Good sales and profit performance: accelerating our growth strategy
Financial Summary
Total sales (inc VAT, inc fuel) up 5.1 per cent to £21,421 million (2008/09: £20,383 million)
Total sales (inc VAT, ex fuel) up 6.7 per cent
Like-for-like sales (inc VAT, ex fuel) up 4.3 per cent(1)
Underlying operating profit up 8.9 per cent to £671 million (2008/09: £616 million)
Underlying profit before tax(2) up 17.5 per cent to £610 million (2008/09: £519 million)(3)
Underlying basic earnings per share(4) up 12.7 per cent to 23.9 pence (2008/09: 21.2 pence)(3)
Proposed full year dividend of 14.2 pence (2008/09: 13.2 pence), up 7.6 per cent
Statutory
Profit before tax up 57.3 per cent to £733 million (2008/09: £466 million)
Basic earnings per share up 93.4 per cent to 32.1 pence (2008/09: 16.6 pence)
Balance sheet and financing
Property value of £9.8 billion up £2.3 billion, £0.7 billion due to investment and development activity(6)
IAS 19 pension deficit post-tax at March 2010 of £303 million (March 2009: deficit of £222 million)
Triennial March 09 pension funding agreed - utilises property asset, post-tax cash flows unchanged(7)
Net debt of £1,549 million, ongoing funding secured on property, credit rating withdrawal requested
Making Sainsbury's Great Again
Now over 19 million weekly customer transactions, up one million year on year
‘Supermarket of the Year’ in 2009 Retail Industry Awards
Top marks in the Consumer Focus ‘Green to the Core’ survey(8)
127,000 colleagues share bonus of over £80 million
Food: World’s largest retailer of Fairtrade(9) ; UK’s largest retailer of Freedom Food
Non-food: Growing at three times the rate of food; Bank pre-tax operating profit £19 million
Channels: 51 new convenience stores; groceries online sales up just under 20 per cent
Space: 1.1 million sq ft of gross new space added, including 38 new supermarkets
On track for 2.5 million sq ft, or 15 per cent, of gross new space growth in two years to March 2011
David Tyler, Chairman, said: “The Board is pleased with the performance of Sainsbury’s over the last year. We have delivered sales growth ahead of the market and good profit growth with underlying earnings per share up over 12 per cent. Our progress in achieving our strategic objectives has been strong, particularly on growing space and developing our complementary non-food offer. At the same time, our values continue to underpin everything we do, with our focus on customer service and responsible trading. As a result of this continued progress, the Board is recommending a full year dividend of 14.2 pence, an increase of 7.6 per cent over the previous year. This dividend is covered 1.68 times by earnings in line with our policy for dividend cover of 1.50 to 1.75 times.”

Justin King, Chief Executive, said: "Sainsbury's has outperformed because we continue to lead on providing healthy, fresh and tasty food with universal appeal. Total sales, including VAT, excluding fuel, for the year were up 6.7 per cent and like-for-like sales were up 4.3 per cent. Like-for-like sales have grown cumulatively over five years by nearly 25 per cent. Customers recognise the progress we have made in ‘Making Sainsbury’s Great Again’ and we now serve on average over 19 million customers each week. That's one million more than last year and nearly five million more than five years ago.

"Colleagues have worked hard to deliver operational excellence resulting in better service and further productivity savings which have contributed to 17.5 per cent growth in underlying profit before tax, a good performance in difficult trading times. I am delighted therefore that 127,000 colleagues will share a bonus of over £80 million. Our success has also meant that we have been able to invest over £900 million in capital expenditure in the year. This has added 1.1 million sq ft to our store estate, opening or extending over 100 stores and creating over 6,500 new jobs with Sainsbury’s.

"Sainsbury’s is a growing business with a strong balance sheet, valuable property assets and an improving return on capital. Our strong operating cash flows support our plans to accelerate the investment programme, delivering further trading and property value for shareholders. Whilst we expect that the environment will remain challenging and consumer spending will be under pressure, we believe our strong space growth plans, supporting our expanding food, complementary non-food and convenience store businesses, alongside our continued focus on productivity, will enable the business to make further good progress.”

Notes:
Like-for-like sales: Like-for-like sales growth has been Easter-adjusted for comparative purposes. 2009/10 included a Good Friday trading week and an Easter Sunday trading week in the first quarter, whereas 2008/09 only included an Easter Sunday trading week.
Underlying profit before tax: Profit before tax from continuing operations before any profit or loss on the sale of properties, investment property fair value movements, impairment of goodwill, financing fair value movements, IAS 19 pension financing element and one-off items that are material and infrequent in nature.
Pensions accounting in 2009/10: As previously announced, Sainsbury’s has excluded the non-cash IAS 19 financing element from its underlying profit definition. The comparatives for all underlying measures (including underlying profit before tax and underlying earnings per share) have been restated accordingly.

FY 2008/09 £m
Reported UPBT 543
Less IAS 19 pension financing element (24)
Revised UPBT 519

Reported underlying basic earnings per share 22.1p
Revised underlying basic earnings per share 21.2p

Underlying basic earnings per share: Profit after tax from continuing operations attributable to ordinary shareholders before any profit or loss on the sale of properties, investment property fair value movements, impairment of goodwill, financing fair value movements, IAS 19 pension financing element and one-offitems that are material and infrequent in nature, divided by the weighted average number of ordinary shares in issue during the period, excluding those held by the ESOP trusts, which are treated as cancelled.
Certain statements made in this announcement are forward-looking statements. Such statements are based on current expectations and are subject to a number of risks and uncertainties that could cause actual events or results to differ materially from any expected future events or results referred to in these forward-looking statements. They appear in a number of places throughout this announcement and include statements regarding our intentions, beliefs or current expectations and those of our officers, directors and employees concerning, amongst other things, our results of operations, financial condition, liquidity, prospects, growth, strategies and the business we operate. Unless otherwise required by applicable law, regulation or accounting standard, we do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.
The property value has been estimated based on independent third party valuations as at March 2010 covering a representative sample of around 50 per cent of our freehold and long leasehold properties. The basis of valuation is investment market value based on rent and yield, assuming sale and leaseback on the standard institutional lease which the Company currently uses when transacting its disposals of mature assets.
Cash contributions to pension fund unchanged over the next five years on a post-tax basis
Consumer Focus (formally known as the National Consumer Council) commissioned independent marketing research agency, GfK NOP Ltd, to conduct in-store, helpline and website research during July 2009.
World’s largest Fairtrade retailer by value.
Sainsbury’s will report its 2010/11 First Quarter Trading Statement at 07:00 (BST) on 16 June 2010.
Sainsbury’s 2010/11 Third Quarter Trading Statement will reflect the 14 weeks ending 8 January 2011 and its 2010/11 Fourth Quarter Trading statement will reflect the 10 weeks ending 19 March 2011.
Download the full release as a PDF

A results presentation for analysts and investors will be held at 09:45 (BST) on 13 May 2010.

To view the slides of the Results Presentation and the Webcast: We recommend that you register for this event in advance. To do so, please visit www.j-sainsbury.co.uk and follow the on-screen instructions. To participate in the live event, please go to the website from 09:30 (BST) on the day of the announcement, and further instructions will be on the website. An archive of the webcast will be available from 12:00 (BST).

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A transcript of the presentation will be available at www.j-sainsbury.co.uk