opportunities,

facing the Group. These are considered alongside the

assumptions, scenarios and actions underpinning

the Group’s corporate plans to ensure that risks

areunderstood in the context of strategy and

futureprospects.

During the year, the Audit Committee reviewed the

Group’s risk register, principal and emerging risks

and related mitigation strategies. Particular focus

was given to prioritised risks and movements in risk

profile, and to ensuring that the principal risks

remain aligned to the Next Level Sainsbury’s

strategy. As part of this review, detailed scenario

analysis was undertaken, including stress testing

ofliquidity as part of the Group’s resilience and

viability assessment.

The Board considers that the principal risks and

uncertainties disclosed in the Strategic Report

represent those risks that could have a material

impact on the Group’s business model, strategy,

performance, solvency or liquidity, and that they

provide a balanced and understandable view of

theGroup’s risk profile.

Risk management and internal

control framework

The Group has an established internal control

framework encompassing financial, operational,

compliance and risk management controls. This

framework supports the delivery of the Group’s

strategy and the management of principal risks,

withcontrols embedded within day-to-day

businessprocesses and supported by Group-wide

policies, defined delegations of authority and

training programmes.

Oversight of the framework is provided through

management reporting, governance committees and

independent assurance activities. The Audit Committee

oversees the effectiveness and monitoring of the

Group’s internal controls on behalf of the Board,

including the remediation of any identified

weaknesses.

Key financial controls and

ITgeneral controls

During the year, the Committee oversaw the

effectiveness of the Group’s key financial controls

and IT general controls as part of its preparation

forthe revised Provision 29 of the UK Corporate

Governance Code. The Committee monitored the

internal control environment and the

implementation of management actions to further

strengthen the Group’s financial reporting systems.

The internal controls over financial reporting (ICFR)

programme, sponsored by the Chief Executive and

Chief Financial Officer, continued to support the

identification, documentation and assessment of

key and material controls, including IT general

controls. The Committee received regular updates

onprogress, the outcomes of control testing and

third-party reviews, and reviewed management’s

actions to address any issues identified.

Strengthening oversight of internal

controls and resilience

The 2024 Code introduced a revision to Provision 29

expanding on the previous requirement for Boards to

annually review the effectiveness of the Company’s

risk management and internal control framework.

The revised Provision 29 expands on the previous

requirement for Boards to annually review the

effectiveness of the Company’s risk management

and internal control systems to review the

effectiveness of the risk management and internal

control framework. The revised provision expands

the definition of material controls to include

reporting controls and stipulates additional reporting

requirements, including how the Board has

monitored and reviewed the effectiveness of the

framework, a declaration of effectiveness of the

material controls and a description of any material

controls which have not operated effectively as

atthe balance sheet date and any actions taken.

Companies are expected to report against the revised

Provision 29 for financial years starting on or after

1January 2026.

In line with FRC expectations, and to assess

compliance with the revised Provision 29, management

has undertaken a review of the risk management

and internal control framework and carried out

astructured ‘dry run’ of the effectiveness of all

material controls, including financial, operational,

reporting and compliance controls. This work focused

on identifying the Group’s key and material controls,

assessing their design and operation and enhancing

the consistency of documentation and oversight

across the Group.

The dry run review was designed to strengthen

governance, improve consistency of oversight, and

support the Board’s future Provision 29 disclosures.

The outcomes of this review were presented to the

Audit Committee throughout 2025/26, with the

results of the dry run provided to the Audit

Committee in April 2026.

Provision 29 preparation:

1. Understanding

• Reviewing all material controls to assess

theirvalidity

• Consolidating and simplifying material controls,

ensuring they address the Group’s principal

risks and are supported by key controls

• Identifying new material controls required

toaddress new and emerging risks

• Updating the Board and Audit Committee

onkey and material controls

• Preparation of self-attestations of how material

controls are designed and are operating

Led by:

Corporate Governance Reform Steering Committee

2. Testing/challenge

• Risk analysis of key and material controls

• Independent testing of controls and assumptions

to identify opportunities for improvement

Led by:

Corporate Governance Reform Steering Committee

3. Judgement

• Reviewing findings, assessing their

significance and ensuring appropriate actions

are taken where issues are identified

Led by:

Operating Board

4. Confirmation/confidence

• Drawing together evidence to form a balanced

view on the effectiveness of the internal

control framework

Led by:

Audit Committee, with conclusion and approval

by the Board

Audit Committee report continued

76 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Strengthening oversight of internal

controls and resilience continued

As a result of this work, the Audit Committee gained

improved visibility of the Group’s key and material

controls and how they operate in practice. The review

identified opportunities to simplify certain controls,

strengthen documentation and improve consistency

of control ownership. Management actions are

underway and the Audit Committee will continue

tomonitor progress during 2026/27.

As part of the review, control owners completed

self-attestations on the design and operation of key

and material controls. These were subject to risk-based

review and independent challenge. The Audit

Committee considered the findings, the significance

of any issues identified and the actions agreed to

address them and the Board was kept informed

throughout the process.

The Audit Committee considers that this work

provides a robust foundation for the Board’s future

reporting under Provision 29 and supports the Board’s

ongoing assessment of the effectiveness of the Group’s

risk management and internal control framework.

For further information on the Group’s risk

management approach on pages 40 to 47

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 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.

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.

The Committee received regular updates on the

continued progress to exit the core banking services

and streamline the Financial Services proposition,

including the agreements with Allianz UK on car and

home insurance and a new partnership with

NatWest. There is regular communication between

Sainsbury’s Internal Audit function and its equivalent

within the Bank.

External audit

Scope of the external audit plan and

feeproposal

The Committee reviewed PwC’s overall work plan,

and, through regular communication, advised PwC

ofany specific matters which the Committee was

considering from previous audits and current

operations. The Committee approved PwC’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. Ernst & Young

(EY) had been the Company’s auditor since July 2015.

Following a tender process, the Committee recommended

appointing PwC. Following approval by shareholders

at the 2025 AGM, PwC was appointed as the Group’s

auditor for the year ending 28 February 2026. The

Committee approved the appointment of Simon

Morley as the PwC partner for 2025/26.

Non‑audit services and fees

The Committee has overseen the Company’s policy

which restricts the engagement of its external auditors

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.

Audit Committee report continued

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 PwC during

2025/26 related principally to the renewal of the Euro

MTN (EMTN) Programme. The total non-audit fees

were £0.1 million. The audit fees for the year in

respect of the Group and subsidiaries were £3.2

million. A breakdown of the fees is provided in note

8.4 of the consolidated financial statements.

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 its 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

Risk management, internal

controls and principal risks

and uncertainties continued

77 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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,

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, work programme and results. The Director

of Group 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

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.

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.

Audit Committee report continued

Audit effectiveness review

An audit effectiveness review will be undertaken in the early part of 2026/27 following the conclusion of PwC’s

first year as the Group’s auditor. This effectiveness review is planned to be undertaken as follows:

Questionnaires Analysis Discussion

Questionnaires will be distributed to those Directors

and managers in the business directly involved in the

audit. The questionnaires will seek feedback on their

experience with the external auditor, considering areas

such as the knowledge and experience of the audit

team, audit strategy and planning, and the quality

ofcommunication.

Management will

collate the responses

and report back to the

Board and the Audit

Committee.

The results of the

review will be

discussed and

feedback will be

provided to the

external auditor.

An audit effectiveness review of EY’s performance as external auditor for 2024/25 was completed in the early

part of the financial year. The Committee concluded that EY remained effective, objective and independent in

its role as external auditor. Outcomes of the effectiveness review were communicated to EY.

The Committee has confirmed compliance with the provisions of the Statutory Audit Services Order 2014.

Transition to PwC as external auditor

PwC was formally appointed at our AGM in July 2025.

As this fell part way through the financial year,

EYprovided a statutory statement upon resignation

confirming that the resignation followed the tender

and that no matters were required to be brought

tothe attention of shareholders or creditors. The

Committee reviewed this statement and was

satisfied that the change in auditor did not indicate

any concerns regarding the integrity of the Group’s

financial reporting, internal controls or

managementbehaviours.

To ensure a smooth transition, the Committee

monitored the handover arrangements between the

two firms, including the transfer of prior year audit

insights, accounting policy considerations and matters

arising from the outgoing auditor’s interim review

procedures. This process was designed to maintain

continuity and uphold audit quality during

thetransition.

Internal audit

Director of Group Audit,

RiskandResilience

The Director of Group 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, 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.

78 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 203 to 206

See note 5, non-underlying items, on pages 153 to 155

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 £128 million (2025 restated: £325 million). Excluded items are detailed on pages 153 to 155.

The most significant items relate to costs associated with retail restructuring programmes.

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 £525 million, which comprises £6,371 million of assets

and £(5,846) million of liabilities, which relate to the Sainsbury’s Pension Scheme, plus three unfunded

pension liabilities for former senior employees of Sainsbury’s and Home Retail Group. This compares to a net

surplus in the prior year of £731 million.

See note 33, retirement benefit obligations, on pages 186 to 187

The Committee reviewed a summary of the actuarial assumptions used in arriving at the valuation for the

defined benefit pension scheme and was satisfied that they are reasonable.

In particular, the Committee reviewed the financial impact of discount, inflation and mortality rates and

related sensitivities.

Going concern and viability

Going concern and viability projections are produced bi-annually and monitoredregularly.

See statement of viability on page 48

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 2026 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 2026.

Audit Committee report continued

Significant financial reporting matters and judgements

Set out below are the most significant financial reporting matters considered by the Committee during the year, including how we challenged the key decisions and the conclusions we reached. Ineach case, the Committee

concluded that the accounting treatment and related disclosures wereappropriate.

79 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Areas of focus Actions taken

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 104 to 115 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 have been given to the impacts of

climate change on the Group’s financial statements.

Contingent liabilities

The Group is exposed to a wide range of applicable laws, regulations as well commitments arising from past

events. 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 36, contingent liabilities, on page 193 for further details

The Committee further considered management’s assessment of the status of ongoing regulatory

investigations and litigation, its classification of these as contingent liabilities and the associated disclosure.

Prior period restatements

The prior year financial statements have been restated to incorporate the deferred tax impact arising from a

misclassification of qualifying assets as non-qualifying for tax purposes and an omission of the tax effects

of impairment and disposal.Comparative period amounts of certain balance sheet line items have also been

re-presented, with no impact on net assets.

See note 2, basis of preparation and consolidation, on page 140 for further details

The Committee reviewed the accounting for, and disclosure of, prior year restatements in relation to deferred

tax and balance sheet re-presentations.

Audit Committee report continued

80 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

latest increase continues the significant investment

we’ve been making in colleague pay over the last

fewyears and reflects the vital role our frontline

colleagues play in delivering for customers every day.

Our front-line managers will receive a three percent

salary increase effective 24 May 2026.

Our benefits play an important role in our total

reward package, which includes a generous pension,

colleague discount, free food in stores and depots,

salary advance and savings products and the

opportunity for colleagues to share in the Company’s

success through our all-employee share schemes.

The Committee reviews the Company’s progress in

closing its gender and ethnicity pay gaps. Our mean

gender pay gap is 6.6 per cent (down from 7.5 per

cent last year), alongside a small increase to the

median pay gap to 6.5 per cent (from 6.1 per cent),

both of which remain well below the UK average. Our

ethnicity pay gap has remained broadly stable, with

the mean in favour of ethnically diverse colleagues at

-3.3 per cent from -3.4 per cent last year.

Executive remuneration in 2025/26

The Committee carefully assesses performance to

ensure that incentive outcomes are a true and fair

reflection of the underlying performance of the

business and aligned to the experience of

shareholders and other stakeholders.

The Committee is satisfied that the total remuneration

for Executive Directors in respect of 2025/26 reflects

performance over the period and the progress that

has been made against our Next Level Sainsbury’s

strategic goals.

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. The profit element

outturn is 75 per cent of maximum, with amaximum

outturn of 100 per cent for retail free cash flow.

Annual statement from the Remuneration Committee Chair

Dear Shareholder

As we enter the final year of our

Next Level Sainsbury’s strategy,

welook back on two years of strong

performance, in which we have

delivered a winning combination

ofvalue, quality, availability and

service. The Remuneration

Committee is focused on ensuring

that executive remuneration reflects

the results that have been delivered

and continues to drive performance

against our strategic goals.

The Remuneration Committee has been pleased by the

delivery against our Next Level Sainsbury’s goals,

including winning grocery market share and reaching

our highest volume market share in ten years. The

business has delivered a strong set of financial results

and shareholder returns in 2025/26. Highlights are

underlying retail operating profit of £1,025 million,

alongside retail free cash flow generation of £574

million and good progress towards our target to deliver

£1 billion of cost savings by March 2027. We continue to

deliver strong cash returns for shareholders. In addition

to ordinary dividends of £316 million in the year,

wereturned £300 million of additional proceeds,

following the disposal of our banking operations, via a

special dividend of 11.0 pence per share in December

and through the addition of £50 million to our core £200

million share buyback programme. The proposed full-

year dividend of 13.7 pence , up 0.7 per cent year-on

-year, builds on the strong returns made to shareholders

over the past few years.

Our front-line colleagues play a vital role in delivering

for our customers every day and rewarding them well

continues to be a priority. This year, we have again

chosen to invest in an above inflation pay increase

for hourly paid colleagues. We have increased pay

by 42 per cent in the last five years, demonstrating

our commitment to supporting our colleagues’

wellbeing and success with competitive rates of pay

complemented by a strong benefits package.

The Remuneration Committee continues to take a

balanced and responsible approach to executive pay,

taking all stakeholder perspectives into consideration.

When making its decisions this year, the Committee

has carefully considered the appropriateness of

incentive outturns in the context ofthe strong results

that have been delivered. During 2025, the Committee

carried out a review of the Remuneration Policy and

our revised Policy is set out in this report.

Colleague engagement

andoversight

The Remuneration Committee considers pay and

conditions in the wider organisation when making

executive pay decisions. The Committee considers

oversight of pay arrangements across Sainsbury’s to

be an important element of its remit. An update on

recent reward activity and colleague pay and benefits

initiatives, along with an overview of colleague

feedback gathered from a range of communications

channels, is provided at every meeting. The Chair and

I meet with colleagues each year to understand their

views on executive pay and provide them with greater

insight into the way that we structure our executive

remuneration package. Non-Executive Directors spend

time in stores and participate in colleague listening

events where theycan hear our colleagues’ perspectives

ontheirpay and working life at Sainsbury’s.

In 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. These were further

increased in August 2025, to £12.60 per hour nationally

and to £13.85 per hour in London. We made another

above inflation investment in colleague pay in March

2026, taking our base rate for hourly paid colleagues to

£13.23 nationally and to £14.54 in our London stores,

ahead of the National Living Wage. At five per cent, this

Committee governance

The 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. Martin Scicluna, Simon

Roberts, the 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 held five scheduled meetings in the

year. The Committee has a calendar of standard

items within its remit and in addition it held

in-depth discussions on specific topics, in particular

the review of the Remuneration Policy during 2025.

The Committee’s composition, responsibilities and

operation comply with the principles of good

governance as set out in the UK Corporate

Governance Code, the Listing Rules and the

Companies Act 2006. The Terms of Reference for the

Committee are available on the Company’s website.

2026/27 remuneration

• Continued above inflation investment in

colleagues – retail hourly paid colleagues across

both Sainsbury’s and Argos moved from £12.60 to

£13.23 per hour and £13.85 to £14.54 per hour for

those based in London effective 29 March 2026

• Chief Executive awarded a three per cent pay

increase, below the five per cent increase for

retail hourly paid colleagues

• Chief Financial Officer awarded a six per cent

pay increase, reflecting her pivotal role in the

successful sale of the Bank and her exceptional

performance and contribution since her

appointment

• 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 2026 Leaders’ Share Award will measure

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)

81 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Annual bonus continued

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.

During the year, significant progress was made

against our customer and colleague metrics. In

addition the Committee concluded that both

executive directors delivered exceptional

performance as demonstrated by both the strong

financial results, market share gains and substantial

returns to shareholders. These achievements were

delivered notwithstanding a number of challenging

external headwinds. In this context the strategic

scorecard paid out at 29 per cent out of 30 per cent

for both executive directors.

This results in an overall bonus of 86.5 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.

Further detail is set out on pages 94 and 95.

Long‑Term Incentive Plan –

2023Leaders’ Share Award

The 2023 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). Targets

were set in April 2023.

The remaining 20 per cent of the plan was subject to

key strategic indicators (market share, customer,

colleague and Plan for Better). Bláthnaid Bergin’s

2023 award is the first granted following her

appointment to the Board.

The Committee determined that this award should

vest at 72.5 per cent of maximum.

This outturn is a result of strong retail free cash flow

performance above the stretch target, ROCE and cost

reduction between target and stretch, with EPS

between threshold and target. Grocery market share

and the customer element also outperformed the

stretch target, with a strong performance delivered

in colleague engagement.

Despite progress across our Plan for Better

commitments, the stretching Scope 1 and plastics

reduction targets set for the 2023 Leaders’ Share

Award were not achieved. For Scope 3, vesting has

been based on our progress towards the WWF

retailer requirements, which have evolved since the

targets were originally set. We have been working

with our suppliers in alignment with the WWF

requirements, with 51.6 per cent of emissions now

covered by suppliers with any 1.5 degree SBTi targets

(near term or net zero) approved by the end of

2025/26. Assessing our performance on this basis,

the overall outturn under the Plan for Better element

was 10.7 per cent of maximum.

Further detail is set out on page 96

Review of Remuneration Policy

The Committee undertook a thorough review of

thecurrent Remuneration Policy during 2025 in

preparation for the presentation of the Policy for

shareholder approval at the 2026 AGM, in line with

the normal three year renewal cycle.

The Committee considered the latest proxy

guidelines and guidance and the views of our major

investors, alongside the views of management

andadvice from our remuneration advisers. The

Committee determined that, overall, the current

Policy continues to be appropriate and concluded

that only small amendments need to be made to

ensure the Committee has the flexibility to respond

when required during the life of the next policy.

The changes proposed are an increase to the

maximum award available under the Long-Term

Incentive Plan from 250 per cent to 300 per cent and

the ability to reduce but not remove entirely the level

of compulsory bonus deferral for executives who

have met their shareholding requirement. Neither

change will be implemented during the coming year.

We operate in a fast moving and competitive talent

market. The retail sector (and food retail specifically)

has been reshaped in recent years with an increase

Annual statement from the Remuneration Committee Chair continued

in private equity-backed and both listed and

privately-owned international players. The market in

which we compete for talent therefore extends

beyond other FTSE 100 companies. Notwithstanding

the context of our sector, the Committee is setting

the increased Long-Term Incentive Plan headroom

broadly in line with the current award levels for

UK-listed companies of our size. We have not

benchmarked ourselves against larger and more

global FTSE 100 companies.

The Committee believes that these changes are

consistent with our closest retail competitors and

relatively conservative. It is in our shareholders’

interests that we have sufficient flexibility to be able

to respond to the strategic needs of the business over

the life of the policy. We consulted with major

shareholders regarding these changes in February 2026,

with feedback being overwhelmingly supportive. The

Committee is grateful to our shareholders who engaged

with us and shared their invaluable feedback during

the consultation process

2026/27 remuneration

The Committee considered the pay of the wider

workforce and senior management when determining

the pay review for Executive Directors this year. It

awarded Simon Roberts a three per cent pay increase

effective 24 May 2026, taking his base salary to £1,039,177.

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. Recognising

her role in maximising shareholder value through the

highly successful winding down of our banking

operations, together with the transfer of ongoing

financial services into the Sainsbury’s business, along

with the expansion in her role since her appointment

and her significant contribution as CFO, Bláthnaid

Bergin has been awarded a sixper cent pay increase

effective 24 May 2026, taking her base salary to £738,057.

The Committee determined that the performance

framework and weightings for the 2026/27 annual

bonus should remain unchanged from last year, with

50 per cent of the bonus to be paid out in cash and

the remaining 50 per cent to be deferred into shares

for a further two years.

Our long-term incentive awards are aligned to the eight

key performance indicators that we have used to

monitor our progress since 2021, with the weightings

and metrics unchanged from last year. For the 2026

Leaders’ Share Award, 70 per cent of the Executive

Directors’ award vests subject to delivery of targets

against 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 will pay out

based on performance against the four strategic

indicators (volume market share, customer, colleague

and Plan for Better), each with a weighting of 7.5 per

cent. The Committee has reviewed the performance

metrics and targets to ensure they remain appropriate

and stretching. Given the conflict in the Middle East, the

Committee may need to apply judgement in assessing

the final performance outcomes for both incentives.

As in prior years, the 2026 award level for the Chief

Executive is 250 per cent of salary, and 225 per cent

of salary for the Chief Financial Officer.

Committee effectiveness

Following the externally facilitated effectiveness

review, I am pleased to report that the Committee

was found to operate to a high standard, with

effective oversight and a thorough approach.

Closing remarks

Our revised Remuneration Policy is laid out on pages

87 to 93, together with summaries of how we have

implemented and plan to implement the Policy in

2025/26 and 2026/27. We hope that the disclosure

provided in this report provides clear insight into the

Committee’s decisions and that you will all support

the resolution to vote for the revised Policy and this

report at the forthcoming AGM.

The Remuneration Committee has a clear commitment 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

strategic goals and values.

Jo Harlow

Chair, Remuneration Committee

82 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Summary of 2025/26 remuneration

Pay element 2025/26 decisions

Salary

Three per cent increase

forExecutive Directors

(below that of

colleagues)

• Chief Executive, Simon Roberts – £1,008,910 and Chief Financial Officer, Bláthnaid

Bergin – £696,280

• A three per cent salary increase was awarded to Simon Roberts and to Bláthnaid

Bergin from 25 May 2025, which was below the five per cent increase for retail

hourly paid colleagues, and in line with the pay review for senior management

Annual bonus

Award of 86.5 per cent of

maximum for both Chief

Executive and CFO

• The 2025/26 bonus outturn was 86.5 per cent of the maximum for both Simon

Roberts and Bláthnaid Bergin

• The profit element paid out at 37.5 per cent (out of 50 per cent)

• The retail free cash flow element paid out at 20 per cent (out of 20 per cent)

• The Committee determined an outturn at maximum of 29 per cent (out of 30 per

cent) for the strategic scorecard which reflected outcomes against customer and

colleague related metrics and progress towards individual annual objectives for

both Simon Roberts and Bláthnaid Bergin

Long-Term

IncentivePlan (LTIP):

2023 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 a strong performance on ROCE and cost

reduction, with EPS between threshold and target

• Strategic indicators (each with a five per cent weighting): Maximum payout under

the market share element, with strong customer and colleague performance and

a threshold payout for Scope 3 under the Plan for Better element

• This results in a vesting outturn of 72.5 per cent of maximum

£4,000

Total £3,347

Salary

Shareholding

Share awards

Benefits

Pension

Annual bonus LTIP

2024/25 2024/25

2025/26 2025/26

£0 £1,000

£75

£73

£19

£2,000 £3,000

£000s £000s

£4,000 £5,000 £6,000

Total £5,431

Total £5,179

£0

£52

£50

£18

£19

£1,000 £2,000 £3,000

Chief Financial Officer – Bláthnaid BerginChief Executive – Simon Roberts

Total £2,263

Total remuneration for 2025/26

£20

Maximum

opportunity

Actual % of

maximum

Profit

Retail free cash flow

Strategic scorecard

50% 20%

20%

30%

29%37.5%

£2,168£1,948£971

£2,427£1,907£1,002

£1,508£1,077£692

£424

£1,100

£670

Maximum

opportunity

Actual % of

maximum

Retail free cash flow Market share

ROCE Customer

EPS Colleague

Cost reduction Plan for Better

20%

14.5%

20% 20% 5%

10% 13%

250

500

750

1,000

1,250

1,500

1,750

2,000

2,250

2,500

Shareholding guidelines (auditedinformation)

Simon Roberts was appointed in 2020 and has met his guideline of three times salary.

Bláthnaid Bergin was appointed at the start of the 2023/24 financial year and hasmet her guideline of two times salary.

Simon Roberts Bláthnaid Bergin

Guideline

8.2 x salary

Number of shares (000)

2.4 x salary

Further details of the bonus measures and

outturn can be found on pages 94 and 95.

Further details of the LTIP outturn can be found on page 96.

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Summary of 2026/27 remuneration

Pay element Executive Directors Other colleague groups

Salary • Chief Executive, Simon Roberts – £1,039,177 effective 24 May 2026 (three per cent salary increase), below the five per

cent award agreed for retail hourly paid colleagues

• Chief Financial Officer, Bláthnaid Bergin – £738,057 effective 24 May 2026 (six per cent salary increase) in recognition of

her role in maximising shareholder value through the highly successful winding down of our banking operations, together

with the transfer of ongoing financial services into the Sainsbury’s business, along with the expansion in her role since her

appointment and her significant contribution as CFO

• 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

• Five per cent increase in March 2026 for retail hourly paid colleagues

• Three per cent increase for management effective 24 May 2026

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

• 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

• 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

• The maximum awards for 2026/27:

– 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, customer and

personal performance

• For more senior grades, bonus is part paid in cash, and part in shares

deferred for two years

LTIP: 2026 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

• Grant levels for 2026 awards:

– Simon Roberts – 250 per cent of salary

– Bláthnaid Bergin – 225 per cent of salary

Measure Weighting Threshold Maximum

Underlying basic EPS

17.5% 24.0p 30.0p

Cumulative cost savings 17.5% £600m £900m

Cumulative retail free cash flow

17.5% £1,550m £1,850m

ROCE

17.5% 9.0% 11.0%

Strategic indicators 30%

Based on market share, customer satisfaction, colleague engagement and Plan for Better.

Further details set out on pages 98 and 99.

a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 203 to 206.

• Top c.185 managers participate in this plan

• Maximum award varies by grade

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 2026/27 are in line with our Remuneration Policy.

84 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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:

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 around 140,000 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

for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

ownership

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 UK Corporate Governance Code, the Committee gives consideration to the following:

• Simplicity and transparency – performance metrics and targets are reviewed 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 – the Committee ensures our pay practices drive the

right behaviours in line with our values and culture

• Risk mitigation – performance targets are reviewed annually to ensure they are stretching without

encouraging unnecessary risk. The Committee has the ability to adjust incentive outcomes to ensure

they accurately reflect performance and believes that this discretion is an important feature and

mitigates the risk of unwarranted vesting outcomes. In the event that certain risk events come to light

the Committee may operate recovery provisions on all incentive awards

• Potential outcomes – When setting the policy for senior executives and when agreeing incentive

outturns, the Committee believes it is important to exercise sound judgement to ensure that executive

pay levels appropriately reflect performance and are aligned with the interests of shareholders

85 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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. 185 colleagues) also participate in our Long-Term Incentive Plan

• We offer colleague discount in Sainsbury’s, Argos, Tu and Habitat. During 2025/26 colleagues saved over

£80.5 million on their Sainsbury’s shopping – around £444 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. We also

offer additional enhanced discount days at key times of celebration e.g. Christmas

• This year we celebrated our Christmas peak period by giving colleagues a £10 voucher towards their

festive shopping, at a cost of over £1.2 million

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. 98,000 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 16,000 colleagues participate in our Sharesave plans, representing an uptake rate of 17 per cent

• Colleagues can also buy shares through the Sainsbury’s Share Purchase Plan (SSPP)

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 2025/26 we issued over 428,000 recognition rewards worth over £3.1 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. We have established a forward-thinking Early Careers portfolio, which includes

apprenticeships, graduate schemes, school leaver pathways, and opportunities for returners or those changing

careers all designed to meet Sainsbury’s talent needs. In 2025/26 we have supported colleague development

through a range of interventions including our flagship leadership development programme and coaching,

finance fast start, code first girls, negotiation skills programmes and the retail trainee manager programme

• Our Wellbeing agenda is sponsored by Tracey Clements, our Chief Retail, Logistics and Supply Chain

Officer, emphasising that colleagues’ wellbeing including mental health, financial stability and physical

wellbeing are at the core of the support we offer. We offer a range of support mechanisms, including

self-serve wellbeing resources, manager training, an Employee Assistance Programme and peer to peer

support through our Wellbeing Champion network

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 25 of the Annual Report

• Our ‘Make It Better Together’ groups operate at store, regional and national levels, giving colleagues

access to leaders at all levels. This rolls 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. Colleagues

are also invited to join ‘In conversation with Simon’ sessions, an opportunity for a two way dialogue with

the Chief Executive. Each member of our Operating Board holds listening sessions with retail and SSC

colleagues, connecting the leadership team with the everyday experience of colleagues and helping to

improve decision-making

• 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 2025 and the next one is in June 2026

• 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 198:1. 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 2025 mean gender pay gap is 6.6 per cent (reduced from 7.5 per cent in 2024). Our median gender pay

gap has increased from 6.1 per cent to 6.5 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 2025 mean ethnicity pay gap is negative and has

changed to -3.3 per cent from -3.4 per cent and our median ethnicity pay gap to -6.0 per cent from -5.8

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 building inclusive leadership across the company and improving diverse

representation at all levels of the business. We continue to pursue the stretching ambition of achieving

50 per cent gender representation and 15 per cent ethnically diverse representation at senior levels by

2028

Remuneration in context continued

86 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration Policy

Directors’ Remuneration Policy

The following section sets out our Directors’ Remuneration Policy. This

Policy is subject to a binding shareholder vote at the AGM on 2 July 2026

and, if approved, will be effective from this date.

In determining the new Remuneration Policy the Committee followed a robust process which included

discussions on the content of the Policy at the Remuneration Committee meetings during the year to ensure it

remains fit for purpose. The Committee considered input from management and our independent advisers

while ensuring that conflicts ofinterest were suitably mitigated. The Committee also took into account best

practice and guidance from major shareholders.

Consideration of shareholder views

The Remuneration Committee values the views of the Company’s shareholders and guidance from shareholder

representative bodies. The Committee proactively consults extensively with our major shareholders to ensure

that their views are represented in discussions on remuneration matters. In early 2026, the Committee consulted

with our major shareholders on the proposed updates to the Remuneration Policy, with responses to the proposals

being overwhelmingly positive. As part of the review of the Remuneration Policy the Committee considered the

latest proxy voting guidelines and guidance from majorinvestors.

Policy table for Executive Directors

The table below summarises each element of the policy for Executive Directors, with further details set out after the table.

Base salary

Purpose and link to strategy Core element of remuneration used to attract and retain executives who can deliver our strategic objectives.

Operation Typically reviewed annually with increases normally taking effect in May.

Consideration is given to a number of internal and external factors including business and individual performance, role, responsibilities, scope, market positioning, inflation and colleague

payincreases.

Opportunity Salary increases (in percentage of salary terms) for Executive Directors will normally be within the range of those for the wider workforce. There is no maximum salary opportunity.

Where the Committee considers it necessary and appropriate, larger increases may be awarded in individual circumstances such as:

• A change in scope or responsibility;

• If a new Executive Director is appointed at a lower rate and the salary is realigned over time as the individual gains experience in the role; or

• Alignment to market level.

Benefits

Purpose and link to strategy Competitive benefits to assist in attracting and retaining executives.

Operation A range of benefits may be provided including, but not limited to, colleague discount, car allowance (or company car), private medical cover and health screening, life assurance, group income

protection and all-employee share plan participation.

The Committee keeps the benefits offered, the policies and the levels provided under regular review.

Opportunity The value of benefits provided will be reasonable in the context of relevant market practice for comparable roles and taking into account any individual circumstances (e.g. relocation). There is

no maximum monetary value.

Participation in any HMRC-approved all-employee share plan is limited to the maximum award levels permitted by the relevant legislation.

Changes to the Remuneration Policy

The Remuneration Policy was last approved at the 2023 AGM, and an updated Policy will be presented at the

2026 AGM.

Following an extensive review, the Committee determined that overall the 2023 Policy continues to work well.

However, as noted in the Remuneration Committee Chair’s statement, we have made two minor amendments

which will give the Committee greater flexibility over the three-year life of the Policy. These changes are designed

tofuture proof our Policy by enabling us to respond to the strategic needs of the business and emerging trends in

the hyper-competitive talent market that continues to apply in the food retail sector.

The two changes are as follows:

• The introduction of flexibility to reduce (but not remove entirely) mandatory bonus deferral requirements

for executives who have met their shareholding guidelines.

• An increase to the maximum Long-Term Incentive Plan award that can be made to provide additional

headroom of 50 per cent of salary for the LTIP (i.e. awards of up to 300 per cent of salary).

87 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration Policy continued

Retirement benefits

Purpose and link to strategy Provides an income following retirement and assists colleagues in building funds for their future.

Operation Participation in a defined contribution plan and/or a cash salary supplement.

Opportunity For Executive Directors, the value of any pension and/or cash supplement provided will be in line with the rate available to the majority of the workforce (currently 7.5 per cent of salary

perannum).

Annual bonus

Purpose and link to strategy Rewards performance on an annual basis against key financial, operational and individual objectives, as well as strategic priorities. Awards partially delivered in shares to provide further

alignment with shareholders.

Operation Performance measured over the financial year.

Bonus level determined by the Committee after the year-end based on performance against targets.

Normally 50 per cent of the total bonus is paid in cash, with the balance deferred into shares for a period of two years. The Committee can reduce the proportion of the bonus that is deferred

into shares once the shareholding guideline has been met. Some element of bonus deferral will remain.

Dividend equivalents may accrue during the vesting period on the deferred bonus shares.

Measures and targets are reviewed annually.

Recovery provisions (i.e. malus and clawback) apply.

Opportunity Maximum opportunity of up to 250 per cent of salary per annum.

Performance details Based on a combination of financial (e.g. profit), operational and individual metrics.

The detail of the measures, targets and weightings may be varied by the Committee year-on-year based on the Company’s strategic goals. At least half of any award will be subject to

financial measures. The level of threshold payment for performance varies depending on the performance measurement with payouts from zero per cent. Full payout requires

outperformance of stretch objectives.

Policy Table for Executive Directors continued

88 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration Policy continued

Long‑Term Incentive Plan (“LTIP”) – Leaders’ Share Award

Purpose and link to strategy Recognises and rewards for delivery of Company performance and shareholder value over the longer term. Share-based to provide greater alignment with shareholder interests.

Operation Awards of conditional share awards (or equivalent) with vesting dependent on performance measured over a period of at least three financial years.

Awards will normally be subject to a retention period following the end of the performance period which means awards will be released after five years.

The Committee reviews the metrics, targets and weightings prior to each grant to ensure that they remain appropriate. Recovery provisions (i.e. malus and clawback) apply.

Dividend equivalents may accrue, to the extent awards vest.

Opportunity Maximum award of up to 300 per cent of salary per annum in respect of any financial year. Award levels for 2026/27 are set out on page 98.

Performance details Based on a combination of financial and strategic measures appropriate within the context of the Company strategy and external environment over the relevant performance period. For

achievements at threshold levels of performance, up to 25 per cent of maximum will normally vest under each element.

Prior to granting awards, the Committee will review the performance conditions and may opt to vary the metrics and weightings to ensure measures and targets remain aligned with its

objectives. For awards granted in 2026/27, 70 per cent of the award is subject to financial measures. The Committee would seek to consult as appropriate with its major shareholders regarding

any material changes.

Shareholding guidelines

Purpose and link to strategy Alignment of Executive Directors’ interests with those of shareholders.

Operation The in-employment guidelines are to build and maintain a shareholding equal to three times salary for the Chief Executive and two times salary for other Executive Directors.

Executive Directors are normally expected 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).

Executive Directors will normally 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.

89 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration Policy continued

Setting performance measures andtargets

The Committee believes it is important that the performance conditions applying to incentive arrangements

are aligned with the short and long-term objectives of the Company, while supporting the Company’s purpose,

culture, values and risk profile. We operate in a dynamic market with evolving challenges and the Committee

reviews the performance measures and targets each year to ensure that they remain relevant and stretching.

Further details of the performance measures are set out in the Annual Report on Remuneration.

The performance measures in the annual bonus areselected as they are the key drivers of business

performance. The targets for the annual bonus areset with reference to the corporate strategy and internal

budgets as well as the external context (e.g. market forecasts). This approach seeks to ensurethat the

threshold and stretch targets are appropriately challenging.

The LTIP performance measures focus on the delivery of long-term strategic priorities and returns to

shareholders. Target setting follows a similar approach to that used for the annual bonus.

The Committee may vary or rebalance the weighting of the performance metrics for future annual bonus and

LTIP awards, in order to ensure that they remain aligned with the Company’s strategic objectives.

The Committee retains the ability to adjust incentive outcomes to ensure that they remain reflective of

underlying financial and non-financial performance of participants or the Group or where the formulaic

outcome is not appropriate in the context of circumstances that were unexpected or unforeseen when the

targets were set. The Committee may also adjust the targets for awards or the calculation of performance

measures and vesting outcomes for events not foreseen at the time the targets were set to ensure they remain

a fair reflection of performance over the relevant period. When making such judgements, the Committee may

take into account all such factors deemed relevant.

Recovery provisions (malus and clawback) – preventing rewards forfailure

The Remuneration Committee may operate recovery provisions (malus and clawback) on all incentive awards.

The Committee may reduce or cancel, or impose further conditions on an unvested award in the event of

material mis-statement of financial results, serious reputational damage, serious misconduct, fraud, or other

cases of extreme failure where the Committee considers such adjustment to be warranted.

In addition, in the circumstances outlined above, the Committee may claw back 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.

Consideration of colleague pay andconditions

When considering remuneration arrangements forExecutive Directors, the Committee takes into account, as a

matter of course, the pay and conditions of colleagues throughout the Company.

In particular, the Committee receives regular updates on pay, incentives and benefits across the business as

well as updates on any major changes to the pay of colleagues. The Committee takes into account thewider

pay context, including the overall salary increase budget for management, the increase in rate of pay for

hourly paid colleagues and the Chief Executive pay ratio.

The Board receives regular updates on the views of colleagues via our annual and mini ‘We’re Listening’

engagement surveys, Leader Listening programme and national ‘Make It Better Together’ group (our Workforce

Advisory Panel). In addition, Non-Executive Directors regularly engage with the ‘Make It Better Together’ group

on executive pay giving colleagues the opportunity to share their views and opinions.

The Company operates all-employee share plans which support colleagues to become shareholders in the

Company; these colleagues can then comment on the policy in the same way as other shareholders.

90 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Potential total remuneration opportunity under our pay policy

The Committee believes it is important that a significant portion of the package for Executive Directors is

performance related and delivered in shares to align their interests with shareholders. The balance between

fixed pay (base salary, pension and benefits) and variable pay (annual bonus and LTIP) changes with

performance. The variable proportion of total remuneration increases significantly for increased levels of

performance. At least 60 per cent of the package is delivered through variable pay at mid-point performance

and this proportion increases to at least three-quarters of the package at maximum levels of performance.

The charts below show the total remuneration potential of the Executive Directors, in accordance with the

intended implementation of the Remuneration Policy for 2026/27, under three performance scenarios.

Opportunity Minimum Mid-point Maximum

Fixed pay Salary – Simon Roberts £1,039,177;

Bláthnaid Bergin £738,057

Benefits – car allowance and private healthcare

(in line with 2026/27 actuals)

Pension – 7.5% of salary

Annual bonus Simon Roberts – 220% of salary

Bláthnaid Bergin – 180% of salary

Nil 50% of maximum 100% of maximum

LTIP/Leaders’

Share Award

Simon Roberts – 250% of salary

Bláthnaid Bergin – 225% of salary

Nil 50% of maximum 100% of maximum

Impact of share price

As LTIP awards are granted in shares, the value can vary significantly depending on the movement of the share

price over the relevant vesting and retention period. For example, if the share price increased by 50 per cent

over the relevant vesting and retention period, the maximum values shown in the charts above would increase

to £7.3 million for Simon Roberts and £4.6 million for Bláthnaid Bergin. Similarly, if the share price was to fall by

50 per cent, the maximum values shown in the charts above would reduce to £4.7 million for Simon Roberts

and £3.0 million for Bláthnaid Bergin.

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Chief Executive – Simon Roberts

£000’s

Minimum Mid-point Maximum

£1,134

£3,576

£6,018

100% 32% 19%

38%

43%

32%

36%

7,000

6,000

5,000

4,000

3,000

2,000

1,000

Chief Financial Officer – Bláthnaid Bergin

£000’s

Minimum Mid-point Maximum

£810

£2,305

£3,800

100% 35% 21%

35%

44%

29%

36%

Fixed pay

Annual bonus

LTIP

Remuneration Policy continued

Our approach to recruitment

The Committee believes it is vital to be able to attract and recruit leaders of the calibre required to deliver our

strategic objectives, while remaining mindful of the cost to the Company. When determining remuneration

arrangements for new appointments, the Committee intends to pay no more than it believes is necessary to

secure the required talent. The Committee will seek to align the remuneration package with the approved

Remuneration Policy.

Fixed Pay Salary and benefits (including retirement benefits) would be determined in accordance

with the Policy Table. An alternative package may also be necessary where an individual

fulfils an executive role on an interim basis.

In certain cases, the initial salary for a new appointment may be set at a lower level, with

the intention of increasing the salary over time as the executive gains experience in the role.

Benefits may need to be tailored based on the individual circumstances (e.g. relocation,

housing or travel allowances may be required).

Variable pay The maximum variable remuneration which may be offered to an executive will be no more

than 550 per cent of salary (excluding any buy out arrangements). This limit is consistent

with the overall maximum set out in the Policy table.

Within these limits and where appropriate the Committee may tailor the award (e.g. timeframe,

form, performance criteria) based on the commercial circumstances.

Shareholders will be informed of the terms for any such arrangements.

Buy outs The Committee may need to buy out remuneration terms forfeited on joining the Company.

In such circumstances, the Committee will seek to ensure any buy out is of comparable

commercial value and capped as appropriate.

The quantum, form and structure of any buy out arrangement will be determined by

theCommittee taking into account the terms of the previous arrangement being forfeited

(e.g. form and structure of award, timeframe, performance criteria, likelihood of vesting, etc.).

The buy out may be structured as an award of cash or shares. However, the Committee will

normally have a preference for replacement awards to be made in the form of shares and to

be within the Company’s existing incentive plans.

Where an executive is appointed from either within the Company or following corporate

activity/reorganisation (e.g. acquisition of another company), the normal policy would be

tohonour any legacy arrangements in line with the original terms and conditions.

91 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration Policy continued

Service contracts and policy for departing Executive Directors

The Company’s policy is for Executive Directors’ service contracts to be terminable on 12 months’ notice by

either party.

Contracts contain non-compete and non-solicit clauses with key suppliers and colleagues. The Company’s

normal practice is that Executive Directors may take up one non-executive role outside the Company, with

approval from the Board, subject to the role being in a business that does not compete with the Company and

with consideration of the time commitment. Directors are normally entitled to retain the fees earned from

such appointments.

In the event of early termination without notice, any severance payment would be limited to one year’s salary

and benefits (including pension), normally payable on a phased basis and subject to mitigation. Benefits payable

may include certain one-off benefits in connection with termination such as legal costs and the costs of

meeting any settlement agreement.

There are no specific terms in service contracts relating to a change of control.

The Executive Directors’ service contracts are available for shareholders to view at the Company’s

registeredoffice.

The Committee retains discretion to determine the exact termination terms of any Executive Director, having

regard to all the relevant facts and circumstances available to them at the time. The table opposite sets out the

general position and range of approaches in respect of incentive arrangements. In accordance with the terms

of the relevant incentive plan rules, based on the circumstances of any departure the Committee has discretion

to determine how an Executive Director should be categorised for each element and determine vesting levels

accordingly based on the range shown.

‘Bad Leaver’

(e.g. termination for cause, etc.)

‘Good Leaver’

(e.g. cessation due to ill health, etc.)

Annual bonus No entitlement following

datenotice served.

Any unvested bonus shares

lapse on cessation.

Bonus may be payable subject to performance.

Awards are normally pro-rated based on the period

worked during the financial year, with payments

usually occurring following the year-end.

Any unvested bonus shares will normally vest in

full,unless the Committee determines otherwise.

Awards normally vest at the standard time, unless

the Committee determines that awards should vest

onanearlier date.

On death, unvested awards will be released and vest

in full.

Long-Term

Incentive Plan

Unvested awards will lapse

onnotice.

Unvested awards normally vest at the normal time

subject to performance.

Awards normally will be pro-rated by reference to the

proportion of the performance period that has

elapsed since cessation, unless the Committee

determines otherwise.

Awards normally will remain subject to any

applicable retention period.

On death, awards vest early on cessation with

performance measured at this time. Awards are

pro-rated by reference to the proportion of the

performance period that has elapsed at cessation.

If the Director leaves in the first six months after the

start of the performance period, the award normally

lapses in full.

All-employee

share plans

In line with HMRC rules.

92 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Detailed provisions

All share awards are subject to the terms of the relevant plan rules under which the award has been granted.

Since 2025 share awards are normally granted under the LTIP rules approved by shareholders at the 2024 AGM.

The Committee may adjust or amend awards only in accordance with the provisions of the relevant plan rules.

This includes making adjustments to awards to reflect one-off corporate events, such as a change in the

Company’s capital structure. In accordance with the plan rules, awards may be settled in cash rather than

shares, where the Committee considers this appropriate.

On a change of control, bonus share awards would be released or vest in full. LTIP awards may vest taking

account of relevant factors including progress against relevant performance conditions and may be pro-rated

based on time.

In the event of a demerger or other significant distribution, share awards may be allowed to vest wholly or in

part. A winding up, administration or a voluntary arrangement event would result in bonus share awards being

released or vesting in full and LTIP awards would normally vest subject to achievement of the relevant

performance conditions on the same time pro-rated basis as above.

In similar corporate events, awards under HMRC-approved all-employee plans would vest in accordance with

the standard approved terms.

The Committee may approve payments to satisfy commitments agreed prior to the implementation ofthis

Policy where such commitment was either: (i)made prior to the implementation of the 2014 Remuneration

Policy; or (ii) agreed during the term of, and was consistent with, the Remuneration Policy in force at the time.

This includes previous incentive awards that are currently outstanding and unvested. The structure of these

legacy awards is generally consistent with the Policy Table but the performance conditions applying may be

different.

The Committee may also approve payments outside of this policy, in order to satisfy any legacy arrangements

made to a colleague prior to (and not in contemplation of) promotion to the Board of Directors. This policy

applies equally to any individual who is required to be treated as a Director under the applicable regulations.

The Committee may make minor amendments to the Remuneration Policy to aid its operation or

implementation without seeking shareholder approvals (e.g. for regulatory, exchange control, tax or

administrative purposes or to take account of a change in legislation) provided that any such change is not to

the material advantage of colleagues.

Remuneration Policy continued

Remuneration Policy for the Non‑Executive Chair and Non‑Executive Directors

The remuneration of the Non-Executive Chair is determined by the Remuneration Committee and the remuneration

of the Non-Executive Directors by the Non-Executive Chair and Executive Directors. The Non-Executive Chair and

Non-Executive Directors receive fees and may be eligible for certain benefits. Non-Executive roles are not

entitled to any performance-related pay or pension.

The Non-Executive Chair and Non-Executive Directors do not have service contracts. The Company’s policy is

toappoint the Non-Executive Chair and Non-Executive Directors 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 serving three months’ written

notice by either party and six months’ in the case of the Non-Executive Chair. The Non-Executive Directors’

letters of appointment are available for shareholders to view at the Company’s registered office.

Non‑Executive Director Remuneration Policy

Approach to setting

remuneration

The fees for Non-Executive Directors are set at a level which is considered

appropriate to attract individuals with the necessary experience and ability to

oversee the business. Fees may be paid in cash or shares.

Typically reviewed annually in May.

Judgement is used but consideration is given to a number of internal and external

factors including responsibilities, market positioning, inflation and colleague

payincreases.

Where appropriate benefits may be provided such as colleague discount, private

medical cover and annual medical assessment.

Travel and other reasonable expenses (including any associated taxes) incurred in

the course of performing their duties are reimbursed to Non-Executive Directors.

Opportunity Fee opportunity reflects responsibility and time commitment.

Additional fees are paid for additional time commitments or for further

responsibilities such as chairing Committees.

The value of benefits provided will be reasonable in the market context and take

account of the individual circumstances and benefits provided in comparable roles.

93 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 28 February 2026,

together with comparative figures for the 52 weeks to 1 March 2025.

Notes

Simon Roberts

£000

Bláthnaid Bergin

£000

2025/26 2024/25 2025/26 2024/25

Base salary 1,002 971 692 670

Benefits a) 20 19 18 19

Pension b) 75 73 52 50

Total fixed pay 1,097 1,063 762 739

Annual bonus c) 1,907 1,948 1,077 1,100

Long-Term Incentive Plan d) 2,427 2,168 1,508 424

Total variable pay 4,334 4,116 2,585 1,524

Total 5,431 5,179 3,347 2,263

a) Benefits include a combination of cash and non-cash benefits, valued at the taxable value. For 2025/26, benefits for Executive

Directors included a cash car allowance (£15,250), private medical cover and taxable expenses. Executive Directors are also entitled

to group income protection cover, life assurance and colleague discount.

b) 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.

c) 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. No further performance conditions apply to the Bonus

Share Award. In 2024/25, a further £170,866 of Simon Roberts’ cash bonus was deferred into shares which vested on 19 December

2025 at the point that bank capital was returned to shareholders.

d) 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.

The LTIP figures include accrued dividend equivalent shares over the performance period. The 2025/26 values are based on the

average share price over the fourth quarter for 2025/26 of £3.291. The 2023 Leaders’ Share Award is the first Long-Term Incentive

Plan granted to Bláthnaid Bergin following her appointment to Chief Financial Officer. The 2025/26 values shown above include the

share price growth since grant: +£351k for Simon Roberts and +£218k for Bláthnaid Bergin.

The 2024/25 LTIP figure has been updated from the fourth quarter average share price to the actual share price on the vesting date

of 22 April 2025 (£2.626). Bláthnaid Bergin’s 2024/25 LTIP vesting related to an award granted prior to her appointment as an

Executive Director in March 2023, so was not subject to the two-year retention period. In the interests of transparency the full value

has been included in the single figure table.

Annual bonus for 2025/26 (audited information)

For 2025/26 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 2025/26 were profit (50 per cent), retail free cash flow (20 per cent) and a strategic

scorecard (30 per cent comprising colleague, customer and individual objectives, each being ten per cent).

After the end of the financial year the Remuneration Committee undertook a review of performance to

determine annual bonus outcomes for Simon Roberts and Bláthnaid Bergin. As detailed below, the Committee

identified that a bonus was payable to the Executive Directors. As in prior years, the Remuneration Committee

has sought to take a measured and rounded approach to performance assessment when determining incentive

outcomes to ensure that they are fair and proportionate.

The following table summarises the final outcomes for the Executive Directors.

Outcome

(% of overall

maximum)

Simon

Roberts

£000

Outcome

(% of overall

maximum)

Bláthnaid

Bergin

£000

Profit 37.5% 827 37.5% 467

Retail free cash flow 20% 441 20% 249

Strategic scorecard 29% 639 29% 361

Total 86.5% 1,907 86.5% 1,077

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

950 1,000 1,050 1,025

a) Underlying Retail Operating Profit. This measure is defined in the Alternative Performance Measures section of the Annual Report

on pages 203 to 206

Retail free cash flow performance

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

500 560 574

a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 203 to 206.

b) For 2025/26 there was no payout for retail free cash flow performance below target.

Governance Report

94 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Annual report on remuneration continued

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 nine per

cent (out of ten per cent) for the customer element, ten per cent (out of ten per cent) for the colleague element

and ten per cent (out of a possible ten per cent) for performance against their individual strategic objectives.

This results in a strategic scorecard outturn of 29 (out of a possible 30 per cent) for both Simon Roberts and

Bláthnaid Bergin.

Shared objectives

Customer Grew volume share in a challenging market, achieving a new high point and reaching our

highest share in ten years. Continued growth in primary customers, building on our progress

from the last 4 years. We have maintained the strength of our competitive price position.

Customers continue to trade up to Taste the Difference products, with sales exceeding the £2

billion target set for the year.

Whilst there is still more to do, over the last year we have grown customer satisfaction vs.

the high 2024/25 base, with year-on-year growth across availability, range and value for

money. Delivered significant improvements in colleague helpfulness and consistent

improvements across Grocery Online.

Colleague Colleague engagement remains high despite ongoing business change activity which has

impacted colleagues. In our February 2026 We’re Listening Mini survey, we matched our

highest ever ‘happiness’ score. Our aim has been consistently to build inclusive leadership

across the Company and improve diverse representation at all levels and we continue to

focus on building a talent pipeline to support our ambition. Again this year, we were the first

UK supermarket to announce an above inflation pay increase for our hourly paid colleagues.

We have continued to invest to improve colleague safety and enhance loss prevention

measures, making the protection of our colleagues apriority.

Both Executive Directors continue to advocate for diverse representation within the business

and externally. During the year, Simon spoke at the Diversity in Retail Inclusion Summit,

where he is a member of the Advisory Board, as well as speaking at Diversity in Grocery’s

DIG Live event. Bláthnaid is our Executive Sponsor for Disability and meets regularly with

our internal network group and has participated in work to drive better accessibility for our

customers. Bláthnaid was the keynote speaker for International Women’s Day in 2025/26.

Simon Roberts Bláthnaid Bergin

Shared

objectives

Worked in partnership with the Operating Board to drive our 2025/26 financial plan to deliver

strong performance across Next Level strategic outcomes and plan commitments, achieving

underlying retail operating profit, retail free cash flow and annual savings ahead of target,

whilst balancing customer value and service, expanding food space and delivering market

leading shareholder returns.

Put in place a fully dedicated Managing Director and management team to accelerate the

turnaround of Argos and deliver sustained improvement in financial and customer

performance.

Director-

specific

Delivered further improvements in the

consistency of our quality, value and service

for customers and continued to take grocery

volume market share, growing share by

+0.13% pts year-on-year in a challenging

market.

Returned £816 million of cash to shareholders

in 2025/26 (£316 million ordinary dividends,

£250 million share buyback, £250 million

special dividend).

Drove our new store opening and space

conversion plans to deliver expectations for

both customers and shareholders, opening ten

new supermarkets and 33 convenience stores.

Invested in 70 of our highest potential stores

through our More for More programme.

Harnessed and drove new leadership

accountabilities across the business.

Delivered a successful dry run and embedded

the new Control Framework across the

business in readiness for compliance with the

new Corporate Governance Code.

Continued transformation of the banking

business, executed well ahead of budget and

expected timelines. Developed a streamlined

operating model for Sainsbury’s Financial

Services going forward.

Delivered the triennial valuation of the

pension scheme, achieving a positive

outcome for the Company and employees,

whilst ensuring the scheme remains fully

funded.

All aspects of the new debt reporting

requirements have been embedded in

finance, credit ratings have been maintained

and remain stable and bond spreads have

tightened.

95 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

2023 Leaders’ Share Award (2023/24 to 2025/26 performance period)

(audited information)

The 2023 Long-Term Incentive Plan is known as the 2023 Leaders’ Share Award.

Awards were granted under the rules of the J Sainsbury plc 2016 Long-Term Incentive Plan. The 2023 Leaders’

Share Award vested 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.

In terms of the financial metrics, retail free cash flow performance was above the stretch target, ROCE and cost

reduction performance between target and stretch, with EPS between threshold and target. Market share was

at stretch, alongside a strong colleague engagement performance, towards the top of the range. The customer

element was at the stretch target, reflecting the strong progress that we have made in the three years since the

targets were set.

Despite progress across our Plan for Better commitments, the stretching Scope 1 and plastics reduction targets

set for the 2023 Leaders’ Share Award were not achieved. For Scope 3, our original LTIP target was based on the

WWF retailer requirements, which set out that retailers should report on emissions covered by suppliers with

near-term and long-term (i.e. net zero) 1.5 degree SBTi targets. WWF has subsequently updated its retailer

requirements allowing reporting on emissions covered by suppliers who have 1.5 degree SBTi near-term targets

only. This change acknowledges that suppliers may have clear near-term reduction plans but committing

to a long-term target is challenging as the breadth of dependencies involved makes it difficult to establish

full confidence in a 2050 roadmap at this stage. We have been working with our suppliers in alignment with

this change, achieving a result of 51.6 per cent of emissions covered by suppliers with any 1.5 degree SBTi

targets (near term or net zero) approved by the end of 2025/26. Assessing our performance on this basis, the

Committee determined that the threshold outturn had been achieved for this element. This results in an overall

outturn under the Plan for Better element of 10.7 per cent of maximum.

Taking account of all eight metrics, this results in a performance outturn of 72.5 per cent of the maximum

for the 2023 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 Executive Directors.

Metric Weighting

Threshold target

(25% of element

vests)

Maximum target

(100% of

element vests Outcome

% of maximum

achieved

Cumulative retail free cash flow

20% £1,350m £1,650m £1,744m 100.0%

ROCE

20% 7% 10% 8.9% 72.5%

EPS

20% 20p 27p 22.3p 49.6%

Cost reduction 20% £750m £1,250m £1,027m 66.6%

Market share 5% 11.74% 12.17% 12.90% 100.0%

Customer 5% 0bps 200bps 200bps 100.0%

Colleague 5% -1 vs 2022

score

+4 vs 2022

score

+3 vs 2022

score

85.0%

Plan for Better 5% See below See below 10.7%

Scope 1 – GHG

emissions

354,971 tCO

e 308,539 tCO

e 441,017 tCO

Scope 3

– suppliers

with SBTi 1.5

degree net

zero target

approved

50% of

emissions

80% of

emissions

51.6%

(suppliers

with any 1.5

degree SBTi

target)

Own brand

plastic

packaging

reduction

52,379 tonnes 34,920 tonnes 57,305 tonnes

Performance gateway The Remuneration Committee must be satisfied that the

Company’s underlying performance over the period

justifies the level of vesting

Achieved

Total 72.5%

(out of a maximum of 100%)

a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 203 to 206.

Recovery provisions

The Remuneration Committee may operate recovery provisions (malus and clawback) on all incentive awards.

The Committee may reduce or cancel an unvested award, or impose further conditions on an unvested award

in the event of material mis-statement of financial results, serious reputational damage, serious misconduct,

fraud, or other cases of extreme failure where the Committee considers such adjustment to be warranted.

In addition, in the circumstances outlined above, the Committee may clawback incentives, by requiring an

Executive Director to make a repayment in relation to bonus payments and share awards. This provision would

apply for up to two years following the end of the relevant performance period. A two-year clawback period

was considered appropriate in light of the risk profile of the business and standard market practice.

No recovery provisions were applied during the last financial year.

Annual report on remuneration continued

96 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Annual report on remuneration continued

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 2025 Leaders’ Share Award

250% of salary £2,522,275 25% of each element 879,454 26 February 2028

Bonus Share Award

50% of bonus award £973,936 N/A 339,587 N/A

Bank Share Award

N/A £170,864 N/A 59,576 N/A

Bláthnaid Bergin

2025 Leaders’ Share Award

225% of salary £1,566,630 25% of each element 546,244 26 February 2028

Bonus Share Award

50% of bonus award £550,000 N/A 191,748 N/A

a) The performance conditions applying to the 2025 Leaders’ Share Award are set out in the 2025 Annual report on remuneration. The basis of award shows the maximum value. The award was made on 30 May 2025 and the number of shares has been calculated using the

average share price between 22 May and 29 May 2025 of £2.868. Subject to performance, the award will vest in May 2028 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 30 May 2025, this is the mandatorily deferred portion of the 2024/25 bonus. Simon Roberts received a bonus of 91 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 91 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 22 May and 29 May 2025 of £2.868. No

further performance conditions apply. The Bonus Share Awards will be released in March/April 2027.

c) This award was made in respect of the additional element of Simon Roberts’ 2024/25 cash bonus that was deferred into shares, which vested on the return of bank capital to shareholders on 19 December 2025.

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 2025/26 financial year.

Ordinary shares

Scheme interests

1 March 2025 28 February 2026 22 April 2026

Bonus Share

Awards

LTIP awards

with performance

period completed

LTIP awards

with performance

period outstanding

SAYE

Simon Roberts

941,338 1,104,029 1,104,029 709,352 1,618,745 2,623,772 0

Bláthnaid Bergin

348,397 255,092 255,092 398,193 0 1,690,528 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 Plan awards are structured as nil-cost options.

c) Relates to 2024 and 2025 Bonus Share Awards.

d) Relates to 2021 Win in Food award and 2022 Leaders’ Share Award (vested but unexercised). Notional dividends are added for LTIP awards where the performance period has ended.

e) Relates to 2023 Leaders’ Share Award, 2024 Next Level incentive plan and 2025 Leaders’ Share Award (all expressed at the maximum) where the performance period has not ended. As noted above, following the year-end, the 2023 Leaders’ Share Award will vest at 72.5 per

cent of maximum.

f) On 24 April 2025, Simon Roberts exercised 341,887 shares under his 2023 Bonus Share Award at a share price of £2.599, achieving a notional gain of £888k. On 14 May 2025, he exercised 994,658 shares under his Future Builder 2020 Part 1 and 2 awards at a share price of

£2.769, achieving a notional gain of £2,754k. On 12 January 2026, he exercised 64,423 shares under his Bank Share Award at a share price of £3.077, achieving a notional gain of £198k.

g) On 24 April 2025, Bláthnaid Bergin exercised 87,528 shares under her 2023 Bonus Share Award at a share price of £2.599, achieving a notional gain of £227k. On the same date, she exercised 161,398 shares under her 2022 Leaders’ Share Award at a share price of £2.599,

achieving a notional gain of £419k.

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 36.0 million shares (2025: 39.3 million) held by the Trustees.

97 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Remuneration in 2026/27

Details of the salary increases, pension opportunity and annual bonus and LTIP awards (including a summary

of the performance measures and relative weightings, are provided on page 84.

Annual bonus

The annual bonus for 2026/27 will operate on the same basis as 2025/26.

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.

2026 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 2026 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 2026 awards as shown in the table.

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.

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% £600m £900m

Cumulative retail free

cash flow

17.5% £1,550m £1,850m

ROCE

17.5% 9.0% 11.0%

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

94bps improvement against

CompanyCSAT score

Colleague engagement 7.5% -4 vs 2025 score +1 vs 2025 score

Plan for Better

Scope 1

7.5%

399,332 tCO

e absolute GHG emissions 326,726 tCO

e absolute GHG emissions

Food waste 6% above Food Waste target 6% below Food Waste target

a) These measures are defined in the Alternative Performance Measures section of the Annual Report on pages 203 to 206.

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.

Annual report on remuneration continued

98 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 28 February

2026 for each Non-Executive Director, together with comparative figures for the 52 weeks to 1 March 2025.

2025/26 2024/25

Fees

£000

Benefits

£000

Total

£000

Fees

£000

Benefits

£000

Total

£000

Martin Scicluna 550 0 550 533 0 533

Jo Bertram 78 0 78 76 0 76

Katie Bickerstaffe 52 0 52 N/A N/A N/A

Brian Cassin

34 1 35 97 0 97

Steve Hare 52 0 52 N/A N/A N/A

Jo Harlow 100 2 102 97 0 97

Adrian Hennah 114 0 114 97 0 97

Tanuj Kapilashrami 78 0 78 76 0 76

Keith Weed 100 6 106 97 7 104

a) Paid in relation to the year. Fees were set on 26 May 2024 and 25 May 2025.

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) Brian Cassin stepped down from the Board on 3 July 2025.

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 Chair fee increased to £553,719 and the base fee for

Non-Executive Directors increased to £78,697. Senior Independent Director and Committee Chair fees increased

from £21,091 to £21,724. The new fee levels were effective from 25 May 2025.

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.

2026 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 uses 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 203 to 206

J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Non‑Executive Director remuneration continued

Chair and Non-Executive Director fees for 2026/27

In 2026 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 24 May 2026.

Fees effective from 24 May 2026

Chair £570,331

Base fee £81,058

Senior Independent Director fee (additional) £22,376

Chair of Remuneration Committee fee (additional) £22,376

Chair of Audit Committee fee (additional) £22,376

Chair of Corporate Responsibility and Sustainability Committee fee (additional) £22,376

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

1 March 2025 28 February 2026 22 April 2026

Martin Scicluna 15,000 15,000 15,000

Jo Bertram 8,000 8,000 8,000

Katie Bickerstaffe

N/A 24,370 24,370

Brian Cassin

25,000 N/A N/A

Steve Hare

N/A 3,000 3,000

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.

b) Steve Hare and Katie Bickerstaffe joined the Board on 3 July 2025.

c) Brian Cassin stepped down from the Board on 3 July 2025.

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 94 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 colleague

earning a London rate of pay and the 75th percentile colleague earning an additional unsociable hours

premium.

The Chief Executive’s total remuneration comprises a significant proportion of variable pay which will change

each year depending on incentive outcomes.

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

2025/26 Option B

219:1 198:1 197:1

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 2025 gender pay gap data. In line

with the regulations, our 2025 gender pay gap data identifies employees using a snapshot date of 5 April 2025.

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 for the period 2 March 2025 to 28 February 2026.

Financial year Remuneration Chief Executive

25th percentile pay ratio

(lower quartile)

50th percentile pay ratio

(median)

75th percentile pay ratio

(upper quartile)

2025/26 Base salary £1,002,000 £24,079 £26,467 £26,627

Total remuneration £5,431,000 £24,836 £27,415 £ 27,546

The Remuneration Committee considers pay ratios as one of many reference points when reviewing executive

remuneration and considers that the median pay ratio for 2025/26 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.

Annual report on remuneration continued

100 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 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

Percentage change in remuneration

from 2024/25 - 2025/26

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 0.0% 42.7% N/A 2.7% -29.2% 1.5% 3.9% 12.4% 20.8% 4.0% 1.3% -5.2% 3.2% 3.7% -2.1%

Bláthnaid Bergin

N/A N/A N/A N/A N/A N/A N/A N/A N/A 3.1% -0.7% -4.1% 3.2% -3.1% -2.1%

Martin Scicluna 0.0% 0.0% N/A 2.7% 0.0% N/A 3.9% N/A N/A 4.0% -100% N/A 3.2% 0.0% N/A

Jo Bertram

N/A N/A N/A N/A N/A N/A 3.9% -100% N/A 4.0% 0.0% N/A 3.2% 0.0% N/A

Katie Bickerstaffe

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Brian Cassin

0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% 0.0% N/A 4.0% 0.0% N/A 3.2% N/A N/A

Steve Hare

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Jo Harlow

0.0% 0.0% N/A 7.2% 0.0% N/A 4.9% N/A N/A 4.0% -100% N/A 3.2% N/A N/A

Adrian Hennah

e)f)

N/A N/A N/A 18.4% -100% N/A 3.7% 0.0% N/A 4.0% 0.0% N/A 18.1% 0.0% N/A

Tanuj Kapilashrami 0.0% 0.0% N/A 2.9% 0.0% N/A 3.9% 0.0% N/A 4.0% 0.0% N/A 3.2% 0.0% N/A

Keith Weed

0.0% 0.0% N/A 22.1% 0.0% N/A 12.0% N/A N/A 4.0% -43.4% N/A 3.2% -21.5% N/A

All colleagues

-1.2% -21.9% 5.2% 7.6% -6.6% -5.4% 15.3% 0.8% 30.2% 13.3% 1.6% -14.6% 6.6% 4.9% 9.7%

a) Bláthnaid Bergin was appointed to the Board on 5 March 2023.

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) Katie Bickerstaffe and Steve Hare joined the Board on 3 July 2025.

d) Brian Cassin stepped down from his roles as both Non-Executive Director and Senior Independent Director on 3 July 2025. His fee for 2025/26 has been annualised to provide a more meaningful comparison.

e) Year-on-year changes in Non-Executive Director fee levels will be impacted by responsibility and Committee membership changes during the year.

f) Adrian Hennah took on the Senior Independent Director role effective 3 July 2025. The % Salary change from 2024/25 to 2025/26 reflects actual fees received and has not been annualised.

g) 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

2024/25

£m

2025/26

£m % change

2024/25

£m

2025/26

£m % change

4,091 4,319 5.5% 508

816

60.6%

a) The percentage change in the declared dividend excluding share buy back and the special dividend is 2.6 per cent.

Annual report on remuneration continued

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Annual report on remuneration continued

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 2016/17 2017/18 2018/19 2019/20 2020/21

2021/22 2022/23 2023/24 2024/25 2025/26

Single figure remuneration (£000) S Roberts — — — — 1,325 3,599 5,217 4,806 5,179 5,431

M Coupe 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% 86.5%

M Coupe 35% 57% 56% 22% 0% — — — — —

LTIP vesting percentage

ofmaximum

S Roberts — — — — 60% 70% 77.5% 70% 72.5% 72.5%

M Coupe 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.

Sainsbury’s

250

200

150

100

Mar-16 Mar-17 Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Mar-24 Mar-25 Mar-26

FTSE 100

FTSE All-Share Food & Drug Retailers

TSR performance since March 2016

102 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Annual report on remuneration continued

Governance – the Remuneration Committee

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 and six months, in the case of the Non-Executive Chair.

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, remuneration policy, incentive plan design and incentive plan rules. Their consultants

attended all of the Committee meetings. In relation to their advice, Deloitte received fees of £142,250 (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 Directors’ Remuneration Report (excluding the Policy) at the 2025 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 (2025 vote) 97.89%

1,518 million

2.11%

33 million

—

1 million

Remuneration Policy (2023 vote) 99.12%

1,782 million

0.88%

16 million

—

0.2 million

Approved by the Board on 22 April 2026.

Jo Harlow

Chair, Remuneration Committee

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Climate change and Task Force on Climate-related Financial Disclosures(TCFD)

Introduction

To improve business resilience to growing environmental challenges and contribute towards developing a more

sustainable food system, we need to understand our impacts and dependencies related to nature, climate

and human rights issues and the interconnectedness between them. We are aware of the role we must play in

addressing these current, evolving and future issues.

This disclosure focuses on the required elements from the Task Force on Climate-related Financial Disclosures

(TCFD). However, as part of our commitment to nature, we also became an early adopter of the Taskforce on

Nature-related Financial Disclosures (TNFD). To demonstrate the interconnectedness of environmental issues

across our business we have signposted, within this disclosure, the areas which are common to both climate

and nature, particularly in the Governance and Risk Management sections. We aim to build out our TNFD

disclosure over time, increase the scope and depth of coverage of nature-related issues and begin quantifying

the impact of these issues across the business as well as introducing TNFD aligned metrics and targets.

Additional TNFD specific requirements are included in our standalone Plan for Better Report.

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

success in reducing our own emissions and we are engaging closely with our suppliers to ensure we are driving

positive change across our value chain.

Tackling climate change is not achievable by any business or organisation alone. 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 but it is equally important that we participate in

sector-wide initiatives that strengthen resilience in the wider food system. We continue to work closely with

key partners across our industry including the Institute of Grocery Distribution (IGD), the Waste and Resources

Action Programme (WRAP), the British Retail Consortium (BRC) and the Consumer Goods Forum (CGF) to align

approaches on common issues and help drive systemic change at scale.

Over the last decade we have taken many strides forward 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 TCFD disclosure explains how we have identified, responded to and

monitored the impacts of climate-related risks and opportunities on our business, including how we embed

our findings into our wider strategy to bolster our environmental resilience. This is our sixth year of reporting

against the recommendations set by the TCFD. We have complied with the Financial Conduct Authority

Listing Rule LR 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 processes outlined in this section on governance for climate-related matters are the same for nature and

human rights-related matters.

The Board

The Board is accountable for risk management, strategy and target setting of our principal environmental risk,

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. Details on the frequency of Board meetings are in our

wider governance section on page 55.

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 regularly

presented upskill sessions on sustainability-related topics, such as embedding an internal carbon price,

development of carbon reduction roadmaps, EU Deforestation Regulation compliance and our approach to

sustainable sourcing and environmental resilience to the Senior Leadership Team at the Plan for Better

Acceleration Squad with Board level oversight from the Corporate Responsibility and Sustainability Committee.

More broadly, we also continue to upskill the wider Finance, Commercial and Technical teams across the Food

and General Merchandise divisions on areas such as carbon emission reductions, food waste reductions and

nature-related topics such as those relating to water risks, soil health and sustainable sourcing.

See pages 56 to 58 for biographies of our Board members, including their skills and experience.

Board Committees

The Corporate Responsibility and Sustainability Committee reviews the sustainability strategy, which includes

climate and monitors the business engagement with our key stakeholders.

The Remuneration Committee reviews remuneration for Executive Directors against our Plan for Better targets

and metrics. These Long-Term Incentive Plans are reviewed annually and include sustainability targets. See

page 96 for more details on which targets are included.

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 71 to 103.

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 63.

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 sponsored by the Chief Commercial 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-related 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

71 to 72, providing information on the governance structure, its responsibilities, meeting frequency and principal

activities in the year.

104

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Strategy

This section explains how our strategy responds to the impacts and opportunities of climate change on our

business. We acknowledge that climate change is a key driver of nature loss and can exacerbate nature-related

risks such as water availability and excess challenges Therefore, some of the impacts and opportunities

discussed in this disclosure are linked to our nature-related impacts and dependencies and are relevant for

TNFD. As our approach to TNFD evolves over time, we aim to better quantify the impact of wider nature-related

issues, such as soil degradation, on our business to ensure we have a comprehensive view of the impacts of

environmental risks across our business.

Our business risk and resilience strategy, covering climate, environmental, human rights, geopolitical and

economic risks, has an established governance framework and a dedicated team to identify, track and

mitigate supply chain risks across fresh and grocery food categories. Under this strategy, we are establishing

long-term strategic supplier partnerships, dynamic sourcing models and joint risk management plans to

strengthen surety of supply. For environmental risks, we have risk mapped against our sourcing regions and

commodities using eight indicators: water stress, heat stress, flood risk, water pollution, biodiversity loss,

soil degradation, deforestation and conversion. These insights inform deeper investigations where needed

and feed directly into commercial reviews to ensure mitigations are embedded into sourcing strategies and

supplier contracts. Examples include olive oil and processed tomatoes. Looking ahead, we are expanding this

work through a more integrated, forward-looking resilience programme that focuses on enhancing supplier

relationships, developing a centralised data platform for environmental and supply risk analytics and building

capability across internal teams. This ensures our raw material procurement strategies continue to secure

long-term supply while proactively managing emerging risks and strengthening business resilience.

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, to create new products

with a reduced environmental impact for our customers and to 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 40).

Financial impact ranges

Impact Financial range (revenue)

High Greater than £125 million

Medium £25 million to £125 million

Low Less than £25 million

Time horizons

Time period Years Reason

Short 0 to 5 years Aligned to our financial planning cycle

Medium 5 to 15 years Nearer term focusing on transition risks and opportunities

Long 15 to 50 years Longer term focusing on physical risks and opportunities

The table below captures the key climate-related risks and opportunities impacting our business, identified

through our risk management and internal control framework 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 109 to 110 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/

chronic

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

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

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.

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 considered within our corporate plan. Further

details are on page 113.

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Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

Strategy continued

Strategy b) Impact of climate‑related risks and opportunities on business, strategy

andfinancial planning

Our climate-related strategy is designed to respond to and manage the impacts of climate-related risks and

opportunities that we have identified and support us in our journey to achieving our SBTi approved 2030 near-

term and net zero targets. We have a target to achieve net zero within our own operations by 2035 and in our

Scope 3 emissions by 2050.

We outline below the key actions we are taking to address the impacts of identified climate-related risks and

opportunities.

Key climate-related risk/

opportunity How our strategy addresses the risks and opportunities identified

Climate conscious

consumers

favouring lower

GHG emission

products

Healthy and

sustainable

diets

Reduce carbon

emissions

Reduce food

waste

Our Next Level strategy continues to focus on being first choice for food and playing 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

(such as fruit, vegetables and fibre-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 Discovery beef range to explore how we

can reduce the emissions of our products and develop lower carbon products across

other supply chains.

During the year we partnered with our coffee supplier to launch a new coffee range from

La Celia. Through a holistic approach focused on low emission fertilisation and forest

restoration, as well as supporting the La Celia women farmers, we have helped to reduce

emissions on farm whilst enhancing the resilience of the environment and local

communities. See our case study on page 110 for more details. 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.

We are making progress on transitioning our shell eggs from brown to white eggs, which

are less carbon intensive and result in higher animal welfare outcomes, aiming towards 100

per cent in our own brand core ranges. Further details can be found in the case study on

page 107.

This year we also completed a trial with Strawson’s, one of our long-term produce

suppliers, on the use of electric HGVs to explore the feasibility of moving away from

fossil fuel use in our produce supply chains, agreeing a further rollout following a

successful trial.

We continue to use recycled and alternative fibres in our garments, while exploring

options to advance our circularity programmes and improve operational efficiency. We

are also investigating how we can support fibre-to-fibre recycling by driving an

increase in textile take-back initiatives.

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 109 for more details).

Introduction of a

carbon price

leading to an

increase in the cost

of higher GHG

emission products

Reduce carbon

emissions

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. These costs have been embedded 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 consider 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

. We have continued to invest in on-site renewable electricity

generation and purchase 100 per cent renewable electricity through a portfolio of

Power Purchase agreements as well as purchasing Renewable Energy Certificates.

Examples of innovative technology that we have introduced include: the trial and

subsequent rollout of a new air curtain that reduces air infiltration through our

doors, helping to maintain store temperatures more efficiently. We have also

trialled a new building management system that has demonstrated improved

control over heating and lighting and will be looking to roll this out across our

estate over the coming year. We continue to install our innovative Refrigeration

Integrated Heating and Cooling (RIHC) systems, which replace natural gas heating

by using the refrigeration systems to provide all heating and cooling requirements.

In-store refrigeration systems are replaced according to their lifecycles, ensuring

that fridges using higher carbon HFC refrigerant gases are replaced with more

energy efficient natural CO

refrigerants systems. Alongside this, we have

identified all systems using the highest carbon HFC gases not due to be replaced

before 2030 and converted them to a lower carbon refrigerant gas to minimise their

impact on the environment whilst they remain in the estate.

We continue to work towards transitioning our fleet to alternative fuels, with

theambition of achieving this by 2035. 2025/26 has seen us progress several vehicle

decarbonisation initiatives including the addition of 30 heavy goods vehicle (HGV)

trucks powered with fuel directly from food waste. This diesel alternative is 100 per

cent biomethane, a renewable gas produced from the anaerobic digestion of unsold

food. We now operate over 200 electric Groceries Online vans and have an award-

winning public network of rapid chargers for Sainsbury’s customers at 80 locations.

We have also started creating an electric HGV charging network across our estate,

with three locations currently in development through a government funded Zero

Emission HGV and Infrastructure Demonstrator (ZEHID) initiative.

We are working closely with our external academic partner Imperial College 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.

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Key climate-related risk/

opportunity How our strategy addresses the risks and opportunities identified

Ban on the sale of new

petrol/diesel cars and

vans from 2035 leading

to a reduction in

fuelsales

Increase in demand for

electrical vehicle

charging

Reduce carbon

emissions

Following the launch of our dedicated electric vehicle (EV) charging business,

Smart Charge, in 2024, our customers can now access 661 ultra-rapid EV charging

points across 80 Sainsbury’s stores.

To better understand the financial impacts of this transition risk we have performed

quantitative scenario analysis on our Fuel category (see page 109 for more details).

Increased likelihood of

heat events, flooding

and droughts leading

to a reduction in crop

yields and increased

sourcing costs

Reduce 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 nature and 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, supported by a third party, we conducted a comprehensive assessment

of environmental risks (both climate and nature) across a significant proportion of

our current and possible sourcing regions around the world, considering a wide

variety of commodities and products. This exercise assessed both current and

future environmental risks including water stress, flooding and heat stress. The

output has helped our Commercial teams understand the possible impacts of

sourcing decisions and where measures may need to be taken to mitigate risk

exposure and capitalise on opportunities.

Where supply chain geolocation information is known (such as farm or site level) or a

more comprehensive understanding of risk is required, we conduct detailed analysis

on exposure to environmental risks, accounting for any interregional variation. One

example of this is our continued rollout of Land App across our supply chain, a tool

which provides detailed mapping, at a farm level, of environmental risk exposure.

More information on our qualitative assessment of our supply chain is detailed

onpage108.

We utilise our assessments of environmental risk to help identify key asks for

oursuppliers. Based on our current risk assessment we ask that all our suppliers

are required to have comprehensive water risk assessments and management

plans in place as standard and provide proof of legal water abstraction, pushing for

stronger certification alignment and encouraging collective action with other

stakeholders in the area.

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 110 for more details).

Key climate-related risk/

opportunity How our strategy addresses the risks and opportunities identified

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 offset water use across our stores through nature-

based solutions (NbS). We are continuing to work to identify NbS that can both

improve the resilience of our supply chain and stores, whilst increasing the water

resilience of priority catchments. This year we collaborated on Replenish projects at

Coldharbour Farm, located in the River Sherway catchment. We have also

collaborated with the Aire Resilience Company which aims to utilise NbS to

strengthen climate resilience and reduce flood risk in the River Aire catchment. These

activities not only improve flood defence of the wider catchment but also water

quality.

To further our understanding of how material flood risk is to our estate we also

perform analysis 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 108.

Case study

Transitioning to eggs with a lower carbon footprint

We are making progress on transitioning our shell eggs from brown to white eggs, aiming towards 100 per

cent in our own brand core ranges.

Commissioning a life cycle assessment with three of our egg suppliers, white eggs were found to have a 12.7

per cent lower carbon footprint than our brown eggs. This is largely due to better feed conversion and the

longer productive lifespan of the white hens. Additionally, white hens are less prone to feather pecking,

leading to higher animal welfare.

Transitioning to white eggs helps us to support our customers to make more sustainable dietary choices,

while still maintaining the excellent taste, quality and nutrition they expect. This initiative has benefits

across multiple areas of our Plan for Better, including carbon and animal health and welfare and

exemplifies our approach of collaborating with our suppliers to build a more resilient food system in the UK.

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

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Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

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. We assess the impact of climate

change and nature loss 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 or wider

flood mitigation activities.

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 continues to be 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 continue to monitor 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 and natural flood management

solutions in the surrounding catchments.

Case study

Tadcaster store flood protection

Tadcaster is one of our stores we have identified as at high risk of flooding. In February 2022, during Storm

Franklin, our early flood warning system meant that we were able to put up flood defences eight hours

ahead of the Environment Agency flood warning, enabling us to avoid damage from the heavy rain and

rising River Wharfe and reopen our store quickly once the flood risk passed.

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

a) We continually review the scope of categories assessed across our environmental risks, including across climate, nature and

human rights, both qualitatively and quantitatively. These categories may change as the environmental risks evolve over time.

We have worked with a third party climate specialist to better understand the impact of physical climate risks

on selected supply chains in geographic areas of heightened risk including the UK, Spain, Peru, South Africa

and Morocco. Using geolocation data from over 500 of our farms, we looked at five physical risks: flooding, heat

stress, water stress, wildfire and tropical cyclones, under three different climate scenarios (RCP 2.6, 4.5 and 8.5)

up to 2050. Overall, the qualitative analysis indicated that these supply chains are at high risk from heat stress,

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 have broadened the scope of coverage for our supply chain locations and commodities assessed for

environmental risks. We have assessed over 400 regions in 69 countries around the world, for eight different

environmental risks, with an increased focus on nature-related risks (e.g. water stress, water pollution, flooding,

deforestation, conversion, biodiversity loss, soil health and heat stress). This has allowed us to identify some

of the key focus areas for environmental action and is used to inform decisions taken by our Technical and

Commercial teams about sourcing locations or for onboarding new suppliers as part of our existing due diligence

processes. It also helps us to identify where more comprehensive environmental requirements and mitigation

measures may be required. We expand on the detail of this exercise in our standalone Plan for Better Report.

Quantitative scenario analysis

Our own operations

Building on the qualitative analysis undertaken above we also assess the potential financial impact from

coastal, river and surface water flooding over two climate scenarios (RCP 2.6 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 time frames. The analysis helped to identify the most exposed

properties in our portfolio – 45 properties within our estate make up over 60 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.

a) 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

108 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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) and publicly available climate data

from The World Bank Group, 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 22 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 energy and carbon,

as well as our nature principles (manage water sustainably, improve biodiversity and soil health, protect and regenerate natural

habitats and conserve marine ecosystems)

• Continue to explore development of lower GHG emission animal protein within existing products (including a further rollout of

our Discovery beef range – our integrated beef supply chain) and promotion of meat alternatives to capture switching calories

from existing and new customers

• Engagement with suppliers to source deforestation-free soy within our supply chain as well as engaging with industry peers to

encourage their alignment with this approach

Clothing

• Increase the use of recycled and alternative fibres

• Explore options for circularity programmes

• Signatories of UK Textiles Pact, which aims to reduce the aggregate water footprint of new products sold by 30 per cent and

reduce carbon by 50 per cent

• Continue to drive progress towards our target for 100 per cent of our cotton to be sourced to an independent standard. This year

we are collaborating with our key clothing and home textiles suppliers to achieve traceability to farm level

Fuel

• We continue to expand Smart Charge, our ultra-rapid EV charging service, helping to address the shortage of electric chargers in the UK

• We continue to develop decarbonisation roadmaps for our Scope 3 hotspots and investigate lower carbon fuel offerings at our

petrol filling stations

Regulation £150m to £200m

revenue loss to MFP

category in isolation

Overall opportunity

to business

post-mitigations

N/A £1,000m to £1,100m

revenue loss to Fuel

category in isolation

Smaller revenue loss risk/

potential opportunity to

business post-mitigations

Changes in consumer

preferences

£350m to £400m

revenue loss to MFP

category in isolation

Overall opportunity

to business

post-mitigations

£100m to £150m

revenue loss to

Clothing

category in

isolation

Risks should be considered in isolation as the complex interrelationship between multiple risks has not been considered.

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

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Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

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 transition risks on most exposed products in a low emissions scenario in 2050

To assess the financial impact of the increased likelihood of heat events, reduced labour capacity, drought andflooding, we evaluated the production of Produce, Cotton, Coffee and Tea in our key sourcing locations.

Weconsidered two scenarios, one where global warming reaches 4.3°C (high emission) as a result of no global action having been taken to reduce emissions, leading to extreme physical risks manifesting in the long term and a

1.5°C (low emission) scenario where the Paris Agreement is met but physical risks are still experienced, albeit more mildly. The below table shows the results of the 4.3°C (high emission) scenario only.

Our scenario analysis considered the impacts of these acute physical risks and the resulting diminished or lost crop yields that would result in increased supply costs. We assume these additional costs are passed on directly to

the consumer, reducing demand and impacting our revenue.

Annual revenue loss to most exposed crops in isolation in 4.3°C scenario in 2050, assuming no actions are taken to mitigate risks:

Mitigations that are being implemented/considered as part of our strategic planning to minimise the financial

impacts of the risks identified:

Most material physical

climate risks

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 and nature, associated with growing

locations are being addressed. For example, supplier guidance on water risk

reduction 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 and nature-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, as well as LEAF Marque and Global G.A.P.

SPRING across specific produce

• Human rights: working towards a transition to net zero and nature positive that is

just and equitable for the communities we source from

Heat events £40m to £45m revenue loss

to crops

£40m to £45m revenue loss

to crops

£20m to £25m

revenue loss to crops

£20m to £25m revenue

loss to crops

Labour capacity N/A N/A £10m to £15m

revenue loss to crops

£10m to £15m revenue

loss to crops

Drought £15m to £20m revenue loss

to crops

£20m to £25m revenue loss

to crops

£5m to £10m revenue

loss to crops

£0m to £5m revenue

loss to crops

Flooding £5m to £10m revenue loss to

crops

£10m to £15m revenue lost

factory operation days

£0m to £5m revenue

loss to crops

£0m to £5m revenue

loss to crops

Key sourcing locations Spain

Benin

Brazil

India

USA

Bangladesh (manufacturing)

Brazil

Colombia

Honduras

Peru

Vietnam

India

Kenya

Malawi

Rwanda

Risks should be considered in isolation as the complex interrelationship between multiple risks has not been considered.

Produce considers citrus fruits, lettuce, berries and potatoes grown in Spain and the UK.

Case study

La Celia low carbon coffee

In July 2025, we launched a dedicated roast and ground coffee product from La Celia, Colombia, producing lower carbon coffee through a new growing model. By a switch to low-urea fertiliser and applied application to

reduce excess, we have reduced emissions at farm level, on average by 30 per cent (compared to 2022), whilst also supporting and empowering dedicated women farmers. We have supported La Celia women farmers to plant

native trees, sequestering carbon and mitigating soil erosion. Through workshops, field training and knowledge exchanges, there is a strong network where these women support each other, share best practices and inspire

their communities. They have become advocates for climate-smart agriculture, role models for future generations and key players in Colombia’s coffee sector.

110 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 (pages 166 – 167). 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. Given the phased withdrawal from Financial Services and 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. This remains limited,

as the Bank does not have a mortgage portfolio or undertake any corporate lending.

Risk management

The processes outlined in the Risk management section for climate-related matters are the same for nature

and human rights-related matters.

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 nature and social sustainability risks.

See page 44 for more detail.

We identify climate-related risks through bi-annual 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 sets 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 time frame).

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 44.

The risk management process for climate is in line with the business-wide risk management framework described

onpages 40 to 47.

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

Databook which can be found on our corporate website (https://corporate.sainsburys.co.uk).

Case study

Berries and cherries

We source our berries and cherries from multiple regions across the world, including some that are exposed to greater water availability issues, largely exacerbated by climate change. If left unaddressed, a lack of available

water could present surety of supply challenges for the business. To help mitigate this risk, we have set up long-term agreements with our berry and cherry partner suppliers. This is typically uncommon for this type

of produce, which has historically operated on seasonal purchasing agreements. By establishing long-term agreements, we can work collaboratively and confidently to implement the measures necessary to address

key environmental challenges and ensure supply. Most notably we have been working with our partner suppliers to improve how we measure, manage and utilise water, recognising the importance of this resource for

environments and communities and our ability to produce delicious berries and cherries for Sainsbury’s customers. As part of this process, we have been working towards all our partner suppliers’ programmed growers

attaining Global G.A.P. SPRING and LEAF Marque certification in all 13 of the countries we source from. These certification schemes set us up to better risk assess water use, improve grower engagement and strengthen our

ability to track water capture and usage alongside recycling and waste. The schemes also help to fast-track innovation in our produce growing techniques to reduce water use. This is the first milestone in a 5-year surety of

supply plan that we have with all our partner suppliers in berries and cherries looking at how we can mitigate risk.

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

111 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 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

assured 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 assured by ERM CVS

(providing limited assurance under ISAE 3000)

Absolute Scope 3 GHG

emissions (tCO

Near -term (2030) target boundary includes emissions from the

material categories: 1a) purchased goods for resale 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

Reduction

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). This metric is assured by

ERM CVS (providing limited assurance under ISAE 3000)

Plan for Better

commitment Metric Methodology

Nature Soy independently certified

– Credits/Mass-Balance/

Segregated/Low risk origin (%)

Sustainably sourced soy tonnage during the 2025 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 2025

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 sourced as a percentage of total cubic metre volume of

all assessed timber products sourced during the 2025

calendar year with the exception of non-food products which are

calculated as a percentage of total volume sold. 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

sourced during the financial year with the exception of non-food

products which are calculated as a percentage of total volume

sold

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 sourced during the financial year

Volume of cocoa bean

equivalent sourced to an

independent standard – Mass-

Balance/Segregated (%)

Independently sourced cocoa bean equivalent tonnage during

the 2025 calendar year as a percentage of total cocoa bean

equivalent tonnage footprint, 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 2025 calendar year where coffee is the main ingredient

Beef sourced from country

with negligible risk of

deforestation or conversion or

sourced from supplier with

Deforestation and Conversion

Free control mechanism (%)

Beef tonnage from own brand products sourced from

countries with negligible risk of deforestation or conversion or

sourced from supplier with Deforestation and Conversion Free

control mechanism as a percentage of total own brand beef

tonnage sold during the 2025 calendar year

112 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 page 114.

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 25 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 page 108.

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 on pages 109, 110 and note 17 of the financial statements on page 166.

Capital deployment

Amount of capital expenditure,

financing, or investment

deployed toward climate-

related risks and opportunities

Reporting

currency

This year, through Graphite (our energy efficiency investment programme), we have spent £18 million focused on the decarbonisation of heat, increasing the amount of renewable

energy, energy efficiency and technology trials as we continue to focus on engineering innovation, which supports identification of the latest technology to support our

decarbonisation roadmap. We have focused on controller trials, enhanced metering, remote monitoring, thermal energy storage control strategies and new battery technologies.

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 energy efficient natural CO

refrigerants systems. Alongside this we have identified all systems using the highest carbon HFC gases with the

highest CO

f-gases not due to be replaced before 2030 and converted them to a lower carbon refrigerant gas to minimise their impact on the environment whilst they remain in the estate.

We also made a significant investment in 2024 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 are rolling out electric vehicles in our Groceries Online (GOL) operations, with a fleet of over 200 EV vans in use across our GOL

operations and our award-winning Smart Charge rapid EV charging network continues to grow, with 80 locations across the UK.

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. This has led us to invest

in a range of opportunities over many years, demonstrating how climate-related opportunities have become a key growth area for us.

Opportunities in which we have invested include:

• Consumer-facing EV rapid charging, which has seen us expand our award-winning Smart Charge network to 661 bays across 80 locations across the UK

• The use of a broad range of renewable energy technologies, with over 280 sites hosting a solar PV system, as well as biomass boilers, ground-source and air-source heat pumps

and combined heat and power plants used within our estate. The adoption of electric vehicles continues within our operations, with over 200 EV vans now operational and we are

working with partners to bring in eHGVs with supporting charging infrastructure during 2026/27. Engineering innovation remains at the heart of our decarbonisation programme

and builds up new, innovative technologies 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 ton of GHG

emissions used internally by

an organisation

Price in

reporting

currency,

per MT of

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 footprint analysis we continue to assign category-level emission factors at an individual product-level. We have updated our emission factors for

food and electrical products (Argos only) so that we have better product specific secondary emission factors.

More information can be found in the Scope 3 section on page 114.

Remuneration

Proportion of executive

management remuneration

linked to climate considerations

Description Our Plan for Better metrics, which include climate-related metrics, form part of the Executive Directors’ long-term incentive arrangements.

Further details can be found on page 96.

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

113 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) 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%

2020/21 817,420 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%

2025/26 441,017 53.6%

a) 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 pages 122 to 124. This 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 roadmap 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

continue to work towards 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 116 to 119.

Scope 3

Baseline

2023/24 tCO

Scope 3 GHG near term target boundary

emissions 27,692,972

Forest, Land and

Agriculture (FLAG) Energy/Industry Total

10,407,072 17,285,900 27,692,972

Of which category:

1a – purchased goods for resale 10,407,072 7,933,692 18,340,764

11a – consumer use N/A 9,352,208 9,352,208

The above table reflects our revised Scope 3 baseline. 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 page 119 for more

information on our approach to rebaselining).

Our 1.5˚C net zero SBTi approved target is the reduction of our Scope 3 near term boundary Forest, Land and

Agriculture (FLAG) emissions by 36.4 per cent and our energy and industrial emissions by 50.4 per cent by 2030.

Our Scope 3 target boundary covers emissions from the following material categories: 1a) purchased goods for

resale and 11a) consumer use.

Our GHG emissions footprint continues to be calculated using industry average carbon emission factors. This

helps us to identify our most carbon-intensive products and key suppliers that constitute the majority 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. We

continue to improve the accuracy of the data we use in our emissions footprint and this year have successfully

engaged with some of our strategic protein suppliers to obtain primary emission factor data and where we are

confident, to integrate this data into our Scope 3 inventory calculations. We have also partnered with two strategic

data providers to model significantly more specific emission factors at the product and ingredient level for our

own brand products and electrical products (Argos only). This improved level of granularity enables insights and

action towards our SBTi targets. We continue to collaborate with other retailers and WRAP on reporting Scope 3

emissions. This 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. This insight is key to developing our own Scope 3 roadmap and reduction strategy as part of our Climate

Transition Plan. We continue to request that our suppliers disclose on either Secaro (previously Manufacture

2030) or HIGG and that our key suppliers to set 1.5

C aligned 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. This year we have progressed our Climate Transition Plan by developing clear, data-driven pathways

towards our net zero ambition. More information on our Scope 3 strategy can be found in our Climate Transition

Plan section on page 117.

114 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Climate change and Task Force on Climate-related Financial Disclosures(TCFD) continued

Metrics and targets continued

Metrics and Targets c) Targets used to manage climate‑related risks and opportunities and performance against targets

The following metrics and targets are used to monitor progress against climate-related risks and opportunities and are embedded in our Plan for Better. These metrics and targets are governed by the Plan for Better Acceleration

Squad with oversight from the Corporate Responsibility and Sustainability Committee. We have set SBTi approved GHG emission reduction targets covering all scopes and time frames. We include sustainability metrics within

the long-term remuneration targets for Executive Directors (see page 96 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 Databook, which is published on our corporate website (https://corporate.sainsburys.co.uk).

Plan for Better commitment Metric Baseline

Results

Target2024/25 2025/26

Reduction in

carbonemissions

Absolute GHG emissions within our own operations (tCO

e) 949,744 tCO

e 2018/19 448,734 tCO

e 441,017 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) 27,692,972 tCO

e 2023/24

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 Secaro

or HIGG (% of emissions) 43.8% 2022/23 53.0% 59.5% N/A

Suppliers with SBTi 1.5°C net zero target approved (% of emissions) <2% 2022/23 11.6% 26.7% 50-80% of emissions by 2025/26 (LTIP only)

Suppliers with any 1.5°C target approved by the SBTi (% of emissions) N/A 39.8% 51.6% 50% of emissions by 2025/26

Reduction in water use Absolute water usage within our own operations (m

) 3,224,000m

2018/19 2,562,660m

2,401,772m

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 81.9% 82.2% 85%

2025/26

Reduction in food waste Food waste to anaerobic digestion as a percentage of food handled (%) 0.728% 2019/20 0.617% 0.503% 0.364% 2030/31

Nature Soy sourced to an independent sustainability standard (%) 5.8% 2019 96.6%

100% 100% 2025

Palm sourced to an independent sustainability standard (%) 99.1% 2019 100% 100% 100% 2025

Timber sourced to an independent sustainability standard (%)

99.3% 2025 N/A 99.3% 100% 2025

Cotton sourced to an independent sustainability standard (%)

 97.2% 2 025 N/A 97.2 % 100% 2025

Number of Woodland trees planted (number cumulative) 493,750 trees 2019/20 1,425,461 1,558,339 1,500,000 (cumulative) 2025/26

Manmade cellulosic fibres sourced to an independent

environmental standard (%)

94.2% 2025/26 N/A 94.2% 100% 2025/26

Leather tonnage from tanneries certified to a minimum of bronze level by the

Leather Working Group (%)

100% 2025/26 N/A 100% 100% 2025/26

Volume of cocoa bean equivalent certified (%) 47.0% 2023 65.4% 97.7%

100% 2025

Coffee sourced to an independent sustainability standard (%) 64.0% 2024 64.0% 99.9% 100% 2025

Beef sourced from country with negligible risk of deforestation or conversionor

sourced from supplier with Deforestation and Conversion Freecontrol mechanism (%)

100% 2025 N/A 100% 100% 2025

a) Scope 3 emissions footprint has been restated to a new baseline year. For further information please see page 119

b) Secaro was previously called Manufacture 2030

c) Soy metric has been restated in the prior year due to supplier resubmission

d) Timber, Cotton, Leather and Manmade cellulosic fibres metrics have been restated due to methodology changes

115 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 section for details). In line with the SBTi guidance, our 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.

Over the past year, we have progressed our Climate Transition Plan by developing a clear, data-driven pathway

towards our net zero ambition, building on the work already underway across our key emission hotspot areas.

After several years of focus across our emission hotspots we have made progress in Scope 1 and 2 and laid the

foundations in Scope 3. We have developed clear roadmaps that translate existing strategies, supplier insights

and modelling into a clearer, long-term pathway to 2050. This represents a natural maturation of our approach as

data quality improves, supplier engagement expands and expectations around transition planning evolve.

Our integrated roadmaps provide a more consistent view of where reductions are achievable now and where

progress depends on wider industry collaboration or the delivery of government policy. This insight supports

stronger decision-making on priorities, investments and timing. We are working to further embed our emission

reduction strategy in our Climate Transition Plan and align with our existing governance structures so that

there is a coordinated programme with clear ownership across all areas of the business. This approach ensures

coherent governance, alignment with emerging transition plan frameworks and increased transparency across

our external disclosures.

Driving progress

Reduction targets from

baseline

Absolute emissions

target tCO

2018/19 baseline 949,744

2025/26 53.6% 441,017

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

19 years, reducing our emissions by 53.6 per cent from our 2018/19 baseline. We have implemented projects

through our ongoing Graphite investment programme, having completed its 15

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 research institutions like 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 our own operations through embedding

capital allocation into our corporate financial plan 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

53.5% • Transitioning our vehicle fleet

to alternative, low carbon fuels

by 2035

• Moving the majority of

company cars to electric and

hybrid

• Over 20 stores with fully electric GOL

fleets

• 30 HGVs operating on biomethane

produced from food waste

• Participation in eFreight 2030 consortium

to test and trial electric HGVs and chargers

Refrigerants:

Switch to natural

refrigerants

29.2%

• Replacing our remaining

refrigeration systems that use

HFC refrigerant gas with

natural alternatives, aligning

replacements with equipment

lifecycles

• Removing the highest carbon

HFCs from our estate by 2030

• Removing refrigerant gas in

logistics

• Ongoing removal of HFC refrigerant gas

through our annual refrigeration

replacement programme, replacing this

with CO

• Conversion of over 130 store refrigeration

systems to R448a, a replacement

refrigeration gas that will reduce system

carbon emissions by 68%

• Depot investment to electrify the

refrigeration systems within our rigid

fleet whilst stationary at our depots

Heating:

Electrification of

heat

17.3%

• 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, energy efficiency to reduce

electricity consumption remains a key focus for us. 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. Cumulatively, Sainsbury’s sources 30 per cent of electricity from new-to-

planet renewable electricity sources.

116 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Value chain – Scope 3 – net zero by 2050

Emission reduction targets from our 2023/24 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 98 per cent of our emissions are in our value chain (Scope 3). The SBTi has approved our Scope

3 targets, which are in line with limiting global temperature increases to 1.5°C and FLAG compliant. We are

prioritising engagement with our key suppliers who make up the majority of emissions covered by our 2030

Scope 3 target.

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 initiatives

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

• Continued action groups with our high

environmental impact suppliers (HEIS) across

livestock, crops and fish supply chains

• HEIS evaluations now completed six monthly

and insights are used in regular conversations

with suppliers

• Further rolled out our Discovery beef range,

moving towards our expectation that 100% of

the range will be lower carbon beef

• Using the learnings from the beef integrated

supply chain to explore how we can develop

lower carbon products across other supply

chains such as our low carbon coffee and our

white egg transition

• Rolled out the Land App project across ourUK

supply chain to gather more data onland use

• Improving the links and influence we have on

our global supply chains, including upskill

visits to specific high risk geographies, for

example beef production in Brazil

• Engaged with suppliers to source

deforestation-free soy within our supply

chain, as well as engaging with industry

peers to encourage their alignment with

this approach

Strategy

Proportion of

emission

footprint Key activities Progress to date

Production

ofproducts

continued

Supplier

operations

28% • 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

• Support suppliers to understand,

develop and deliver their own

emission reduction plans and

work to understand opportunities

for supply chain collaboration

that accelerates progress

• Collaborate with suppliers on

product development, innovation

and efficiencies

• 439 suppliers disclosed on either M2030 or

HIGG 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, for example Discovery beef,

mushrooms grown without peat, low

carbon fertiliser use in coffee and our

transition to white eggs

Healthy and

sustainable

diets

N/A

• Making it easier for customers

tomake healthy, affordable,

accessible, sustainable diet choices

• Reduce consumption of high

emission products through

reformulations, innovation,

rangechange and promotion

• Collective industry action to

encourage improvements to

consumer diets

• Join or create working groups

andcoalitions to support

researchandpolicy advocating

• We continue to prioritise offers on fruit and

vegetables, supporting our customers to

make plant-rich choices and have

outperformed the market in volume growth

within the Produce category

• We introduced our first category wide fish

multi-buy and continued running meat

free multi-buys, partnering with ‘Meat Free

Made Easy’ in our January campaign

• Over 1,250 products with our Healthy

Choice Logo were made available to our

customers during the year

• We joined the Food Foundation’s Keen Bean

pledge where we aim to increase bean sales

volume by 2028/29. This year, we have

successfully trialled giving additional space to

pulses across our stores and will share further

learnings as the programme progresses

• 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

Sainsbury’s Climate Transition Plan within the TCFD section continued

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.

117 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Sainsbury’s Climate Transition Plan within the TCFD section continued

Strategy

Proportion of

emission

footprint Key activities Progress to date

Supply Chain

Transport

1% • 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

• Completed trial on electric HGV with one of

our long-term suppliers to explore the

feasibility of moving away from fossil fuel use

in our produce supply chains, agreeing a

further rollout following a hugely successful

trial

• Continue to explore carbon reduction

opportunities with our suppliers

Use of

products

Fuel

29%

• 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 661 charging bays

across 80 Sainsbury’s stores

Electricals 5%

• Supporting customers to manage

in-home energy usage through

inclusion of improved energy

efficiency products

• Developing circularity pathways to

reduce lifecycle emissions

• Embedding energy efficiency improvements

into product ranging and tenders to improve

ratings across our products

Acknowledging the uncertainties for Scope 3

By definition, Scope 3 is beyond our direct control. This creates uncertainty in meeting our Scope 3 targets. To

address this, we have developed a comprehensive Scope 3 roadmap that incorporates available supplier data,

includes assumptions about societal and industry change over time and identifies key dependencies and

enablers required for us to achieve our targets. This roadmap provides a structured approach to prioritising

actions, tracking progress and adapting to external changes, ensuring transparency and accountability across

the value chain and creating a clear strategy and associated plan for our business to deliver Scope 3 reductions.

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 are 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. We also have a significant dependency on the decarbonisation of

the UK energy grid, particularly impacting supplier operations and emissions from use of our sold products. Healthy

and sustainable diets require collaboration across industry and with government to explore optimum nutritional

and sustainable diets and encouraging customers to choose more healthy and sustainable options through offering

a range of choice.

118 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 on 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 Secaro (previously 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 taking steps 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

• Support category teams with upskilling and knowledge to confidently engage

suppliers alongside our commercial conversations

• 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 responsible 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 (https://corporate.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.

Baseline reporting and SBTi alignment

During 2025/26 we have continued to improve the quality, granularity and coverage of our Scope 3 emissions

data. This has enabled us to establish a new 2023/24 baseline that provides a more accurate and representative

foundation for long-term decarbonisation planning.

Updating emissions baselines and methodologies is recognised good practice in carbon accounting, reflecting

the evolution and improvements in supplier data, categorisation standards and international guidance

(including SBTi and GHG Protocol) over time. Revising baselines when material improvements are made

strengthens accuracy, enhances comparability going forward and supports more credible decision-making.

Whilst this new baseline does not change the 1.5

C-aligned ambition of our SBTi targets, it does mean that

some progress achieved between the original 2018/19 baseline and 2023/24 cannot be reflected in year-on-year

charts going forward.

We will continue to reference our current SBTi-validated targets, which remain anchored to the historical

baseline, until such a time as we re-submit and re-validate with SBTi in the future. This approach maintains

transparency whilst ensuring future reporting and progress are grounded in the most robust data available.

Sainsbury’s Climate Transition Plan within the TCFD section continued

119 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Directors’ report

Additional statutory information required can be found below:

Board diversity targets

The Board is committed to promoting the importance of diversity, equity and inclusion across our business.

Asat 28 February 2026 (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.

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 50% 3 4 57%

Women 5 50% 1 3 43%

a) Executive management means the Operating Board.

Reporting table on ethnicity representation

Number of

Board members

Percentage

of the Board

Number of senior

positions on the

Board (Chair, CEO,

SID, CFO)

Number in

executive

management

Percentage of

executive

management

White British (or other White

including minority White groups) 6 60% 4 7 100%

Mixed/multiple ethnic groups 0 0% 0 0 0%

Asian/Asian British 1 10% 0 0 0%

Black/African/Caribbean/

BlackBritish 0 0% 0 0 0%

Other ethnic group 0 0% 0 0 0%

Not specified/prefer not to say 3 30% 0 0 0%

a) Executive management means the Operating Board.

Our diversity data contained in the above tables was self-reported by the Board and Operating Board during

onboarding and/or through our internal human resource management system.

We encourage all colleagues to self-report information such as gender, gender identity, ethnicity, age, sexual

orientation and disability, whilst also including a ‘prefer not to say’ option.

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.

Colleague engagement

Details on how we engage with our colleagues can be found on page 25.

Corporate Governance

During 2025/26, the Board considers that the Company has applied the principles and complied with the

provisions (excluding Provision 29) of the UK Corporate Governance Code 2024. and Provision 29 of the UK

Corporate Governance Code 2018. Further information on how the Board has applied the principles of the Code,

and how the provisions have been complied with, is set out in the Governance Report on pages 53 to 124.

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.

Directors’ interests

The beneficial interests of the Directors and their connected persons in the shares of the Company are shown

on pages 97 and 100. During the year, no Director had any material interest in any contract of significance to

the Group’s business.

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 34.

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.

Financial risk management and financial instruments

Notes 27 to 28 on pages 172 to 179 disclose details relating to financial risk management and

financialinstruments.

120 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Directors’ report continued

Groceries Supply Code of Practice (GSCOP)

Compliance with the GSCOP

GSCOP sets out how large retailers should manage certain aspects of their relationship with grocery suppliers.

In accordance with GSCOP requirements, the General Counsel and Company Secretary is the Code Compliance

Officer (CCO) whose duties include hearing disputes between suppliers and the retailer. The CCO handles all

supplier matters confidentially, disclosing identities only where a supplier has expressly authorised it.

In line with the Order and the Code, Sainsbury’s delivered an Annual Compliance Report to the Competition and

Markets Authority as approved by the Chair of the Audit Committee and 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, Sainsbury’s Chief Commercial and Sustainability Officer and key senior

directors from the supply chain and the Core Commercial Transformation programme 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. Proactive stakeholder engagement is a key element of our GSCOP approach. We

issue regular communications to suppliers that cover a variety of topics relating to regulatory updates, general

business updates and GSCOP-related topics including the channels available for contacting Sainsbury’s in

confidence. We also hold an annual trade briefing session, giving suppliers the opportunity to engage with our

leadership team and to learn about our strategy and how it is being implemented.

We are making good progress with our plans to improve our Core Commercial systems and processes. This

multi-year programme will bring our existing systems together onto a single platform, helping to simplify

operations, strengthen how we collaborate with suppliers, and increase our agility in responding to customer

needs. It represents a significant transformation and is a key enabler for sustaining our growth momentum

and delivering the ambitions set out in our Next Level Sainsbury’s strategy. We continue to keep the GCA

informed of progress where there may be implications for suppliers.

In line with the GCA’s feedback from its supplier deep dive themes, we established a new Core Commercial

Transformation Supplier Working Group in March 2025, bringing together representatives from across our

supplier base. As the programme advances and we develop more detailed future ways of working, we will

involve a broader group of suppliers to help shape and test new processes and systems to support a smooth

transition across our diverse supply network. The first release planned for Summer 2026 will have a relatively

small impact on our ways of working with suppliers.

During the reporting year, we have continued to enhance our compliance with GSCOP, taking on board 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, approximately 1,900 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 emerging risk areas and the procedures in place to manage these. An established compliance

monitoring programme is embedded within the business. The Operating Board and Audit Committee are

updated two times a year on GSCOP matters.

Two potential breaches were reported in 2025/26 (six in 2024/25). Of these, one breach was pursued as aformal

Article 11 Dispute and none have been referred to the GCA for arbitration.

Two were raised within our Trading division and one of these was escalated to the CCO using standard

escalation procedures. Both potential breaches reported in the year were resolved in the year. In addition, one

potential breach from the previous year (2024/25) was also resolved in the financial year. All complaints related

to delists. Causes of potential breaches are reviewed to identify areas for improvement.

Health, safety and wellbeing

The health, safety and wellbeing of our colleagues and customers is an essential part of our business

operations. See pages 20 to 23 for more information.

Ordinary shares

Details of the changes to the ordinary issued share capital during the year are shown on page 171. As at 21 April

2026, 2,274,921,614 ordinary shares of 28 4/7 pence have been issued, are fully paid up and are listed on the

London Stock Exchange.

Major interests in shares

As at 28 February 2026, 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 DTR 5 of the

Disclosure Guidance and Transparency Rules:

Number of

ordinary shares % of voting rights

Date of notification

VESA Equity Investment S.à.r.l. 235,773,510 10.00 7 November 2024

BlackRock, Inc. 177,839,804 7.81 6 January 2026

Qatar Holdings LLC 155,890,509 6.82 4 December 2025

Schroders plc 116,161,658 5.22 31 March 2021

Bestway Group UK Limited 118,273,900 5.01 2 August 2024

Pzena Investment Management, Inc 118,145,905 5.05 7 January 2025

1 Percentages shown are as a percentage of the Company’s issued share capital when the Company was notified of the change in holding.

121 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

As at 21 April 2026, 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 DTR 5 of the

Disclosure Guidance and Transparency Rules:

Date notified Number of ordinary shares

% of voting

rights

VESA Equity Investment S.à r.l. 7 November 2024 235,773,510 10.00

BlackRock, Inc. 31 March 2026 226,518,121 10.00

Qatar Holdings LLC 4 December 2025 155,890,509 6.82

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 27

Details of any long-term incentive plans See Remuneration Report, Remuneration Policy and note 34

Shareholder waiver of dividends See note 26

Shareholder waiver of future dividends See note 26

Other information requirements set out in LR 6.6.1 are not applicable to the Company.

Political donations

The Company made no political donations in 2025/26 (2024/25: £nil).

Post‑balance sheet events

Subsequent to the balance sheet date, the Group acquired 6,128,749 shares through the J Sainsbury Employee

Share Ownership Trust, for the purpose of satisfying future share awards under the Group’s employee share

plans. The financial liability of £21 million recognised at the balance sheet date has subsequently been

derecognised following the acquisition and settlement of directly attributable costs.

Research and development

In the ordinary course of business, the Company regularly develops new products and services. See page 11 for

more information.

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 £5,189,191.10. 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 2025, the Company was authorised by shareholders to purchase its

own shares within certain limits and as permitted by the Articles of Association.

During this financial year the Company completed two share buyback programmes. Both programmes took

place using the authority to purchase its own shares as approved by shareholders at the AGM. On 22 April 2025,

the Company announced the commencement of a share buyback programme of up to £200 million, to be

completed by the end of the first half of the financial year. The programme completed on 12 September 2025

with an aggregate purchase price of £157.6 million. On 7 November 2025, the Company announced the

commencement of a further share buyback programme for up to £92 million, to be completed by the end of

2025/26. This programme completed on 19 January 2026, bringing the aggregate purchase price of the buyback

programmes to £250 million this financial year.

Further information can be found on page 37.

Updated Streamlined Energy and Carbon Reporting – 2025/26 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 and use

of sold products by 50.4 per cent for Energy/Industry emissions and by 36.4 per cent for Forest, Land and

Agriculture (FLAG) emissions. 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 2025, IEA 2025 and Association of Issuing Bodies (AIB) 2025. 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 2025/26, 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 and heat, 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

2025/26 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.

Directors’ report continued

122 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Methodology continued

In 2025/26, 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 and certificate-backed renewable

electricity from the UK, Northern Ireland, and the Republic of Ireland).

The following report compares Scope 1 and 2 greenhouse gas emissions for 2025/26 and 2024/25. 2025/26 Scope 1 and Scope 2 GHG emissions have been subject to assurance by ERM Certification and Verification Services

Limited, with a clean, unqualified opinion issued. This has been done 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 below represents Sainsbury’s energy use and associated GHG emissions from electricity and fuel in the UK for the reporting years 2025/26 and 2024/25, in line with UK Government Streamlined Energy and Carbon

Reporting requirements.

Sainsbury’s breakdown

UK locations

Energy consumption (kWh) Location based (tCO

e) Market based (tCO

Emission source 2024/25 2025/26 2024/25 2025/26 2024/25 2025/26

Combustion of fuel and operation of facilities (Scope 1) 1,354,032,684 1,371,081,547 396,566 400,387 403,057 388,635

Electricity, heat, steam and cooling purchased for own use (Scope 2) 1,182,621,736 1,173,332,994 239,230 201,700 — —

Total 2,536,654,419 2,544,414,541 635,795 602,088 403,057 388,635

Argos and Habitat breakdown

UK locations

Energy consumption (kWh) Location based (tCO

e) Market based (tCO

Emission source 2024/25 2025/26 2024/25 2025/26 2024/25 2025/26

Combustion of fuel and operation of facilities (Scope 1) 222,984,795 172,621,232 52,162 40,624 52,162 52,376

Electricity, heat, steam and cooling purchased for own use (Scope 2) 44,516,788 40,963,122 9,190 7,223 — —

Total 267,501,583 213,584,354 61,352 47,847 52,162 52,376

Global locations (excludes UK)

Energy consumption (kWh) Location based (tCO

e) Market based (tCO

Emission source 2024/25 2025/26 2024/25 2025/26 2024/25 2025/26

Combustion of fuel and operation of facilities (Scope 1) 37,760 30,000 7 5 7 5

Electricity, heat, steam and cooling purchased for own use (Scope 2) 112,892 159,073 33 28 — —

Total 150,652 189,072 40 34 7 5

Sainsbury’s Group

Energy consumption (kWh) Location based (tCO

e) Market based (tCO

Emission source 2024/25 2025/26 2024/25 2025/26 2024/25 2025/26

Combustion of fuel and operation of facilities (Scope 1) 1,577,055,239 1,543,732,779 448,734 441,017 448,734 441,017

Electricity, heat, steam and cooling purchased for own use (Scope 2) 1,227,251,416 1,214,455,189 248,452 208,952 — —

Total 2,804,306,655 2,758,187,968 697,1 87 649,969 448,734 441,017

Energy efficiency statement

During 2025/26, Sainsbury’s has demonstrated its commitment to reducing the energy consumption of its operations by implementing the following energy efficiency initiatives:

Directors’ report continued

123 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Electricity consumption

We have completed our 15th 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 including:

– Heating and ventilation optimisation

– Voltage optimisation,

– The installation of ‘Air Doors’ to mitigate air infiltration

– Continuation of Engineering Innovation programme, reviewing and trialling the latest technology to

support in achieving net zero by 2035, including the trial of new building management systems for our

stores and a grid scale battery

– We continue to deliver the most efficient new stores through the installation of highly efficient zero

carbon technologies

Refrigeration

We continue to replace refrigeration systems that use HFC refrigerant gas with more efficient alternatives that

use natural refrigerants – CO

, along with installing fridge doors and LED cabinet lighting to further improve

system efficiency.

Natural gas

We continue to remove natural gas heating, installing Refrigeration Integrated Heating and Cooling (RIHC)

systems, which take the residual heat generated by the refrigeration units and use this for space heating

around the store to meet the heating demand, reducing and even removing the need for natural gas.

Fleet

After trialling electric vans within our estate in previous years we started to roll out their use across more of

ouroperations, increasing the amount of EV vans within our fleet to over 200. Within our logistics operations

we introduced 30 HGVs operating on biomethane produced from food waste and have trialled the use of Green

Tyres and electric refrigerated trailers. Preparations were made for the installation of a grid scale battery

system in one of our distribution centres in Spring 2026, to trial how the technology can support the site in

balancing its electricity consumption with the grid. We also continued to work on the development of a network

of EV truck chargers that will go live in 2026 as we look to introduce our first electric trucks into our fleet.

The Directors’ Report was approved by the Board of Directors and signed on its behalf by:

Nick Grant

Company Secretary

22 April 2026

Directors’ report continued

124 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

126 Statement of Directors’ Responsibilities

127 Independent Auditors’ Report to the Members ofJ Sainsbury plc

Consolidated financial statements

135 Consolidated income statement

136 Consolidated statement of comprehensive income/(loss)

137 Consolidated balance sheet

138 Consolidated statement of changes in equity

139 Consolidated cash flow statement

140 Notes to the consolidated financial statements

Company financial statements

198 Company balance sheet

199 Company statement of changes in equity

200 Notes to the Company financial statements

Additional information

203 Alternative Performance Measures (APMs)

209 Useful contacts

210 Glossary

Financial statements

Financial Statements

125 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance ReportStrategic Report Governance Report Financial Statements

Statement of directors’ responsibilities

in respect of the financial statements

The directors are responsible for preparing the Annual Report and Financial Statements in accordance with

applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the

directors have prepared the consolidated financial statements in accordance with UK-adopted international

accounting standards and the company financial statements in accordance with United Kingdom Generally

Accepted Accounting Practice (United Kingdom Accounting Standards, comprising FRS 101 “Reduced

Disclosure Framework”, and applicable law).

Under company law, 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 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;

• state whether applicable UK-adopted international accounting standards have been followed for the

consolidated financial statements and United Kingdom Accounting Standards, comprising FRS 101 have

been followed for the company financial statements, subject to any material departures disclosed and

explained in the financial statements;

• make judgements and accounting estimates that are reasonable and prudent; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the

group and company will continue in business.

The directors are responsible for safeguarding the assets of the group and company and hence for taking

reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are also responsible for keeping adequate accounting records that are sufficient to show and

explain the group’s and company’s transactions and disclose with reasonable accuracy at any time the

financial position of the group and company and enable them to ensure that the financial statements and the

Annual Report on remuneration comply with the Companies Act 2006.

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.

Directors’ confirmations

The directors consider that the Annual Report and Financial Statements and accounts, taken as a whole, is fair,

balanced and understandable and provides the information necessary for shareholders to assess the group’s

and company’s position and performance, business and strategy. Each of the directors, whose names and

functions are listed in the Governance Report confirm that, to the best of their knowledge:

• the consolidated financial statements, which have been prepared in accordance with UK-adopted

international accounting standards, give a true and fair view of the assets, liabilities, financial position and

profit of thegroup;

• the company financial statements, which have been prepared in accordance with United Kingdom

Accounting Standards, comprising FRS 101, give a true and fair view of the assets, liabilities and financial

position of the company; and

• the Strategic Report includes a fair review of the development and performance of the business and the

position of the group and company, together with a description of the principal risks and uncertainties that

it faces.

• The Statement of directors’ responsibilities was approved by the Board of Directors and signed on its behalf

by:

Nick Grant

General Counsel and Company Secretary

22 April 2026

126 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Independent auditors’ report

to the members of J Sainsbury plc

Report on the audit of the financial statements

Opinion

In our opinion:

• J Sainsbury plc’s Consolidated financial statements and Company financial statements (the “financial

statements”) give a true and fair view of the state of the Group’s and of the Company’s affairs as at

28 February 2026 and of the Group’s profit and the Group’s cash flows for the 52 week period then ended;

• the Consolidated financial statements have been properly prepared in accordance with UK-adopted

international accounting standards as applied in accordance with the provisions of the Companies Act 2006;

• the Company financial statements have been properly prepared in accordance with United Kingdom

Generally Accepted Accounting Practice (United Kingdom Accounting Standards, including FRS 101

“Reduced Disclosure Framework”, and applicable law); and

• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements, included within the Annual Report and Financial Statements 2026

(the “Annual Report”), which comprise:

• the Consolidated balance sheet as at 28 February 2026;

• the Company balance sheet as at 28 February 2026;

• the Consolidated income statement for the period then ended;

• the Consolidated statement of comprehensive income/(loss) for the period then ended;

• the Consolidated statement of changes in equity for the period then ended;

• the Company statement of changes in equity for the period then ended;

• the Consolidated cash flow statement for the period then ended; and

• the notes to the financial statements, comprising material accounting policy information and other

explanatory information.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and

applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors’ 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 remained independent of the Group in accordance with the ethical requirements that are relevant to our

audit of the financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed

public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these

requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical

Standard were not provided.

Other than those disclosed in note 8.4 of the Consolidated financial statements, we have provided no non-audit

services to the Company or its controlled undertakings in the period under audit.

Our audit approach

Context

J Sainsbury plc is a UK headquartered grocery retailer with complementary general merchandise and financial

services operations. The Group operates primarily in the UK. The 52 week period ended 28 February 2026

represented our first year as external auditors of the Group and the Company.

As part of our audit transition, we performed specific procedures over opening balances, including a review of

the predecessor auditors’ working papers and an assessment of audit risk. We also undertook process

walkthroughs to obtain an understanding of key financial reporting processes and controls across the Group. In

addition, we independently assessed the appropriateness of the Group’s accounting policies and evaluated key

areas of estimation uncertainty and judgement affecting the Consolidated and Company financial statements.

Throughout the first year audit, we continuously reassessed our risk assessment to reflect our initial audit

findings, including our evaluation of the Group’s control environment and the resulting impact on our planned

audit approach. Based on this work, we determined the following matters to be of most significance to our

audit of the financial statements and have, therefore, included them as key audit matters:

• Valuation of Home Retail Group goodwill (Group), reflecting the significance of management estimation involved

in forecasting future cash flows and determining key assumptions used in the impairment assessment;

• Valuation of the Sainsbury’s Pension Scheme (Group), reflecting the complexity of the valuation of certain

pension assets, and the materiality of the defined benefit obligations, and the sensitivity of the valuation to

movements in actuarial assumptions;

• Valuation of deferred tax balances relating to property, plant and equipment (Group), reflecting judgement

in assessing the measurement of deferred tax liabilities; and

• Carrying value of investments (Company), reflecting the significance of these balances to the Company

financial statements.

Overview

Audit scope

• As part of designing our audit, we determined materiality and assessed the risks of material misstatement

in the financial statements.

• Our Group audit included full scope audits of six components, including the Company, as well as audit

procedures being performed over various items at a Group level, including the consolidation, goodwill,

intercompany accounts, income tax, pensions, share-based payments and the assessment of going concern.

• The full scope components provided coverage of approximately 99% of Group revenue.

• At a Group level, we also performed audit procedures over specified balances and transactions across a

further two components and targeted risk assessment analytics over all remaining components.

Key audit matters

• Valuation of Home Retail Group goodwill (Group)

• Valuation of the Sainsbury’s Pension Scheme (Group)

• Valuation of deferred taxes relating to property, plant and equipment (Group)

• Carrying value of investments (Company)

127 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our audit approach continued

Overview continued

Materiality

• Overall Group materiality: £36.0 million based on approximately 5% of underlying profit before tax from continuing operations.

• Overall Company materiality: £80.0 million based on approximately 1% of total assets.

• Performance materiality: £23.4 million (Group) and £52.0 million (Company).

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Key audit matters

Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the 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) identified by the auditors, including 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, and any comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon,

and we do not provide a separate opinion on these matters.

This is not a complete list of all risks identified by our audit.

Key audit matter How our audit addressed the key audit matter

Valuation of Home Retail Group goodwill (Group)

As described in note 16 (Intangible assets) of the Consolidated financial statements, the Group holds goodwill of

£95 million in respect of the Home Retail Group (Argos) group of cash-generating units (“Argos goodwill”).

Under IAS 36 ‘Impairment of Assets’, and consistent with the Group’s accounting policy set out in note 3.8a,

goodwill is required to be tested for impairment annually, regardless of whether any indicators of impairment

arepresent.

The recoverable amount of the Argos goodwill has been determined based on value in use (“VIU”), which concluded

that headroom of £150 million (as set out in note 17, Impairment of non-financial assets) exists over the carrying

value, and accordingly no impairment of goodwill was recognised.

The determination of the recoverable amount requires management to make significant estimates regarding the

forecast short-term cash flows underpinning the VIU model, the pre-tax discount rate, and the long-term growth

rate applied to the terminal value calculation. These assumptions are inherently subjective and sensitive to

changes in the competitive retail environment, consumer behaviour and macroeconomic conditions. Accordingly,

as described in note 4.2, management considers the impairment of non-financial assets to represent a key source

of estimation uncertainty.

Given the magnitude of the goodwill balance, the headroom in the model and the level of estimation inherent in

forecasting future cash flows, we determined that the carrying value of goodwill for Home Retail Group (Argos)

represents a key audit matter for the current year audit.

In evaluating and testing the recoverable amount of Argos goodwill, we:

• Understood and evaluated the design and implementation of management’s controls over the goodwill

impairment assessment and forecasting process;

• Tested the mathematical accuracy of the VIU models and agreed relevant data back to Board approved plans;

• Evaluated the reasonableness of management’s cash flow forecasts by comparing the assumptions made

with internal and external data. In particular, we:

– Compared the short-term growth rates with recent performance history and market data;

– Challenged key assumptions within the short-term cash flow forecasts and validated these to support

and external data where relevant;

– Obtained evidence to assess the historical accuracy in management’s forecasting process; and

– Performed sensitivity analysis to understand the impact of changes in key assumptions on the

available headroom.

• Considered the impact of climate-related risks and commitments on future forecasts;

• Involved our valuation experts to assist in our evaluation of the discount rate and long-term growth rate

used by management; and

• Whilst not the area of heightened risk, we assessed the disclosures in the Consolidated financial

statements and ensured these are in line with the requirements of IAS 1 and IAS 36.

Based on the procedures performed, we noted no material issues from our testing.

Independent auditors’ report continued

to the members of J Sainsbury plc

128 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Key audit matter How our audit addressed the key audit matter

Valuation of the Sainsbury’s Pension Scheme (Group)

Refer to note 3.18 (accounting policy) and note 33 (Retirement benefit obligations) of the Consolidated financial

statements.

The Group has defined benefit pension schemes (including small unfunded schemes) with a net surplus of £525

million as at 28 February 2026 (2025: net surplus of £731 million).

The gross assets and liabilities of the Sainsbury’s Pension Scheme (which includes a Sainsbury’s section and an

Argos section) are £6,371 million and £5,823 million respectively as at the current period end and are significant in

the context of the Consolidated balance sheet. There are additional obligations related to unfunded schemes

totalling £23 million, which are immaterial and were not subject to audit procedures.

Management estimation is required in relation to the measurement of pension scheme obligations and

management employs independent actuarial experts to assist in determining appropriate assumptions such as

inflation, discount rates and mortality. Movements in these assumptions can have a material impact on the

determination of the gross liability and, therefore, the extent of any net surplus or deficit.

The pension assets include investments in pooled investment vehicles (‘PIVs’), which include assets that are valued

using level 3 fair value measurements, being valuations that include inputs that are not based on observable

market data. These level 3 funds specifically carry significant risk of valuation error due to the lack of an

observable market price, which requires judgement and estimates to be applied by the investment managers in

determining the value of the underlying assets.

The valuation of the defined benefit schemes’ obligations and investments in complex PIVs are considered a key

audit matter given the quantum of the balances and the judgement and estimation involved in determining the

valuations.

We evaluated the design and implementation of controls in respect of the valuation of the more complex

PIVs and the defined benefit obligations (DBO).

We obtained an understanding of all PIVs and assessed their complexity to determine the population

considered more complex and for which there is greater valuation risk.

For all material PIVs, we obtained confirmation of valuations directly from investment managers and agreed

them to the valuations recorded by management.

On a sample basis, we obtained additional information for complex PIVs and assessed whether this provided

any evidence that the valuations provided by the investment managers may have been incorrect.

Our audit approach in response to the key estimates within the Sainsbury’s Pension Scheme DBO included

the following procedures:

• We engaged our actuarial experts to evaluate whether the assumptions were: (i) consistent with the

specifics of the Sainsbury’s Pension Scheme; and (ii) consistent with independently developed estimates;

• We evaluated the calculations prepared by management’s external actuaries, including testing the

completeness and accuracy of the underlying data. To evaluate the reasonableness of management’s

estimate, our experts also compared their independent estimate with management’s estimate; and

• We tested the DBO by rolling forward the results from the 30 September 2024 triennial funding valuation

to assess consistency with the updated valuation results, and reviewed the new demographic studies

carried out as part of the triennial valuation that were used in setting the assumptions.

Whilst not the area of heightened risk, we also assessed the completeness and accuracy of the associated

disclosures.

Based on the procedures performed, we noted no material issues from our testing.

Independent auditors’ report continued

to the members of J Sainsbury plc

Our audit approach continued

Key audit matters continued

129 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Key audit matter How our audit addressed the key audit matter

Valuation of deferred taxes relating to property, plant and equipment (Group)

Refer to note 2.1 (Prior period restatements) and note 10 (Taxation) of the consolidated financial statements.

In the prior financial year, the Group reported a deferred tax liability of £429 million, £209 million of which related

to accelerated capital allowances. This liability should represent the difference between the accounting and tax

values of property, plant and equipment on which capital allowances have been claimed and, therefore, requires

tracking of these values over time.

During the financial year, management performed a detailed review of historical capital expenditure, identifying

areas where this tracking had not been performed correctly, resulting in a prior year restatement to deferred tax of

£114 million, partially offset by £12 million reallocation to current tax, giving rise to the net impact to deferred tax

of £102 million, as set out in note 2.1.

As the depreciation of property, plant and equipment that does not qualify for tax relief is a key driver of the

Group’s effective tax rate, this restatement also impacts the Group’s underlying effective tax rate.

Given the restatement, this was an area where we applied significant audit effort and hence why it was identified

as a key audit matter.

Utilising tax specialists, we evaluated the process for monitoring the accounting and tax values of property,

plant and equipment.

On a sample basis, we tested the treatment of property, plant and equipment expenditure, ensuring that the

expenditure was correctly classified and that this classification was treated as qualifying or non-qualifying

in accordance with relevant tax legislation. We assessed changes made to both the classification of

expenditure and to the tax treatment of each category as part of the restatement.

We assessed the impact of the restatement on comparative periods, considering the changes to the deferred

tax liability on accelerated capital allowances, the impact on the underlying effective tax rate and the

appropriateness of disclosures included within note 2.1.

We also considered the control implications of the restatement, in particular assessing whether any other

material components of deferred tax could be impacted.

Based on the procedures performed, we agree with the appropriateness of the restated deferred tax position

and consider the associated disclosures appropriate.

Carrying value of investments (Company)

The carrying value of Investments in subsidiaries, joint ventures and associates in the Company financial statements

is £6,592 million (note C2 to the Company financial statements).

The key judgement is whether there is an impairment trigger in respect of the Company’s carrying value of its

investments, which includes consideration of whether the carrying value of the investments is supported by the net

assets and/ or forecast future cash flows of the underlying Group undertakings.

As such it was this area where we applied the most audit effort in respect of the audit of the Company and hence why

it was identified as a key audit matter.

Audit procedures included, but were not limited to, the following:

• We assessed the quantum of the net assets of the underlying investment to determine whether they were in

excess of the carrying value of the Company’s investments in subsidiaries, joint ventures and associates, as

well as considering the nature of those assets, and confirmed that there were no indicators of impairment;

• We confirmed that the market capitalisation of the Group as at 28 February 2026 exceeded the carrying

value of the Company investments in subsidiaries, joint ventures and associates; and

• We considered whether any other evidence obtained in respect of our audit represented an indicator of

impairment.

Based on the procedures performed, we noted no material issues from our testing.

Independent auditors’ report continued

to the members of J Sainsbury plc

Our audit approach continued

Key audit matters continued

130 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our audit approach continued

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on

the financial statements as a whole, taking into account the structure of the Group and the Company, the

accounting processes and controls, and the industry in which they operate.

J Sainsbury plc (the “Company”) and its subsidiaries (together, the “Group”) operate primarily in Retail

(comprising the sale of food, household, general merchandise, clothing and fuel primarily through store and

online channels) and Financial Services (comprising banking and insurance services through Sainsbury’s Bank

and Argos Financial Services). The Group’s operations are predominantly UK-based, with its principal trading

entities being Sainsbury’s Supermarkets Limited (“SSL”), Argos Limited (“Argos”), and Sainsbury’s Bank plc. The

operations are supported by various centralised Group functions.

The Group’s accounting and financial reporting functions are structured around these segments. Centralised

Group functions manage certain corporate-level balances, including goodwill, intercompany accounts, income

tax, pensions and share-based payments, and the consolidation process. The Financial Services business

operates with a degree of autonomy, maintaining its own finance function.

We tailored the scope of our audit to ensure that we obtained sufficient, appropriate audit evidence to be able

to form an opinion on the financial statements as a whole, taking into account the structure of the Group and

the Company, the accounting processes and controls, and the industry in which they operate. In establishing

the overall approach to the Group audit, we determined the type of work that needed to be performed by us,

asthe Group engagement team, or by component auditors operating under our instructions.

We determined that SSL and Argos were significant components due to their relative size, given their overall

contribution to the Group’s underlying profit before tax, from continuing operations and revenue, and due to

risk, in particular in relation to deferred tax, pensions and, for Argos goodwill. Together, these two entities

represent the vast majority of the Group’s trading activity and are the primary drivers of the key audit matters

identified in this audit report. These two components were subject to full scope audits.

Outside of these two components, full-scope audits were performed at a further four non-significant

components, including the Company, given their nature and contribution to certain Consolidated financial

statement line items. Three of these components are within the Group’s Financial Services segment. Taken

together, these six full-scope components provided coverage of approximately 99% of Group revenue.

In addition to the six full-scope audits, the Group team performed audit procedures over financial statement

line items within a further two non-significant components to ensure we obtained sufficient, appropriate

evidence over specific balances and transactions that are relevant to the Consolidated financial statements.

For all other non-significant components, where no detailed testing took place, we performed targeted risk

assessment procedures, consistent with the limited associated risk of material misstatement in the financial

information of these components.

For work that was not completed by the Group audit team, we determined the level of involvement we needed

to have in the audit work at those components to be able to conclude whether sufficient, appropriate audit

evidence had been obtained as a basis for our opinion on the Consolidated financial statements as a whole.

Inaddition to instructing and reviewing the reporting from those component audit teams, we conducted file

reviews, maintained regular dialogue through the financial year and participated in key meetings with the

component audit teams as part of the audit. We also visited the Group’s Financial Services head office, meeting

with both the component auditors and with management.

In relation to the audit of the Company financial statements, this was performed by the Group audit team.

TheCompany is a holding company and predominantly holds investments in subsidiaries and intercompany

balances. The Company is also a full scope, non-significant component of the Group.

The impact of climate risk on our audit

The Group has set its Science Based Targets initiative (SBTi) 1.5°C aligned targets to reduce Scope 1 and 2

greenhouse gas (GHG) emissions by 68 per cent by 2030 from its 2018/19 baseline and achieve net zero within

its own operations by 2035, as well as to reduce Scope 3 Forest, Land and Agriculture (FLAG) emissions by 36.4

per cent and energy and industrial emissions by 50.4 per cent by 2030, with net zero achieved across its value

chain by 2050.

Management considers that climate change does not give rise to a material impact on the Consolidated

financial statements. As part of our audit, we inquired of management to understand the Group’s risk

assessment process in relation to climate change. Management’s climate-related risk assessment is informed

by external sustainability experts, including its collaboration with Imperial College on its transition roadmap to

2035. We reviewed management’s assessment of climate-related physical risks (including heat events, flooding

and drought) and transition risks (including regulation and changes in consumer preferences), their relevance

to the Group and the impact, if any, on the financial statements.

In evaluating the completeness of risks identified, we engaged our internal climate change specialists to

review management’s assessment and considered the Group’s latest Carbon Disclosure Project (“CDP”)

submission. We understood how management has considered the Group’s Plan for Better climate

commitments in their assessment, including the embedding of Plan for Better cash flows, principally property

capital expenditure to achieve net zero by 2035, into the FY27 Corporate Plan base model. The cashflows to

meet these climate commitments are, therefore, already reflected in the base forecasts used for impairment

testing, the going concern assessment and the viability statement and no separate modelling of these is

required. Based on their risk assessment, management has also concluded that no separate modelling for

climate change related risks is required.

In responding to the risks identified, we specifically considered how climate change risk could impact the

assumptions in management’s forecasts used in assessing the carrying value of goodwill and other non-

financial assets, including the most material transitional risks in fuel sales, regulation and changes in

consumer preferences in meat, fish and poultry, which management modelled under a 1.5°C scenario. We also

assessed the consistency of the Plan for Better cash flows within the base model with the Group’s externally

communicated commitments. In addition, we considered the appropriateness of not separately modelling

climate change as a severe but plausible downside scenario in areas such as going concern and viability. We

did not find management’s assessment to be unreasonable.

We also read the climate change disclosures in the other information within the Annual Report to ascertain

whether they are materially consistent with the financial statements and the knowledge gained from our

audit. No exceptions to this were identified. Our responsibility over other information is further described in the

Reporting on other information section of this audit report.

Independent auditors’ report continued

to the members of J Sainsbury plc

131 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Our audit approach continued

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds

for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit

and the nature, timing and extent of our audit procedures on the individual financial statement line items and

disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial

statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole

asfollows:

Financial statements – Consolidated Financial statements – Company

Overall materiality

£36.0 million. £80.0 million

How we

determinedit

Approximately 5% of underlying profit

before tax from continuing operations

approximately 1% of total assets

Rationale for

benchmark applied

As the business is profit oriented, a

profit-based metric is a generally

accepted materiality benchmark. We

consider that underlying profit before

tax from continuing operations is the

primary measure used by

management and other key

stakeholders in assessing the

performance of the Group.

We consider that total assets is the

primary measure used by the

shareholders in assessing the

performance of the Company, as it is a

holding entity, and is a generally

accepted materiality benchmark.

For each component in the scope of our Group audit, we allocated a materiality that is less than our overall

Group materiality. The range of materiality allocated across components was between £5.0 million and £33.2

million.

We use performance materiality to reduce to an appropriately low level the probability that the aggregate of

uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance

materiality in determining the scope of our audit and the nature and extent of our testing of account balances,

classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality

was 65% of overall materiality, amounting to £23.4 million for the Consolidated financial statements and £52.0

million for the Company financial statements.

In determining the performance materiality, we considered a number of factors – the history of misstatements,

risk assessment and aggregation risk and the effectiveness of controls – and concluded that an amount in the

middle of our normal range was appropriate.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit

above £1.8 million (Group audit) and £1.8 million (Company audit) as well as misstatements below those

amounts that, in our view, warranted reporting for qualitative reasons.

Conclusions relating to going concern

Our evaluation of the directors’ assessment of the Group’s and the Company’s ability to continue to adopt the

going concern basis of accounting included:

• We obtained the directors’ going concern forecast and downside sensitivities and evaluated and challenged

the key assumptions within the forecasts and considered whether these were supported by the evidence we

obtained;

• We tested the assessment, including verifying going concern model inputs against Board-approved

forecasts and validating the mathematical accuracy of the model;

• We understood and evaluated the related controls surrounding management’s forecasting and budgeting

process and considered the historical accuracy of management forecasting by comparing budgeted results

with actual performance;

• We read the Group’s borrowing facility documentation to confirm their availability to the Group and the

Company through the going concern period, including verifying that management had appropriately

identified and assessed financial covenant compliance;

• We assessed whether the sensitivities modelled in the severe but plausible downside scenario were

sufficiently severe, including considering the principal risks facing the business. We evaluated the amount

and timing of identified mitigating actions available to respond to a severe but plausible downside scenario

and considered whether those actions are feasible and within the Group’s control; and

• We assessed the appropriateness of disclosures relating to going concern in the financial statements.

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’s and the Company’s

ability to continue as a going concern for a period of at least twelve months from when the financial

statements are authorised for issue.

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.

However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as

tothe Group’s and the Company’s ability to continue as a going concern.

In relation to the directors’ 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.

Independent auditors’ report continued

to the members of J Sainsbury plc

132 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements

and our auditors’ report thereon. The directors are responsible for the other information. Our opinion on the

financial statements does not cover the other information and, accordingly, we do not express an audit opinion

or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.

In connection with our audit of the financial statements, 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 audit, or otherwise appears to be materially misstated. If we

identify an apparent material inconsistency or material misstatement, we are required to perform procedures

to conclude whether there is a material misstatement of the financial statements or a material misstatement

of the other information. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report based on

these responsibilities.

With respect to the Strategic report and Directors’ report, we also considered whether the disclosures required

by the UK Companies Act 2006 have been included.

Based on our work undertaken in the course of the audit, the Companies Act 2006 requires us also to report

certain opinions and matters as described below.

Strategic report and Directors’ report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic

report and Directors’ report for the period ended 28 February 2026 is consistent with the financial statements

and has been prepared in accordance with applicable legal requirements.

In light of the knowledge and understanding of the Group and Company and their environment obtained in the

course of the audit, we did not identify any material misstatements in the Strategic report and Directors’ report.

Directors’ Remuneration

In our opinion, the part of the Annual report on remuneration to be audited has been properly prepared in

accordance with the Companies Act 2006.

Corporate governance statement

The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term

viability and that part of the corporate governance statement relating to the Company’s compliance with the

provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with

respect to the corporate governance statement as other information are described in the Reporting on other

information section of this report.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of

the corporate governance statement, included within the Governance Report is materially consistent with the

financial statements and our knowledge obtained during the audit, and we have nothing material to add or

draw attention to in relation to:

• The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks;

• The disclosures in the Annual Report that describe those principal risks, what procedures are in place to

identify emerging risks and an explanation of how these are being managed or mitigated;

• The directors’ statement in the financial statements about whether they considered it appropriate to adopt

the going concern basis of accounting in preparing them, and their identification of any material

uncertainties to the Group’s and Company’s ability to continue to do so over a period of at least twelve

months from the date of approval of the financial statements;

• The directors’ explanation as to their assessment of the Group’s and Company’s prospects, the period this

assessment covers and why the period is appropriate; and

• The directors’ statement as to whether they have a reasonable expectation that the Company will be able to

continue in operation and meet its liabilities as they fall due over the period of its assessment, including any

related disclosures drawing attention to any necessary qualifications or assumptions.

Our review of the directors’ statement regarding the longer-term viability of the Group and Company was

substantially less in scope than an audit and only consisted of making inquiries and considering the directors’

process supporting their statement; checking that the statement is in alignment with the relevant provisions of

the UK Corporate Governance Code; and considering whether the statement is consistent with the financial

statements and our knowledge and understanding of the Group and Company and their environment obtained

in the course of the audit.

In addition, 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 and

our knowledge obtained during the audit:

• The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and

understandable, and provides the information necessary for the members to assess the Group’s and

Company’s position, performance, business model and strategy;

• The section of the Annual Report that describes the review of effectiveness of risk management and internal

control systems; and

• The section of the Annual Report describing the work of the Audit Committee.

We have nothing to report in respect of our responsibility to report when the directors’ statement relating to

the Company’s compliance with the Code does not properly disclose a departure from a relevant provision of

the Code specified under the Listing Rules for review by the auditors.

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of directors’ responsibilities in respect of the financial statements,

the directors are responsible for the preparation of the financial statements in accordance with the applicable

framework and for being satisfied that they give a true and fair view. The directors are also responsible for such

internal control as they 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’s and the

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

Company or to cease operations, or have no realistic alternative but to do so.

Independent auditors’ report continued

to the members of J Sainsbury plc

133 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Responsibilities for the financial statements and the audit continued

Auditors’ 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 auditors’ 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design

procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of

irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities,

including fraud, is detailed below.

Based on our understanding of the Group and industry, we identified that the principal risks of non-

compliance with laws and regulations related to employment law, health and safety legislation, data

protection laws and the Groceries Supply Code of Practice, and we considered the extent to which non-

compliance might have a material effect on the financial statements. We also considered those laws and

regulations that have a direct impact on the financial statements such as the UK Companies Act 2006, the UK

Corporate Governance Code, UK tax legislation and UK banking regulations. We evaluated management’s

incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of

override of controls), and determined that the principal risks were related to posting inappropriate journal

entries to manipulate financial results and management bias in accounting estimates. The Group engagement

team shared this risk assessment with the component auditors so that they could include appropriate audit

procedures in response to such risks in their work. Audit procedures performed by the Group engagement team

and/or component auditors included:

• understanding and evaluating the design and implementation of controls designed to prevent and detect

management override of controls, including irregularities and fraud;

• discussions with management, Internal Audit and the Group’s General Counsel regarding their consideration

of known or suspected instances of non-compliance with laws and regulations or fraud;

• identifying and testing journal entries, in particular any journal entries posted with unusual account

combinations;

• challenging estimates and judgements made by management and assessing these for management bias; and

• designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing.

There are inherent limitations in the audit procedures described above. We are less likely to become aware of

instances of non-compliance with laws and regulations that are not closely related to events and transactions

reflected in the financial statements. Also, 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.

Our audit testing might include testing complete populations of certain transactions and balances, possibly

using data auditing techniques. However, it typically involves selecting a limited number of items for testing,

rather than testing complete populations. We will often seek to target particular items for testing based on

their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion

about the population from which the sample is selected.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s

website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.

Use of this report

This report, including the opinions, has been prepared for and only for the Company’s members as a body in

accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving

these opinions, accept or assume responsibility for any other purpose or to any other person to whom this

report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

• we have not obtained all the information and explanations we require for our audit; or

• adequate accounting records have not been kept by the Company, or returns adequate for our audit have

not been received from branches not visited by us; or

• certain disclosures of directors’ remuneration specified by law are not made; or

• the Company financial statements and the part of the Annual report on remuneration to be audited are not

in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

We were first appointed by the Company for the financial year ended 28 February 2026. Our uninterrupted

engagement covers 1 financial year.

Other matter

The Company is required by the Financial Conduct Authority Disclosure Guidance and Transparency Rules to

include these financial statements in an annual financial report prepared under the structured digital format

required by DTR 4.1.15R – 4.1.18R and filed on the National Storage Mechanism of the Financial Conduct

Authority. This auditors’ report provides no assurance over whether the structured digital format annual

financial report has been prepared in accordance with those requirements.

Simon Morley (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP

Chartered Accountants and Statutory Auditors

London

22 April 2026

Independent auditors’ report continued

to the members of J Sainsbury plc

134 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Consolidated income statement

			52 weeks to 28 February 2026			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	33,6 4 7	—	3 3,6 47	32 ,7 7 2	—	32,7 7 2
Cost of sales		(31, 369)	(7 2)	(3 1 ,4 41)	(30,51 1)	(78)	(3 0, 58 9)
Gross profit/(loss)		2,278	(7 2)	2, 206	2,261	(78)	2,183
Administrative expenses		(1,328)	(6 3)	(1 , 39 1)	(1,3 02)	(9 9)	(1 ,4 0 1)
Other income		75	7	82	55	53	108
Operating profit/(loss)		1,0 2 5	(1 2 8)	897	1 ,014	(1 24)	890
Finance income	9	24	40	64	31	36	67
Finance expense	9	(3 31)	(11)	(3 4 2)	(3 36)	(14)	(35 0)
Profit/(loss) before tax - continuing operations		718	(9 9)	619	70 9	(102)	607
Income tax (expense)/credit	10	(2 10)	5	(20 5)	(205)	19	(1 86)
Profit/(loss) after tax - continuing operations		508	(94)	414	504	(8 3)	421
Loss after tax - discontinued operations	11	—	(2 1)	(2 1)	—	(16 8)	(16 8)
Profit/(loss) for the financial period		508	(115)	393	50 4	(2 51)	253
Earnings per share	12	pence		pence	pence		pence
Basic - total		22.3		17. 3	2 1 .6		10.9
Diluted - total		21 .9		16.9	21 .2		10.7
Earnings per share - from continuing operations	12
Basic - continuing				18.2			18 .1
Diluted - continuing				1 7. 8			1 7. 8

* Refer to note 2 for details of prior year restatements.

The notes on pages 140 to 197 form an integral part of these financial statements.

135 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Consolidated statement of comprehensive income/(loss)

		52 weeks to	52 weeks to
		28 February	1 March 2025
		2026	(restated*)
	Note	£m	£m
Profit for the financial year		393	253
Items that will not be subsequently reclassified to the income statement
Remeasurement on defined benefit pension schemes	33.3	(265)	(3 3)
Cash flow hedges fair value movements		—	1
Tax relating to items that will not be reclassified		67	8
		(19 8)	(24)
Items that may be subsequently reclassified to the income statement
Currency translation differences		(1)	—
Movements on financial assets at fair value through other comprehensive income		(1)	1
Cash flow hedges fair value movements	29	(4 0)	13
Items reclassified from cash flow hedge reserve	29	5	2
Tax relating to items that may be reclassified		5	(4)
		(3 2)	12
Total other comprehensive loss for the year (net of tax)		(2 3 0)	(12)
Total comprehensive income for the year		163	241
Continuing operations		184	4 09
Discontinued operations	11.1	(2 1)	(16 8)
Total comprehensive income for the year		163	241

* Refer to note 2 for details of prior year restatements.

The notes on pages 140 to 197 form an integral part of these financial statements.

136 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Consolidated balance sheet

		28 February	1 March 2025	2 March 2024
		2026	(restated*)	(restated*)
	Note	£m	£m	£m
Non-current assets
Property, plant and equipment	14	9, 3 8 6	9, 35 8	9,2 82
Right-of-use assets	15	4,4 86	4 ,4 55	4,296
Intangible assets	16	838	807	806
Investments in joint ventures and associates		2	2	2
Other financial assets	18	129	769	761
Trade and other receivables	20	22	42	108
Amounts due from Financial Services customers and other banks		—	—	1 ,4 6 7
Derivative financial assets	29	18	35	68
Retirement benefit surplus	33	548	754	7 14
		1 5 ,4 2 9	1 6,222	1 7, 5 0 4
Current assets
Inventories	19	1,987	1,94 6	1,9 27
Trade and other receivables	20	4 31	57 2	582
Amounts due from Financial Services customers and other banks		—	—	3,0 50
Other financial assets	18	—	1,1 67	26
Derivative financial assets	29	7	15	8
Income taxes receivable		19	86	75
Cash and cash equivalents	30	1,0 67	2,222	1 ,978
		3,511	6 ,00 8	7, 6 4 6
Assets of disposal group and non-current assets held for sale	21	3	2,52 7	10
		3, 5 14	8 ,535	7, 6 5 6
Total assets		18,94 3	24 ,7 5 7	25, 160
Current liabilities
Trade and other payables	22	(5,56 5)	(5 ,4 8 9)	(5, 261)
Amounts due to Financial Services customers and other deposits	23	—	(1, 955)	(5,515)
Borrowings	32	(8 0)	(7 2)	(6 5)
Lease liabilities	15	(505)	(4 8 3)	(515)
Other financial liabilities	18	(2 1)	—	—
Derivative financial liabilities	29	(2 0)	(15)	(28)
Income taxes payable		—	(4)	—
Provisions	24	(14 0)	(2 3 0)	(1 1 3)
		(6, 3 3 1)	(8 , 24 8)	(1 1,4 9 7)
Liabilities of disposal group held for sale	21	—	(3,1 3 6)	—
		(6, 3 3 1)	(11,384)	(1 1 ,49 7)
Net current liabilities		(2,81 7)	(2, 8 49)	(3 ,8 41)

		28 February	1 March 2025	2 March 2024
		2026	(restated*)	(restated*)
	Note	£m	£m	£m
Non-current liabilities
Trade and other payables	22	(2 2)	(24)	(1 1)
Amounts due to Financial Services customers and other deposits	23	—	(1 3)	(2 06)
Borrowings	32	(9 81)	(1,0 4 2)	(1 ,1 3 0)
Lease liabilities	15	(5,035)	(5,01 1)	(4 , 8 3 9)
Derivative financial liabilities	29	(3)	(1 1)	(59)
Retirement benefit deficit	33	(2 3)	(2 3)	(24)
Deferred income tax liability	10	(3 02)	(327)	(256)
Provisions	24	(96)	(1 57)	(167)
		(6 ,4 6 2)	(6, 608)	(6,6 92)
Total liabilities		(1 2 ,7 9 3)	(1 7, 9 9 2)	(18, 189)
Net assets		6,15 0	6,765	6, 971
Equity
Called up share capital	25	6 47	669	678
Share premium	25	1, 465	1 ,4 4 8	1 ,4 30
Merger reserve	25	173	173	568
Capital redemption and other reserves	26	(65)	(5 4)	955
Retained earnings		3,930	4,52 9	3, 340
Total equity shareholders’ funds		6,15 0	6,765	6, 971

* Refer to note 2 for details of prior year restatements.

The notes on pages 140 to 197 form an integral part of these financial statements.

Approved by the Board of Directors on 22 April 2026, and signed on its behalf by:

Simon Roberts Bláthnaid Bergin

Chief Executive Chief Financial Officer

137 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Consolidated statement of changes in equity

		Called up	Share premium		Capital redemption	Retained	Total
		share capital	account	Merger reserve	and other reserves	earnings	Equity
	Note	£m	£m	£m	£m	£m	£m
At 2 March 2025 (as previously reported)		669	1 ,4 4 8	173	(5 4)	4,415	6,65 1
Opening balance adjustment		—	—	—	—	1 14	114
At 2 March 2025 (restated*)		669	1 ,4 4 8	17 3	(5 4)	4, 529	6,765
Profit for the financial year		—	—	—	—	393	39 3
Other comprehensive loss (pre-tax)		—	—	—	(37)	(265)	(30 2)
Tax relating to components of other comprehensive loss		—	—	—	5	67	72
Total comprehensive (loss)/income		—	—	—	(3 2)	195	16 3
Cash flow hedges gains transferred to inventory		—	—	—	13	—	13
Transactions with owners:
Transfer between reserves	26	—	—	—	6	(6)	—
Dividends	13	—	—	—	—	(566)	(566)
Share-based payment	34	—	—	—	—	80	80
Purchase of own shares for share schemes	26	—	—	—	(85)	—	(8 5)
Shares allocated in respect of share option schemes	25, 26	3	17	—	62	(62)	20
Purchase of own shares for cancellation	26	—	—	—	(2 5 1)	—	(2 5 1)
Cancellation of own shares	25, 26	(2 5)	—	—	2 76	(2 51)	—
Tax on items charged to equity		—	—	—	—	11	11
At 28 February 2026		647	1,465	173	(6 5)	3,930	6,15 0

		Called up	Share premium	Merger	Capital redemption	Retained	Total
		share capital	account	reserve	and other reserves	earnings	Equity
	Note	£m	£m	£m	£m	£m	£m
At 3 March 2024 (as previously reported)		678	1 ,4 30	568	955	3,2 37	6,8 68
Opening balance adjustment		—	—	—	—	103	103
At 3 March 2024 (restated*)		678	1 ,4 30	568	955	3,340	6,971
Profit for the financial year		—	—	—	—	253	253
Other comprehensive income/(loss) (pre-tax)		—	—	—	17	(33)	(16)
Tax relating to components of other comprehensive income/(loss)		—	—	—	(4)	8	4
Total comprehensive income		—	—	—	13	228	24 1
Cash flow hedges gains transferred to inventory		—	—	—	18	—	18
Transactions with owners:
Transfer between reserves	25, 26	—	—	(395)	(1 ,03 5)	1 ,4 3 0	—
Dividends	13	—	—	—	—	(30 8)	(3 08)
Share-based payment	34	—	—	—	—	80	80
Purchase of own shares for share schemes	26	—	—	—	(63)	—	(63)
Shares allocated in respect of share option schemes	25, 26	12	18	—	37	(4 4)	23
Purchase of own shares for cancellation	26	—	—	—	(2 00)	—	(20 0)
Cancellation of own shares	25, 26	(21)	—	—	221	(20 0)	—
Tax on items charged to equity		—	—	—	—	3	3
At 1 March 2025 (restated*)		669	1 ,4 4 8	173	(5 4)	4,529	6 ,765

* Refer to note 2 for details of prior year restatements.

The notes on pages 140 to 197 form an integral part of these financial statements.

138 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Consolidated cash flow statement

		52 weeks to	52 weeks to
		28 February	1 March 2025
		2026	(restated*)
	Note	£m	£m
Cash flows from operating activities
Operating profit - continuing operations		89 7	890
Depreciation	14,15	1 ,0 39	1 ,033
Amortisation	16	19 9	1 82
Net impairment loss on non-financial assets	17	23	2 2
Loss /(profit) on sale of non-current assets and early termination of leases		3	(53)
Fair value movements		12	(2)
Share-based payments expense	34	7 5	7 3
Defined benefit scheme expense	33.2	8	8
Defined benefit pension scheme payments	33.4	(27)	(4 5)
Operating cash flows before changes in working capital - continuingoperations		2, 2 2 9	2 ,10 8
Changes in working capital
Increase in inventories		(29)	—
Decrease/(increase) in other financial assets		1, 807	(1, 149)
Decrease in trade and other receivables		81	15
Increase in trade and other payables		13 8	24 7
Decrease in amounts due to Financial Services customers and otherdeposits		(1 ,9 6 8)	—
Decrease in provisions		(7 1)	(7)
Cash generated from operating activities - continuing operations		2,1 8 7	1,21 4
Interest paid		(348)	(359)
Corporation tax paid		(65)	(53)
Net cash generated from operating activities - continuing operations		1 , 7 74	802

		52 weeks to	52 weeks to
		28 February	1 March 2025
		2026	(restated*)
	Note	£m	£m
Cash flows from investing activities
Purchase of property, plant and equipment		(61 3)	(61 7)
Initial direct costs on new leases		(8)	(34)
Purchase of intangible assets		(2 3 0)	(20 8)
Proceeds from disposal of property, plant and equipment		41	45
Interest received		23	27
Net cash used in investing activities - continuing operations		(787)	(787)
Cash flows from financing activities
Proceeds from issuance of ordinary shares		20	2 0
Proceeds from borrowings		—	5 4 4
Repayment of borrowings		(5 9)	(6 2 3)
Purchase of own shares for share schemes		(6 4)	(6 3)
Purchase of own shares for cancellation	26	(2 51)	(2 0 0)
Capital repayment of lease obligations		(5 0 4)	(48 7)
Dividends paid on ordinary shares	13	(566)	(30 8)
Net cash used in financing activities - continuing operations		(1 ,4 24)	(1 ,1 17)
Net (decrease)/increase in cash and cash equivalents
Continuing operations		(4 37)	(1,102)
Discontinued operations	11.4	(7 1 8)	1,345
Total (decrease)/increase in cash and cash equivalents		(1,1 5 5)	24 3
Opening cash and cash equivalents		2,221	1 ,978
Closing cash and cash equivalents	30	1,0 6 6	2,221
Disclosed in the balance sheet:
Cash and cash equivalents		1 ,06 7	2,222
Overdraft		(1)	(1)
		1,0 6 6	2,221

* Refer to note 2 for details of prior year restatements.

The notes on pages 140 to 197 form an integral part of these financial statements.

139 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 Charterhouse Street, London EC1M 6HA,

United Kingdom.

The Group’s consolidated financial statements (the financial statements) are

presented in Pounds Sterling, which is the functional currency of the Parent.

Unless otherwise stated, amounts are rounded to the nearest million.

Within these financial statements, ‘2026’ refers to the 52 weeks to

28 February 2026, or as at 28 February 2026; and ‘2025’ refers to the

52 weeks to 1 March 2025, or as at 1 March 2025.

The principal activities of the Company and its subsidiaries (together,

the Group) are Food, General Merchandise and Clothing and

Financial Services.

2 Basis of preparation and consolidation

2.1 Basis of preparation and presentation

The Group’s financial statements have been prepared in accordance with

UK-adopted international accounting standards and with the

requirements of the Companies Act 2006 as applicable to companies

reporting under those standards.

They have been prepared under the historical cost convention, except for

certain financial instruments, defined benefit pension scheme assets and

share-based payments, as explained in the accounting policies below.

Unless otherwise stated, material accounting policies have been applied

consistently to all periods presented in the financial statements.

Prior period restatements

a) Deferred tax

The tax charge in the comparative period income statement and the

comparative period balance sheets has been restated to incorporate the

deferred tax impact arising from a misclassification of assets between

those impacting deferred tax and those which do not, and an omission

of the tax effects of prior year impairments and disposals. Prior year

adjustments from the finalisation of each year’s tax compliance process

that are related to fixed assets have been included within the restated

figures. Therefore, the restatement also includes current tax impacts.

b) Balance sheet line items

Comparative period amounts of the following line items within the Group

balance sheet have been re-presented, with no impact on net assets:

• Taxes payable, which was previously presented on a net basis, has

been re-presented to separately disclose income taxes receivable and

income taxes payable, and to present other taxation and social security payables within trade and other payables.

• Lease liabilities have been re-presented to correct the classification between certain current and non-current liabilities.

• The net retirement benefit surplus has been re-presented to separately disclose the present value of unfunded obligations as retirement benefit

deficit, as the Group does not have the right to offset these amounts.

• Cash and cash equivalents have been re-presented to reclassify other investment securities, whereby the maturity date of the underlying

instrument exceeded 3 months at recognition but was less than 3 months at the prevailing balance sheet date, to other financial assets within

current assets.

c) Discontinued operations and reclassification to non-underlying

Discontinued operations were previously included in underlying measures whilst the associated trading activities remained ongoing. Following

completion of the NatWest, NewDay and NoteMachine disposals, these activities are substantially ceased, and have therefore been reclassified to

non-underlying so as to only reflect ongoing trading performance within underlying results.

In July 2025, the Group agreed to sell the Travel Money business to Fexco Group, with the sale completing in January 2026. The Travel Money business

is presented as a discontinued operation in both the current and comparative periods.

Prior period comparatives

The prior period comparatives have been restated in accordance with IAS 8: ‘Accounting Policies, Changes in Accounting Policies and Errors’ and have

impacted the primary financial statements as follows:

Income statement

			Underlying items			Non-underlying items					Total
	As	Deferred	Discounted		As	Deferred	Discounted		As	Deferred	Discounted
	previously	tax	operations	As	previously	tax	operations	As	previously	tax	operations	As
	reported	(a)	(c)	restated	reported	(a)	(c)	restated	reported	(a)	(c)	restated
52 weeks to 1 March 2025	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	32,812	—	(40)	32,772	—	—	—	—	32,812	—	(40)	32,772
Cost of sales	(30,513)	—	2	(30,511)	(78)	—	—	(78)	(30,591)	—	2	(30,589 )
Gross profit/(loss)	2,299	—	(38)	2,261	(78)	—	—	(78)	2,221	—	(38)	2,183
Administrative expenses	(1,325)	—	23	(1,302)	(100)	—	1	(99)	(1,425)	—	24	(1,401 )
Other income	55	—	—	55	53	—	—	53	108	—	—	108
Operating profit/(loss)	1,029	—	(15)	1,014	(125)	—	1	(124)	904	—	(14)	890
Finance income	31	—	—	31	36	—	—	36	67	—	—	67
Finance expense	(336)	—	—	(336)	(14)	—	—	(14)	(350)	—	—	(350 )
Profit/(loss) before tax
- continuing operations	724	—	(15)	709	(103)	—	1	(102)	621	—	(14)	607
Income tax (expense)/
credit	(216)	7	4	(205)	15	4	—	19	(201)	11	4	(186 )
Profit/(loss) after tax
- continuing operations	508	7	(11)	504	(88)	4	1	(83)	420	11	(10)	421
Loss after tax - discontinued operations	31	—	(31)	—	(209)	—	41	(168)	(178)	—	10	(168 )
Profit/(loss) for the financial period	539	7	(42)	504	(297)	4	42	(251)	242	11	—	253

Financial Statements

140 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

2 Basis of preparation and consolidation continued

2.1 Basis of preparation and presentation continued

Prior period restatements continued

Balance sheets

		FY24					Net
	As	opening	Deferred		Taxes	Lease	retirement
	previously	reserves	tax	Cash	payable	liabilities	benefit	As
	reported	adj (a)	(a)	(b)	(b)	(b)	(b)	restated
At 1 March 2025	£m	£m	£m	£m	£m	£m	£m	£m
Non-current assets
Retirement benefit
surplus	731	—	—	—	—	—	23	754
	16,199	—	—	—	—	—	23	16,222
Current assets
Other financial assets	612	—	—	555	—	—	—	1,167
Income tax receivable	—	30	(18)	—	74	—	—	86
Cash and cash
equivalents	2,777	—	—	(555)	—	—	—	2,222
	5,922	30	(18)	—	74	—	—	6,008
Total assets	24,648	30	(18)	—	74	—	23	24,757
Current liabilities
Trade and other payables	(5,278)	—	—	—	(211)	—	—	(5,489)
Lease liabilities	(590)	—	—	—	—	107	—	(483)
Income taxes payable	(141)	—	—	—	137	—	—	(4)
	(8,281)	—	—	—	(74)	107	—	(8,248)
Net current liabilities	(2,968)	30	(18)	—	—	107	—	(2,849)
Non-current liabilities
Lease liabilities	(4,904)	—	—	—	—	(107)	—	(5,011)
Retirement benefit deficit	—	—	—	—	—	—	(23)	(23)
Deferred income tax
liability	(429)	73	29	—	—	—	—	(327)
	(6,580)	73	29	—	—	(107)	(23)	(6,608)
Total liabilities	(17,997 )	73	29	—	(74)	—	(23)	(17,992)
Net assets	6,651	103	11	—	—	—	—	6,765
Equity
Retained earnings	4,415	103	11	—	—	—	—	4,529
Total equity
shareholders’ funds	6,651	103	11	—	—	—	—	6,765

						Net
	As	Deferred		Taxes	Lease	retirement
	previously	tax	Cash	payable	liabilities	benefit	As
	reported	(a)	(b)	(b)	(b)	(b)	restated
At 2 March 2024	£m	£m	£m	£m	£m	£m	£m
Non-current assets
Retirement benefit surplus	690	—	—	—	—	24	714
	17,480	—	—	—	—	24	17,50 4
Current assets
Other financial assets	17	—	9	—	—	—	26
Income tax receivable	—	30	—	45	—	—	75
Cash and cash equivalents	1,987	—	(9)	—	—	—	1,978
	7,571	30	—	45	—	—	7,646
Total assets	25,061	30	—	45	—	24	25,160
Current liabilities
Trade and other payables	(5,091)	—	—	(170)	—	—	(5,261)
Lease liabilities	(515)	—	—	—	—	—	(515)
Income taxes payable	(125)	—	—	125	—	—	—
	(11,452)	—	—	(45)	—	—	(11,497)
Net current liabilities	(3,871)	30	—	—	—	—	(3,841)
Non-current liabilities
Lease liabilities	(4,839)	—	—	—	—	—	(4,839)
Retirement benefit deficit	—	—	—	—	—	(24)	(24)
Deferred income tax liability	(329)	73	—	—	—	—	(256)
	(6,741)	73	—	—	—	(24)	(6,692)
Total liabilities	(18,193)	73	—	(45)	—	(24)	(18,189)
Net assets	6,868	103	—	—	—	—	6,971
Equity
Retained earnings	3,237	103	—	—	—	—	3,340
Total equity shareholders’
funds	6,868	103	—	—	—	—	6,971

141 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

2 Basis of preparation and consolidation continued

2.1 Basis of preparation and presentation continued

Prior period restatements continued

Cash flow statement

	As	Discontinued
	previously	operations	Cash	As
	reported	(c)	(b)	restated
for the 52 weeks to 1 March 2025	£m	£m	£m	£m
Operating profit	904	(14)	—	890
Share-based payments expense	75	(2)	—	73
Operating cash flows before changes in working capital
- continuing operations	2,124	(16)	—	2,108
Changes in working capital
Decrease/(increase) in other financial assets	(603)	—	(546)	(1,149)
Cash generated from operating activities
-continuing operations	1,776	(16)	(546)	1,214
Net cash generated from operating activities
-continuing operations	1,364	(16)	(546)	802
Net (decrease)/increase in cash and cash equivalents
Continuing operations	(540)	(16)	(546)	(1,102)
Discontinued operations	1,329	16	—	1,345
Total (decrease)/increase in cash and cash equivalents	789	—	(546)	243
Opening cash and cash equivalents	1,987	—	(9)	1,978
Closing cash and cash equivalents	2,776	—	(555)	2,221

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 104, 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 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. The Group will continue to monitor developments in

accounting standards, sustainability reporting requirements and broader regulatory or government policy changes

that may influence future reporting. 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	17.2
Provisions	24.1
Retirement benefit obligations	33.5

The policy, technology and market changes in response to climate change are still developing, and these are

interdependent upon each other, and consequently the financial statements cannot capture all possible future

outcomes as these are not yet known. The degree of certainty of these changes may also mean that they

cannot be taken into account when determining asset and liability valuations and the timing of future cash

flows under the requirements of UK-adopted international accounting standards.

2.2 Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for a period of at

least 12 months from the date of approval. Accordingly, they continue to adopt the going concern basis in

preparing the financial statements. The assessment period for the purposes of considering going concern is

the 16 months to 10 September 2027.

In assessing the Group’s ability to continue as a going concern, the Directors have considered the Group’s most

recent corporate planning processes. This includes an annual review that considers profitability, the Group’s

cash flows, committed funding and liquidity positions, financial covenant, and forecasted future funding

requirements typically over three years, with a further year of indicative movements.

The Group’s most recent corporate planning processes includes assumed cashflows to address climate change

risks, including costs associated with initiatives in place as part of the Plan for Better commitment which

include reducing environmental impacts and meeting customer expectations in this area, notably through

reducing packaging and reducing energy usage across the estate. Climate-related risks do not result in any

material uncertainties affecting the Group’s ability to continue as a going concern.

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

which remain in issuance. In addition, the Group has in place an inflation-linked amortising loan with a

principal of £378 million outstanding at the reporting date, with a maturity date of April 2031. Refer to note 32.1

for details of the amortisation profile.

Notes to the consolidated financial statements continued

142 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

2 Basis of preparation and consolidation continued

2.2 Going concern continued

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 tranches. Tranche A has a final maturity of December

2029, and Tranche B has a final maturity of December 2028. As at 28 February 2026, the Revolving Credit Facility

was undrawn. No additional forms of financing are assumed in the assessment of the Group as a going

concern. Refer to note 27.4 for details of the Group’s financial covenant.

In assessing going concern, severe but plausible scenarios in relation to the Group’s principal risks in line with

those disclosed in the viability statement on page 48 have been considered by overlaying them into the

corporate plan and assessing the impact on cash flows, net debt, financial covenant and funding headroom.

These severe but plausible scenarios included modelling inflationary pressures on both food margins and

general recession-related risks, including those which may arise from conflict in the Middle East, the impact of

a cyber-attack on operations, payment of a regulatory fine and the failure to deliver planned cost savings. In

addition, a reverse stress test was performed to assess the additional level of sales decline required before the

Group fully utilises its available funding and mitigations or breaches its financial covenants. 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. These include reducing any non-essential capital

expenditure and operating expenditure, bonus and pay awards, and pausing dividend payments.

Previously, additional consideration was given to the credit, liquidity and capital adequacy of the Bank given

the phased withdrawal from Financial Services and transition to a distributed model. Following the completed

sales with NatWest, NewDay, NoteMachine, Allianz and Fexco in the current and previous period, the current

capital position and the progress made on transition, the Directors no longer deem this a material

consideration in making an assessment over 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

The financial statements for the 52 weeks to 28 February 2026 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.

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 Bank plc and its subsidiaries have been consolidated for the 12 months to 28 February 2026, being

the Bank’s year-end date (2025: 28 February 2025). Adjustments are made for the effects of significant

transactions or events that occur between this time period and the Group’s financial year comprising the 52

weeks to 28 February 2026.

Sainsbury’s Thistle Scottish Limited Partnership and Nectar 360 Services LLP are partnerships that 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.

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, represent 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 Pounds 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

There were no new accounting standards, interpretations and amendments to standards and IFRIC

interpretations that became applicable during the year which had a material impact on the Group’s results or

net assets.

143 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

2 Basis of preparation and consolidation continued

2.4 New standards, interpretations and amendments adopted by the Group continued

a) New accounting standards adopted by the Group continued

Accordingly, no changes were required 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 1 March 2025.

b) New accounting standards in issue but not yet effective

The Group has not applied any standards, interpretations or amendments that have been issued but are not

yet effective. With the exception of IFRS 18 ‘Presentation and Disclosure in Financial Statements’, the new

requirements are not expected to have a material impact on the Group’s accounting policies, results or net assets.

IFRS 18 ‘Presentation and Disclosure in Financial Statements’ will become effective in the financial statements

for the financial year ending 26 February 2028. IFRS 18 sets out overall requirements for the presentation and

disclosure in financial statements, and all income and expenses will be classified into one of five categories on

the income statement: operating, investing, financing, taxation and discontinued operations. The standard will

also introduce ‘management defined performance measures’, a subset of the Group’s alternative performance

measures, which will be disclosed in the audited financial statements.

The Group has commenced its assessment of IFRS 18, which will include determining the impacts on the Group

including system changes, transition plans and quantifying the impacts of the new standard on the

comparative financial statements. The Group’s profit before tax will not change.

2.5 Alternative Performance Measures (APMs)

In the reporting of financial information, the Directors use certain Alternative Performance Measures (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 IFRS 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.

Non‑underlying items

Underlying profit measures are presented to supplement IFRS results which also reflects how performance is

measured internally. These measures exclude items classified as non-underlying in order to present

performance on a consistent basis between periods. Further information on non-underlying items is provided

in note 5.

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 include further information on the definition, purpose

and reconciliation to the closest IFRS measure.

Changes to APMs

The definition of the Group’s Retail like-for-like sales APM has been updated during the period to exclude VAT.

In prior periods, this measure was presented inclusive of VAT. The revised approach is considered to provide

more relevant information by aligning more closely with amounts presented under IFRS. Accordingly, the

comparative Retail like-for-like sales APM reconciliation has been re-presented to reflect this change.

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 and 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 at 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 and services 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.

Notes to the consolidated financial statements continued

144 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

3 Material accounting policies continued

3.1 Revenue continued

c) Financial Services continued

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, 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 clawback, an appropriate element of the commission receivable is deferred and amortised over the

clawback period.

Income from the sale of travel money, representing the difference between the cost price and the selling price,

is recognised when the sale to the customer takes place.

3.2 Cost of sales

Cost of sales consists of all costs that are directly attributable to the point of sale including warehouse costs,

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.

The Group regularly enters into arrangements to receive income from suppliers. This income can be in the form

of purchase discounts, sales volume incentives or amounts received to perform marketing or promotional

activities in store or online. These arrangements are collectively known as ‘supplier arrangements’ and are

recognised as a reduction to cost of sales when the performance conditions within each agreement have been

met. The types of supplier income and recognition policies are as follows:

Volume based discounts / incentive

Volume based discounts/ incentives are earned based on either sales or intake volumes over a defined period

for defined products. Income is recognised as a deduction to cost of sales on sale of the inventory to which it

relates. Where discounts are received based on intake volumes and there remains inventory unsold at the

reporting period, the relevant discount is deducted from the carrying value of that inventory.

Marketing and promotional income

Marketing and promotional income primarily relates to in-store or on-line activity, including promotional or

marketing materials, support for promotional pricing or product placement. Income is recognised over the

period to which the agreement relates and in accordance with the performance conditions therein. As these

agreements do not identify specific inventory purchases, this approach is deemed the best estimate to reflect

the appropriate reduction in cost of sales.

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 that

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.

c) Uncertain Tax Provisions

Tax provisions are recognised for uncertain tax positions where a risk of a potential additional tax liability has

been identified and it is considered likely that the Group will be required to settle that tax. The Group measures

its tax balances based on either the most likely amount or the expected value, depending on which method

provides a better prediction of the resolution of the uncertainty.

145 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

3 Material accounting policies continued

3.5 Property, plant and equipment

a) Land and buildings

Land and buildings are held at historical cost less accumulated depreciation and, where appropriate, any

provision for impairment as determined in accordance with note 3.8. Cost includes the original purchase price

of the asset and the costs attributable to bringing the asset to its working condition for intended use.

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.

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 fifty years, or the lease term if shorter

• Fixtures, equipment and vehicles three to fifteen years

• Freehold land not depreciated

Capital work in progress (which excludes land) is not depreciated prior to being available for its intended

commercial use.

e) Disposals and retirement

The gain or loss on disposal or retirement of an asset is determined by comparing proceeds less any associated

costs of disposal with the asset’s carrying amount and is recognised within operating profit.

f) Climate change impacts

Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at the end of each

reporting period. This includes consideration over climate change-related risks that 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 any restoration

costs, 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, that

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 that 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.

Notes to the consolidated financial statements continued

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3 Material accounting policies continued

3.6 Leases continued

b) Group as a lessor continued

Subleases

Classification as a finance or operating lease 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 the square foot leased in the

headlease and sublease where appropriate. This assessment takes into consideration whether the sublease/

headlease are above or below market rate.

Finance leases

Amounts due under finance leases are recorded as a receivable at an amount equal to the net investment in

the lease. This is initially calculated and recognised using the IBR prevalent in the underlying headlease at the

recognition date. Any difference between the derecognised right-of-use asset and the newly recognised

amounts due for leases under finance leases is immediately recognised in the income statement. The Group

recognises finance income over the lease term, reflecting a constant periodic rate of return on the Group’s net

investment in the lease.

Operating leases

Operating lease income is recognised as earned on a straight-line basis over the lease term.

3.7 Intangible assets

a) Goodwill

Goodwill represents the excess of the fair value of the consideration of an acquisition over the fair value of the

Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition. At the

acquisition date goodwill is allocated to the cash- generating unit (CGU) or group of CGUs within the Retail or

Financial Services segments that are expected to benefit from the combination. Goodwill is not amortised, but

is tested at least annually for impairment as set out in note 3.8.

b) Computer software

Software and licences which are capitalised include costs incurred to acquire the assets as well as any external

and internal costs incurred in the development of software. External and internal costs are external direct

costs, as well as directly attributable internal payroll-related costs for employees who are associated with

projects in order to bring the assets into use. Costs associated with internally generated software are

recognised as an intangible asset only if they can be separately identified, it is probable that the asset will

generate future economic benefits which exceed one year, and the cost can be measured reliably. Software

under development is not amortised, but held at cost less any impairment loss.

Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the

specific asset to which it relates. Costs associated with maintaining computer software are recognised as an

expense as incurred.

c) Cloud computing arrangements

Software as a Service (SaaS) arrangements are service contracts providing the Group with the right to access a

cloud provider’s application software over the contract period. Typically, such arrangements involve ongoing

licence fees to obtain access to the cloud provider’s application software, as well as upfront costs incurred to

configure or customise the SaaS solution.

Configuration and customisation costs are capitalised in the following instances as intangible assets:

• The Group has both a contractual right to take possession of the software at any time without significant

penalty, and the ability to run the software independently of the host vendor

• The costs incurred meet the definition of, and recognition criteria for, an intangible asset. This includes, for

example, the development of software code that enhances or modifies, or creates additional capability for,

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 ten 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 (except for goodwill) 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.

147 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

3 Material accounting policies continued

3.8 Impairment continued

Goodwill is assessed annually by measuring the recoverable amount of the associated CGU, or group of CGUs

calculated as the higher of fair value less cost to dispose and VIU. Where the carrying value of the CGU or group

of CGUs 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 or group of CGUs. Impairment losses

recognised for goodwill are not subsequently reversed.

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.

3.9 Inventories

Inventories comprise goods held for resale and are valued on a standard cost or weighted average cost basis,

which both approximate 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 Assets held for sale

Assets or disposal groups are classified as held for sale when their carrying amount is expected to be recovered

principally through a sale transaction rather than through continuing use, and 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 and disposal groups classified as held for sale are measured at the lower of the carrying amount and

fair value less costs to dispose. Assets outside the scope of IFRS 5 ‘Non-current Assets Held for Sale and

Discontinued Operations’, such as financial assets, continue to be measured in accordance with the relevant

accounting standards.

A component of the Group that is held for sale or disposed of is classified as a discontinued operation if it

represents a separate major line of business or geographical area of operation, or forms part of a single

coordinated plan to dispose of such business area. The results of discontinued operations are presented

separately in the income statement and comparative periods are restated accordingly.

Further information on discontinued operations is provided in note 3.20 and note 11.

Where an asset or disposal group no longer meets the criteria to be classified as held for sale, it is measured at

the lower of its carrying amount before classification (adjusted for depreciation that would have been

recognised) and its recoverable amount at the date of reclassification.

3.12 Trade and other payables

Trade payables are initially recognised at fair value and subsequently measured at amortised cost. Amounts

are presented net of supplier arrangements due where there is a contractual right of offset.

3.13 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 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 are based on assumptions which are inherently uncertain and the ultimate financial

impact may differ from the amount provided.

Provisions are 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 considers 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, but do include unavoidable costs related to the lease such as service charges

and insurance.

Property provisions also include provisions for maintenance and restoration (referred to collectively as

dilapidations), which are recognised where the Group has a present obligation to make good its leased

properties, a reliable estimate of the expected cost for dilapidations can be made, and payment for

dilapidations is probable. These provisions are recognised based on historically settled dilapidations which

form the basis of the estimated future cash outflows. The expected timing of the future cash outflow is

consistent with the outstanding length of the lease. Amounts provided are reviewed at each reporting date.

Notes to the consolidated financial statements continued

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3 Material accounting policies continued

3.13 Provisions continued

a) Property provisions continued

Any difference between amounts expected to be settled and the actual cash outflow is 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.

The eventual cost is dependent on response rates, uphold rates, complaint rates, redress costs and claim

handling costs.

3.14 Financial instruments

a) Financial assets

The Group classifies all of its financial assets as either amortised cost, fair value through other comprehensive

income (FVOCI) or fair value through profit or loss (FVPL).

The Group’s non-derivative financial assets comprise:

• Cash and cash equivalents

• Trade and other receivables, excluding prepayments, taxes receivable and employee related benefits

• 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

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 and receivables. The Group has no

intention of trading these assets. With the exception of trade receivables that do not contain a significant

financing component, the Group initially measures these financial assets at fair value plus transaction costs.

Subsequently these assets are carried at amortised cost less impairment using the effective interest rate

method. Income from these financial assets is calculated on an effective interest rate basis and is recognised

in the income statement.

Financial assets at fair value through other comprehensive income

Financial assets that are held for both the purpose of collecting contractual cash flows and to sell are classified

as FVOCI. They are included in non-current assets unless management intends to dispose of the investment

within 12 months of the balance sheet date.

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. 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’s derivative financial liabilities are classified as FVPL and all other financial liabilities are classified

as amortised cost. Financial liabilities’ costs, including premiums payable on settlement or redemption and

direct issue costs, are accounted for on an accrual basis in the income statement using the effective interest

rate method and are added to the carrying amount of the instrument to the extent that they are not settled in

the period in which they arise.

The Group’s non-derivative financial liabilities comprise:

• Borrowings

• Trade and other payables, excluding deferred income, other taxes and social security and employee related

benefits

• Lease liabilities

• Other financial 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 or cancelled, or expires.

149 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

3 Material accounting policies continued

3.15 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 subsequently measured at fair value at each reporting date. Where derivatives do not qualify for hedge

accounting, changes in the fair value are recognised in profit and loss as they arise.

At inception of the hedge relationship, the Group documents the economic relationship between hedging

instruments and hedged items, including whether changes in the cash flows of the hedging instruments are

expected to offset changes in the cash flows of hedged items. The Group documents its risk management

objective and strategy for undertaking its hedge transactions.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow

hedges is recognised in the cash flow hedge reserve within equity. The gain or loss relating to the ineffective

portion is recognised immediately in profit or loss, within other gains/(losses).

Where derivatives qualify for hedge accounting, 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, and 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

Changes in the fair value of a derivative instrument designated in a fair value hedge are recognised in the

income statement. The hedged item is adjusted for changes in fair value attributable to the hedged risk, with

the corresponding entry recognised in the income statement.

Derivative financial instruments that do not qualify for hedge accounting are measured at fair value, with

changes in fair value recognised in the income statement.

3.16 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank, deposits at central banks, investments in

money market funds and deposits, credit and debit card receivables 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.

3.17 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 other 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 subleases (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

3.18 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.

Notes to the consolidated financial statements continued

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3 Material accounting policies continued

3.18 Retirement benefit obligations continued

b) Defined benefit pension scheme (Sainsbury’s Pension Scheme) continued

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.

3.19 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 .

3.20 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 12 months of the assessment date.

The results of discontinued operations are presented separately in the Group income statement for all periods

presented. Where a component is classified as discontinued in the current period, comparative periods are

re-presented to reflect consistent presentation.

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 dispose.

4 Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements requires management to make 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.

Critical accounting judgements represent key decisions made by management in applying the Group’s

accounting policies. Key sources of estimation uncertainty arise where there is a significant risk that actual

outcomes could differ from management assumptions and result in a material adjustment to the carrying

amounts of assets and liabilities within the next 12 months.

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 33), climate change risks do not have any impact on the Group’s

judgements or sources of estimation uncertainty.

The following estimates, which were disclosed as significant estimates in the prior year financial statements,

are no longer deemed to be a key source of estimation uncertainty:

• Revenue recognition: the fair value of Nectar points was disclosed as a key source of estimation

uncertainty in the prior year financial statements. This estimate is no longer deemed to be a key source of

estimation uncertainty as analysis of historical accumulation and redemption patterns of Nectar points,

with fair value calculated with reference to lifetime actual breakage and lifetime issuance, has shown that

any reasonable possible change in these inputs to the estimation within the next 12 months would not have

a material impact on the deferred points liability

• 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). While the

IBRs are determined based on a number of inputs including a reference (risk-free) rate and adjustments to

reflect the Group’s credit risk, these are ascertained on the measurement date and not changed unless a

lease modification occurs. As such, a reasonably possible change in the IBR would not result in a material

adjustment to the carrying amounts of lease liabilities within the next financial year, and therefore the

derivation of discount rates used to determine IBRs is no longer deemed to be a key source of estimation

uncertainty

4.1 Critical accounting judgements

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 that 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.

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).

151 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

4 Critical accounting judgements and key sources of estimation

uncertainty continued

4.1 Critical accounting judgements continued

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 33.1.

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). In the current period, it has been reassessed that the CODM is

considered to be the Group PLC Board, which uses the information regularly provided to make optimal

decisions on the allocation of resources and assess performance.

Additionally in the current period, to ensure appropriate focus on both the Sainsbury’s and Argos businesses,

the operating results of these two businesses are now regularly reviewed by the CODM to make decisions about

the resources to be allocated to each. There are clear separate responsibilities for the commercial proposition

across Sainsbury’s (including Grocery, General Merchandise and Clothing) and Argos respectively.

As such, during the current period, the CODM has been presented information for the following operating segments:

• Retail – Sainsbury’s

• Retail – Argos

• Financial Services

This differs from the prior year, whereby the CODM was presented with information for Food; General

Merchandise and Clothing; and Financial Services respectively.

Management has 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 with the financial information needed to evaluate the business and the

environment in which it operates.

Lease terms

The lease term includes periods covered by extension options where the Group is reasonably certain to exercise

those options, and excludes periods covered by break options where the Group is reasonably certain not to

exercise those options.

In assessing whether the Group is reasonably certain, management considers all relevant facts and

circumstances that create an economic incentive, including the strategic importance of the leased asset, its

expected contribution to the Group’s long-term plans and the costs associated with terminating or replacing

the lease. Judgements are reviewed when significant events or changes in circumstances occur that are within

the control of the Group.

4.2 Key sources of estimation uncertainty

Impairment of non‑financial assets

Goodwill and intangible assets not yet available for use are required to be tested annually for 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 no longer supportable. Impairment testing is carried out in

accordance with the methodology described in note 16 and 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. The Directors draw upon

experience as well as external resources in determining these estimates.

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 or 31 December with an adjustment for cash flows

incurred between the valuation date and the end of the financial year. The assets have been assessed for

impairment, from the date of the most recent statement date through manager enquiry and analysis of similar

public market indices.

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 33.7.

Notes to the consolidated financial statements continued

152 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

5 Non‑underlying items

				2026
		Financial	Retail	Impairment of
		Services	restructuring	non-financial
		model	programmes	assets	Pensions	Other
		5.1	5.2	5.3	5.4	5.5	Total
Continuing operations	Note	£m	£m	£m	£m	£m	£m
Cost of sales		—	(58)	(7)	—	(7)	(72)
Administrative expenses		(8)	(13)	—	(8)	(34)	(63)
Other income		—	—	—	1	6	7
Affecting operating profit		(8)	(71)	(7)	(7)	(35)	(128)
Net finance (costs)/income		—	(3)	—	40	(8)	29
Affecting profit before tax – continuing operations		(8)	(74)	(7)	33	(43)	(99)
Affecting loss before tax – discontinued operations	11						(29)
Affecting profit before tax for the financial year							(128)
Being:
Non-financial asset impairments		—	(3)	(7)	—	—	(10)
Accelerated depreciation of assets and acquisition adjustments		—	(35)	—	—	(17)	(52)
Loss on disposal of properties		—	—	—	—	(2)	(2)
Property closure provisions		—	(12)	—	—	—	(12)
Employee costs		—	(15)	—	—	—	(15)
Non-underlying finance (costs)/income		—	(3)	—	40	(8)	29
Fair value movements		(1)	—	—	1	(7)	(7)
Other net costs		(7)	(6)	—	(8)	(9)	(30)
Affecting profit before tax – continuing operations		(8)	(74)	(7)	33	(43)	(99)

153 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

5 Non‑underlying items continued

				2025 (restated*)
		Financial	Retail	Impairment of
		Services	restructuring	non-financial
		model	programmes	assets	Pensions	Other
		5.1	5.2	5.3	5.4	5.5	Total
Continuing operations	Note	£m	£m	£m	£m	£m	£m
Cost of sales		—	(64)	(16)	—	2	(78)
Administrative expenses		(16)	(58)	—	(8)	(17)	(99)
Other (expense)/income		—	(4)	—	—	57	53
Affecting operating profit		(16)	(126)	(16)	(8)	42	(124)
Net finance (costs)/income		—	(2)	—	36	(12)	22
Affecting profit before tax – continuing operations		(16)	(128)	(16)	28	30	(102)
Affecting loss before tax – discontinued operations	11						(223)
Affecting profit before tax for the financial year							(325)
Being:
Non-financial asset impairments		—	(4)	(16)	—	—	(20)
Accelerated depreciation of assets and acquisition adjustments		—	(42)	—	—	(17)	(59)
Profit on disposal of properties		—	—	—	—	57	57
Property closure provisions		—	(12)	—	—	—	(12)
Employee costs		(7)	(43)	—	—	—	(50)
Onerous contracts		(8)	—	—	—	—	(8)
Non-underlying finance income/(costs)		—	—	—	36	(12)	24
Fair value movements		—	—	—	—	2	2
Other net costs		(1)	(27)	—	(8)	—	(36)
Affecting profit before tax – continuing operations		(16)	(128)	(16)	28	30	(102)

* Refer to note 2.1 (c) for details of prior year restatements.

The impact of non-underlying items on Retail cash generated from operations is presented in note A2.2.

Notes to the consolidated financial statements continued

154 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

5 Non‑underlying items continued

5.1 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.

5.2 Retail restructuring programme

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, we commenced a multi-year

restructuring programme in the prior financial year 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 previously announced, the programme also includes the closure of food

counters, converting cafes to expert partners, and converting remaining scratch bakeries. Costs have continued

to be incurred in the current period, including in relation to restructuring local delivery hubs for Argos, where

colleagues’ shifts will change. Refer to the Strategic Report on page 37 for further details.

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.

For accelerated depreciation of assets, the remaining useful economic lives of corresponding sites have been

reassessed to align with the latest closure dates, resulting in an acceleration in depreciation of these assets.

The existing depreciation of these assets (depreciation that would have been recognised absent a closure

decision) is recognised within underlying expenses, whereas accelerated depreciation above this is recognised

within non-underlying expenses.

Property closure provisions relate to 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.

Other net costs comprise predominantly consultancy costs.

5.3 Impairment of non‑financial assets

Separate from restructuring initiatives and property-related transactions, the Group has recognised £7 million

(2025: £16 million) of impairment in relation to certain non-trading sites whereby rent reviews at previously

impaired sites caused an increase in the associated right-of-use assets, and, in prior periods, sub-tenant

defaults. For further details, refer to note 17.

5.4 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.

5.5 Other

Comprises:

• Acquisition adjustments relate to the unwind of non-cash fair value adjustments arising from the Home

Retail Group acquisition

• Non-underlying finance and fair value movements comprising £8 million (2025: £12 million) of finance costs

relating to lease interest on impaired non-trading sites, and a £7 million loss (2025: £2 million gain) within

cost of sales relating to adverse (2025: favourable) movements on long-term, fixed price Power Purchase

agreements (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 facilitate the comparability of underlying results between periods

• Other net costs include income recognised in relation to the settlement of a legal case involving European

truck manufacturers, and consultancy costs in relation to corporate transaction activity

• Property-related transactions in 2025 of £57 million predominantly related 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

6 Segment reporting

The Group’s operating segments have been determined based on the information regularly provided to

the Chief Operating Decision Maker (CODM). In the current period, it has been reassessed that the CODM is

considered to be the Group PLC Board, which uses the information regularly provided to make optimal

decisions on the allocation of resources and assess performance.

In determining the Group’s reportable segments, management has 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. Given the similar economic characteristics between them,

these two segments have been aggregated into one ‘Retail’ segment within the financial statements as this

provides users with 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. This measure is consistent with that used elsewhere in the Group’s internal reporting and is defined

in note 2.5.

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.

155 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

6 Segment reporting continued

Fuel revenue comprises sales from Petrol Filling Stations (PFS) and the Ultra Rapid Electric Vehicle charging

business (Smart Charge). In prior periods, revenue from Smart Charge was reported within Grocery, General

Merchandise and Clothing. To better reflect the nature of these sales, Smart Charge revenue has been

reclassified to Fuel revenue. As a result, comparative figures have been re-presented. Grocery, General

Merchandise and Clothing revenue has been re-presented from £28,762 million and Fuel revenue has been

re-presented from £3,868 million for the 52 weeks ended 1 March 2025.

6.1 Income statement

			2026
			Financial
		Retail	Services	Group
Continuing operations	Note	£m	£m	£m
Revenue
Grocery, general merchandise and clothing		29,992	—	29,992
Fuel		3,559	—	3,559
Interest receivable		—	58	58
Fees and commission		—	38	38
		33,551	96	33,647
Underlying operating profit		1,025	—	1,025
Underlying finance income	9	24	—	24
Underlying finance costs	9	(331)	—	(331)
Underlying profit before tax		718	—	718
Non-underlying items	5			(99)
Profit before tax - continuing operations				619
Income tax expense	10			(205)
Profit after tax - continuing operations				414
Loss after tax - discontinued operations	11			(21)
Profit after tax - total				393

			2025 (restated*)
				Group
			Financial	- Continuing
		Retail	Services	operations
Continuing operations	Note	£m	£m	£m
Revenue
Grocery, general merchandise and clothing		28,754	—	28,754
Fuel		3,876	—	3,876
Interest receivable		—	103	103
Fees and commission		—	39	39
		32,630	142	32,772
Underlying operating profit/(loss)		1,036	(22)	1,014
Underlying finance income	9	31	—	31
Underlying finance costs	9	(336)	—	(336)
Underlying profit/(loss) before tax		731	(22)	709
Non-underlying items	5			(102)
Profit before tax - continuing operations				607
Income tax expense	10			(186)
Profit after tax - continuing operations				421
Loss after tax - discontinued operations	11			(168)
Profit after tax - total				253

* Refer to note 2.1 (a) and (c) for details of prior year restatements .

Notes to the consolidated financial statements continued

156 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

6 Segment reporting continued

6.2 Other segment items

				2026
				Group	Group
			Financial	- Continuing	- Discontinued
		Retail	Services	operations	operations	Group Total
	Note	£m	£m	£m	£m	£m
Depreciation expense
Property, plant and equipment	14	509	—	509	—	509
Right-of-use assets	15	530	—	530	—	530
Amortisation expense
Intangible assets	16	199	—	199	—	199
Impairment of non-financial assets	17	23	—	23	—	23
Impairment loss on financial assets		—	1	1	—	1
Share based payments	34	72	3	75	5	80

				2025 (restated*)
				Group	Group
			Financial	- Continuing	- Discontinued
		Retail	Services	operations	operations	Group Total
	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	34	71	2	73	7	80

* Refer to note 2.1 (c) for details of prior year restatements.

			2026			2025
			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	572	—	572	629	—	629
Right-of-use assets	15	572	—	572	676	—	676
Intangible assets	16	230	—	230	208	—	208

6.3 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 Group also maintains an operational presence in the Republic of

Ireland and Asia, which does not give rise to significant revenues, capital expenditure or segment net assets in

those territories.

7 Supplier arrangements

The following amounts in relation to supplier arrangements are held on the balance sheet:

	2026	2025
	£m	£m
Within inventory	(3)	(2)
Within current trade receivables
Supplier arrangements due	45	54
Accrued supplier arrangements	51	65
Within current trade payables
Supplier arrangements due	47	37
Total supplier arrangements	140	154

Additionally, £13 million (2025: £18 million) of supplier arrangements contractually agreed but not yet earned is

held on the balance sheet within deferred income.

8 Operating profit

8.1 Operating profit is stated after charging/(crediting):

					2025
				2026	(restated*)
Continuing operations			Note	£m	£m
Employee costs			8.2	4,258	3,966
Inventories recognised as an expense within cost of sales				27,302	26,557
Write-down of inventories				757	721
Depreciation and amortisation	Property, plant and equipment	a)	14	509	532
	Right-of-use assets		15	530	501
	Intangible assets	a)	16	199	182
Impairment of non-financial assets			17	23	22
Short-term lease expense				27	30
Sublet income				(61)	(47)
Loss/(profit) on disposal	Property, plant and equipment			2	(53)
	Lease terminations			(15)	(9)
Foreign exchange gain				(1)	(1)

* Refer to note 2.1 (c) for details of prior year restatements.

a) Includes the unwind of acquisition adjustments as set out in note 5.5.

157 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

8 Operating profit continued

8.2 Employee costs

		2025
	2026	(restated*)
	£m	£m
Wages and salaries, including bonus and termination benefits	3,645	3,532
Social security costs	383	275
Pension costs – defined contribution schemes	211	204
Share-based payments expense	80	80
	4,319	4,091
Discontinued operations	61	125
Continuing operations	4,258	3,966

8.3 Employee numbers

	2026	2025
Average number of employees, including Directors and discontinued operations:	‘000	‘000
Full time	49	53
Part time	93	92
	142	145
Full-time equivalent	91	95

Details of key management compensation can be found in note 37.1 and within the Directors’ remuneration

report on pages 81 to 103.

8.4 Auditors’ remuneration

	2026	2025
	£m	£m
Audit of the Company and consolidated financial statements	1.1	1.5
Audit of the Company’s subsidiaries	2.0	2.7
Audit-related assurance services, including half-year review	0.1	0.1
Total audit fees	3.2	4.3
Non-audit services	0.1	0.1
Total fees	3.3	4.4

With effect from July 2025, following a competitive tender process, PricewaterhouseCoopers LLP (PwC) was

appointed as auditor of the Group, replacing Ernst & Young LLP (EY). Fees payable for the audit of the Company

and the Group’s annual accounts, the audit of the Company’s subsidiaries, and audit-related and non-audit

services during the 52 week period ended 28 February 2026 relate to PwC and for the 52 week period ended

1 March 2025 to EY.

EY was the auditor of Sainsbury’s Bank plc and its subsidiaries in the year, the audit fees for 2026 disclosed

above do not include any fees payable to EY.

Non-audit services related principally to services provided by the Group’s auditor in relation to the update of

the Euro MTN (EMTN) Programme (2025: related to services provided by the Group’s previous auditor in relation

to the establishment of the Euro MTN (‘EMTN’) Programme).

9 Finance income and finance costs

		2026			2025
		Non-			Non-
	Underlying	underlying	Total	Underlying	underlying	Total
Continuing operations	£m	£m	£m	£m	£m	£m
Interest on bank deposits and other financial assets	23	—	23	29	—	29
IAS 19 pension financing income	—	40	40	—	36	36
Finance income on net investment
in leases	1	—	1	2	—	2
Finance income	24	40	64	31	36	67
Secured borrowings	(29)	—	(29)	(35)	—	(35)
Unsecured borrowings	(35)	—	(35)	(41)	—	(41)
Lease liabilities	(267)	(11)	(278)	(260)	(12)	(272)
Provisions - amortisation of discount	—	—	—	—	(2)	(2)
Finance costs	(331)	(11)	(342)	(336)	(14)	(350)

Notes to the consolidated financial statements continued

158 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

10 Taxation

10.1 Income statement

		2025
	2026	(restated*)
Continuing operations	£m	£m
Current tax
Current year UK tax	140	107
Under/(over) provision in prior years	7	(3)
Total current tax expense	147	104
Deferred tax
Origination and reversal of temporary differences	51	63
Under provision in prior years	7	23
Recognition of capital losses	—	(4)
Total deferred tax expense	58	82
Total income tax expense	205	186
Analysed as:
Underlying tax	210	205
Non-underlying tax	(5)	(19)
Total income tax expense	205	186
Underlying tax rate	29.2%	28.9%
Effective tax rate	33.1%	30.6%

The effective tax rate of 33.1 per cent (2025: 30.6 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:

			2026		2025 (restated*)
			Non-			Non-
		Underlying	underlying	Total	Underlying	underlying	Total
Continuing operations		£m	£m	£m	£m	£m	£m
Profit before tax		718	(99)	619	709	(102)	607
Income tax at UK corporation
tax rate of 25% (2025: 25%):		180	(25)	155	177	(26)	151
Disallowed depreciation on UK properties		29	3	32	30	—	30
Gain on disposal of properties		—	(1)	(1)	—	(6)	(6)
Other	a)	(4)	9	5	(2)	(3)	(5)
Under provision in prior years		5	9	14	—	20	20
Recognition of capital losses		—	—	—	—	(4)	(4)
		210	(5)	205	205	(19)	186

* Refer to note 2.1 (a) and (c) for details of prior year restatements. Tax associated with discontinued operations is presented in note 11.

a) Key items within Other includes the tax impact of non-deductible transaction costs and restructuring costs.

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 for the period ended 1 March

2025 onwards. 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, paying

tax well in excess of the required minimum, there is no material im

The Group has 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

2026 2025

Current

tax

Deferred

tax Total

Current

tax

Deferred

tax Total

Continuing operations £m £m £m £m £m £m

Share-based payment reserve — (11) (11) (3) — (3)

Actuarial reserve — (67) (67) — (8) (8)

Financial asset reserve — — — 1 (1) —

Cash flow hedge — (5) (5) — 4 4

— (83) (83) (2) (5) (7)

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.

159 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

10 Taxation continued

10.3 Movements in deferred tax

	Accelerated			Rolled over	Retirement
	capital	Capital		capital	benefit	Share-based
	allowances	losses	Fair value	gains	obligations	payments	Leases	Other	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m
2 March 2025 as previously reported	(209)	43	(12)	(92)	(218)	32	63	(36)	(429)
Opening balance adjustment	100	—	7	—	—	—	—	(5)	102
2 March 2025 (restated*)	(109)	43	(5)	(92)	(218)	32	63	(41)	(327)
(Charge)/credit to income statement - continuing operations	(13)	2	—	—	(43)	4	(32)	24	(58)
Credit to equity or other comprehensive income	—	—	5	—	67	11	—	—	83
28 February 2026	(122)	45	—	(92)	(194)	47	31	(17)	(302)
3 March 2024 as previously reported	(134)	44	(1)	(92)	(244)	35	81	(18)	(329)
Opening balance adjustment	61	—	11	—	—	—	—	1	73
3 March 2024 (restated*)	(73)	44	10	(92)	(244)	35	81	(17)	(256)
(Charge)/credit to income statement - continuing operations	(36)	(5)	(12)	—	18	(3)	(18)	(30)	(86)
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 (restated*)	(109)	43	(5)	(92)	(218)	32	63	(41)	(327)

* Refer to note 2.1 (a) for details of prior year restatements.

Post the offset of balances in the same tax jurisdiction, the total deferred tax is presented as a deferred income tax liability on the consolidated balance sheet.

Deferred tax assets have not been recognised in respect of capital losses of £403 million (2025: £399 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 they relate to taxes levied by the same tax authority. In addition, deferred tax has not been recognised on £249 million

(2025: £249 million) of non-trade loan relationships deficits, an element of which arose from the reactivation of previously disallowed Corporate Interest Restriction amounts within acquired companies in prior years. As it is not

considered probable that these losses will be available for future relief, the Group has not recognised a deferred tax asset in respect of them.

Notes to the consolidated financial statements continued

160 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

11 Discontinued operations

In January 2024 the Group announced that 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 has resulted in a

phased withdrawal with components completing at various stages.

In July 2025, the Group agreed to sell the Travel Money business to Fexco Group, with the sale completing in

January 2026. The Travel Money business is presented as a discontinued operation in both the current and

comparative periods.

During the year, the Group completed the previously announced sale of its personal loan, credit card and retail

deposit portfolios to NatWest Group, disposed of its ATM estate to NoteMachine. In February 2025, the Group

completed the sale of the AFS storecard portfolio to NewDay Group. The results of these businesses are

presented as discontinued operations.

The loss relating to these discontinued operations is set out in note 11.1. The net gain/(loss) on disposal is

measured by reference to the fair value of the relevant portfolios on derecognition and the associated

consideration payable or receivable, as detailed in note 11.2.

11.1 Discontinued operations loss after tax

			2025
		2026	(restated)
	Note	£m	£m
Revenue
Interest receivable		—	273
Fees and commission income		104	96
		104	369
Operating costs		(120)	(317)
Operating (loss)/profit		(16)	52
Restructuring and impairment costs		(25)	(134)
Net gain/(loss) arising from disposals	11.2	12	(141)
Loss before tax		(29)	(223)
Income tax credit		8	55
Loss after tax		(21)	(168)

11.2 Discontinued operations net gain/(loss) arising from disposals

			2025
		2026	(restated)
		£m	£m
Fair value of consideration (payable)/receivable	a)	(244)	149
Fair value of net liabilities/(assets) disposed excluding provisions	b)	258	(218)
Write down of net liabilities/loss on net assets disposed		14	(69)
Costs of disposal		(2)	(72)
Gain/(loss) on disposal before tax		12	(141)
Income tax (expense)/credit		(3)	35
Gain/(loss) on disposal after tax		9	(106)

a) Comprises consideration paid to NatWest of £273 million in respect of the value of the net Core Banking liabilities transferred on 1

May 2025 and consideration receivable of £29 million in respect of the sale of Travel Money assets to Fexco Group. The comparative

period comprises consideration payable on the Core Banking portfolio based on pricing mechanisms set out in the sale agreement

measured at the reporting date 1 March 2025, partially offset by £2 million consideration receivable related to the sale of ATM

assets, and £749 million received relating to the sale of AFS cards and the debt instrument notes derecognised.

b) Comprises the fair value of net liabilities of the Core Banking portfolios at the completion date of 1 May 2025 and the fair value of

Travel Money assets derecognised at the completion date of 31 January 2026. Net liabilities were remeasured to fair value

immediately prior to completion of the sale, with associated fair value movements recognised within operating costs. The

comparative period comprises the fair value of net liabilities of Core Banking portfolios held for sale, together with ATM-related

assets held for sale and AFS cards assets disposed on 28 February 2025, inclusive of £24 million of goodwill.

11.3 Assets and liabilities of disposal group and non‑current assets classified as held for sale

		2026	2025
	Note	£m	£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
Total assets of disposal group and non-current assets classified
as held for sale	21	—	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	21	—	(3,136)
Net liabilities held for sale associated with discontinued
operations		—	(623)

161 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

11 Discontinued operations continued

11.4 Discontinued operations cash flow statement

			2025
		2026	(restated)
		£m	£m
Net cash flows from:
Operating activities		(457)	595
Investing activities	a)	(261)	750
		(718)	1,345

a) Net cash flows used in investing activities relate to consideration paid and received in respect of Core Banking activities disposed.

Net cash flows generated in 2025 primarily related 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.

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).

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.

	2026	2025
	million	million
Weighted average number of shares in issue for calculating basic earnings per share	2,274.2	2,330.6
Weighted average number of dilutive share options	46.6	43.5
Total number of shares for calculating diluted earnings per share	2,320.8	2,374.1

			2025
		2026	(restated*)
	Note	£m	£m
Underlying profit after tax attributable to ordinary shareholders of the parent		508	504
Adjustment for non-underlying items after tax		(94)	(83)
Profit after tax attributable to ordinary shareholders of the parent
-continuing operations		414	421
Loss after tax from discontinued operations	11	(21)	(168)
Profit after tax attributable to ordinary shareholders of the parent		393	253

		Pence
	Pence	per share
	per share	(restated*)
Basic – total	17.3	10.9
Diluted – total	16.9	10.7
Basic - discontinued operations	(0.9)	(7.2)
Diluted - discontinued operations	(0.9)	( 7.1)
Basic – continuing operations	18.2	18.1
Diluted – continuing operations	17.8	17.8
Basic - underlying	22.3	21.6
Diluted - underlying	21.9	21.2

* Refer to note 2.1 (a) and (c) for details of prior year restatements.

13 Dividends

	2026	2025
	pence	pence	2026	2025
	per share	per share	£m	£m
Amounts recognised as distributions
to ordinary shareholders:
Financial year ended 2 March 2024
– Final dividend	—	9.2	—	217
Financial year ended 1 March 2025
– Interim dividend	—	3.9	—	91
– Final dividend	9.7	—	223	—
Financial year ended 28 February 2026
– Interim dividend	4.1	—	93	—
– Special dividend	11.0	—	250	—
	24.8	13.1	566	308
Proposed final dividend at financial year end	9. 6		214

The proposed final dividend was approved by the Board on 22 April 2026 and is subject to shareholders’ approval

at the Annual General Meeting. If approved, it will be paid on 10 July 2026 to shareholders on the register as at

5 June 2026. No amount for the proposed final dividend has been recognised at the balance sheet date.

Notes to the consolidated financial statements continued

162 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

14 Property, plant and equipment

			2026			2025
		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		11,381	4,505	15,886	11,154	4,919	16,073
Additions		168	404	572	280	349	629
Disposals		(105)	(526)	(631)	(26)	(730)	(756)
Transfer from/(to) assets held for sale		29	—	29	(27)	(33)	(60)
At end of financial year		11,473	4,383	15,856	11,381	4,505	15,886
Accumulated depreciation
and impairment
At beginning of financial year		3,508	3,020	6,528	3,347	3,444	6,791
Depreciation expense		201	308	509	203	329	532
Impairment loss	17	12	—	12	1	5	6
Disposals		(75)	(525)	(600)	(22)	(727)	(749)
Transfer from/(to) assets held for sale		21	—	21	(21)	(31)	(52)
At end of financial year		3,667	2,803	6,470	3,508	3,020	6,528
Net book value		7,806	1,580	9,386	7,87 3	1,485	9,358
Capital work-in-progress
included above		184	95	279	202	56	258

Transfers from assets held for sale in the year relate to retail non-current assets where the related asset sales

are no longer expected to complete within the next 12 months.

14.1 Security

	2026		2025
		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
	99	2.1	99	2.1

15 Leases

15.1 Group as a lessee

a) Right‑of‑use assets

			2026			2025
		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		4,055	400	4,455	3,976	320	4,296
New leases and modifications		419	153	572	487	189	676
Impairment loss	17	(11)	—	(11)	(16)	—	(16)
Depreciation expense		(408)	(122)	(530)	(392)	(109)	(501)
At end of financial year		4,055	431	4,486	4,055	400	4,455

b) Lease liabilities

		2026	2025
	Note	£m	£m
At beginning of financial year		5,494	5,354
New leases and modifications		550	627
Interest expense	9	278	272
Payments		(782)	(759)
At end of financial year		5,540	5,494

163 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

15 Leases continued

15.1 Group as a lessee continued

c) Maturity analysis

		2025
	2026	(restated*)
	£m	£m
Contractual undiscounted cash flows
Less than 1 year	773	751
1 to 2 years	719	707
2 to 3 years	667	635
3 to 4 years	625	590
4 to 5 years	579	560
Total less than 5 years	3,363	3,243
5 to 10 years	2,427	2,253
10 to 15 years	1,329	1,357
More than 15 years	2,418	2,447
Total undiscounted lease liability	9,537	9,300
Lease liability in the balance sheet	5,540	5,494
Current	505	483
Non-current	5,035	5,011

* Comparative undiscounted cash flow amounts have been restated to reflect updated assumptions behind the methodology of

determining these amounts. Additionally, refer to note 2.1 (b) for details of the prior year restatement in relation to the

classification between certain current and non-current lease liabilities.

d) Undiscounted future rental payments not currently included within the reported lease liability

	2026	2025
	£m	£m
Extension options expected to not be exercised	4,755	4,591
Lease breaks expected to be exercised	374	341

e) Lease liabilities subject to specific terms (typically occurring on an annual or five‑yearly basis)

	2026	2025
	£m	£m
Inflation-linked rentals	2,982	2,913
Subject to rent reviews	197	207

f) Lease cash flows

	2026	2025
	£m	£m
Total cash outflow for leases (excludes sublet income)	(813)	(791)

15.2 Group as lessor

a) Maturity analysis of lease receivables classified as finance leases

	2026	2025
	£m	£m
Contractual undiscounted cash flows
Less than 1 year	5	11
1 to 5 years	4	12
More than 5 years	6	7
	15	30
Lease receivable included in the balance sheet
Current	4	9
Non-current	7	15
	11	24

b) Maturity analysis of lease rental receivables classified as operating leases

	2026	2025
	£m	£m
Less than 1 year	16	17
1 to 2 years	15	15
2 to 3 years	14	13
3 to 4 years	12	12
4 to 5 years	11	10
5 to 10 years	34	32
10 to 15 years	9	7
More than 15 years	15	20
Total undiscounted lease payments receivable	126	126

Notes to the consolidated financial statements continued

164 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

16 Intangible assets

		Computer	Acquired	Customer
	Goodwill	software	brands	relationships	Total
	£m	£m	£m	£m	£m
Cost
At 2 March 2025	322	1,350	190	32	1,894
Additions	—	230	—	—	230
Disposals	(1)	(435)	—	—	(436)
At 28 February 2026	321	1,145	190	32	1,688
Accumulated amortisation and impairment
At 2 March 2025	39	852	164	32	1,087
Amortisation expense	—	181	18	—	199
Disposals	(1)	(435)	—	—	(436)
At 28 February 2026	38	598	182	32	850
Net book value at 28 February 2026	283	547	8	—	838
Capital work-in-progress included above Cost	—	54	—	—	54
At 3 March 2024	384	1,235	229	32	1,880
Additions	—	208	—	—	208
Disposals	(24)	(93)	—	—	(117)
Transfer to assets held for sale	(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	(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	—	63	—	—	63

In the prior year, following the agreement to sell Core Banking portfolios, goodwill of £38 million and £39 million

of acquired brands was transferred to the disposal group classified as held for sale. In addition, £24 million

previously allocated to the Home Retail Group CGU was derecognised following the disposal of AFS cards.

16.1 Analysis of goodwill balances by CGU

	2026	2025
	£m	£m
Jacksons Stores Limited	18	18
Home Retail Group	95	95
Nectar	147	147
Bells Stores Limited	5	5
Other	18	18
	283	283

17 Impairment of non‑financial assets

17.1 Impairment losses and reversals

Goodwill

There was no impairment of goodwill balances in the current year (2025: nil).

Other non‑financial assets

In line with the assumptions and methodology outlined in note 17.2, the Group assessed whether indicators of

impairment existed at the reporting date. As Argos trading performance was below expectations, management

determined that an indicator of impairment existed in respect of each of the Group’s Argos assets. A full

impairment review was undertaken, resulting in an impairment charge of £2 million. Additionally, an indicator

of impairment existed at the reporting date in respect of trading performance at certain Sainsbury’s stores,

and thus a full impairment review was undertaken over these Sainsbury’s stores’ assets, which resulted in an

impairment charge of £11 million.

In addition to impairment charges arising from the indicator-based review, the Group recognised impairment

charges arising from specific events and circumstances during the year. These comprised £3 million of

impairment as part of retail restructuring programmes, and £7 million of impairment in relation to non-trading

sites, reflecting the impact of rent reviews.

165 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

17 Impairment of non‑financial assets continued

17.1 Impairment losses and reversals continued

Other non‑financial assets continued

			2026			2025
			Financial			Financial
		Retail	Services	Total	Retail	Services	Total
	Note	£m	£m	£m	£m	£m	£m
Balance sheet
Property, plant and equipment		12	—	12	6	—	6
Right-of-use assets		11	—	11	16	—	16
Intangible assets		—	—	—	—	—	—
Total impairment loss		23	—	23	22	—	22
Income statement
Comprising
Within non-underlying items
Restructuring programmes	5.2	3	—	3	4	—	4
Non-restructuring programmes	5.3	7	—	7	16	—	16
Within underlying items
Argos store assets		2	—	2	2	—	2
Sainsbury’s store assets		11	—	11	—	—	—
Total impairment loss		23	—	23	22	—	22
Discontinued operations		—	—	—	—	—	—
Continuing operations		23	—	23	22	—	22

17.2 Impairment methodology

Assessment of indicators of impairment

At each reporting date, the Group assesses whether there are any indicators that non-financial assets other

than goodwill and intangible assets not yet available for use may be impaired. Where such indicator exists, the

recoverable amount of the relevant asset or cash generating unit (CGU) is estimated.

Cash‑generating units

For the purpose of impairment testing, CGUs are determined by reference to the smallest identifiable group of

assets that generate cash inflows that are largely independent from other assets or groups of assets. These

have been assessed as follows:

• Individual stores are typically considered CGUs and represent the collective assets directly attributable to

each respective store

• Within Argos, local fulfilment centres serve a defined set of sub-stores so are tested for impairment at this

aggregated level

• Individual assets are assessed separately for impairment indicators where they are expected to generate

largely independent cash inflows, which would be the case where a decision is taken to sell an individual

asset, such as land bank development sites

• Certain assets, notably brands, do not generate largely independent cash inflows so are assessed for

indicators of impairment, and tested accordingly if indicators are identified, at the corporate level in relation

to the business units of the Group: Sainsbury’s, Argos and Nectar

Central assets and associated cash flows are allocated to the relevant CGUs to which they relate. These assets

are attributed to the lowest level of CGU where allocation can be made on a reasonable and consistent basis,

with allocation performed using an appropriate measure such as relative store sales.

Goodwill acquired is allocated to the CGU or group of CGUs that is expected to benefit from the synergies of the

business combination.

Recoverable amount

The recoverable amount of individual assets, store-level CGUs and group of stores CGUs is measured as the

higher of fair value less cost to dispose and the value-in-use of cash flows expected to be largely independently

generated. For certain assets that do not generate largely independent cash inflows, recoverable amount is

assessed at the level of the relevant business unit to which the asset relates. In these cases, value in use

represents the most appropriate basis for determining recoverable amount. Where the value-in-use indicates

there is an impairment, consideration is given as to whether fair value less cost to dispose may be higher than

value-in-use, with the higher of these being taken as the recoverable amount.

Value‑in‑use

In measuring the value-in-use, cash flow projections are based on the latest management-approved forecast

covering a three-year forecast period. Within this period, medium-term sales and cost projections consider the

outlook for addressable markets, competitor behaviour, expected 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 for forecasting future performance. Online grocery sales are fulfilled by

individual stores and therefore these cash flows are allocated to the individual store CGUs which fulfil the

online sales. In Argos, online GM&C sales for Click & Collect are allocated to the individual store CGUs which

fulfil the online sales, while online sales fulfilled through home delivery are not allocated to the individual store

CGUs.

Beyond the three-year forecast period, cash flows are extrapolated using an estimated average long-term

growth rate.

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 stores forecast level

CGUs, base cash flows are derived from current year performance and extrapolated using the operating profit

growth rate approved by management as part of the annual planning process.

Climate change considerations

As part of the assessment of indicators of impairment, the Group has considered climate-related risks

identified through its scenario analysis performed as part of the Task Force on Climate-related Financial

Disclosures (TCFD) report (page 104).

The immediately quantifiable impacts of climate change and costs expected to be incurred in connection with

our net zero commitments are included within the Group’s budget and three-year plan, which have been used

as the basis for the impairment reviews, with no material impact on cash flows.

Notes to the consolidated financial statements continued

166 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

17 Impairment of non‑financial assets continued

17.2 Impairment methodology continued

Climate change considerations continued

The most material transitional climate risk is in fuel. As such, the Group’s review of impairment indicators

in the current year incorporated the expected climate-related risks associated with fuel sales. The reduction

in fuel sales did not represent a new indicator of impairment, as the expected decline in fuel volumes had

already been incorporated into the Retail segment’s approved forecasts. As such, no further impairment

testing was required.

Other than fuel, changes in consumer preferences in meat fish and poultry (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 £500 million to

£600 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 has 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.

17.3 Key assumptions and sensitivity

Key assumptions

The following key assumptions are used in determining recoverable amounts where impairment testing

is required:

• Short-term cash flows: derived from latest Board-approved forecasts covering a three-year forecast period

• 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 projections, 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 discount rates and long-term growth rates applied in the impairment testing of CGUs or groups of CGUs to

which goodwill is allocated, as well as those applied to the Group’s portfolio of store cash-generating units, are

set out below:

		2026			2025
	Pre-tax	Post-tax	Long-term	Pre-tax	Post-tax	Long-term
	discount rate	discount rate	growth	discount rate	discount rate	growth
Home Retail Group	11.7%	8.8%	2%	11.0%	8.3%	2%
Nectar UK	9.4%	7.1%	2%	9.1%	6.8%	2%
Jacksons Stores Limited	9.4%	7.1%	2%	9.1%	6.8%	2%
Bells Stores Limited	9.4%	7.1%	2%	9.1%	6.8%	2%
Other	9.4%	7.1%	2%	9.1%	6.8%	2%

Sensitivities

Sensitivity analysis on the impairment tests for each CGU or 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), c)	150	236	94	36	269
Nectar UK	a)	1,796	2,501	1,390	1,310	2,282
Jacksons Stores Limited	a), b)	70	88	58	43	98
Bells Stores Limited	a), b)	25	29	23	15	36
Other		45	68	31	22	68

a) Cash flows are derived from Board-approved projections for three years and then extrapolated into perpetuity with an assumed

growth rate of 2.0 per cent.

b) Goodwill balances are allocated to individual store CGUs to which they relate.

c) Whilst the sensitivities applied are based on management’s best estimate of what is reasonably possible, continued uncertainty

regarding the geopolitical and global supply environment, or other factors, may lead to the carrying value not being recovered in

full, for example due to further unforeseen deterioration in cash flows, particularly in relation to consumer discretionary spend. A

further increase in the downside sensitivity of 8 per cent, to a total 33 per cent reduction in the Home Retail Group cash flows,

would erode the remaining headroom thereafter resulting in impairment.

These sensitives are illustrative and the actual outcomes may vary by greater amounts than shown above.

18 Other financial assets and other financial liabilities

						2025
	Non-		2026			(restated*)
	current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
At fair value through other comprehensive income
Debt: other financial assets	117	—	117	757	1,167	1,924
At fair value through profit and loss
Debt: other financial assets	12	—	12	12	—	12
Total other financial assets	129	—	129	769	1,167	1,936
At amortised cost
Other financial liabilities	—	(21)	(21)	—	—	—
Total other financial liabilities	—	(21)	(21)	—	—	—

* Refer to note 2.1 (b) for details of prior year restatements .

167 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

19 Inventories

	2026	2025
	£m	£m
Gross finished goods	2,072	2,039
Inventory provision	(85)	(93)
	1,987	1,946

20 Trade and other receivables

		2026			2025 (restated*)
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Trade receivables	1	120	121	—	125	125
Other receivables	11	54	65	27	151	178
Accrued income	—	116	116	—	141	141
Prepayments	10	139	149	15	154	169
Other taxes	—	2	2	—	1	1
	22	431	453	42	572	614

Trade and other receivables include £100 million (2025: £119 million) relating to supplier arrangements where

there is no right of offset. In addition, current other receivables include £10 million (2025: £85 million) of bank

funds in the course of settlement.

20.1 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.

			2026
		0 to 6 months	6 to 12 months	Over 1 year
	Not past due	past due	past due	past due	Total
	£m	£m	£m	£m	£m
Gross amounts
Trade receivables	115	7	1	2	125
Other receivables	63	3	1	5	72
Gross carrying amount - Trade and other receivables	178	10	2	7	197
Allowance for expected credit losses	(4)	(1)	(1)	(5)	(11)
Net carrying amount	174	9	1	2	186

			2025 (restated*)
		0 to 6 months	6 to 12 months	Over 1 year	Total
	Not past due	past due	past due	past due
	£m	£m	£m	£m	£m
Gross amounts
Trade receivables	100	27	—	1	128
Other receivables	183	1	2	9	195
Gross carrying amount - Trade and other receivables	283	28	2	10	323
Allowance for expected credit losses	(7)	(2)	(2)	(9)	(20)
Net carrying amount	276	26	—	1	303

* At 1 March 2025, trade receivables were re-presented from £158 million to £125 million, other receivables from £219 million to

£178 million, accrued income from £29 million to £141 million, prepayments from £208 million to £169 million, and tax receivables

from £nil to £1 million, to better reflect the nature of certain balances within these sub-categories. The re-presentation has no

impact on the total ‘Trade and other receivables’ balance.

21 Assets and liabilities of disposal group and non‑current assets held

for sale

Non-current assets classified as held for sale total £3 million and relate solely to 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.

As set out in note 11, the Group completed several disposals during its phased withdrawal from Core Banking

Business.

21.1 Assets of disposal group and non‑current assets held for sale

	2026	2025
	£m	£m
Opening balance	2,527	10
Classified as held for sale in the year	27	2,521
No longer classified as held for sale in the year	(19)	—
Sold in the year	(2,532)	(4)
Closing balance	3	2,527
Of which Assets of disposal group held for sale	—	2,512
Non-current assets classified as held for sale	3	15
	3	2,527

Notes to the consolidated financial statements continued

168 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

21 Assets and liabilities of disposal group and non‑current assets held

forsale continued

21.2 Liabilities of disposal group held for sale

		2026	2025
	Note	£m	£m
Opening balance		(3,136)	—
Classified as held for sale in the year		—	(3,136)
Transfer to provisions	24	27	—
Sold in the year		3,109	—
Closing balance		—	(3,136)

22 Trade and other payables

		2026			2025 (restated*)
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Trade payables	—	3,830	3,830	—	3,903	3,903
Other payables	1	423	424	—	397	397
Accruals	11	650	661	8	562	570
Deferred income	10	408	418	16	416	432
Other taxes and social
security	—	254	254	—	211	211
	22	5,565	5,587	24	5,489	5,513

		2025
	2026	(restated*)
Analysis of deferred income	£m	£m
Opening balance as previously reported	357	334
Opening balance adjustment	75	81
Opening balance (restated*)	432	415
Revenue deferred	390	398
Revenue recognised which had previously been deferred	(404)	(381)
Closing balance	418	432

£286 million (2025: £299 million) of deferred income relates to deferred Nectar points.

* As at 1 March 2025, other payables have been re-presented from £533 million to £397 million, accruals from £509 million to

£570 million, deferred income from £357 million to £432 million and other taxes and social security from nil to £211 million, to

better reflect the nature of certain balances within these sub heads. There is no impact on the total ‘Trade and other payables’

balance other than ‘Income taxes payable’. For the restatement of income taxes payable, refer to note 2.1 (b) for further details.

22.1 Foreign currency risk

The Group has net Euro-denominated trade payables of £99 million (2025: £93 million) and US Dollar-

denominated trade payables of £151 million (2025: £140 million).

22.2 Supplier financing arrangements

The Group has supply chain finance programmes in place for a total of £1,191 million (2025: £1,135 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, which 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 which 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

	2026	2025
	£m	£m
Presented within trade and other payables	1,170	1,230
- of which is drawn under the supply chain finance programmes	545	693

b) Range of payment due dates

	2026	2025
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

23 Amounts due to Financial Services customers and other deposits

		2026			2025
	Non-current	Current	Total	Non-current	Current	Total
	£m	£m	£m	£m	£m	£m
Other deposits	—	—	—	13	1,955	1,968
	—	—	—	13	1,955	1,968

During the year, the Group held deposits obtained via deposit aggregators, where the underlying depositors are

retail customers, as well as deposits from wholesale counterparties. Following the announced withdrawal from

Core Financial Services, these deposits were fully repaid during the year, and no amounts remain outstanding

at the year end.

24 Provisions

Property provisions comprise onerous property contract provisions for the least net cost of exiting from the

contract and provisions for dilapidations. Utilisation is expected to be in line with the profile of the leases to

which the provisions relate.

Insurance provisions comprise liabilities in respect of outstanding insurance claims in relation to public

liability, employer’s liability and third-party motor. Utilisation of the provision at the balance sheet date is

expected to be in line with the settlement of claims.

169 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

24 Provisions continued

Restructuring programme provisions comprise mainly redundancies as described in note 5.2, and for Financial Services, note 11. Restructuring provisions are expected to be utilised in the next 12 months.

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. Onerous contract provisions are expected to be utilised in the

next 12 months.

Financial Services other provisions comprise contractually committed costs related to the disposal of AFS cards and potential customer redress payable arising from the historical 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. Other provisions are expected to be utilised in the next 12 months.

				Retail			Financial Services
		Property	Insurance	Restructuring	Other	Onerous	Restructuring	Other
		provisions	provisions	programmes	provisions	contracts	programmes	provisions	Total
		£m	£m	£m	£m	£m	£m	£m	£m
At 2 March 2025		105	63	64	10	95	32	18	387
Additional provisions		21	24	12	1	12	1	6	77
Transfer from liabilities held for sale	a)	—	—	—	—	—	—	27	27
Unused amounts released		(39)	(7)	(5)	—	(7)	(2)	(9)	(69)
Utilisation of provision		(10)	(25)	(40)	—	(69)	(14)	(30)	(188)
Amortisation of discount		1	—	1	—	—	—	—	2
At 28 February 2026		78	55	32	11	31	17	12	236
Current									140
Non-current									96
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									230
Non-current									157

a) Following the disposal of Core Banking portfolios previously classified as held for sale, cost to sell provisions previously recognised within liabilities of disposal group held for sale have been transferred to other provisions.

As at 28 February 2026, £5 million remains provided for migration and data retention costs contractually committed as part of the disposal.

24.1 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, and that no new provisions need to be recognised for climate-related matters.

Notes to the consolidated financial statements continued

170 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

25 Called up share capital and merger reserve

	2026	2025	2026	2025
	million	million	£m	£m
Called up share capital
Allotted and fully paid ordinary shares of 28 4/7p	2,264	2,339	647	669

		2026				2025
	Number	Ordinary	Share	Merger	Number	Ordinary	Share	Merger
	of shares	shares	premium	reserve	of shares	shares	premium	reserve
	million	£m	£m	£m	million	£m	£m	£m
At the beginning of the financial year	2,339	669	1,448	173	2,371	678	1,430	568
Allotted in respect of share option schemes	10	3	17	—	42	12	18	—
Cancellation
of own shares	(85)	(25)	—	—	(74)	(21)	—	—
Transfer to retained earnings	—	—	—	—	—	—	—	(395)
At the end of the financial year	2,264	647	1,465	173	2,339	669	1,448	173

During the period, 85.4 million (2025: 73.6 million) of the Company’s own shares, representing 3.77 per cent

of the called up share capital as at 28 February 2026 (3.14 per cent at 1 March 2025), were purchased, and

subsequently cancelled, for total consideration of £251 million (2025: £200 million) inclusive of £1 million

(2025: £6 million) of directly attributable costs. £251 million (2025: £200 million) has been transferred from

the investment in own shares reserve to retained earnings and £25 million (2025: £21 million) of share capital

has been transferred to the capital redemption reserve owing to the cancellation.

26 Capital redemption and other reserves

	Currency	Investment	Financial			Capital
	translation	in own	asset	Cash flow	Total other	redemption
	reserve	shares	reserve	hedge	reserves	reserve
	£m	£m	£m	£m	£m	£m
At 2 March 2025	—	(99)	22	2	(75)	21
Transfer to retained earnings	—	—	(4)	10	6	—
Financial assets at fair value through other comprehensive income	—	—	(1)	—	(1)	—
Transferred to carrying value of inventory	—	—	—	13	13	—
Cash flow hedges effective portion of fair value movements	—	—	—	(40)	(40)	—
Items reclassified from cash flow hedge
reserve	—	—	—	5	5	—
Purchase of own shares for share schemes	—	(85)	—	—	(85)	—
Allotted in respect of share schemes	—	62	—	—	62	—
Purchase of own shares for cancellation	—	(251)	—	—	(251)	—
Cancellation of own shares	—	251	—	—	251	25
Currency translation differences	(1)	—	—	—	(1)	—
Deferred tax	—	—	—	5	5	—
At 28 February 2026	(1)	(122)	17	(5)	(111)	46
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

26.1 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.

171 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

26 Capital redemption and other reserves continued

26.2 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.

As detailed in note 25, £251 million (2025: £200 million) of the Company’s own shares were purchased and

subsequently cancelled during the period, and transferred from the investment in own shares reserve to

retained earnings.

Shares held by the ESOT

		2026			2025
	Market	Nominal		Market	Nominal
	Value	Value	Number	Value	Value	Number
	£m	£m	m	£m	£m	m
Investment in own shares	126	10.3	36.0	102	11.2	39.3
Maximum number of shares held during the period	146	12.0	41.9	103	11.3	39.7

During the period, the ESOT acquired 20.8 million of the Company’s ordinary shares via market purchase for

cash consideration of £64 million (2025: 23.9 million shares via market purchase for cash of £63 million). The

disposal of 24.1 million (2025: 14.8 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.

26.3 Financial asset reserve

Represents the fair value gains and losses on financial assets at fair value through other comprehensive income.

26.4 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.

26.5 Capital redemption reserve

As part of the share buy-back completed during the period (as detailed in note 25), £25 million (2025: £21 million)

of share capital has been transferred to the capital redemption reserve.

During the prior period the capital redemption reserve as at 3 March 2024 amounted to £680 million. 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.

27 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 risks are 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 limit

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.

27.1 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 monitors its liquidity position through ongoing assessment of key

regulatory and internal liquidity metrics, including the Liquidity Coverage Ratio (LCR), supported by

appropriate limits, controls and oversight designed to mitigate liquidity risks.

To meet its internal limits, as well as Prudential Regulatory Authority requirements, the Bank maintains central

bank deposits and a stock of high-quality liquid assets that can be readily monetised to meet the Bank’s

obligations.

Encumbered assets

		2026	2025
		£m	£m
Assets of the disposal group	a)	—	485
Other assets	b)	—	18

a) During the year ended 1 March 2025, £485 million of personal loan assets (classified as Held for Sale) were pledged to the Bank of

England to facilitate funding if required. Following completion of the sale of these assets as described in note 11, there are no

remaining assets encumbered at 28 February 2026.

b) Cash collateral was advanced as variation margin on centrally cleared derivatives transactions in prior years. All centrally cleared

derivatives were closed during the financial year and cash collateral advanced has been repaid.

The Group has an unsecured committed facility which consists of a £1,000 million Revolving Credit Facility as

set out in note 32.2.

As detailed in note 22.2, some suppliers have access to supply chain financing facilities, which allows these

suppliers to benefit from the Group’s credit profile. The total size of the facility is £1,191 million (2025: £1,135

million) across a number of banks and platforms with an amount utilised of £545 million (2025: £693 million).

The level of utilisation is dependent on the individual supplier requirements and varies significantly over time.

Maturities below are based on the contractual undiscounted cash flows or an estimate of cash flows in respect

of floating interest rate liabilities.

Notes to the consolidated financial statements continued

172 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

27 Financial risk management continued

27.1 Liquidity risk continued

Maturity of financial liabilities – undiscounted

				2026
		Less than	1 to 2	2 to 5	More than
		1 year	years	years	5 years	Total
		£m	£m	£m	£m	£m
Non-derivative financial liabilities	a)
Secured loan: Loan due 2031	b)	(91)	(94)	(254)	(10)	(449)
Bank overdraft		(1)	—	—	—	(1)
Trade and other payables		(4,534)	—	—	—	(4,534)
Other financial liabilities		(21)	—	—	—	(21)
Tier 2 subordinated debt		(13)	(133)	—	—	(146)
Unsecured bond		(30)	(30)	(333)	(368)	(761)
Derivative contracts – gross settled
Foreign exchange forwards – outflow	c)	(1,225)	(164)	—	—	(1,389)
Foreign exchange forwards – inflow	c)	1,212	164	—	—	1,376
Commodity contracts – outflow		(19)	(20)	(40)	(125)	(204)
Commodity contracts – inflow		26	23	44	117	210

			2025 (restated*)
		Less than	1 to 2	2 to 5	More than
		1 year	years	years	5 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		(4,507)	—	—	—	(4,507)
Liabilities of the disposal group	d)	(3,158)	(47)	(66)	—	(3,271)
Amounts due to Financial Services customers
and banks	e)	(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
Other interest rate swaps – Sainsbury’s Bank	f)	(1)	(2)	(4)	—	(7)
Derivative contracts – gross settled
Foreign exchange forwards – outflow	c)	(1,045)	(174)	—	—	(1,219)
Foreign exchange forwards – inflow	c)	1,041	174	—	—	1,215
Commodity contracts – outflow		(23)	(19)	(45)	(132)	(219)
Commodity contracts – inflow		33	27	55	138	253

* Refer to note 2.1 (b) for details of prior year restatements.

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 3.6 per cent for the year ended

28 February 2026, 3.8 per cent for the year ending 27 February 2027 and 3.8 per cent for future years (2025: RPI of 4.9 per cent for the

year ended 1 March 2025, 3.6 per cent for the year ending 28 February 2026 and 3.6 per cent for future years).

c) Cash flows in foreign currencies have been translated using year-end spot rates.

d) 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 were reclassified as held for sale.

e) 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 were classified as held for sale. Amounts reported comprise deposits obtained via deposit aggregators where the ultimate

depositors are retail customers.

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.

27.2 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.

Throughout the year, the Bank’s retail credit risk exposures have decreased as balances have matured or been sold.

At the reporting date, the Bank is not exposed to retail credit risk and all balances are nil following the completion

of sales, described in note 11. As a result, the Retail Credit Risk Committee of Sainsbury’s Bank previously in place to

govern these risks has evolved to more holistic risk management oversight by management.

173 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

27 Financial risk management continued

27.2 Credit risk continued

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 Sterling

liquidity funds, AAA or Aaa/MR1+ from Moody’s. In the event of a split credit rating, the lower rating applies.

				2025
		Long-term	2026	(restated*)
Counterparty		rating	£m	£m
Cash and cash equivalents
Financial institutions – Money market funds	a)	AAA/Aaa	466	239
Financial institutions – Other investment securities		—	—	360
Financial institutions – Short term deposits		—	—	141
Deposits at central banks		AA/Aa3	334	1,043
Derivative financial assets
Interest rate swaps		AA+/Aa1 to A/A2	4	5
Foreign exchange forward contracts		AA+/Aa1 to A/A2	5	13
Commodity forward contracts		AA+/Aa1 to A/A2	3	3

* Refer to note 2.1 (b) for details of prior year restatements.

a) Excludes bank balances, store cash and cash in transit.

d) Maximum exposure to credit risk

		2025
	2026	(restated*)
Credit exposure	£m	£m
On balance sheet items
Assets of the disposal group	—	2,512
Cash and balances with central banks	1,067	2,222
Derivative financial instruments (excludes level 3 instruments)	12	21
Other financial assets	129	1,936
Trade and other receivables	297	435
	1,505	7,1 26

* Refer to note 2.1 (b) for details of prior year restatements.

The exposures are shown gross, before the effect of mitigation through the use of collateral agreements.

At the prior year reporting date, assets of the disposal group comprised Sainsbury’s Bank plc’s personal loans

and credit card portfolios, AFS’s monthly payment plan portfolio and a small residual AFS card portfolio which

fell out of perimeter of the sale to NewDay Group.

As the Financial Services division is not exposed to retail credit risk at the reporting date following the sale of

assets held for sale as described in note 11, tables previously presented covering credit quality, staging or

forbearance arrangements have not been included for prior year comparatives. These can be found in the Annual

report and financial statements for the year ended 1 March 2025 as found on the Investors page of the website:

https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations/results-reports-and-presentations.

27.3 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 a significant proportion of 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 and

any unhedged foreign currency cash flow commitments.

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)

	2026			2025 (restated*)
		Impact on		Impact on
	Impact	cash flow	Impact on	cash flow
	on post tax	hedge	post tax	hedge
	profits	reserve	profits	reserve
	+/- 10%	+/- 10%	+/- 10%	+/- 10%
Group	£m	£m	£m	£m
USD / GBP	1 /(1)	(97)/87	1/(1)	(89)/85
EUR / GBP	1 /(2)	(40)/50	1/(1)	(25)/44

* Comparative amounts have been re-presented to align with the methodology applied in the current year. As a result, the impact on

post-tax profits for EUR has been re-presented from nil to 1/(1). The impact on the cash flow hedge reserve has been re-presented

for USD from (78)/96 to (89)/85 and for EUR from (31)/38 to (25)/44.

Financial Services

The Bank was 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

ATMs. Following the sale of these business lines as described in note 11, the bank is no longer exposed to

foreign exchange risk.

Notes to the consolidated financial statements continued

174 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

27 Financial risk management continued

27.3 Market risk continued

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

		2026
			Variable
	Fixed	Floating	capped	Total
	£m	£m	£m	£m
Other financial assets at fair value through other comprehensive income	117	—	—	117
Other financial assets at fair value through profit
and loss	—	12	—	12
Cash and cash equivalents	263	804	—	1,067
Bank overdraft	—	(1)	—	(1)
Borrowings	(681)	—	(386)	(1,067)
Derivative effect:
Interest rate swaps	220	(220)	—	—
Inflation-linked swaps	(411)	—	411	—
	(492)	595	25	128

		2025 (restated*)
			Variable
	Fixed	Floating	capped	Total
	£m	£m	£m	£m
Other financial assets at fair value through other comprehensive income	1,293	631	—	1,924
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	707	1,515	—	2,222
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

* Refer to note 2.1 (b) for details of prior year restatements.

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 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 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 29 for derivative disclosures.

175 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

27 Financial risk management continued

27.4 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 has 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 against all covenants as at 28 February 2026.

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 previously obtained an individual consolidation waiver from

the PRA, which allowed the Bank to monitor its capital position on a consolidated basis (Bank and Home Retail

Group Card Services Limited). The prior year comparative capital position set out below is on a regulatory

consolidated basis. Following the individual consolidation waiver expiry during the financial year, the capital

position for 2026 is presented for Sainsbury’s Bank on a standalone basis.

Regulatory capital resources under CRD IV

	2026	2025
	Full Impact	Full Impact
	£m	£m
Common Equity Tier 1 (CET 1) capital:
Ordinary share capital	1	701
Allowable reserves	230	(51)
Regulatory adjustments	(1)	(9)
Tier 1 capital	230	641
Tier 2 capital (loan notes - listed)	3	64
Total capital	233	705

On 8 July 2025, the High Court of Justice (Business and Property Courts of England and Wales Companies Court)

approved a reduction of the ordinary share capital of the Bank from £701 million to £1 million, having

previously been resolved on and effected by a Special Resolution passed at a General Meeting of the Bank held

on 22 May 2025. The reduction became effective on 10 July 2025 upon registration of the court order with

Companies House and resulted in an equal and opposite increase to retained earnings. The Bank subsequently

paid £400 million (2025: £nil) of dividends during the year.

b) Leverage ratio (unaudited)

The leverage ratio is defined as the ratio of Tier 1 capital to adjusted assets, which is presented in the table

below for the financial year for Sainsbury’s Bank on a standalone basis following expiry of the individual

consolidation waiver mentioned above. The prior financial year is presented on a regulatory consolidated basis

(Bank and Home Retail Group Card Services Limited). The denominator represents the total non-risk weighted

assets adjusted for certain off balance sheet exposures, assets and regulatory. 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 151.5 per cent is well in excess of the minimum Basel leverage ratio of 3.0 per cent.

	2026	2025
	Full Impact	Full Impact
	£m	£m
Components of the leverage ratio
Total assets as per published financial statements (Sainsbury’s Bank plc
consolidated group)	484	6,400
Movement on consolidation of subsidiary undertakings	—	(209)
Exposure value for derivatives and securities financing transactions	—	7
Off balance sheet exposures: unconditionally cancellable (10%)	—	411
Other adjustments	1	(13)
Central Bank claims	(333)	(1,043)
	152	5,553
Tier 1 capital	230	641
Leverage ratio	151.5%	11.5%

Notes to the consolidated financial statements continued

176 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

28 Financial instruments

The Group recognises the following financial instruments on its balance sheet.

			2026				2025 (restated*)
				At fair value				At fair value
			At fair value through other				At fair value through other
		At amortised	through profit	comprehensive		At amortised	through profit	comprehensive
		cost	or loss	income	Total	cost	or loss	income	Total
	Note	£m	£m	£m	£m	£m	£m	£m	£m
Financial assets
Cash and cash equivalents	30	601	466	—	1,067	1,623	239	360	2,222
Trade and other receivables		297	—	—	297	435	—	—	435
Other financial assets	18	—	12	117	129	—	12	1,924	1,936
Derivative financial instruments	29	—	25	—	25	—	50	—	50
		898	503	117	1,518	2,058	301	2,284	4,643
Financial liabilities
Trade and other payables		(4,534)	—	—	(4,534)	(4,507)	—	—	(4,507)
Borrowings	32	(1,061)	—	—	(1,061)	(1,114)	—	—	(1,114)
Other financial liabilities	18	(21)	—	—	(21)	—	—	—	—
Amounts due to Financial Services customers and banks	23	—	—	—	—	(1,968)	—	—	(1,968)
Lease liabilities	15	(5,540)	—	—	(5,540)	(5,494)	—	—	(5,494)
Derivative financial instruments	29	—	(23)	—	(23)	—	(26)	—	(26)
		(11,156)	(23)	—	(11,179)	(13,083)	(26)	—	(13,109)

* Comparative cash and cash equivalents measured at amortised cost has been re-presented from £2,777 million to £1,623 million, to better reflect the nature of the balances of money market funds as measured at fair value through profit or loss of £239 million, and other

investment securities as measured at fair value through other comprehensive income of £360 million. Comparative trade and other payables have been restated from £(4,945) million to £(4,507) million to exclude balances relating to employer rights and obligations arising

from employee benefits, contract liabilities, and amounts payable in respect of taxes and social security contributions. Comparative trade and other receivables have been restated from £377 million to £435 million to exclude balances that do not meet the definition of a

financial asset. Derivative financial instruments have been re-presented to separately present the gross asset and liability amounts. For the restatement of cash and cash equivalents, refer to note 2.1 (b) for details of prior year restatements.

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, debt instrument on

public exchanges and money market funds

• 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)

177 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

28 Financial instruments continued

28.1 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

cash and cash equivalents, short-term deposits, trade receivables and trade payables, other receivables and

other payables, accruals, overdrafts and lease liabilities are assumed to approximate to their book values.

		2026		2025
		Carrying		Carrying
		amount	Fair value	amount	Fair value
	Level	£m	£m	£m	£m
Financial liabilities
Loans due 2031	2	(386)	(377)	(447)	(440)
Unsecured bond	1	(556)	(567)	(550)	(552)
Tier 2 Capital due 2028	1	(125)	(135)	(124)	(142)
Amounts due to Financial Services
customers and other banks	2	—	—	(1,968)	(1,990)

28.2 Fair value measurements recognised in the balance sheet

		2026				2025 (restated*)
	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
Cash and cash equivalents	—	—	—	—	350	10	—	360
Other financial assets	117	—	—	117	1,754	170	—	1,924
Financial instruments at fair value through profit and loss
Cash and cash equivalents	466	—	—	466	239	—	—	239
Other financial assets	12	—	—	12	12	—	—	12
Derivative financial assets	—	12	13	25	—	21	29	50
Derivative financial liabilities	—	(21)	(2)	(23)	—	(26)	—	(26)

* Refer to note 2.1 (b) for details of prior year restatements.

There have been no transfers over the reported period between levels 1, 2 and 3

28.3 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
	2026	2025
	£m	£m
At beginning of financial year	29	9
Charged to income statement - cost of sales	(7)	2
Charged to other comprehensive income	(11)	18
At end of financial year	11	29

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:

	2026		2025
	Change in	Change in	Change in	Change in
	output	forward	output	forward
	volume	pricing	volume	pricing
	+/-20.0%	+/-20.0%	+/-20.0%	+/-20.0%
	£m	£m	£m	£m
Not in a hedge relationship	1/(1)	4/(4)	2/(2)	7/(7)
Designated in a cash flow hedge relationship	2/(2)	27/(27)	4/(4)	31/(31)

Notes to the consolidated financial statements continued

178 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

28 Financial instruments continued

28.3 Level 3 financial assets continued

c) Offsetting financial instruments

Financial assets and liabilities are offset, and the net amount is 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

				2026
				Amounts
				subject to	Cash
	Gross		Net	master	collateral
	amounts	Amounts	amounts	netting	pledged (not	Net
	recognised	offset	recognised	agreements	offset)	amounts
	£m	£m	£m	£m	£m	£m
Assets
Derivative financial assets	25	—	25	(13)	—	12
Trade and other receivables	320	(23)	297	—	—	297
Cash and cash equivalents	1,067	—	1,067	—	—	1,067
	1,412	(23)	1,389	(13)	—	1,376
Liabilities
Derivative financial liabilities	(23)	—	(23)	13	—	(10)
Trade and other payables	(4,557)	23	(4,534)	—	—	(4,534)
	(4,580)	23	(4,557)	13	—	(4,544)

				2025 (restated*)
				Amounts
				subject to	Cash
	Gross		Net	master	collateral
	amounts	Amounts	amounts	netting	pledged	Net
	recognised	offset	recognised	agreements	(not offset)	amounts
	£m	£m	£m	£m	£m	£m
Assets
Derivative financial assets	50	—	50	(10)	—	40
Trade and other receivables	461	(26)	435	—	—	435
Cash and cash equivalents	2,222	—	2,222	—	—	2,222
	2,733	(26)	2,707	(10)	—	2,697
Liabilities
Derivative financial liabilities	(26)	—	(26)	10	18	2
Trade and other payables	(4,533)	26	(4,507)	—	—	(4,507)
	(4,559)	26	(4,533)	10	18	(4,505)

* At 1 March 2025, derivative financial assets have been re-presented from £nil to (£10 million) and derivative financial liabilities from £nil to

£10 million to reflect the application of the master netting agreement for the Group’s derivative contracts.

The Financial Services segment previously held 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. During the year, the Financial Services segment

ceased the use of all derivative financial instruments resulting in no collateral being pledged/provided at the

reporting date (2025: £18 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 (2025: £1 million) under this facility.

179 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

29 Derivative financial instruments and hedge accounting

Effects of hedge accounting on the Group’s financial position and performance:

		2026				2025
	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	4	220	—	—	1	120	—	—
Cash flow hedges
Inflation rate swaps	—	—	—	411	—	—	—	281
Foreign exchange forward contracts	5	545	(19)	832	13	590	(13)	616
Commodity contracts	3	37	(2)	26	3	26	(5)	45
Power Purchase contracts a)	10	9	(2)	6	20	14	—	—
Derivatives not in a formal hedging relationship
Interest rate swaps	—	—	—	—	4	510	(8)	780
Cross-currency swaps	—	—	—	—	—	14	—	6
Foreign exchange forward contracts	—	—	—	—	—	—	—	2
Power Purchase contracts a)	3	8	—	—	9	11	—	—
Total	25	819	(23)	1,275	50	1,285	(26)	1,730

a) The notional value of the Power Purchase contracts is based on annual generation .

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 is 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 impacting the fair value movements of the hedging instrument compared to the hedged items

• Changes to the forecasted cash flows of hedged items

Notes to the consolidated financial statements continued

180 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

29 Derivative financial instruments and hedge accounting continued

a) Cash flow hedges continued

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:

	2026		2025
		Average		Average
	Notional	interest	Notional	interest
	amount	received	amount	received
	£m	%	£m	%
Less than 1 month	—	—	—	—
1 - 3 months	155	3.62%	—	—
3 months - 1 year	—	—	—	—
1 - 5 years	256	3.62%	281	4.91%
More than 5 years	—	—	—	—

Impact of change in value of hedged items on cash flow hedge reserve

		2026			2025
			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	27	(27)	(11)	(1)	1	—
Commodity contracts	2	(2)	—	5	(5)	(2)
Power Purchase Agreements	11	(11)	7	(18)	18	20

There are no amounts remaining in the hedging reserve for which hedge accounting is no longer applied.

Analysis of fair value movements in cash flow hedge reserve by risk category

				2026
			Movements		Reallocation
			recognised	Amounts	within
		Opening	in OCI	reclassified	reserves	Closing
	Reclassification recognised in	£m	£m	£m	£m	£m
Foreign exchange	Inventory and income
forward contracts	statement	—	(27)	16	—	(11)
Commodity
contracts	Cost of sales	(2)	(2)	4	—	—
Power Purchase
Agreements	Cost of sales	20	(11)	(2)	—	7
Tax		(16)	5	—	10	(1)
		2	(35)	18	10	(5)

				2025
			Movements		Reallocation
			recognised	Amounts	within
		Opening	in OCI	reclassified	reserves	Closing
	Reclassification recognised in	£m	£m	£m	£m	£m
Foreign exchange	Inventory and income
forward contracts	statement	(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

b) Fair value hedges

During the year ended 28 February 2026, the Group entered into £220 million of interest rate swap derivatives

to hedge a portion of the interest rate risk arising from its fixed rate debt issuance. In the prior years within the

Financial Services business, interest rate swaps were executed to hedge interest rate risk arising from its fixed

rate debt issuance. The cash flows under the hedging instruments substantially match the cash flow profile of

the hedged items. 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.

During year ended 28 February 2026, the Financial Services segment closed its interest rate swap derivative to

hedge interest rate risk for its fixed rate debt issuance.

181 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

29 Derivative financial instruments and hedge accounting continued

b) Fair value hedges continued

Maturity profile of instruments used in non‑dynamic hedging strategies of interest rate risk

	2026		2025
		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	100	5.13%	120	10.50%
More than 5 years	120	5.63%	—	—

Impact of hedged items (all via interest rate swaps) on financial statements

			2026
			Change in
			fair value used		Cumulative fair
			for measuring		value hedge adjustments
	Carrying amount		ineffectiveness		included in carrying amount
	Assets	Liabilities		Assets	Liabilities
Line item in financial statements	£m	£m	£m	£m	£m
Borrowings	—	(678)	3	—	4

			2025
			Change in
			fair value used	Cumulative fair
			for measuring	value hedge adjustments
	Carrying amount		ineffectiveness	included in carrying amount
	Assets	Liabilities		Assets	Liabilities
Line item in financial statements	£m	£m	£m	£m	£m
Borrowings	—	(124)	(2)	—	1

Impact of the hedging instruments (all via interest rate swaps) on financial statements:

			2026
			Carrying amount		Change in
					fair value used
		Notional			for measuring
		amount	Assets	Liabilities	ineffectiveness
Line item in financial statements	Hedged Item	£m	£m	£m	£m
Derivative financial assets	Unsecured bond	220	4	—	—
Derivative financial liabilities	Tier 2 capital	—	—	—	1

			2025
			Carrying amount		Change in
					fair value used
		Notional			for measuring
		amount	Assets	Liabilities	ineffectiveness
Line item in financial statements	Hedged Item	£m	£m	£m	£m
Derivative financial liabilities	Tier 2 capital	120	1	—	1

Hedge ineffectiveness recognised in cost of sales

	2026	2025
Change in value for calculating hedge ineffectiveness	£m	£m
Hedged items	4	(2)
Hedging instruments	1	1
	5	(1)

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 apply a CPI uplift to the fixed price, as detailed in note 28, of which £3

million (2025: £9 million) is not within a hedging relationship, with fair value losses of £7 million (2025: gains of £2

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 in 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 the income statement, without offset. Following completion of the Core Banking

portfolio sale in May 2025, all remaining derivatives were closed out as the underlying portfolios were derecognised.

Maturity profile of interest rate risk derivatives not in hedging relationships

	2026		2025
		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%

Notes to the consolidated financial statements continued

182 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

29 Derivative financial instruments and hedge accounting continued

c) Derivatives not in a hedge relationship continued

Impact of the interest rate risk derivatives not in hedging relationships

			2026
			Carrying amount		Change in
					fair value used
		Notional			for measuring
		amount	Assets	Liabilities	ineffectiveness
Line item in financial statements	Hedged Item	£m	£m	£m	£m
Derivative financial assets/liabilities	Loans	—	—	—	3
Derivative financial liabilities	Deposits/capital	—	—	—	—
		—	—	—	3

			2025
			Carrying amount		Change in
					fair value used
		Notional			for measuring
		amount	Assets	Liabilities	ineffectiveness
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)

30 Cash and cash equivalents

		2025
	2026	(restated*)
	£m	£m
Cash in hand and bank balances	267	439
Money market funds	466	239
Short-term deposits	—	141
Other investment securities	—	360
Deposits at central banks	334	1,043
Cash and cash equivalents in the statement of financial position	1,067	2,222
Bank overdrafts	(1)	(1)
Cash and cash equivalents in the statement of cash flows	1,066	2,221
Restricted amounts included above Held within the Group’s Employee Share Ownership Trust	5	—
Held for unclaimed dividends	3	—
Held for insurance purposes	1	3
	9	3

* As at 1 March 2025, money market funds have been re-presented from £1,154 million to £239 million. Additionally, £555 million of

other investment securities has been reclassified to other financial assets within current assets, refer to note 2.1b) for further

details.

30.1 Cash flow statement

Reconciliation of working capital cash flow

2026

• Trade and other receivables: Cashflows differ from the movement in the balance sheet owing mainly to the

presentation of cash flows as discontinued operations of £62 million.

• Trade and other payables: Cashflows differ from the movement in the balance sheet owing mainly to

reclassifications to other lines in the cash flow statement of £48 million and presentation of cash flows as

discontinued operations of £46 million.

• Provisions: Cashflows differ from the movement in the balance sheet owing mainly to the presentation of

cash flows as discontinued operations of £87 million.

2025

• Amounts due from Financial Service customers and other banks: Cashflows differ from the movement in the

balance sheet owing mainly to £2,512 million transferred to assets held for sale on the balance sheet and

£2,005 million cash inflows presented within discontinued operations in the cash flow statement.

• Amounts due to Financial Service customers and other deposits: Cashflows differ from the movement in the

balance sheet owing mainly to £3,109 million transferred to liabilities held for sale on the balance sheet and

£644 million cash outflows presented within discontinued operations in the cash flow statement.

• Trade and other receivables: Cashflows differ from the movement in the balance sheet owing mainly to cash

inflows presented within discontinued operations in the cash flow statement.

• Provisions: Cashflows differ from the movement in the balance sheet owing mainly to cash outflows

presented within discontinued operations in the cash flow statement.

31 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.

183 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

31 Analysis of net debt continued

31.1 Reconciliation of opening to closing net debt

		Cash Movements		Non-Cash Movements
	2 March	Cash flows	Net interest		Other
	2025	excluding	(received) /	Accrued	non-cash	28 February
	(restated*)	interest	paid	interest	movements	2026
	£m	£m	£m	£m	£m	£m
Retail
Net derivative financial instruments	(1)	—	1	(1)	5	4
Borrowings (excluding overdrafts)	(989)	59	57	(57)	(5)	(935)
Lease liabilities	(5,494)	504	278	(278)	(550)	(5,540)
Purchase of own shares for share schemes	—	—	—	—	(21)	(21)
Arising from financing activities	(6,484)	563	336	(336)	(571)	(6,492)
Cash and cash equivalents	727	2	—	—	—	729
Bank overdrafts	(1)	—	—	—	—	(1)
Less: Purchase of own shares for share schemes	—	—	—	—	21	21
Retail net debt	(5,758)	565	336	(336)	(550)	(5,743)
Financial Services
Net derivative financial instruments	(2)	—	—	—	2	—
Borrowings (excluding overdrafts)	(124)	—	12	(13)	—	(125)
Lease liabilities	—	—	—	—	—	—
Arising from financing activities	(126)	—	12	(13)	2	(125)
Financial assets at fair value through other comprehensive income	1,924	(1,807)	—	—	—	117
Cash and cash equivalents	1,495	(1,157)	—	—	—	338
Financial services net funds	3,293	(2,964)	12	(13)	2	330
Group
Net derivative financial instruments	(3)	—	1	(1)	7	4
Borrowings (excluding overdrafts)	(1,113)	59	69	(70)	(5)	(1,060)
Lease liabilities	(5,494)	504	278	(278)	(550)	(5,540)
Purchase of own shares for share schemes	—	—	—	—	(21)	(21)
Arising from financing activities	(6,610)	563	348	(349)	(569)	(6,617)
Financial assets at fair value through other comprehensive income	1,924	(1,807)	—	—	—	117
Cash and cash equivalents	2,222	(1,155)	—	—	—	1,067
Bank overdrafts	(1)	—	—	—	—	(1)
Less: Purchase of own shares for share schemes	—	—	—	—	21	21
Group net debt	(2,465)	(2,399)	348	(349)	(548)	(5,413)

Other non-cash movements relate to new leases, mark to market derivative movements on debt and foreign exchange.

Notes to the consolidated financial statements continued

184 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

31 Analysis of net debt continued

31.1 Reconciliation of opening to closing net debt continued

		Cash Movements		Non-Cash Movements
	3 March	Cash flows	Net interest		Other	1 March
	2024	excluding	(received) /	Accrued	non-cash	2025
	(restated*)	interest	paid	interest	movements	(restated*)
	£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	770	1,155	—	—	(1)	1,924
Cash and cash equivalents	1,101	394	—	—	—	1,495
Financial services net funds	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	770	1,155	—	—	(1)	1,924
Cash and cash equivalents	1,978	244	—	—	—	2,222
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)

* Refer to note 2.1 (b) for details of prior year restatements.

185 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

31 Analysis of net debt continued

31.2 Reconciliation of own shares purchased for share schemes

The table below presents the reconciliation of own shares purchased for share schemes between the Group

statement of changes in equity and the Group cash flow statement.

		2026	2025
		£m	£m
Retail
Included in the Group statement of changes in equity		(85)	(63)
Outstanding amount recognised as financial liabilities	a)	21	—
Included in the Group cash flow statement		(64)	(63)

a) Refer to note 38 for further information on post-balance sheet events.

32 Borrowings

		2026			2025
	Current	Non-current	Total	Current	Non-current	Total
	£m	£m	£m	£m	£m	£m
Loan due 2031	72	314	386	64	383	447
Unsecured bond	4	552	556	3	547	550
Sainsbury’s Bank Tier 2 Capital	5	120	125	6	118	124
Bank overdrafts	1	—	1	1	—	1
	82	986	1,068	74	1,048	1,122
Transaction costs	(2)	(5)	(7)	(2)	(6)	(8)
	80	981	1,061	72	1,042	1,114

32.1 Loan due 2031

The loan is secured against 48 (2025: 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 £378 million

(2025: £438 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.

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 or power and bears no risk over these entities

they are not included in the Group consolidation.

32.2 Undrawn facilities

The Revolving Credit Facility of £1,000 million comprises two £500 million tranches with maturity dates of

December 2029 for Facility A and December 2028 for Facility B. As at 28 February 2026, the Revolving Credit

Facility was undrawn.

32.3 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 five-year tranche and 5.625 per cent per annum

on the ten-year tranche. Interest is payable semi-annually in arrears.

32.4 Sainsbury’s Bank Tier 2 capital

The Group has £120 million (2025: £120 million) of fixed rate reset callable subordinated Tier 2 notes in issuance,

which were issued in September 2022. These notes bear interest on the principal amount at a rate of 10.5 per cent

per annum, payable 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.

32.5 Bank overdrafts

Bank overdrafts are repayable on demand and bear interest at a spread above Bank of England base rate.

33 Retirement benefit obligations

33.1 Scheme overview

All retirement benefit obligations relate to the Sainsbury’s Pension Scheme and three unfunded pension

liabilities for former senior employees of Sainsbury’s and Home Retail Group.

The Sainsbury’s Pension Scheme comprises two sections:

• The Sainsbury’s section, which holds the assets and liabilities of the original Sainsbury’s Pension Scheme

• 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.

Both sections are closed to new members and to future accrual, with benefits determined by past service and

salary or accrued cash balance entitlements. The Scheme is governed by a corporate trustee.

The Group also has unfunded pension liabilities in respect of certain former senior employees.

The Scheme is also used to pay life assurance benefits to current colleagues.

Scheme funding and 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 in these assumptions

resulting in a relatively high estimate of the Scheme’s liabilities. By contrast, IAS 19 ‘Employee Benefits’

requires companies to value the liabilities on a ‘best estimate’ basis which delivers a lower estimate of the

liabilities and therefore a more favourable relative financial position. As such, the accounting valuation is

different to the Trustee’s triennial valuation basis.

The latest triennial valuation as at 30 September 2024 (the 2024 triennial) was completed on 20 March 2026,

and showed a surplus of £171 million (comprising a surplus of £93 million in the Sainsbury’s section and a £78

million surplus in the Argos section), including the estimated value of the Scheme’s entitlements under the

asset backed contribution (ABC) structure. Excluding these entitlements, the surplus was £15 million. The 2024

triennial, among other actuarial updates, assumes higher inflation volatility, which has the effect of reducing

expected liabilities. This may result in an earlier end to contributions under the ABC structure. To provide

additional assurance to the Scheme in that context, the Group has established an escrow account in favour of

the Scheme, which will expire no later than 2048. Funds will be deposited into the escrow account, and either

be released to the Group, or contributed to the Scheme, depending on agreed funding triggers.

Notes to the consolidated financial statements continued

186 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

33 Retirement benefit obligations continued

33.1 Scheme overview continued

Scheme funding and triennial valuation

This arrangement, coupled with the ABC arrangement, will act to protect the Scheme’s access to funds while

reducing the risk that the Company might overfund the Scheme. There are no funds deposited in the escrow

arrangement as at 28 February 2026.

The surplus has been recognised as the Group has concluded that it has an unconditional right to a refund of

any surplus once all member benefits have been paid. The Group’s judgement is that the Trustees would be

unable to unconditionally wind up the plan or enhance members’ benefits without the Group’s consent.

Asset‑backed contribution structure

The Group operates an asset-backed contributions (ABC) structure in support of the Scheme. 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 other Sainsbury’s Group companies. The

Propco is a wholly owned subsidiary of the Group and leases the transferred properties back to other Group

companies. Rental receipts on these leases 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 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 operational flexibility to extend, develop and substitute them.

The Scheme’s interest in the Partnership entitles 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 the Argos section (initially £23 million

per year, increasing to £33 million by 2038)

The Sainsbury’s section reached its funding target on 31 December 2021 and so the first payment stream was

permanently switched off.

The Argos section (stream 2) reached its funding target on 31 December 2024 and so the second payment

stream has also 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 has switched back to the Sainsbury’s section. Payments continue until 2038 or until

both sections have reached their funding targets, if earlier.

The ABC structure provides security to the Scheme which reduces based on funding level targets. Once a

section reaches a specific funding target for three consecutive quarters, the level of security that the Scheme

can access reduces from the following 31 March, in line with the Residual Security Amount (RSA) caps set out

in the ABC structure. The security is currently provided by properties in the ABC structure which are valued

annually. If the value of the property security is outside a corridor either side of the RSA, the Company must

top up if the value is less, or can choose 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.

33.2 Income statement

		2026	2025
		£m	£m
Excluded from underlying profit before tax:
Interest cost on pension liabilities	a)	(297)	(293)
Interest income on plan assets		337	329
Total included in finance income		40	36
Defined benefit pension scheme expenses		(8)	(8)
Total (excluded from underlying profit before tax)		32	28

a) Includes interest of £1 million for the unfunded pension scheme (2025: £1 million).

33.3 Remeasurements included in other comprehensive income

		2026	2025
		£m	£m
Return on plan assets, excluding amounts included in interest		(10)	(448)
Actuarial gains/(losses) arising from changes in Finance assumptions		101	402
Demographic assumptions		(82)	3
Experience		(274)	10
Total actuarial (losses)/gains	a)	(255)	415
Total remeasurements		(265)	(33)

a) Includes £nil remeasurement gain for the unfunded pension scheme (2025: £1 million).

187 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

33 Retirement benefit obligations continued

33.4 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.

		2026			2025
	Sainsbury’s	Argos	Group	Sainsbury’s	Argos	Group
	£m	£m	£m	£m	£m	£m
Present value of funded obligations	(5,049)	(774)	(5,823)	(4,820)	(755)	(5,575)
Fair value of plan assets	5,454	917	6,371	5,418	911	6,329
Retirement benefit surplus	405	143	548	598	156	754
Present value of unfunded obligations	(23)	—	(23)	(13)	(10)	(23)
Net Retirement benefit surplus	382	143	525	585	146	731
Analysed in the Group balance sheet:
Retirement benefit surplus	405	143	548	598	156	754
Retirement benefit deficit	(23)	—	(23)	(13)	(10)	(23)
Net retirement benefit surplus	382	143	525	585	146	731

Movements in net defined benefit surplus

		2026			2025
	Assets	Obligations	Net	Assets	Obligations	Net
	£m	£m	£m	£m	£m	£m
As at the beginning of the financial year	6,329	(5,598)	731	6,702	(6,012)	690
Interest income/(cost)	337	(297)	40	329	(293)	36
Remeasurement (losses)/gains	(10)	(255)	(265)	(448)	415	(33)
Pension scheme expenses	(8)	—	(8)	(8)	—	(8)
Employer contributions	26	—	26	45	—	45
Benefits paid	(303)	304	1	(291)	292	1
As at the end of the financial year	6,371	(5,846)	525	6,329	(5,598)	731

33.5 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 per cent p.a. basis for the Sainsbury’s section and a gilts +0.25 per cent p.a. basis for the Argos section, while

limiting the downside risk associated with investments wherever possible. The investment objectives target a 50 per cent or better chance of being fully funded on this basis between 2029 and 2032 for the Sainsbury’s section

and by 2029 for 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 judgment 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.

Notes to the consolidated financial statements continued

188 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

33 Retirement benefit obligations continued

33.5 Investment strategy and risks associated with defined benefit pension scheme

continued

In June 2025 the Department for Work and Pensions (DWP) confirmed that the Government will introduce

legislation to give affected pension schemes the ability to retrospectively obtain written actuarial confirmation

that historical benefit changes met the necessary standards. In September 2025, the UK Government

introduced amendments to the Pension Schemes Bill to address the decision, allowing for the retrospective

validation of historical alterations to salary-related contracted-out occupational pensions.

Based on a review of the changes made to the Scheme during this period, and the contents of the Pension

Schemes Bill, the Group does not consider that any adjustments to the financial statements are required in

respect of this matter.

During the year the Trustee has initiated a review of its US tax reporting, following the identification of an

inconsistency between differing elements of its US tax filings. The outcome of this review is currently unknown,

and although an additional US tax liability may arise, a reliable estimate of the amount of any potential liability

cannot be made at this stage, although it is not expected to be material, and no provision has been recognised at

this time.

Risks associated with achieving the strategy

Risk	Description	Mitigation
Investment	Misalignment of the investment	Using an FCA-regulated market-leading investment
strategy and	strategy relative to changes in	adviser, a liability-driven investment (LDI) framework
implementation	liabilities reduces the future	has been adopted to align asset and liability risks by
	resources available to meet	hedging interest rate and inflation exposures, thereby
	pension obligations.	reducing funding volatility.
	The strategy also includes	ESG and related risks are incorporated into the Statement
	addressing sustainability and	of Investment Principles (SIP), and an annual TCFD report
	Environmental, Social, and	and Implementation Statement are published covering
	Governance (ESG) related risks	relevant risk management and goals.
	for the Scheme.
		Investment managers have signed up to international
	Poor execution or attention to	ESG principles and are requested to confirm that they
	regulation or underperformance	operate in line with the Trustee’s policies on ESG.
	in applying the strategy could	Investment mandates are monitored closely against
	lead to lower funding levels.
		portfolio benchmarks set out in investment guidelines.
		The Investment Committee will terminate consistently
		underperforming mandates and reallocate capital.
Investment	Insufficient liquidity to meet	The Scheme adopts a collateral sufficiency framework to
liquidity	cash flow requirements to make	ensure that sufficient liquid assets are maintained and
	collateral top up requests to	imposes limits on short-term maturing repurchase contracts.
	manage the Scheme’s derivative	The investment adviser liaises with the scheme actuary
	positions and member benefit	and Pensions department to determine current and
	payments.
		future cash flow requirements.

Risk	Description	Mitigation
Investment	Financial losses may be	Asset managers manage credit limits for all their
counterparty	incurred due to failure of	derivative counterparty exposures and monitor positions
	counterparties or inability to roll	over derivative roll dates.
	over derivative positions.
Inflation	Scheme obligations are linked	The Scheme’s LDI portfolio and inflation-linked
	to inflation, so a higher-than-	investments reduce inflation risk by aligning asset
	expected long-term inflation	movements to changes in inflation expectations.
	rate leads to higher liabilities.	Inflation increases are subject to maximum caps.
Interest rate	Scheme liabilities are	The Scheme’s LDI portfolio reduces this risk on a funding
	determined using discount rates	basis. Whilst the accounting basis may differ because of
	linked to corporate bond yields	divergence between corporate bond and gilt yields, other
	for accounting and gilt yields for	assets held in the portfolio reduce the exposure.
	funding purposes. A decrease in
	yields increases liabilities.
Sustainability,	Investment managers do not	ESG, stewardship and other related risks are incorporated
including ESG	have appropriate policies and	into the Statement of Investment Principles. The Trustee
and climate	procedures in place to identify	publishes an annual TCFD report and an Implementation
	ESG risks and opportunities.	Statement which detail how climate risks are managed.
	A broad range of these risks	Day-to-day management of ESG risks is delegated to
	exists across the activities of	investment managers who are requested to confirm
		alignment with the Trustee’s policies.
	the entities in which the
	Scheme ultimately invests	A net zero carbon emission goal by 2050 has been
	which include exposure to	adopted by the Trustee and follows new climate
	climate transition, a lack of	governance and reporting standards. The Scheme’s
	diversity, equity and inclusion,	investment managers have signed up to the UN
	or poor corporate governance.	Principles of Responsible Investment.
Longevity	The Scheme pays benefits longer	Longevity risk is monitored with the aim of achieving
	than expected due to members	sufficient funding levels to take account of the potential
	living longer than forecast.	for increased life expectancy.
Cyber risk	The increasing threat of	Robust cyber security measures have been implemented
	cyber-attack leads to data	by the Trustee’s custodian and administrators, including
	breaches and financial losses.	regular security assessments and employee training. These
		measures aim to protect sensitive Scheme data and ensure
		the integrity and confidentiality of member information.

189 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

33 Retirement benefit obligations continued

33.6 Analysis of plan assets

		2026		2025
		Quoted	Unquoted	Quoted	Unquoted
		£m	£m	£m	£m
Liability matching assets		3,707	1,397	3,432	1,617
Growth assets
Equity	a)
Private		—	226	—	272
Alternatives
Real Estate		—	54	—	107
Private Debt		—	205	—	442
Diversified Growth		—	221	—	288
Multi asset strategies		216	—	—	—
Cash and Cash equivalents		345	—	171	—
		4,268	2,103	3,603	2,726

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 £5,611 million (2025: £5,282 million),

corporate bonds totalling £2,060 million (2025: £2,237 million), and fixed income derivatives totalling £298 million

(2025: £328 million), offset by repurchase agreements totalling £2,865 million (2025: £2,799 million). Circa 96 per

cent 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, £6,204 million (2025: £6,144 million) is denominated in Pound Sterling and £167 million

(2025: £185 million) is denominated in overseas currencies.

For 2026 the valuation of private market assets is based on the latest available manager statements, adjusted for

cash contributed or remitted. The assets have been assessed for impairment, from the date of the most recent

statement date through manager enquiry and analysis of similar public market indices. This approach differs

from the approach taken in 2025 where, in addition to the cash adjustment detailed above, asset values were

rolled-forward, from the date of the last statement to the balance sheet date, using the returns on related

public market indices. The value of the roll-forward adjustment in 2025 was £12.9 million. Based on historical

analysis it was concluded that the updated approach provided a better estimate of the asset value for private

market assets at the balance sheet date.

33.7 Actuarial assumptions for measuring liabilities

Principal actuarial assumptions

	2026	2025
Discount rate	5.55	5.45
Inflation rate – RPI	3.05	3.15
Inflation rate – CPI	2.50	2.55
Future pension increases	1.95 - 2.90	1.95–2.95

Assumptions are on a weighted average blended basis.

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 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 0.55 per cent p.a.

up to 2030 (2025: 0.60 per cent p.a.).

c) Future pension increases

Pensions in the Scheme receive various increases in payment depending on the section of the Scheme and when

benefits were built up. For the majority of benefits, the increases provided are based on either RPI or CPI inflation,

subject to various caps or collars depending on when benefits were built up. As a result, different assumptions are

needed for each type of pension increase provided and the table above shows the range of assumptions adopted.

d) Mortality

The base mortality assumptions use the SAPS S4 tables for the Sainsbury’s and Argos sections, respectively,

with adjustments to reflect the Scheme’s population.

Following the completion of the 2024 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 2026 year-end are CMI 2024

projections with a long-term rate of improvement of 1 per cent p.a. Future mortality improvements for the 2025

year-end were CMI 2023 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 2024 which was released in June 2025.

Notes to the consolidated financial statements continued

190 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

33 Retirement benefit obligations continued

33.7 Actuarial assumptions for measuring liabilities continued

Principal actuarial assumptions continued

d) Mortality continued

The CMI have made two main changes to the CMI 2024 model, compared with the 2023 version of the model:

• The CMI 2024 core model has been extended to have five period terms considered separately during the

fitting process rather than one period term. Having multiple period terms allows the model to better reflect

the changing mortality trends at different age groups observed in the data. Each of the five age groups is

smoothed separately to achieve an overall adjusted target smoothing factor.

• Modelling the impact of the Covid-19 pandemic using a ‘fitted overlay’ rather than using weights as in earlier

models. A new half-life parameter has been introduced which controls this overlay within the model.

A half-life assumption of 0.5 has been adopted for 2025. This is consistent with the 100% weights parameter

which was adopted under CMI 2023 as both approaches place greater weight on observed post-pandemic

mortality experience than the core CMI parameters.

Life expectancy at age 65

		2026			2025
	Sainsbury’s	Sainsbury’s		Sainsbury’s	Sainsbury’s
	section	section		section	section
	Main	Executive	Argos	Main	Executive	Argos
	Scheme	Scheme	section	Scheme	Scheme	section
	Years	Years	Years	Years	Years	Years
Members aged 65 at balance sheet date
Male pensioner	20.2	22.6	20.7	18.9	22.2	19.8
Female pensioner	22.5	24.0	23.2	22.8	23.5	22.9
Members aged 45 at balance sheet date
Male pensioner	21.2	23.5	21.7	19.9	23.1	20.7
Female pensioner	23.7	25.1	24.4	24.0	24.6	24.0

e) Sensitivity analysis of significant actuarial assumptions

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 the principal assumptions.

Change in present value of funded obligations – increase/(decrease) effect

		Sainsbury’s		Argos		Total
		£m	£m	£m	£m	£m	£m
Financial sensitivities:
Discount rate	+/-0.1%	61	63	11	11	72	74
Discount rate	+/-1.0%	565	682	96	118	661	800
Inflation rate	+/-0.1%	36	36	10	7	46	43
Inflation rate	+/-1.0%	366	369	87	76	453	445
Inflation rate for future
pension increases	+/-0.1%	20	20	7	4	27	24
Inflation rate for future
pension increases	+/-1.0%	186	215	50	46	236	261
Demographic sensitivities:
Life expectancy	+/-1 year	153	163	22	23	175	186

f) Future benefit payments

Details of future committed payments are detailed in the asset-backed contribution section of the overview at

the beginning of this note. The Company expects to meet its committed payment of approximately £27 million

during the next financial year.

The duration of the Scheme’s liabilities is around 14 years for the Sainsbury’s section and 15 years for the Argos

section.

Timing of benefit payments (undiscounted)

	2026	2025
	£m	£m
Within the next 12 months (next annual reporting period)	288	262
Between 2 and 5 years	1,320	1,209
Between 6 and 15 years	4,156	3,897
Between 16 and 25 years	3,950	3,784
Beyond 25 years	4,965	4,598
	14,679	13,750

34 Share‑based payments

		2025
	2026	(restated*)
	£m	£m
Share-based payment expense	80	80
Discontinued operations	5	7
Continuing operations	75	73

* Refer to note 2.1 (c) for details of prior year restatements.

The Group operates the following share schemes:

191 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

34 Share‑based payments continued

34.1 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 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.

	2026		2025
		Weighted		Weighted
		average		average
	Number of	exercise	Number of	exercise
	options	price	options	price
	million	pence	million	pence
Outstanding at beginning of year	55.4	195	59.1	188
Granted	—	—	17.1	200
Lapsed / forfeited	(5.7)	198	(8.2)	197
Exercised	(9.7)	208	(12.6)	168
Outstanding at end of year	40.0	191	55.4	195
Exercisable at end of financial year	—	—	9.6	210
Exercisable Range	161	to 228	161	to 228
Weighted average share price at date of exercise		268		263
Weighted average remaining contractual life		1.5 years		2.2 years

The Sharesave invitation was deferred from November 2025 to May 2026, to enable greater engagement by

colleagues outside of peak trading periods. As a result, no options were granted in the reporting period.

	2026	2025
Share price at grant date	—	275p
Exercise price	—	200p
Expected volatility	—	24.1%
Option life	—	3.2 years
Expected dividend yield	—	4.8%
Risk-free interest rate	—	4.9%
Fair value per option	—	57p

The expected volatility is based on the standard deviation of the Group’s share price for the period immediately

prior to the date of grant of award, over the period identical to the vesting period of the award, adjusted for

management’s view of future volatility of the share price.

34.2 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 per cent of the awards received. For awards issued from 2021 onwards,

schemes vest and participants are able to exercise after three years. Awards will expire five years from the

grant date.

For Executive Directors, awards will normally be subject to a two-year holding period following the end of the

three-year performance period. Awards will expire six years from the date of grant.

For awards granted in and before the year ended 4 March 2023, a core share award was granted which could

grow by up to four times, dependent on the level of performance. For awards granted in the year ended 2 March

2024 onwards, 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 options.

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.

	2026	2025
	million	million
Outstanding at beginning of year	60.8	29.3
Conditionally allocated	22.8	65.8
Released to participants	(10.7)	(29.7)
Lapsed	(8.4)	(4.6)
Outstanding at end of financial year	64.5	60.8
Weighted average remaining contractual life	3.2 years	3.8 years
Weighted average share price at date of exercise (release to participants)	263p	268p

All performance conditions are considered non-market performance conditions and are therefore not included

in the fair value calculations.

Options granted in the year 2026		2025
Share price at grant date	287p	278p
Option life	3 years	3 years
Fair value per option	287p	278p

Notes to the consolidated financial statements continued

192 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

34 Share‑based payments continued

34.3 Nil‑cost share awards

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.

	2026	2025
	million	million
Outstanding at beginning of year	27.2	27.1
Awarded	13.0	15.6
Released to participants in financial year	(13.4)	(14.8)
Lapsed	(1.4)	(0.7)
Outstanding at end of financial year	25.4	27. 2
Weighted average remaining contractual life	1.9 years	1.8 years
Weighted average share price at date of exercise (release to participants)	253p	254p

35 Commitments

	2026	2025
	£m	£m
Capital commitments contracted, but not provided for	124	179
Leases that have been signed, but not yet commenced	10	32

36 Contingent liabilities

The Group through the size, nature and scope of its operations and people is exposed to a wide range of

applicable laws and regulation including: employment related legislation such as the Equality Act 2010 and the

Health and Safety at Work Act 1974; business conduct legislation such as the Competition Act 1998, the Modern

Slavery Act 2015 and the Bribery Act 2010; product or sales related legislation such as the Food Safety Act 1990

and the Digital Markets Competition and Consumer Act 2024, and is also exposed to risks relating to past

corporate transactions such as guarantees made in relation to disposed assets. These expose the Group to

potential material liabilities which may crystallise following events such as civil legal action, regulatory

enforcement action, or under property disposal guarantees in the event of insolvency of current tenants and

their ultimate parents. In assessing the required disclosure or recognition of potential liabilities, the Group

considers factors including probability, materiality and quantifiability of any claims received.

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 19,800 equal pay claims from circa 14,100 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 judgment from the Tribunal in respect of the second stage will be given in the

course of 2028. This judgment 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 or 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.

37 Related party transactions

37.1 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:

	2026	2025
	£m	£m
Short-term employee benefits	14	16
Post-employment employee benefits	1	1
Share-based payments	9	8
	24	25

Three key management personnel had credit card balances with Financial Services (2025: five). These arose in

the normal course of business and were immaterial to the Group and the individuals. One key management

personnel held saving deposit accounts with Financial Services (2025: two). These balances arose in the normal

course of business and were immaterial to the Group and the individuals. Following the disposal of the credit

cards and deposits businesses to NatWest in May 2025, these balances are no longer related party transactions.

A loan of £0.5 million (2025: £nil) was made, and fully repaid, to one key management personnel in the year.

193 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

37 Related party transactions continued

37.2 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:

	2026	2025
	£m	£m
Rental expenses paid	(8)	(8)

Year-end balances arising from transactions with joint ventures and associates are as follows:

	2026	2025
	£m	£m
Other payables	(3)	(2)

37.3 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 33 to these financial statements.

38 Post‑balance sheet events

Subsequent to the balance sheet date, the Group acquired 6,128,749 shares through the J Sainsbury Employee

Share Ownership Trust, for the purpose of satisfying future share awards under the Group’s employee share

plans. The financial liability of £21 million recognised at the balance sheet date has subsequently been

derecognised following the acquisition and settlement of directly attributable costs.

39 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.

39.1 Wholly owned subsidiary undertakings

The Group holds a majority of the voting rights of the following undertakings:

	Country of
Entity	incorporation	Interest	Holding	Registered office address *
Argos Business Solutions Limited	UK	100%	Indirect	33 Charterhouse Street
Argos Card Transactions Limited	UK	100%	Indirect	33 Charterhouse Street
Argos Distributors (Ireland) Limited	Ireland	100%	Indirect	6th Floor, South Bank House
Argos Holdings Limited	UK	100%	Indirect	33 Charterhouse Street
Argos Limited	UK	100%	Indirect	33 Charterhouse Street
Argos (N.I.) Ltd	UK	100%	Indirect	Forestside Shopping Centre
Argos Surbs Investments Limited	UK	100%	Indirect	33 Charterhouse Street
Avenell Property Limited	UK	100%	Indirect	33 Charterhouse Street
Barleygold Limited	UK	100%	Indirect	50 Bedford Street
Bells Stores Limited	UK	100%	Indirect	33 Charterhouse Street
BLSSP (PHC 7) Limited	UK	100%	Indirect	33 Charterhouse Street

	Country of
Entity	incorporation	Interest	Holding	Registered office address *
Cliffrange Limited	UK	100%	Indirect	33 Charterhouse Street
Coolidge Investments Limited	UK	100%	Indirect	33 Charterhouse Street
Cornerford Limited	UK	100%	Indirect	33 Charterhouse Street
Financial Recovery Services Limited	UK	100%	Indirect	33 Charterhouse Street
First Stop Stores Limited	UK	100%	Indirect	33 Charterhouse Street
Global (Guernsey) Limited	Guernsey	100%	Indirect	PO Box 33, Dorey Court
Habitat Retail Limited	UK	100%	Indirect	33 Charterhouse Street
Hobart Property Limited	UK	100%	Indirect	33 Charterhouse Street
Holborn UK Investments Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group (Finance) LLP	UK	100%	Indirect	33 Charterhouse Street
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 Charterhouse Street
Home Retail Group Card
Services Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group Holdings
(Overseas) Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group Insurance
Services Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group Nominees Limited	UK	100%	Indirect	33 Charterhouse Street
Home Retail Group UK Service
Company Limited a)	UK	100%	Indirect	33 Charterhouse Street
Horndrift Limited	UK	100%	Indirect	33 Charterhouse Street
J Sainsbury Common Investment
Fund Limited	UK	100%	Indirect	33 Charterhouse Street
J Sainsbury Distribution Limited	UK	100%	Indirect	33 Charterhouse Street
J Sainsbury Pension Scheme
Trustees Limited	UK	100%	Indirect	33 Charterhouse Street
J Sainsbury Trustees Limited b)	UK	100%	Indirect	33 Charterhouse Street
Jacksons Stores Limited	UK	100%	Indirect	33 Charterhouse Street
Jacksons Stores 2002 Limited	UK	100%	Indirect	33 Charterhouse Street
JS Information Systems Limited	UK	100%	Indirect	33 Charterhouse Street
JS Insurance Limited	Isle of Man	100%	Indirect	Third Floor, St George’s Court
JSD (London) Limited	UK	100%	Indirect	33 Charterhouse Street
Jungle Online	UK	100%	Indirect	33 Charterhouse Street
Jungle.com Limited	UK	100%	Indirect	33 Charterhouse Street
Jungle.com Holdings Limited	UK	100%	Indirect	33 Charterhouse Street
Nash Court (Kenton) Limited	UK	100%	Indirect	33 Charterhouse Street

Notes to the consolidated financial statements continued

194 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

	Country of
Entity	incorporation	Interest	Holding	Registered office address *
Nectar 360 Limited	UK	100%	Indirect	33 Charterhouse Street
Nectar 360 Services LLP	UK	100%	Indirect	33 Charterhouse Street
Nectar EMEA Limited	UK	100%	Indirect	33 Charterhouse Street
Nectar Loyalty Holding Limited	UK	100%	Indirect	33 Charterhouse Street
Ramheath Properties Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Bridgeco Holdco Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Holdco A Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Holdco B Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Propco A Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Propco B Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Propco C Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Propco D Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury Property Investments Limited	UK	100%	Indirect	33 Charterhouse Street
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**	Hong Kong	100%	Indirect	Unit 904, 9/F, Tower 2
Sainsbury’s Argos Asia
Technical Limited**	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%	Indirect	33 Charterhouse Street
Sainsburys Corporate Director Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Corporate Healthcare
Trustee Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Corporate
Secretary Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Group Holdings Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Heather GP Limited	UK	100%	Indirect	4th Floor, 1 New Park Square
Sainsbury’s Holdings Limited	UK	100%	Direct	33 Charterhouse Street
Sainsbury’s Intermediate
Holdings Limited c)	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Manor GP Limited	UK	100%	Indirect	4th Floor, 1 New Park Square
Sainsbury’s Manor Property Limited	UK	100%	Indirect	4th Floor, 1 New Park Square
Sainsburys (NI) Ltd	UK	100%	Indirect	Forestside Shopping Centre
Sainsbury’s Rose LP Limited	UK	100%	Indirect	33 Charterhouse Street

	Country of
Entity	incorporation	Interest	Holding	Registered office address *
Sainsbury’s SL Limited	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Supermarkets Ltd	UK	100%	Indirect	33 Charterhouse Street
Sainsbury’s Thistle Scottish
Limited Partnership	UK	100%	Indirect	3 Lochside Avenue
Sainsbury’s Tyne Property
Holdings Limited	UK	100%	Indirect	33 Charterhouse Street
Smartcharge Limited	UK	100%	Indirect	33 Charterhouse Street
Software Warehouse Holdings Limited	UK	100%	Indirect	33 Charterhouse Street
Stamford House Investments Limited	UK	100%	Indirect	33 Charterhouse Street
Stamford Properties One Limited	UK	100%	Indirect	33 Charterhouse Street
Stamford Properties Three Limited	UK	100%	Indirect	33 Charterhouse Street
Stamford Properties Two Limited	UK	100%	Indirect	33 Charterhouse Street
Stanhope Finance Limited	UK	100%	Indirect	33 Charterhouse Street
Town Centre Retail (Bicester) Limited	UK	100%	Indirect	33 Charterhouse Street

a) As of 7 April 2026 the company’s name changed from Home Retail Group UK Service Company Limited to Tumblecrest 5 Limited

b) As of 15 April 2026 the company’s name changed from J Sainsbury Trustees Limited to Tumblecrest 7 Limited

c) As of 7 April 2026 the company’s name changed from Sainsbury’s Intermediate Holdings Limited to Tumblecrest 6 Limited

* See full addresses on page 197.

** An application has been made to deregister this company.

39.2 Associated undertakings

The Group has an interest (as shown), direct or indirect, in the ordinary share capital of the following joint

ventures and associates:

	Country of
Entity	incorporation	Interest	Holding	Registered office address*
BL Sainsbury Superstores Limited**	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%	Indirect	33 Charterhouse Street

* See full addresses on page 197.

** An application has been made to deregister this company.

39 Related undertakings continued

39.1 Wholly owned subsidiary undertakings continued

195 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

39 Related undertakings continued

39.3 Overseas branches

The Group has the following branches overseas:

	Country of
Entity	incorporation	Holding	Registered office address *
Sainsbury’s Argos Asia Limited	Bangladesh	Indirect	Level 10, Simpletree Anarkali
–BangladeshLiaison Office
Sainsbury’s Argos Asia Limited	India	Indirect	16th Floor, DLF Downtown 4
–IndiaBranchOffice

39.4 Subsidiary undertakings exempt from audit

The following subsidiaries are exempt from the requirements of the Companies Act 2006 relating to the audit

of individual accounts by virtue of section 479A of the Act:

Entity	Company registered number
Argos Surbs Investments Limited	05716474
Avenell Property Limited	03817411
Barleygold Limited	NI032407
Bells Stores Limited	01476345
BLSSP (PHC 7) Limited	04104076
Coolidge Investments Limited	07697101
Cornerford Limited	03871316
First Stop Stores Limited	03061483
Hobart Property Limited	03978071
Holborn UK Investments Limited	06482903
Home Retail Group Holdings (Overseas) Limited	00872776
Horndrift Limited	03871243
J Sainsbury Common Investment Fund Limited	02789936
J Sainsbury Distribution Limited	02653788
J Sainsbury Pension Scheme Trustees Limited	02721178
J Sainsbury Trustees Limited	00974484
Jacksons Stores 2002 Limited	04455255
Jacksons Stores Limited	03974443
JSD (London) Limited	03780122
Nash Court (Kenton) Limited	03447714
Nectar EMEA Limited	05821446
Nectar Loyalty Holding Limited	06436907
Ramheath Properties Limited	01762921
Sainsbury Bridgeco HoldCo Limited	05644629
Sainsbury Holdco A Limited	05644636
Sainsbury Holdco B Limited	05644633
Sainsbury Propco A Limited	05644620
Sainsbury Propco C Limited	05676364

Entity	Company registered number
Sainsbury Propco D Limited	05676370
Sainsbury Property Investments Limited	02184043
Sainsbury’s Corporate Healthcare Trustee Limited	02256123
Sainsbury’s Corporate Secretary Limited	13368643
Sainsbury’s Group Holdings Limited	11833110
Sainsbury’s Holdings Limited	16565950
Sainsbury’s Intermediate Holdings Limited	10125892
Sainsbury’s Manor GP Limited	SC453278
Sainsbury’s Manor Property Limited	SC453263
Sainsbury’s Rose LP Limited	11837174
Sainsbury’s SL Limited	13361881
Sainsburys (NI) Ltd	NI674962
Sainsburys Corporate Director Limited	06246904
Sainsbury’s Heather GP Limited	SC621875
Sainsbury’s Thistle Scottish Limited Partnership	SL033628
Sainsbury’s Tyne Property Holdings Limited	11733455
Smartcharge Limited	15004383
Stamford House Investments Limited	01970437
Stamford Properties One Limited	03896034
Stamford Properties Three Limited	03896030
Stamford Properties Two Limited	03896032
Town Centre Retail (Bicester) Limited	05564905

Notes to the consolidated financial statements continued

196 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

39 Related undertakings continued

39.5 Full registered office addresses

Address		Full address
4th Floor, 1 New Park Square a)		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 200070, People’s Republic of China
33 Charterhouse Street		33 Charterhouse Street, London, EC1M 6HA, United Kingdom
44 Esplanade		44 Esplanade, St Helier, Jersey, JE4 9WG, Channel Islands
50 Bedford Street		50 Bedford Street, Belfast, BT2 7FN, United Kingdom
100	Victoria Street	100	Victoria Street, London SW1E 5JL, United Kingdom
Forestside Shopping Centre		Forestside Shopping Centre, Upper Galwally, Belfast, BT8 6FX, United Kingdom
Level 10, Simpletree Anarkali		Level 10, Simpletree Anarkali, 89 Gulshan Avenue Plot-03, Block – CWS(A), Dhaka – 1212, Bangladesh
Bangladesh PO Box 33, Dorey Court		PO Box 33, Dorey Court, Admiral Park, St Peter Port, Guernsey, GY1 4AT, Channel Islands
Third Floor, St George’s Court, Isle of Man		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
16th Floor, DLF Downtown 4		16th Floor, DLF Downtown, DLF Downtown Block – 4, 16th Floor, Ambience Island, Sector 25A, Sector 24 Gurugram – 122002, India
45 Gresham Street		45 Gresham Street, Gresham Street, London, EC2V 7BG, United Kingdom

a) As of 1 April 2026, all Companies associate with this address will move registered office to TLT LLP, 9

Floor, Cadworks, 41 West Campbell Street, Glasgow, G2 6SE.

197 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes to the consolidated financial statements continued

The profit after tax for the Company for the financial year was £319 million (restated 2025: loss after tax of

£762million). The notes on pages 200 to 202 form an integral part of these financial statements.

The financial statements were approved by the Board of Directors on 22 April 2026, and are signed on its behalf by:

Simon Roberts Bláthnaid Bergin

Chief Executive Chief Financial Officer

Company registered number: 00185647

28 February 1 March 2025

2026 (restated*)

Note £m £m

Non-current assets

Investments in subsidiaries, joint ventures and associates C2 6,592 6,592

Trade and other receivables C3 956 845

Derivative financial assets

5 —

7,553 7,4 37

Current assets

Trade and other receivables C3 — 222

Derivative financial assets

— 1

Cash and cash equivalents

476 406

476 629

Total assets

8,029 8,066

Current liabilities

Trade and other payables C4 (2,311) (1,884)

Borrowings C6 (2) (1)

Other financial liabilities (21) —

Income taxes payable

(21) (28)

(2,355) (1,913)

Net current liabilities

(1,879) (1,284)

Non-current liabilities

Borrowings C6 (549) (542)

Derivative financial liabilities

(1) (1)

Deferred income tax liability C5 (16) (19)

Provisions

(1) (1)

(567) (563)

Total liabilities

(2,922) (2,476)

Net assets

5,107 5,590

Equity

Called up share capital C7 647 669

Share premium

1,465 1,448

Merger reserve

173 173

Capital redemption and other reserves C7 (77) (79)

Retained earnings

2,899 3,379

Total equity

5,107 5,590

* Refer to Note C1.5 for details of prior year restatements

Company balance sheet

Financial Statements

198 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 2 March 2025 (restated*) 669 1,448 173 (79) 3,379 5,590

Profit for the year

— — — — 319 319

Total comprehensive income

— — — — 319 319

Transactions with owners:

Dividends — — — — (566) (566)

Share-based payment

— — — — 80 80

Purchase of own shares for share schemes

— — — (85) — (85)

Shares allocated in respect of share option schemes C7 3 17 — 62 (62) 20

Purchase of own shares for cancellation C7 — — — (251) — (251)

Cancellation of own shares C7 (25) — — 276 (251) —

At 28 February 2026

647 1,465 173 (77) 2,899 5,107

At 3 March 2024 (as previously reported) 678 1,430 568 681 3,466 6,823

Opening balance adjustment — — — (74) 38 (36)

At 3 March 2024 (restated*) 678 1,430 568 607 3,504 6,787

Loss for the year — — — — (762) (762)

Other comprehensive loss — — — (1) — (1)

Total comprehensive loss — — — (1) (762) (763)

Transactions with owners:

Transfer between reserves C7 — — (395) (680) 1,075 —

Dividends

— — — — (308) (308)

Purchase of own shares for share schemes

— — — (63) — (63)

Allotted in respect of share option schemes C7 12 18 — 37 70 137

Purchase of own shares for cancellation C7 — — — (200) — (200)

Cancellation of own shares C7 (21) — — 221 (200) —

At 1 March 2025 (restated*) 669 1,448 173 (79) 3,379 5,590

The notes on pages 200 to 202 form an integral part of these financial statements.

* Refer to Note C1.5 for details of prior year restatements

Company statement of changes in equity

199 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 recharged to those respective subsidiaries. The fair value of employee services received,

measured by reference to the grant date fair value, is recharged to the subsidiary over the vesting period, with

a corresponding credit to equity.

f) Own shares held

Own shares represent the shares of J Sainsbury PLC that are held by the Employee Share Ownership Trust

(ESOT), or which are purchased and held for cancellation as part of the share buyback programme. The

Company adopts a ‘look-through’ approach which, in substance, accounts for the trust as an extension of the

Company. Shares purchased for cancellation are included in own shares held until cancellation, at which point

they are transferred to retained earnings. Own shares held can include equity elements of forward contracts

where the Group has an obligation to purchase its own shares. Own shares are recognised within Capital

redemption and other reserves.

C1.3 Key sources of estimation uncertainty

Assessment of impairment of investments in subsidiary undertakings

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.

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.

C1.5 Prior period restatements

Income taxes payable

Comparative amounts have been re-presented to separately disclose income taxes payable, and to present

other taxation balances within trade and other payables. This resulted in taxes payable and trade and other

payables being re-presented, with no impact on net assets or equity.

Own shares held

Prior period comparatives have been restated to reflect that the Employee Share Ownership Trust (ESOT) has

been accounted for as an extension of the Company.

Prior period comparatives

The prior period comparatives have been restated in accordance with IAS 8: ‘Accounting Policies, Changes in

Accounting Policies and Errors’ and have impacted the balance sheet as follows:

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 28 February 2026 (2025: 52 weeks to 1 March 2025).

The financial statements have been prepared on the going concern basis, as set out in Note 2 of the

consolidated financial statements, and 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 are derived from Board-approved cash flow

projections for three 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 C1.2(a).

Notes to the Company financial statements

200 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

C1 Basis of preparation and accounting policies continued

C1.5 Prior period restatements continued

The Company has taken exemption of the disclosure exemption under FRS 101 in relation to presenting a

statement of financial position as at the beginning of the preceding period when a retrospective restatement

has been made.

As previously

presented Income taxes

ESOT

Aggregation As restated

At 1 March 2025 £m £m £m £m

Current liabilities

Trade and other payables (1,878) (4) (2) (1,884)

Income taxes payable (32) 4 — (32)

(1,911) — (2) (1,913)

Net current liabilities (1,282) — (2) (1,284)

Total liabilities (2,474) — (2) (2,476)

Net assets 5,592 — (2) 5,590

Equity

Capital redemption and other reserves 21 — (100) (79)

Retained earnings 3,281 — 98 3,379

Total equity 5,592 — (2) 5,590

C2 Investments in subsidiaries, joint ventures and associates

2026 2025

£m £m

Subsidiaries

At the beginning of the financial year 6,591 7,295

Additions

6,592 80

Impairment

— (784)

Disposals (6,591) —

At the end of the financial year

6,592 6,591

Joint ventures and associates

— 1

6,592 6,592

During the year, the Company transferred subsidiary undertakings to Sainsbury’s Holdings Limited in return

for 29 newly issued shares in Sainsbury’s Holdings Limited. Following the share for share exchange, the

Company derecognised £6,591 million of subsidiary investments and £1 million of joint ventures and

associates, and subsequently recognised additions of £6,592 million in relation to the investment in

Sainsbury’s Holdings Limited.

The Directors acknowledged that as at 28 February 2026 the market capitalisation of J Sainsbury plc exceeded

the net assets of the Group, which primarily consists of investments in subsidiaries. This was not considered to

be an indicator of impairment under IAS 36 “Impairment of assets”.

The Directors also considered whether there were any other observable indicators of impairment over the

Company’s investment in subsidiaries and concluded that none were present. Accordingly, no impairment test

over the investment in subsidiaries was required to be performed in the year.

C3 Trade and other receivables

2026 2025

Non-current Current Total Non-current Current Total

£m £m £m £m £m £m

Amounts owed by Group companies 956 — 956 845 222 1,067

C4 Trade and other payables

2026 2025

Current Total

Non-current Current Total Non-current (restated*) (restated*)

£m £m £m £m £m £m

Amounts owed to Group entities — 2,306 2,306 — 1,878 1,878

Other payables — 2 2 — 2 2

Other taxes and social security — 3 3 — 4 4

— 2,311 2,311 — 1,884 1,884

* Taxes payable, which was previously presented on a net basis, has been re-presented to present other taxes and social security

within trade and other payables.

C5 Deferred Taxation

Rolled over

Capital losses capital gains Total

£m £m £m

At 2 March 2024 and 1 March 2025 13 (32) (19)

Credit to income statement 3 — 3

At 28 February 2026 16 (32) (16)

C6 Borrowings

2026 2025

Current Non-current Total Current Non-current Total

£m £m £m £m £m £m

Unsecured bond 4 552 556 3 547 550

Transaction costs

(2) (3) (5) (2) (5) (7)

2 549 551 1 542 543

Refer to note 32 of the consolidated financial statements for further details.

Notes to the Company financial statements continued

201 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

During the period, 85.4 million (2025: 73.6 million) of the Company’s own shares were purchased, and

subsequently cancelled, for total consideration of £251 million (2025: £200 million) inclusive of £1 million (2025:

£6 million) directly attributable costs. £251 million (2025: £200 million) has been transferred from the

investment in own shares reserve to retained earnings and £25 million (2025: £21 million) of share capital has

been transferred to the capital redemption reserve owing to the cancellation.

C8 Contingent liabilities

Through the normal course of business, the Company has issued guarantees covering various commitments of

its subsidiaries. The Company has also provided a guarantee to the Bank of England in respect of any

borrowings by Sainsbury’s Bank plc under the terms of the Sterling Monetary Framework. No liability has been

recognised in the Company’s accounts for this guarantee as it is considered remote that the guarantee will be

called on note 39.4 of the consolidated financial statements sets out details on subsidiary undertakings

exempt from audit.

C9 Post‑balance sheet events

Subsequent to the balance sheet date, the Company acquired 6,128,749 shares through the J Sainsbury

Employee Share Ownership Trust. The financial liability of £21 million recognised at the balance sheet date has

subsequently been derecognised following the acquisition and settlement of directly attributable costs.

C7 Share capital and reserves

C7.1 Called up share capital and merger reserve

2026 2025 2026 2025

million million £m £m

Called up share capital

Allotted and fully paid ordinary shares of 28 4/7p  2,264 2,339 647 669

2026 2025

Number

of shares

Ordinary

premium

Merger

reserve

Number

of shares

Ordinary

premium

Merger

reserve

million £m £m £m million £m £m £m

At the beginning of the

financial year 2,339 669 1,448 173 2,371 678 1,430 568

Allotted in respect of share

option schemes 10 3 17 — 42 12 18 —

Cancellation of own shares (85) (25) — — (74) (21) — —

Transfer to retained

earnings — — — — — — — (395)

At the end of the

financial year 2,264 647 1,465 173 2,339 669 1,448 173

C7.2 Capital redemption and other reserves

Investment in

own shares

Other

reserves

Capital

redemption

reserve

Total capital

redemption

and other

reserves

£m £m £m £m

2 March 2025 (restated*) (100) — 21 (79)

Purchase of own shares for share schemes (85) — — (85)

Shares allocated in respect of share option schemes 62 — — 62

Purchase of own shares for cancellation (251) — — (251)

Cancellation of own shares 251 — 25 276

28 February 2026 (123) — 46 (77)

3 March 2024 (as previously reported) — 1 680 681

Opening balance adjustment (74) — — (74)

3 March 2024 (restated*) (74) 1 680 607

Transfer to retained earnings — — (680) (680)

Purchase of own shares for share schemes (63) — — (63)

Shares allocated in respect of share option schemes 37 — — 37

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)

1 March 2025 (restated*) (100) — 21 (79)

* Refer to Note C1.5 for details of prior year restatement.

202 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

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 excluding 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 like-for-like.

The measure is used widely in the retail sector.

Reconciliation

2026 2025 (restated*)

Retail like-for-like (exc. Fuel, exc. VAT) 3.9% 3.4%

Underlying net new space impact 0.4% (0.1)%

Retail sales growth (exc. Fuel, exc. VAT) 4.3% 3.3%

Fuel impact (1.5)% (1.6)%

Total Retail sales growth (inc. Fuel, exc. VAT) 2.8% 1.7%

* Retail like-for-like sales APM has been restated to exclude VAT. Refer to note 2.5 for details.

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 as a whole is viewed from a management perspective, with

finance costs managed for the Group as a whole.

Reconciliation

Calculated as Retail underlying operating profit as a percentage of Retail sales. Refer to A1.2b).

b) 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

2026 2025

Note £m £m

Retail underlying operating profit 6.1 1,025 1,036

Add: Retail underlying depreciation and amortisation A2.1 1,186 1,156

Retail underlying EBITDA

2,211 2,192

Retail sales 6.1 33,551 32,630

Retail underlying EBITDA margin

6.6% 6.7%

Retail underlying operating margin

3.1% 3.2%

c) 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.

d) 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.

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 and are disclosed on the face of the

income statement.

Alternative Performance Measures (APMs) (unaudited) continued

203 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Alternative Performance Measures (APMs) (unaudited)

2026

Retail:

underlying

Retail:

non-

underlying

Retail:

total

Financial

Services Group

£m £m £m £m £m

Purchase of intangible assets (230) — (230) — (230)

Capital expenditure (843) — (843) — (843)

Initial direct costs on new leases (8) — (8) — (8)

Proceeds from disposal of property,

plantandequipment 41 — 41 — 41

Interest received 23 — 23 — 23

(787) — (787) — (787)

Cash flows from financing activities

–continuing

Proceeds from issuance of ordinary shares 20 — 20 — 20

Purchase of own shares for share schemes (64) — (64) — (64)

Intragroup share scheme recharge 7 — 7 (7) —

Other share-related transactions (37) — (37) (7) (44)

Purchase of own shares for cancellation (251) — (251) — (251)

Repayment of borrowings (59) — (59) — (59)

Capital repayment of lease obligations (504) — (504) — (504)

Dividends paid on ordinary shares:

Dividends paid on ordinary

shares(excludingspecial dividends) (316) — (316) — (316)

Special dividend paid (250) — (250) — (250)

(1,417) — (1,417) (7) (1,424)

Intragroup dividend 400 — 400 (400) —

Net increase/(decrease) in cash and

cashequivalents– continuing 168 (107) 61 (498) (437)

Net decrease in cash and cash

equivalents–discontinued operations — (59) (59) (659) (718)

168 (166) 2 (1,157) (1,155)

Bridge to retail free cash flow

Retail cash flows from operating activities

–continuing 1,972 (107) 1,865

Retail cash flows from investing activities

–continuing (787) — (787)

Capital repayment of lease obligations (504) — (504)

Retail free cash flow 681 (107) 574

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.

Reconciliation

2026

Retail:

underlying

Retail:

non-

underlying

Retail:

total

Financial

Services Group

£m £m £m £m £m

Cash flows from operating activities

–continuing

Operating profit/(loss) continuing 1,025 (116) 909 (12) 897

Depreciation and amortisation 1,186 52 1,238 — 1,238

Share-based payments and other:

Net impairment charge on non-financial assets 13 10 23 — 23

(Profit)/loss on sale of non-current assets and

early termination of leases (5) 8 3 — 3

Fair value movements 5 7 12 — 12

Share-based payments expense 68 4 72 3 75

Defined benefit scheme expenses — 8 8 — 8

Defined benefit pension scheme payments — (27) (27) — (27)

Operating cash flows before changes in

working capital 2,292 (54) 2,238 (9) 2,229

Movements in working capital 128 (53) 75 (117) (42)

Cash generated from operations– continuing 2,420 (107) 2,313 (126) 2,187

Interest paid (336) — (336) (12) (348)

Corporation tax paid (112) — (112) 47 (65)

1,972 (107) 1,865 (91) 1,774

Cash flows from investing activities

–continuing

Purchase of property, plant and equipment (613) — (613) — (613)

Alternative Performance Measures (APMs) (unaudited) continued

204 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

A2 Cash flows and borrowings continued

A2.1 Retail cash flows (Closest IFRS equivalent: Group cash flows) continued

Reconciliation continued

2025 (restated*)

Retail:

underlying

Retail:

non-

underlying

Retail:

total

Financial

Services Group

£m £m £m £m £m

Cash flows from operating activities

–continuing

Operating profit/(loss) – continuing 1,036 (214) 822 68 890

Depreciation and amortisation 1,156 59 1,215 — 1,215

Share-based payments and other:

—

Net impairment charge/(reversal) on

non-financial assets 2 20 22 — 22

Profit on sale of non-current assets and early

termination of leases (6) (47) (53) — (53)

Fair value movements — (2) (2) — (2)

Share-based payments expense 71 — 71 2 73

Defined benefit scheme expenses — 8 8 — 8

Defined pension benefit schemepayments — (45) (45) — (45)

Operating cash flows before changes in

working capital 2,259 (221) 2,038 70 2,108

Movements in working capital 98 105 203 (1,097) (894)

Cash generated from operations– continuing 2,357 (116) 2,241 (1,027) 1,214

Interest paid (347) — (347) (12) (359)

Corporation tax paid (89) — (89) 36 (53)

1,921 (116) 1,805 (1,003) 802

Cash flows from investing activities –

continuing

Purchase of property, plant and equipment (617) — (617) — (617)

Purchase of intangible assets (208) — (208) — (208)

Capital expenditure (825) — (825) — (825)

Initial direct costs on new leases (34) — (34) — (34)

Proceeds from disposal of property, plant and

equipment 45 — 45 — 45

Interest received 27 — 27 — 27

(787) — (787) — (787)

Cash flows from financing activities

–continuing

Proceeds from issuance of ordinary shares 20 — 20 — 20

Purchase of own shares for share schemes (63) — (63) — (63)

2025 (restated*)

Retail:

underlying

Retail:

non-

underlying

Retail:

total

Financial

Services Group

£m £m £m £m £m

Other share-related transactions (43) — (43) — (43)

Purchase of own shares for cancellation (200) — (200) — (200)

Proceeds from borrowings 544 — 544 — 544

Repayment of borrowings (623) — (623) — (623)

Net repayment of borrowings (79) — (79) — (79)

Capital repayment of lease obligations (487) — (487) — (487)

Dividends paid on ordinary shares (308) — (308) — (308)

(1,117) — (1,117) — (1,117)

Net increase/(decrease) in cash and cash

equivalents– continuing 17 (116) (99) (1,003) (1,102)

Net (decrease)/increase in cash and cash

equivalents– discontinued operations — (52) (52) 1,397 1,345

17 (168) (151) 394 243

Bridge to retail free cash flow

Retail cash flows from operating activities

–continuing 1,921 (116) 1,805

Retail cash flows from investing activities

– continuing (787) — (787)

Capital repayment of lease obligations (487) — (487)

Retail free cash flow 647 (116) 531

* Refer to note 2.1 (b) and (c) for details of prior year restatements.

A2.2 Non‑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

2026 2025

Note £m £m

Defined benefit pension scheme payments A2.1 (27) (45)

Non-underlying cash movements:

Retail restructuring programmes (72) (71)

Other

(8) —

Operating cash flows

(80) (71)

Effect on Retail cash generated from operations

(107) (116)

Alternative Performance Measures (APMs) (unaudited) continued

205 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

A2 Cash flows and borrowings continued

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. 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 31 to the financial statements.

A3.2 Net debt/underlying EBITDA (closest IFRS equivalent: none)

Definition and purpose

Retail net debt divided by Group underlying EBITDA based on a 52-week rolling basis.

Helps management measure the ratio of the business’ debt to operational cash flow.

Reconciliation

2026 2025

Note £m £m

Retail net debt 31 5,743 5,758

Group underlying EBITDA A4.2 2,211 2,222

Net debt/Group underlying EBITDA

2.6x 2.6x

Group underlying EBITDA is reconciled within the fixed charge cover analysis in note A4.2.

Comparatives are as originally reported.

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 retail net debt. The average is

calculated on a 14-point basis which uses the average of 14 data points, representing the previous 13 period

ends and the opening position.

Represents the total capital that the Group has utilised in order to generate profits. Management uses this to

assess the performance of the business.

Reconciliation

Net debt as set out in note 31.

2026 2025

Note £m £m

Return (Group underlying operating profit) 6.1 1,025 1,066

£m £m

Group net assets Balance sheet 6,150 6,651

Less: Net pension surplus 33.4 (525) (731)

Deferred tax on pension surplus 10.3 194 218

Less: retail net debt 31 5,743 5,758

Effect of in-year averaging

(17) (42)

Capital employed

11,545 11,854

Return on capital employed

8.9% 9.0%

Comparatives are as originally reported.

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. 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

2026 2025

Note £m £m

Group underlying operating profit 6.1 1,025 1,066

Add: Group underlying depreciation and amortisation expense A2.1 1,186 1,156

Group underlying EBITDA

2,211 2,222

Repayment of capital element of lease obligations A2.1 (504) (487)

Underlying finance income 9 24 31

Underlying finance costs 9 (331) (336)

Fixed charges

(811) (792)

Fixed charge cover

2.7x 2.8x

Comparatives are as originally reported.

Alternative Performance Measures (APMs) (unaudited) continued

206 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Additional shareholder information

Managing your shares

Our share registrar is managed by MUFG Corporate Markets. The quickest and most environmentally friendly way for you to view and manage your

shareholding is electronically at https://uk.investorcentre.mpms.mufg.com.

If you need to contact MUFG

Corporate Markets

Sainsburys@cm.mpms.mufg.com

+44 371 664 0555

Calls are charged at the standard geographic

rate and will vary by provider. Calls outside

the United Kingdom will be charged at the

international rate. We are open Monday –

Friday, 9.00-5.30 excluding bank holidays

inEngland and Wales.

For deaf and speech impaired customers,

MUFG Corporate Markets welcome calls via

Relay UK. see www.relayuk.bt.com for

more information.

MUFG Corporate Markets, Central Square,

29Wellington Street, Leeds, LS1 4DL

Provide and maintain your bank/

building society details to

receive your dividend payments

Change your address

Submit your proxy voting

instructions

Elect to receive shareholder

communications

electronically

Have your Investor Code (IVC) to

hand and scan the QR code below

for access to Investor Centre, a

free, online secure service that

enables you to manage and

monitor all of your shares in one

place via a mobile app or the web.

Please contact MUFG Corporate

Markets for assistance with

theQR code or the Investor

Centreservice.

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, if you are resident in the UK, Channel

Islands or Isle of Man, you may consider using MUFG Corporate Markets.

For more information on MUFG Corporate Markets share dealing service,

visit https://sharedeal.cm.mpms.mufg.com.

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 MUFG Corporate Markets. 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.

Sainsbury’s corporate website

More information about J Sainsbury plc, including the latest results and

reports, can be found on https://corporate.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 Investor Code, which can be found on all communications issued by MUFG Corporate Markets. 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 MUFG Corporate Markets using the details above.

To read the latest version of our Privacy Notice and understand more about how we process your data, please visit https://corporate.sainsburys.co.uk/privacy-policy/.

Financial calendar 2026/27

Financial year-end 2025/26 28 February 2026

Q1 trading statement 30 June 2026

Annual General Meeting 2 July 2026

Payment date of final dividend July 2026

Interim (half-year) results announcement 22 October 2026

Q3 trading statement January 2027

Preliminary (full-year) results announcement April 2027

207 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Shareholders

Shareholder information as at 28 February 2026.

2026 2025

Number of shareholders 89,422 92,786

Number of shares in issue 2,263,689,189 2,339,424,088

Annual General Meeting (AGM)

The 2026 AGM will be held at Leonardo Royal Hotel London St Paul’s ,

10Godliman St, London, EC4V 5AJ at 11.00am on Thursday, 2 July 2026

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 https://corporate.sainsburys.co.uk/.

Dividends

A combined dividend payment of 15.1p per share, comprising an interim

dividend of 4.1p and a special dividend of 11.0p per share was paid on

19December 2025. Shareholders will be asked to approve a dividend of 9.6p

per Ordinary share for the year ended 28 February 2026 at this year’s AGM.

If approved, this will be paid on 10 July 2026 to all shareholders who are on

the register of members on 5 June 2026. Dividends will be made directly to

your nominated bank or building society account by direct credit. Please

visit https://uk.investorcentre.mpms.mufg.com, and to provide your

account details.

For more information on dividends, please see page 37 and note 13

onpage 162.

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

https://uk.investorcentre.mpms.mufg.com.

Shareholder security and share fraud

Be ScamSmart

Investment scams are designed to look like genuine investments

Find out more at www.fca.org.uk/scamsmart

Spot the warning signs

Have you been:

• contacted out of the blue

• promised tempting returns and told the investment is safe

• called repeatedly, or

• told the offer is only available for a limited time?

If so, you might have been contacted by fraudsters.

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

1. Reject cold calls

2. Check the FCA Warning List

3. Get impartial advice

Remember: if it sounds too good to be true, it probably is!

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:

Shareholder Correspondence

PO Box 505000

Louisville

KY 40233-5000

USA

Tel (toll-free for US domestic callers): 1-888-269-2377

Tel (international callers): +1-201-680-6825

Website: www.mybnymdr.com

Email: shrrelations@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

208 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Useful contacts

Registered office

J Sainsbury plc

33 Charterhouse Street

London EC1M 6HA

Registered number 00185647

Sainsbury’s corporate website

https://corporate.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 Charterhouse Street

London EC1M 6HA

InvestorRelations2@sainsburys.co.uk

Registrars

MUFG Corporate Markets

Central Square

29 Wellington Street

Leeds LS1 4DL

sainsburys@cm.mpms.mufg.com

Group Company Secretary

Nick Grant

Independent auditors

PricewaterhouseCoopers LLP

1 Embankment Place

London WC2N 6RH

Solicitors

Linklaters LLP

Stockbrokers

UBS

Shore Capital

General contact details

For any customer enquiries, please visit our websites:

Sainsbury’s

https://help.sainsburys.co.uk/help/contact-us

Argos

www.argos.co.uk/help/contact-us

Habitat

www.habitat.co.uk/help/contact-us

Nectar

www.nectar.com/help

Sainsbury’s Bank

https://www.sainsburysbank.co.uk/support

209 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Annual General Meeting (AGM) – This year the AGM will be held on 2 July 2026 at the Leonardo Royal Hotel

London St Paul’s, 10 Godliman Street, London, EC4V 5AJ, at 11:00.

Argos Financial Services (AFS) – Home Retail Group Card Services Limited; andHome Retail Group Insurance

Services Limited.

bps – Basis points.

by Sainsbury’s – Core own label brand.

CDP – Carbon Disclosure Project.

Click & Collect – Service which allows customers to place general merchandise and grocery orders online for

collection in store.

Corporate Responsibility and Sustainability (CR&S) – The need to act responsibly in managing our impact

on a range of stakeholders: customers, colleagues, investors, suppliers, the community and the environment.

CPI – Consumer Price Index.

Earnings per share (EPS) – Earnings attributable to ordinary shareholders of the Parent divided by the

weighted average number of ordinary shares in issue during the year, excluding those held by ESOP Trusts,

which are treated as cancelled.

Fair value – The amount for which an asset could be exchanged, or a liability settled, between knowledgeable,

willing parties in an arm’s length transaction.

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 Regulation.

Greenhouse gas (GHG) – Gases in the atmosphere which absorb infrared radiation emitted from Earth’s

surface creating a ‘greenhouse effect’.

Group – The Company and its subsidiaries.

GSCOP – Grocery Supply Code of Practice.

HFSS – High fat, sugar and salt.

IFRIC – International Financial Reporting Interpretations Committee.

IFRSs – International Financial Reporting Standards.

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.

Live Well for Less – Sainsbury’s customer commitment to continue to help people live the life they want to

live, with quality products at fair prices.

LTIP – Long-Term Incentive Plan.

Net zero – Our commitment to becoming net zero in our own operations by 2035 through reducing our GHG

emissions as much as possible and not adding to the amount of GHG in the atmosphere.

Nectar – Sainsbury’s loyalty programme.

Nom&Gov – the Nomination and Governance Committee.

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

210 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes

211 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Notes

212 J Sainsbury plc Annual Report and Financial Statements 2026 Financial StatementsStrategic Report Governance Report

Financial Statements

Produced by Design Portfolio

www.design-portfolio.co.uk

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.

33 Charterhouse Street

London

EC1M 6HA

Find out more at

https://corporate.sainsburys.co.uk/