Interim Results
Sainsbury(J) PLC
20 November 2002
J Sainsbury plc - Interim results for 28 weeks ended 12 October 2002
Group Results
• Underlying profit before tax* up 10.7 per cent to £342m (2001: £309m)
• Interim dividend up 5 per cent to 4.22 pence per share (2001: 4.02p)
• Pre-tax return on capital employed increased to 11.5 per cent
Sainsbury's Supermarkets in UK
• Underlying operating profit* up 14.9 per cent to £286m (2001: £249m)
• Business transformation programme and cost savings on track
• Operating margins (VAT inclusive) increased to 3.8 per cent
• Nectar - already the UK's largest loyalty programme
Shaw's Supermarkets in US
• Underlying operating profit* up 8.8 per cent to $110m (2001: $101m)
• Acquisition of 18 stores in New England for $75m
* before exceptional items and amortisation of goodwill
Peter Davis, group chief executive, said: ' This is the fourth consecutive
half-year of improved underlying group profits, up 10.7 per cent on last year, a
clear reversal after two years of decline. In the first half of this year,
Sainsbury's Supermarkets achieved double digit earnings growth, up 14.9 per
cent, and improved its operating margins and return on capital. Shaw's turned
in another strong performance with 8.8 per cent growth in dollar profits. As a
result the Board has increased the dividend by 5 per cent.
'This solid performance has been achieved in more challenging market conditions
in both the US and in the UK, where there is less growth compared to last year,
little food inflation and increased competitive pressures.
Sainsbury's Supermarkets
'In Sainsbury's Supermarkets, we are focusing on building a strong business,
more competitive for the future whilst maintaining our market position. We
delivered £90 million of cost savings and are well on-track to deliver our
target of £200 million for the year and £700 million by March 2004. We are
progressing well with delivering our modern, more efficient infrastructure.
'We continue to focus on Quality, Service and Price. We've launched several
distinctive ranges: 'Freefrom'- a range of gluten, wheat or dairy free foods; '
Way to Five'- 70 products boosting fruit and vegetable intake; 'Perform and
Protect'- household cleaning and toiletry products and 'Active Naturals'- a new
beauty and home care range. Our quality has been recognised; we have won '
Fresh Produce Retailer of the Year', 'Supermarket Wine Retailer of the Year' and
the 'Organic Supermarket of the Year,' among others.
Formats
'We are progressing with a range of formats to meet the needs of existing
customers while also attracting new shoppers and have stepped up investment in
non-foods to complement our progress on food. Larger stores need a wider choice
of non-foods as shown by our trial store at Monk's Cross in York where sales are
already up 29 per cent. We have incorporated many lessons into a further five
Main Plus stores and have identified 57 stores that fit this format. The next
trial store opens in Croydon next month.
'Six savacentre trial stores, with food and non-food ranges for families on
tighter budgets, opened successfully. Sales are in line or ahead of expectations
and we plan more stores next year.
'Our Mixed Mission format, which includes Locals, Centrals and older town-centre
stores, is working well. We have now opened our 45th Local and know they can be
traded effectively in close proximity without impacting each other. Trials on
the older town-centre stores are now complete and we are rolling out this
successful format.
'Our customers are clear that we should be first for food but also want us to
enhance our non-food offer. The Board is committed to giving more priority to
this area and we are strengthening our non-food team. As a result of extensions,
format development and new stores we expect to have more space and a
significantly enhanced non-food offer by this time next year.
Nectar
'After only two months, Nectar is the UK's largest loyalty programme. With
over 11 million active card users in one third of UK households, this is a
significant achievement. Nectar gives customers opportunities to earn points
more quickly. It's both a powerful promotional tool and a mechanism by which we
can identify and shape stores and products to better meet customer needs.
Sainsbury's Bank
'At our last results presentation we said we faced some interesting choices with
Sainsbury's Bank. We have now decided to accelerate growth through increased
investment and expect profit for the year to be in line with that of last year.
'Sainsbury's Bank performed well during the first half with an underlying profit
increase of 32 per cent. Compared with the same period last year, customer
acquisitions are up 90 per cent, insurance sales have increased by 63 per cent,
the loan book has doubled and we have achieved record sales of credit cards.
'We have launched a leading car insurance product, are trialling simple
long-term savings products and are increasingly using Nectar opportunities to
build deeper customer relationships across the Bank and Supermarket.
Sainsbury's to You
'Sales have increased 90 per cent against the first half last year, customer
orders are running at over 33,000 a week and we have achieved further cost
efficiencies. Losses have been reduced from £29 million (first half of 2001) to
£19 million. We are confident of a further reduction in the second half and
expect Sainsbury's to You to become profitable in the latter part of 2003/04.
In October we extended our offer by launching a new interactive TV service with
NTL.
Replatforming
'We are replacing all of our electronic in-store systems and will have installed
these in more than 100 stores by Christmas. In the next 12 months we plan to
complete this activity as well as replacing most of our trading and supply chain
systems. We have a good relationship with Accenture and could not have delivered
the volume or quality of change we have achieved without their involvement. Our
replatforming programme remains on track and within the costs originally
identified.
Supply Chain
'We have reached an important stage in replacing our Supply Chain
infrastructure. Hams Hall, (Birmingham) is already operating to support
Christmas trading and we will be phasing in new automation from the New Year. It
will become our first fully automated depot and further such centres at Stoke,
Waltham Point and New Hoddesdon will become operational during our next
financial year. Modernising the supply chain is a core strategy which aims to
improve product availability while lowering operating costs. We estimate this
project will start to pay back in 2003/04, will ultimately deliver annual
savings of £100 million and will achieve a double-digit post-tax real return on
investment.
Reinvigoration
'Reformatting our existing stores is key to improving our customer offer and
driving both sales and profitability. We completed 29 refurbishments in the
first half and with ultimate sales increases of 8 per cent are achieving a
post-tax real return of 10 per cent. We completed seven extensions in the first
half and now have 82 stores over 45,000 square feet. Ultimate sales increases
are 28 per cent delivering a post-tax real return on investment of around 13 per
cent.
Pensions
'Our pension schemes, like others, have been affected by declining stock
markets. Our pension fund is well covered at over 120 per cent on the
government's minimum funding requirement basis and our schemes have sufficient
cash to meet their current liabilities. Any funding deficit is addressed over
the average service lives of current members (estimated at 14 years). In the
meantime we increased our employer contribution by £15 million last year and
will do so again this year.
'The key event determining the level of employer contributions is the actuarial
valuation which is undertaken every three years. The next one is in March 2003
and a full update will be available when the results are known this time next
year.
Shaw's Supermarkets
'Shaw's delivered another good performance achieving like-for-like sales growth
of 1.3 per cent (Easter adjusted), ahead of many US retailers. In October we
promoted Paul Gannon, previously chief operating officer, to chief executive
following Ross McLaren's retirement. Our purchase of 18 stores from Ames
offers an exciting opportunity to strengthen our number two position in the New
England market by opening new stores and replacing existing smaller sites. It
is a good long-term move but one-off costs associated with opening and
relocating stores means the purchase will not be accretive until 2004/05.
Summary
'I am pleased that we have delivered double digit profit growth and our cost
saving targets. We have also improved margins and return on capital. We are now
entering the peak 12 months of our business transformation programme. While we
might have welcomed a more benign market we are determined to deliver on our
plans and remain confident that we are making real progress across the Group to
achieve our targets.'
For enquiries:
Investor Relations +44 (0) 20 7695 7162 Media +44 (0) 20 7695 7295
Roger Matthews Jan Shawe
Lynda Ashton Pip Wood
The Company will be holding a presentation at 0945 GMT. If you would like to
attend, please telephone 0207 695 6227.
You are welcome to listen to the presentation via our live-teleconference
facilities. The dial-in number and instructions are as follows:
1. Dial +44 (0) 20 8515 2306 10 minutes prior to the start of the
presentation. When requested please provide your full name and company
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2. You will be placed 'on hold' and music will be heard until the
conference begins. This will be listening only.
3. To listen to the replay of the presentation for 7 days afterwards please
dial +44 (0) 20 8797 2499. You will be asked for pin number: 117721#.
Slides will be on the website: www.j-sainsbury.co.uk from 9.30am GMT onwards and
the event will be available to view via the delayed web cast from 3.30pm GMT on
the day.
An interview with Sir Peter Davis, Chief Executive, in video / audio and text
will be available from 0700 GMT, 20.11.02 on: http://www.j-sainsbury.co.uk/ and
on http://www.cantos.com
Group financial summary
The results for the first half-year reflect solid progress despite more
challenging market conditions both in UK and US. Group sales (including VAT)
from continuing operations increased by 1.6 per cent to £9,744 million. (2001:
£9,601 million). Underlying operating profit from continuing operations was £371
million, an increase of £34 million or 10.1 per cent over the previous year.
Underlying operating profit - Continuing operations 2002 2001 Change
£m £m %
Sainsbury's Supermarkets* 286 249 14.9
Shaw's Supermarkets 73 70 3.3
Sainsbury's Bank 9 10 (6.3)
JS Developments 3 8 (60.0)
Underlying operating profit 371 337 10.1
*Including Sainsburys to You and profit share
Net interest payable increased to £30 million (2001: £22 million), as a result
of higher net debt, partially offset by a US dollar exchange rate benefit and
lower short-term interest rates. Interest capitalised in the first half amounted
to £12 million (2001: £16 million).
Underlying Group profit before tax increased by 10.7 per cent to £342 million
(2001: £309 million).
The Group's US dollar denominated assets are hedged by maintaining a
corresponding amount of debt in US dollars. The US dollar depreciated against
sterling in the first half, which resulted in lower operating profit, financing
costs and net debt in sterling terms. At constant exchange rates, Group sales
increased by 2.5 per cent, Group operating profit by 11.3 per cent and
underlying profit before tax by 11.7 per cent.
Exceptional operating costs were £10 million (2001: £21 million). These relate
to severance and closure costs arising from the business transformation
programme in Sainsbury's Supermarkets. As previously announced, we expect the
exceptional operating costs for the full year to be between £35 million and £50
million.
The Group tax charge was £111 million (2001: £99 million). The underlying
effective tax rate in the first half was 33 per cent, down from 33.5 per cent
last year.
Underlying earnings per share was 11.8 pence (2001: 10.7 pence), an increase of
10.6 per cent on the previous year.
The Board has declared an interim dividend of 4.22 pence per share which
represents an increase of 5 per cent over the previous year. The interim
dividend will be paid on 10 January 2003 to shareholders on the Register of
Members at the close of business on Friday 29 November 2002.
Group capital expenditure in the half-year was £595 million (2001: £561
million). UK capital expenditure was £514 million including £143 million on new
stores, £221 million on existing stores and £131 million on the supply chain.
Shaw's capital expenditure was £81 million (2001: £55 million). We forecast
Group capital expenditure to be £1.2 billion for the year. Group pre-tax return
on capital employed increased by 0.4 per cent to 11.5 per cent (2001: 11.1 per
cent).
Operating cash inflow was strong at £445 million, up 53 per cent on last year.
Net proceeds from the disposal of operations amounted to £75 million, which
included £78 million from the partial repayment of the Homebase vendor loan
notes. Net debt at the half-year increased by £238 million to £1.4 billion (30
March 2002: £1.2 billion) with gearing increasing to 28 per cent (30 March 2002:
24 per cent).
Sainsbury's Supermarkets
Total sales grew by 3.0 per cent (3.8 per cent excluding petrol, Easter
adjusted) to £8,048 million (2001: £7,814 million). Like-for-like sales growth
(excluding petrol) was 2.8 per cent (2001: 6.0 per cent). Like-for-like sales
growth (excluding petrol) for the first half was impacted by a lower market
growth, lower food inflation at 0.4 per cent (2001: 1.8 per cent), and our
decision to terminate the Air Miles contract in advance of launching our new,
significantly enhanced, Nectar loyalty programme on 16 September 2002.
Sainsbury's Supermarkets sales+
2002/03 2002/03 2002/03
% Growth Q1 Q2 H1
Volume 2.6 2.2 2.4
Inflation 0.5 0.3 0.4
Like-for-like sales growth 3.1 2.5 2.8
Net new space 0.5 1.4 1.0
Total growth 3.6 3.9 3.8
+ Including VAT, excluding petrol & Easter adjusted.
Cost savings of £90 million were delivered during the first half, of which just
over half related to buying efficiencies. We are on track to deliver £200
million of cost savings for the year and the target of £700 million by March
2004.
A significant proportion of the product mix margin improvement and cost savings
have been reinvested in lower prices and promotional marketing to drive sales
and in our major infrastructure programmes, to deliver operating efficiencies in
the future.
Investment in Sainsbury's to You in the first half was £19 million (2001: £29
million). Sales have increased by 90 per cent and further cost efficiencies have
been delivered.
Underlying operating profit for the first half-year was £286 million (2001: £249
million), an increase of 14.9 per cent over the previous year. The operating
margin (excluding Sainsburys to You and including VAT) increased from 3.6 per
cent to 3.8 per cent.
Shaw's Supermarkets (US operations)
Total sales grew by 2.3 per cent (3.1 per cent, Easter adjusted) to $2,409
million (2001: $2,355 million). Like-for-like sales growth for the first half
was 1.3 per cent (2001: 4.5 per cent).
Shaw's sales+
2002/03 2002/03 2002/03
% Growth Q1 Q2 H1
Like-for-like growth 0.5 1.8 1.3
New space 1.7 1.9 1.8
Total growth 2.2 3.7 3.1
+ Including sales tax, Easter adjusted.
Economic conditions were challenging during the first half. Shaw's operates
solely in the New England market, where it has a strong No. 2 position and has
achieved a like-for-like sales growth ahead of many US food retailers. Strict
cost control has contributed to operating profit increasing by 8.8 per cent to
$110 million (2001: $101 million) and the operating margin increasing
from 4.3 per cent to 4.6 per cent.
An adverse dollar to sterling currency movement depressed Shaw's reported
earnings when translated into sterling. Shaw's operating profit in dollars
increased by 8.8 per cent and in sterling by 3.3 per cent.
Sainsbury's Bank
Sainsbury's Bank performed well during the first half-year. Net income increased
by 37.3 per cent and operating profit was £9 million (2001: £10 million). The
results for the first half of 2001 included a VAT credit of £3 million.
Adjusting for the impact of the VAT credit, the underlying profit increase was
an impressive 32.4 per cent.
Profit for the year is expected to be in line with last year, as we invest to
accelerate future growth.
Property development
JS Developments' operating profit in the first half was £3 million (2001: £8
million). The company is project based and no major projects were sold in the
first half. However, a number of major projects are in the course of development
and are due to be completed towards the end of this financial year, subject to
market conditions.
Group profit and loss account
28 weeks to 28 weeks to
12 October 13 October
2002 2001
(unaudited) (unaudited)
Note £m £m
Turnover including VAT and sales tax+ 2 9,744 9,601
VAT and sales tax (560) (556)
Continuing operations 9,184 9,037
Discontinued operations - 8
Turnover excluding VAT and sales tax 9,184 9,045
Continuing operations-operating profit before exceptional costs and
amortisation of goodwill 371 337
Exceptional operating costs 3 (10) (21)
Amortisation of goodwill (7) (8)
Continuing operations-operating profit 354 308
Discontinued operations-operating loss - (2)
Operating profit 2 354 306
Share of operating profit/(loss) in joint ventures 1 (4)
Loss on sale of properties 3 (5) (3)
Profit on ordinary activities before interest 350 299
Net interest payable (30) (22)
Underlying profit on ordinary activities before tax* 342 309
Exceptional items (15) (24)
Amortisation of goodwill (7) (8)
Profit on ordinary activities before tax 320 277
Taxation 4 (111) (99)
Profit on ordinary activities after tax 209 178
Equity minority interest (3) (3)
Profit for the financial period 206 175
Equity dividends (81) (78)
Retained profit for the financial period 125 97
Basic earnings per share 5 10.8p 9.2p
Underlying earnings per share* 5 11.8p 10.7p
Diluted earnings per share 5 10.7p 9.1p
Underlying diluted earnings per share* 5 11.7p 10.6p
Dividend per share 4.22p 4.02p
+ Including VAT at Sainsbury's Supermarkets and sales tax at Shaw's Supermarkets.
* Before exceptional items and amortisation of goodwill.
Group statement of total recognised gains and losses
28 weeks to 28 weeks to
12 October 13 October
2002 2001
(unaudited) (unaudited)
Note £m £m
Turnover including VAT and sales tax+ 2 9,744 9,601
VAT and sales tax (560) (556)
Continuing operations 9,184 9,037
Discontinued operations - 8
Turnover excluding VAT and sales tax 9,184 9,045
Continuing operations-operating profit before exceptional costs
and amortisation of goodwill 371 337
Exceptional operating costs 3 (10) (21)
Amortisation of goodwill (7) (8)
Continuing operations-operating profit 354 308
Discontinued operations-operating loss - (2)
Operating profit 2 354 306
Share of operating profit/(loss) in joint ventures 1 (4)
Loss on sale of properties 3 (5) (3)
Profit on ordinary activities before interest 350 299
Net interest payable (30) (22)
Underlying profit on ordinary activities before tax* 342 309
Exceptional items (15) (24)
Amortisation of goodwill (7) (8)
Profit on ordinary activities before tax 320 277
Taxation 4 (111) (99)
Profit on ordinary activities after tax 209 178
Equity minority interest (3) (3)
Profit for the financial period 206 175
Equity dividends (81) (78)
Retained profit for the financial period 125 97
Basic earnings per share 5 10.8p 9.2p
Underlying earnings per share* 5 11.8p 10.7p
Diluted earnings per share 5 10.7p 9.1p
Underlying diluted earnings per share* 5 11.7p 10.6p
Dividend per share 4.22p 4.02p
+ Including VAT at Sainsbury's Supermarkets and sales tax at Shaw's
Supermarkets.
* Before exceptional items and amortisation of goodwill.
Group statement of total recognised gains and losses
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Profit for the financial period 206 175
Currency translation differences on foreign currency net investments (5) (1)
Total recognised gains relating to the financial period 201 174
Change in accounting policy for deferred tax - (160)
Total recognised gains since last annual report 201 14
There is no material difference between the above profit for the financial
period and the historical cost equivalent.
Reconciliation of movements in equity shareholders' funds
28 weeks to 28 weeks to
12 October 2002 13 October
(unaudited) 2001
£m (unaudited)
£m
Profit for the financial period 206 175
Equity dividends (81) (78)
125 97
Currency translation differences (5) (1)
Proceeds from ordinary shares issued for cash 3 8
Amounts deducted in respect of shares issued to the QUEST - (1)
Net movement in equity shareholders' funds 123 103
Opening equity shareholders' funds 4,848 4,751 *
Closing equity shareholders' funds 4,971 4,854
* Restated for change in accounting policy for deferred tax.
Group balance sheet
12 October 13 October 30 March
2002 2001 2002
(unaudited) (unaudited) (audited)
£m £m £m
Note
Fixed assets
Intangible assets 235 266 263
Tangible assets 7,159 6,546 6,906
Investments 121 168 174
7,515 6,980 7,343
Current assets
Stock 872 880 751
Debtors 310 365 398
Sainsbury's Bank 6 2,279 2,138 2,193
Investments 15 14 16
Cash at bank and in hand 509 839 370
3,985 4,236 3,728
Creditors: amounts falling due within one year
Sainsbury's Bank 6 (2,139) (2,014) (2,060)
Other (2,247) (2,843) (2,648)
(4,386) (4,857) (4,708)
Net current liabilities (401) (621) (980)
Total assets less current liabilities 7,114 6,359 6,363
Creditors: amounts falling due after more than one year (1,874) (1,226) (1,223)
Provisions for liabilities and charges (205) (223) (231)
Total net assets 5,035 4,910 4,909
Capital and reserves
Called up share capital 484 484 484
Share premium account 1,424 1,408 1,421
Revaluation reserve 39 39 39
Profit and loss account 3,024 2,923 2,904
Equity shareholders' funds 4,971 4,854 4,848
Equity minority interest 64 56 61
Total capital employed 5,035 4,910 4,909
Group cash flow statement
28 weeks to 28 weeks to
12 October 13 October
2002 2001
(unaudited) (unaudited)
£m £m
Note
Net cash inflow from operating activities 7 445 290
Dividend from joint venture 8 -
Returns on investments and servicing of finance
Interest received 44 41
Interest paid (72) (46)
Interest element of finance lease payments (16) (11)
Net cash outflow from returns on investments and servicing of finance (44) (16)
Taxation (90) (69)
Capital expenditure and financial investment
Purchase of tangible fixed assets (580) (490)
Sale of tangible fixed assets 76 184
Purchase of intangible fixed assets (2) (3)
Net cash outflow from capital expenditure and financial investment (506) (309)
Acquisitions and disposals
Investment in/loans from joint ventures 3 -
Sale of subsidiary undertakings 75 14
Investment in other fixed asset investments - (7)
Net cash inflow from disposals 78 7
Equity dividends paid to shareholders (207) (197)
Net cash outflow before use of liquid resources and financing (316) (294)
Financing
Issue of ordinary share capital 3 7
(Decrease)/increase in short-term borrowings (236) 472
Increase in long-term borrowings 550 230
Increase in finance leases 151 1
Capital element of finance lease payments (4) (1)
Net cash inflow from financing 464 709
Increase in net cash in the period 148 415
Reconciliation of net cash flow to movement in net debt
Increase in net cash in the period 148 415
Cash inflow from increase in debt (314) (701)
Movement in finance leases (154) (1)
Exchange adjustments 82 3
Movement in net debt in the period 8 (238) (284)
Net debt at the beginning of the period 8 (1,156) (859)
Net debt at the end of the period 8 (1,394) (1,143)
Notes to the results
1. Accounting policies
The financial information has been prepared using the accounting policies set
out in the Annual Report and Financial Statements 2002.
2. Group turnover and operating profit
Set out below are the Group turnover and operating profit.
28 weeks to 28 weeks to Change %
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Turnover inc VAT
Food retailing and financial services - UK 8,137 7,897 3.0
Property development - UK 13 53 (75.5)
Food retailing - US 1,594 1,643 (3.0)
Continuing operations 9,744 9,593 1.6
Discontinued operations-Food retailing Egypt - 8
Total 9,744 9,601 1.5
Turnover ex VAT
Food retailing and financial services - UK 7,589 7,354 3.2
Property development - UK 13 53 (75.5)
Food retailing - US 1,582 1,630 (2.9)
Continuing operations 9,184 9,037 1.6
Discontinued operations-Food retailing Egypt - 8
Total 9,184 9,045 1.5
Operating profit
Food retailing and financial services - UK 295 259 14.1
Property development - UK 3 8 (60.0)
Food retailing - US 73 70 3.3
Continuing operations- operating profit before exceptional
costs and amortisation of goodwill
371 337 10.1
Exceptional operating costs-UK (10) (13)
-US - (8)
Amortisation of goodwill-US (7) (8)
Discontinued operations-Food retailing Egypt - (2)
Total 354 306 15.6
2. Group turnover and operating profit (continued)
US sales and operating profit have been translated at an average exchange rate
for the period of £1 = $1.5113 (2001: £1 = $1.4328).
28 weeks to 28 weeks to Change %
12 October 2002 13 October 2001
(unaudited) (unaudited)
$m $m
Shaw's sales and operating profit
Sales (including sales tax) 2,409 2,355 2.3
Operating profit 110 101 8.8
3. Exceptional items
3.1 Exceptional operating costs
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Sainsbury's Supermarkets 10 13
Shaw's Supermarkets - 8
Exceptional operating costs 10 21
The costs in Sainsbury's Supermarkets relate to the business transformation
programme which involves upgrading its IT systems, supply chain and store
portfolio. These costs are exceptional operating costs due to the scale, scope
and pace of the transformation programme. These costs involve asset write offs
and reorganisation costs.
3.2 Exceptional non-operating items
Loss on sale of properties were as follows:
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Sainsbury's Supermarkets 2 3
Shaw's Supermarkets 3 -
5 3
4. Taxation
The tax charge in the profit & loss account comprises:
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Current tax 107 96
Deferred tax 6 6
Tax relief on exceptional items (2) (3)
111 99
5. Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares in issue
during the period, excluding those held by the Employee Share Ownership Trusts
which are treated as cancelled.
For diluted earnings per share, the weighted average number of ordinary shares
in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. These represent share options granted to employees where the exercise
price is less than the average market price of the Company's ordinary shares
during the period to 12 October 2002.
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
million
million
Weighted average number of shares in issue 1,911.7 1,907.7
Weighted average number of dilutive share options 13.0 13.5
Total number of shares for calculating diluted earnings per share 1,924.7 1,921.2
The alternative measure of earnings per share is provided because it reflects
the Group's underlying trading performance by excluding the effect of
exceptional items and amortisation of goodwill.
28 weeks to 28 weeks to
12 October 13 October
2002 2001
(unaudited) (unaudited)
Earnings Per share Earnings Per share
£m amount £m amount
pence pence
Basic earnings 206 10.8 175 9.2
Exceptional items net of tax:
Operating profit 8 0.4 18 0.9
Loss on sale of properties 5 0.2 3 0.2
Amortisation of goodwill 7 0.4 8 0.4
Underlying earnings before exceptional items 226 11.8 204 10.7
and amortisation of goodwill
Diluted earnings 206 10.7 175 9.1
Underlying diluted earnings before exceptional 226 11.7 204 10.6
items and amortisation of goodwill
6. Current assets and creditors of Sainsbury's Bank
12 October 13 October 30 March
2002 2001 2002
(unaudited) (unaudited) (audited)
£m £m £m
Current assets
Cash 31 45 57
Treasury bills and other eligible bills 74 54 56
Loans and advances to banks 482 704 602
Loans and advances to customers* 1,153 838 959
Debt securities 522 480 500
Prepayments and accrued income 17 17 19
2,279 2,138 2,193
Creditors: amounts falling due within one year
Customer accounts 2,063 1,957 2,023
Accruals and deferred income 76 57 37
2,139 2,014 2,060
*Loans and advances to customers include £484 million (13 October 2001: £436
million; 30 March 2002: £416 million) of loans and advances repayable in more
than one year.
In addition to the above assets, Sainsbury's Bank had fixed assets of £8 million
at 12 October 2002 (13 October 2001: £7 million; 30 March 2002: £7 million)
included in tangible fixed assets and other liabilities of £4 million
(13 October 2001: £3 million; 30 March 2002: £2 million) included in creditors
due within one year.
7. Reconciliation of operating profit to net cash inflow from operating
activities
28 weeks to 28 weeks to
12 October 2002 13 October 2001
(unaudited) (unaudited)
£m £m
Operating profit 354 306
Depreciation 205 182
Amortisation of intangible assets 9 9
Loss on sale of equipment, fixtures and vehicles 5 -
Increase in stocks (139) (110)
Decrease in debtors 1 9
Increase/(decrease) in creditors and provisions 17 (100)
Increase in Sainsbury's Bank current assets (86) (224)
Increase in Sainsbury's Bank creditors 79 218
Net cash inflow from operating activities 445 290
8. Analysis of net debt
At 30 March Cash Other Exchange At 12 October
2002 flow non-cash movements 2002
(audited) £m movements £m (unaudited)
£m £m £m
Current asset investments 16 (1) - - 15
Cash and liquid funds 370 148 - (9) 509
Overdrafts (14) 1 - - (13)
372 148 - (9) 511
Debt due within one year (327) 236 - 72 (19)
Debt due after one year (1,017) (550) - 3 (1,564)
Finance leases due within one year (4) (33) - - (37)
Finance leases due after one year (180) (114) (7) 16 (285)
Total (1,156) (313) (7) 82 (1,394)
9. Financial information
The Interim Results are unaudited but have been reviewed by the Auditors. The
financial information presented herein does not amount to full accounts within
the meaning of Section 240 of the Companies Act 1985 (as amended). The figures
for the 52 weeks to 30 March 2002 have been extracted from the Annual Report and
Financial Statements 2002 which have been filed with the Registrar of Companies.
The audit report on the Annual Report and Financial Statements 2002 was
unqualified and did not contain a statement under Section 237 (2) or (3) of the
Companies Act 1985.
The Company's results will be published in the Interim Statement, which will be
posted to shareholders on 20 November 2002. Copies will also be available from
J Sainsbury plc, 33 Holborn London EC1N 2HT and at its paying agents Citibank,
N.A., 336 Strand, London WC2R 1HB and Chase Manhattan Bank, Trinity Tower, 9
Thomas More Street, London E1 9YT.
Review report by the Auditors to the Board of
Directors of J Sainsbury plc
Independent review report to J Sainsbury plc
Introduction
We have been instructed by the Company to review the financial information,
which comprises a Group profit and loss account, Group statement of total
recognised gains and losses, Group balance sheet, Group cash flow statement,
comparative figures and associated notes. We have read the other information
contained in the Interim Report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
Directors' responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the Interim Report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the 28 weeks ended
12 October 2002.
PricewaterhouseCoopers
Chartered Accountants and Registered Auditors
1 Embankment Place
London
WC2N 6RH
19 November 2002
Notes:
(a) The maintenance and integrity of the J Sainsbury plc web site
is the responsibility of the Directors; the work carried out by the Auditors
does not involve consideration of these matters and, accordingly, the Auditors
accept no responsibility for any changes that may have occurred to the Interim
Report since it was initially presented on the web site.
(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other
jurisdictions.
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