Preliminary Results 1999/2000
Sainsbury(J) PLC
31 May 2000
J Sainsbury plc - Preliminary Results 1999/2000
Highlights
* Underlying PBT in line with expectations
* Total dividend per share unchanged at 14.32p
* New management team accelerating pace of change
* Clear leadership and focus on Sainbury's UK Supermarkets
* Strong performance in Shaw's - including Star Markets
* Strong like-for-like sales growth in Homebase
* Acceleration of e-commerce strategy across the group.
J Sainsbury plc today announced underlying profit before tax, in line with the
range indicated in the third quarter trading statement, at £580m, down 23.2%
on the previous year. Group sales were £17.4 billion, up 6.3% on the previous
year. Underlying basic earnings per share was 20.5p, down 24.1%. Total
dividend per share remains at 14.32p.
Shaw's and Homebase both performed well. On a comparable basis Homebase's
sales were up 13.2%, including like-for-like sales growth of 12.1%, and
operating profit was up 9.1%. Shaw's sales, which include Star Markets
acquired during the year, were up 25.7% with operating profit up 46%.
Sainsbury's Supermarkets reported sales up 1.8% and operating profit, before
e-commerce costs, down 27.2% on the previous year .
Sainsbury's Bank, in its 3rd year of operation, reported an operating profit
of £2.9m and over one million customer accounts.
Sir Peter Davis, group chief executive said, 'These results demonstrate that,
while we have two very strong businesses in Homebase and Shaw's and have made
good progress with Sainsbury's Bank, we need to focus our efforts on our core
supermarket business.
'Since my appointment in March 2000 I have concentrated on arresting the
decline in Sainsbury's Supermarkets. We are working hard to re-establish
ourselves as the UK's favourite food retailer by making the Sainsbury's
experience special again for customers and colleagues. We are now prioritising
our tasks for the coming year and will invest for longer term growth.
'The Sainsbury's brand is a very strong asset; it stands for good quality and
value for money. It also stands for high and consistent store standards as
well as specialist advice. We excel in key areas within our business; we
sell more organic food than any of our competitors, lead the market with our
'ready-meal' offering and our Be Good To Yourself range is now one of the best
selling brands in our stores.
'We have reviewed and restructured the group and supermarket boards to clarify
the role of both and help accelerate the pace of change. A new group
executive committee has responsibility to develop long term strategy for the
group and replaces a number of other committees to help us make decisions,
move quickly and share 'best practice' across our operating companies.
'We are concentrating on improving store standards to bring all our stores up
to the standards of the best. Our new London Colney store is a good example of
how larger stores will operate in the future and our Central and Local formats
designed with specific customer requirements in mind have also been
successful. Last year we opened 20 stores (including four Locals), extended
22 and refurbished 16.
'We are implementing a thorough and radical re-engineering of our processes
and systems to achieve optimum performance. We were the first UK retailer to
invest in the GlobalNetXchange which, through Oracle, already has the
technology in place to help us reduce costs and will deliver streamlined
systems and improved product availability.
'We will be accelerating our internet shopping service Sainsbury's To You; a
new dedicated picking centre in west London opens this summer to service
customers within the M25. Smaller centres and stores will now also be used to
speed up this service in major connurbations outside London.
'Customers tell us that they look to us for advice and ideas. Our 'Taste for
Life' website being launched in June provides exactly that and we believe will
be the best in the UK for food and drink. This will provide a superb platform
for the future as we work with Carlton to establish a leading presence in the
new internet and interactive TV channels of communication and commerce with
our customers.
'Homebase is now a substantial number two in the UK DIY market with many
opportunities for growth. Its large store format trial has been successful at
Greenwich and Dundee and there is now a major roll-out programme. The
e-commerce strategy for Homebase is well advanced and will be launched later
this year providing another significant growth opportunity.
'Shaw's has performed well during the past year and the integration of Star
Markets has gone smoothly consolidating Shaw's as a strong regional player.
Shaw's has dramatically improved its store formats and customer offer. It has
focused on a food and drug concept and with a strong emphasis on perishables
has helped it compete successfully in the US market. Growth prospects are
encouraging with further benefits expected from the Star Markets acquisition.
'Recovery will take time, however, our venture with the GlobalNetXchange and
other steps we are taking to re-engineer our processes will deliver cost
savings in the longer term. We are managing our property portfolio
aggressively both in releasing value through our sale and leaseback scheme and
in reviewing development potential in our existing estate, including our head
office complex.'
'As I said when I rejoined the company, I am determined to make Sainsburys
somewhere special to shop again and somewhere special to work. I am now even
more determined, but also confident that we can.'
Outlook
The Board is committed to turning around the profit decline in the
supermarkets business. This will require investment in the customer offer,
existing estate, accelerating the home delivery service and, over a longer
period, in information systems and the supply chain. These investments will
take time to benefit profits. There are significant opportunities to restore
profit growth in subsequent years and to deliver increasing returns to
shareholders.
In view of this confidence, and the Group's strong asset base, the Board felt
it was not appropriate to cut the dividend but to maintain it at last year's
level (on a comparable 52 week basis).
Financial Results
2000 1999* Change %
Turnover inc VAT (£m) 17,414 16,378 6.3
Underlying pre tax profit ** (£m) 580 755 -23.2
Underlying earnings per share ** 20.5p 27.0p -24.1
Dividend per share *** 14.32p 14.32p -
* 52 weeks to 3 April 1999 (unaudited).
** Before amortisation of goodwill, exceptional costs and non-operating items.
*** On a 56 week basis, dividend per share was 15.32 pence in 1999.
Group sales grew 6.3% to £17,414 million in the 52 weeks ended 1 April 2000
with the acquisition of Star Markets in the US and a strong sales performance
from Homebase being the main contributors to this growth.
Underlying Group pre tax profit (before amortisation of goodwill, exceptional
costs and non-operating items) was 23.2% lower at £580 million, within the
range indicated in our January trading statement. Underlying basic earnings
per share decreased in line with this by 24.1% to 20.5 pence per share. These
reductions were entirely due to the profits decline in Sainsbury's
Supermarkets.
Net exceptional items for the year were £60 million, an increase of £5 million
over the first half. The second half included additional severance and
restructuring costs of £11 million and store closure costs amounting to £46
million. This was offset by net property profits of £52 million, including a
property profit of £82 million generated from an innovative sale and leaseback
of 16 UK supermarkets.
The Directors propose the payment of a final dividend of 10.30 pence per share
payable on 28 July 2000 to shareholders on the register at the close of
business on 16 June 2000. This results in a total dividend per share for the
year of 14.32 pence - the same level as last year on a comparative 52 week
basis.
UK Supermarkets
Sales in Sainsbury's Supermarkets increased by 1.8%. Adjusting for Easter,
like-for-like sales growth in the second half of 1.4% showed an improvement
over the first half decline of 0.9% with sales in the third quarter benefiting
from strong Christmas and Millennium sales.
Sales growth was impacted by price competition and, during the second half, by
food price deflation. During the year, price inflation was around 1% and in
the fourth quarter was 0.6% primarily due to petrol price inflation, with
underlying food inflation being negative.
The overall cost base increased largely due to inflation in labour and rents.
This, combined with slightly lower sales volumes and low price inflation,
resulted in a decrease in underlying operating profit to £542 million, before
e-commerce costs of £19.7 million, a reduction of 27.2% over the previous
year.
Homebase
A strong Homebase sales performance reflects the success of our value
repositioning which was launched at the beginning of the year. Reported sales
growth for the year was 10.0% with operating profit down 13.4% to £64.6
million before charging e-commerce costs of £7.6 million.
Given the importance of Easter trade to Homebase it is necessary to look at
comparable trading periods. The most recent year that includes a full Easter
trading period in both the current and comparative years is the 52 weeks to 4
March 2000 (i.e. four weeks earlier than the statutory reporting period end).
Sales for this period show an increase of 13.2% on the previous year,
including an increase in like-for like sales of 12.1%.
On the same basis, Homebase operating profit increased by 9.1%. The
improvement from the reported figures is partly due to the timing of Easter
and partly due to a particularly strong trading performance in the four weeks
to 3 April 1999.
Like-for-like sales growth was strong throughout the year through pricing and
promotional activity coupled with a strong advertising campaign.
Shaw's
Shaw's performed well with like-for-like sales growth of 3.1%. Including the
acquisition of Star Markets, reported sales and operating profits were $3,857
million and $129 million representing improvements of 25.7% and 46.0%
respectively.
The integration of Star Markets has been successful, contributing $7.6 million
to operating profit before exceptional costs and amortisation of goodwill.
Synergies in the year were $14 million, ahead of our initial expectations, and
were realised from buying, distribution and back office support functions.
Sainsbury's Bank
Sainsbury's Bank reported its first operating profit of £2.9 million for the
year, an improvement of £8.0 million on 1998/99. Turnover declined by 7.2%,
affected by the fall in interest rates during the year; however, there was a
compensating reduction in costs.
Cash flow
Operating cash flow generated by the business remained strong at £838 million.
After dividends, net interest and tax, cash flow was £246 million. Payments
for fixed assets during the year amounted to £761 million being offset by
proceeds from the sale of fixed assets of £385 million including the sale and
leaseback of sixteen stores. Total payments for acquisitions were £293
million, being primarily the Star Markets acquisition, resulting in net debt
of £1,264 million as at 1 April 2000 with gearing of 27%.
Group profit and loss account
for the 52 weeks to 1 April 2000
2000 52 weeks 1999 56 weeks
Before Before
except- Except- except- Except-
ional ional ional ional
items items Total items items Total
Note £m £m £m £m £m £m
Turnover including VAT
and sales taxes 2 17,414 - 17,414 17,587 - 17,587
VAT and sales taxes (1,143) - (1,143) (1,154) - (1,154)
Turnover excluding VAT
and sales taxes 16,271 - 16,271 16,433 - 16,433
Continuing operations 15,784 - 15,784 16,433 - 16,433
Acquisitions 487 - 487 - - -
Group turnover excluding
VAT and sales taxes 16,271 - 16,271 16,433 - 16,433
Cost of sales 4 (15,118) (83) (15,201) (15,095) (21) (15,116)
Gross profit 1,153 (83) 1,070 1,338 (21) 1,317
Administrative expenses4 (486) (29) (515) (406) - (406)
Amortisation of
goodwill 9 (11) - (11) - - -
Year 2000 costs (6) - (6) (30) - (30)
Profit sharing (10) - (10) (45) - (45)
Group administrative
expenses (513) (29) (542) (481) - (481)
Operating profit 640 (112) 528 857 (21) 836
Continuing operations 659 (96) 563 857 (21) 836
Acquisitions (19) (16) (35) - - -
Group operating profit 640 (112) 528 857 (21) 836
Associated undertakings
- share of profit 1 - 1 12 - 12
Profit on sale of
properties 4 - 52 52 - 11 11
Profit on disposal
of an associate - - - - 84 84
Profit on ordinary
activities before interest 641 (60) 581 869 74 943
Net interest payable 3 (72) - (72) (55) - (55)
Profit on ordinary
activities before tax 569 (60) 509 814 74 888
Underlying profit on
ordinary activities
before tax 580 (60) 520 814 74 888
Amortisation of goodwill (11) - (11) - - -
Group profit on ordinary
activities before tax 569 (60) 509 814 74 888
Tax on profit on
ordinary activities (189) 27 (162) (258) (34) (292)
Profit on ordinary
activities after tax 380 (33) 347 556 40 596
Equity minority interest 2 - 2 2 - 2
Profit for the
financial year 382 (33) 349 558 40 598
Dividends (274) (294)
Retained profit 75 304
Earnings per share 5 18.3p 31.4p
Underlying earnings
per share* 5 20.5p 29.2p
Diluted earnings
per share 5 18.2p 31.1p
Underlying diluted
earnings per share* 5 20.5p 29.0p
* Before amortisation of goodwill, exceptional costs and non-operating items
Group statement of total recognised gains and losses
for the 52 weeks to 1 April 2000
2000 1999
52 weeks 56 weeks
£m £m
Profit for the financial year 349 598
Currency translation differences on
foreign currency net investments 3 5
Total recognised gains and losses
relating to the financial year 352 603
There is no material difference between the above profit for the period and
the historical cost equivalent.
Reconciliation of movements in equity shareholders' funds
2000 1999
52 weeks 56 weeks
£m £m
Profit for the financial period 349 598
Equity dividends (274) (294)
75 304
Currency translation differences 3 5
Goodwill on disposals charged to profit
for the financial year - 148
New share capital subscribed for
less expenses of capital issues 21 68
Amounts deducted in respect of
shares issued to the QUEST (1) (6)
Other (-) (2)
Net movement in equity shareholders' funds 98 517
Opening equity shareholders' funds 4,644 4,127
Closing equity shareholders' funds 4,742 4,644
Group balance sheets
1 April 2000 3 April 1999
Note £m £m
Fixed assets
Intangible assets 316 -
Tangible assets 6,563 6,409
Investments 98 41
6,977 6,450
Current assets
Stocks 986 843
Debtors 320 249
Investments 18 17
Sainsbury's Bank 6 1,718 1,766
Cash at bank and in hand 533 725
3,575 3,600
Creditors: due within one year
Sainsbury's Bank 6 (1,607) (1,669)
Other (3,113) (2,880)
(4,720) (4,549)
Net current liabilities (1,145) (949)
Total assets less current liabilities 5,832 5,501
Creditors: due after one year (993) (804)
Provisions for liabilities and charges (48) (8)
Total net assets 4,791 4,689
Capital and reserves
Called up share capital 481 480
Share premium account 1,379 1,359
Revaluation reserve 39 38
Profit and loss account 2,843 2,767
Group shareholders' funds 4,742 4,644
Equity minority interest 49 45
Total capital employed 4,791 4,689
Group cash flow statement
for the 52 weeks to 1 April 2000
2000 1999
52 weeks 56 weeks
Note £m £m
Net cash inflow from operating activities 7 838 1,322
Dividends received from associated
undertakings - 3
Returns on investments and servicing
of finance
Interest received 46 46
Interest paid (109) (113)
Interest element of finance lease
rental payments (17) (16)
Net Cash outflow from returns on
investments and servicing of finance (80) (83)
Taxation (218) (287)
Capital expenditure and financial investment
Payments to acquire tangible fixed assets (755) (803)
Receipts from sale of tangible fixed assets 385 107
Purchase of own shares (68) (2)
Payments for intangible assets (6) -
Net cash outflow from capital expenditure
and financial investment (444) (698)
Acquisitions and disposals
Acquisition of and investment in
subsidiary and associated undertakings 9 (293) (11)
Investment in Sainsbury's Bank by
minority shareholder 4 9
Proceeds from disposal of an associate - 345
(Investment in)/proceeds from disposal
of other fixed asset investments (1) 3
Net cash (outflow)/inflow from acquisitions
and disposals (290) 346
Equity dividends paid (294) (249)
Net cash (outflow)/inflow before
management of liquid resources
and financing (488) 354
Management of liquid resources - 3
Financing
Issue of ordinary share capital 16 38
Increase in short-term borrowings 79 188
Increase/(decrease) in long-term borrowings 173 (9)
Capital element of finance lease rental payments (4) (6)
Net cash inflow from financing 264 211
(Decrease)/increase in cash in the period (224) 568
Reconciliation of net cash flow to movement in net debt
2000 1999
Note £m £m
(Decrease)/increase in cash in the period (224) 568
Cash inflow from increase in debt and
lease financing (248) (173)
Debt in subsidiaries acquired (76) -
New finance leases (7) (17)
Currency translation difference (5) (5)
Movement in net debt in the period 8 (560) 373
Net debt at the beginning of the period 8 (704) (1,077)
Net debt at the end of the period 8 (1,264) (704)
Notes to the Results
1. Accounting policies and financial period
The financial information has been prepared using the accounting policies set
out in the 1999 Annual Accounts except for the accounting for computer
software costs.
The previous policy was to write off software as incurred unless it formed an
integral part of a purchased tangible asset. Costs incurred in acquiring and
developing computer software are now capitalised as fixed assets where the
software supports a significant business system and the expenditure leads to
the creation of an identifiable durable asset. Computer software assets are
depreciated over their expected useful lives.
Expenditure on projects which has been capitalised as fixed assets amounted to
£18 million and depreciation where the software assets were already in use
amounted to £3 million so giving a net impact of £15 million. It is not
practicable to restate prior years as the required detail covering previous
years is not available across all Group companies.
The 1999 financial year covered a 56 week period rather than 52 weeks. To
facilitate comparison, where appropriate, information for the 52 weeks to 3
April 1999 (unaudited) is presented.
2. Group sales and operating profit (before amortisation of goodwill, Year
2000 costs, exceptional costs and profit sharing)
Set out below are the Group sales (including VAT)and operating profit before
amortisation of goodwill, Year 2000 costs, exceptional costs and profit
sharing for the 52 weeks ended 1 April 2000, the 52 weeks ended 3 April 1999
(unaudited) and the 56 weeks ended 3 April 1999.
52 weeks 52 weeks 56 weeks 52 weeks
Sales (£ million) to 1 April to 3 April to 3 April Change %
2000 1999 1999
(unaudited)
Sainsbury's Supermarkets 13,266.7 13,033.5 14,004.4 1.8%
Homebase 1,428.1 1,297.9 1,393.0 10.0%
Sainsbury's Bank 136.0 146.5 157.5 -7.2%
JS Developments 165.2 31.6 31.7 422.8%
Other 0.1 12.9 12.9 -
UK total 14,996.1 14,522.4 15,599.5 3.3%
Shaw's Supermarkets 2,394.1 1,855.3 1,987.9 29.0%
Sainsbury's Egypt 24.3 - - -
Overseas total 2,418.4 1,855.3 1,987.9 30.4%
TOTAL 17,414.5 16,377.7 17,587.4 6.3%
Operating profit (£ million)
Sainsbury's Supermarkets 521.8 732.3 792.8 -28.7%
Homebase 57.0 74.6 76.3 -23.6%
Sainsbury's Bank 2.9 (5.1) (5.6) -
JS Developments 16.4 9.0 8.9 82.2%
Other (0.5) 3.3 3.4 -
UK total 597.6 814.1 875.8 -26.6%
Shaw's Supermarkets 80.0 53.4 56.3 49.8%
Sainsbury's Egypt (10.8) - -
Overseas total 69.2 53.4 56.3 29.6%
TOTAL 666.8 867.5 932.1 -23.1%
US sales and operating profit have been translated at an average exchange rate
for the period of £1 = $1.61 for the 52 weeks ended 1 April 2000 (1999 56
weeks : $1.66, 52 weeks $1.65).
Shaw's sales and operating profit in local currency (including Star Markets)
Sales ($ million) 3,856.7 3,069.0 3,290.7 25.7%
Operating profit ($ million) 128.9 88.3 94.7 46.0%
The results set out above are after deducting all e-commerce expenditure
including home shopping:
Pre e-commerce % change E-commerce Post e-commerce
£m £m £m
Sainsbury's Supermarkets 541.5 -27.2% 19.7 521.8
Homebase 64.6 -13.4% 7.6 57.0
Operating profit for the 52 weeks ended 1 April 2000 excludes Year 2000 costs
of £5.5 million (56 weeks ended 3 April 1999 - £29.7 million and 52 weeks
ended 3 April 1999 - £27.8 million) representing the incremental costs of
converting computer software to deal with the Year 2000 date change.
3. Capitalised interest
Group interest capitalised in the 52 week period ended 1 April 2000 was £14
million (56 week period ended 3 April 1999 : £15 million).
4. Exceptional items
4.1 Exceptional operating items
The exceptional costs comprise the following:
2000 1999
Severance
and
reorganisation Store
costs closures Total Total
£m £m £m £m
Sainsbury's Supermarkets 19 8 27 -
Homebase 18 27 45 21
Shaw's Supermarkets 4 7 11 -
Exceptional cost of sales 41 42 83 21
Sainsbury's Supermarkets 12 - 12 -
Homebase - 4 4 -
Shaw's Supermarkets 13 - 13 -
Exceptional administrative expenses 25 4 29 -
Total exceptional costs 66 46 112 21
The reorganisation costs incurred in Sainsbury's Supermarkets were the result
of simplifying central and store operations and streamlining the store
management structure. The integration of Savacentre into Sainsbury's
Supermarkets is now complete.
Homebase has closed 99 kitchen studios which were loss making and is utilising
the space released for extending its own range of products. The severance and
reorganisation costs of closure amounted to £15 million. Homebase has also
simplified its operations which resulted in associated severance costs of £4
million. Restructuring costs at Hampden Group PLC, which was acquired during
the year, amounted to £2 million.
The exceptional severance costs in US operations all relate to the integration
of Star Markets (see note 9). The closure provision includes a programme of
14 store closures at Homebase.
4.2 Exceptional non-operating items
The exceptional non-operating items comprise the following:
2000 1999
£m £m
Sale and leaseback of UK
supermarket freeholds 82 -
Disposal of Shaw's Supermarkets
shopping centres (15) -
Other (15) 11
52 11
An amount of £82 million is included in property profits resulting from the
sale of 16 supermarket freehold properties for proceeds of £325 million to a
property company not related to the Group. The supermarkets have been leased
back by Sainsbury's Supermarkets for a period of 23 years at a market rent
which will increase by 1% per annum over the lease period. The leases have
been treated as operating leases. The Company has provided a guarantee to the
purchasers of the freeholds that the properties will realise at least £170
million at the end of the lease period. In view of the relatively low amount
of this guarantee when compared to the present market value of the freehold
interests, it is believed that the likelihood of this guarantee being invoked
is remote.
Provision was made for a loss of £15 million on the sale of 19 shopping
centres owned by Shaw's Supermarkets. The transaction generated net proceeds
of £72 million. In 15 of these shopping centres, Shaw's Supermarkets will
enter into a lease, but only for the area from which it trades.
5. Earnings per share
The calculation of earnings per share is based on profit after tax and
minority interest, divided by the weighted average number of ordinary shares
in issue during the 52 week period to 1 April 2000 of 1,913.5 million (56
weeks to 3 April 1999 : 1,909.4 million).
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. The group has only one category of dilutive potential ordinary
shares: those share options granted to employees where the exercise price is
less than the average market price of the Company's ordinary shares during the
year.
2000 1999
number number
(million) (million)
Weighted average number of shares in issue 1,913.5 1,909.4
Weighted average number of dilutive
share options 4.1 17.0
Total shares for calculating diluted
earnings per share 1,917.6 1,926.4
The alternative measure of earnings per share is provided because it reflects
the Group's underlying trading performance by excluding the effect of
amortisation of goodwill, exceptional costs, the profit or loss on the sale of
properties, and any profits or losses on disposal of associated undertakings
or subsidiaries.
2000 1999
52 weeks 56 weeks
Earnings Per share Earnings Per share
amount amount
£m pence £m pence
Basic earnings per share 349 18.3 599 31.4
Amortisation of goodwill 11 0.6 - -
Exceptional costs 84 4.4 14 0.7
Profit on sale of properties
and disposal of an associate (52) (2.8) (55) (2.9)
Basic earnings per share before
amortisation of goodwill,
exceptional costs and profit on
sale of properties and disposal
of an associate 392 20.5 558 29.2
Diluted earnings per share 349 18.2 599 31.1
Diluted earnings per share before
amortisation of goodwill, exceptional
costs and profit on sale of properties
and disposal of associate 392 20.5 558 29.0
6. Current assets and creditors of Sainsbury's Bank
1 April 3 April
2000 1999
£m £m
Current assets
Treasury bills and other eligible bills 64 83
Loans and advances to banks 542 1,212
Loans and advances to customers* 684 398
Debt securities 399 48
Prepayments and accrued income 29 25
1,718 1,766
Creditors: due within one year
Customer accounts 1,590 1,653
Accruals and deferred income 17 16
1,607 1,669
* Loans and advances to customers include £329 million (1999 - £100 million)
of loans and advances repayable in more than one year.
In addition to the above assets and liabilities, Sainsbury's Bank had other
assets of £5million at 1 April 2000 (3 April 1999 : £4 million) and other
liabilities of £4 million (3 April 1999: £nil).
7. Reconciliation of operating profit to net cash inflow from operating
activities
2000 1999
52 weeks 56 weeks
£m £m
Operating profit 528 836
Depreciation 410 388
Amortisation of intangible assets 12 -
(Profit)/loss on sale of equipment, fixtures and vehicles (4) 6
Increase in stocks (86) (75)
Increase in debtors (47) (73)
Increase in creditors and provisions 39 256
Decrease/(increase) in Sainsbury's Bank current assets 48 (182)
(Decrease)/increase in Sainsbury's Bank creditors (62) 166
838 1,322
8. Analysis of net debt
Debt in
At 3 subsidiaries Other At 1
April Cash acquired non-cash Exchange April
1999 flow (excluding movements movements 2000
cash and
overdrafts)
£m £m £m £m £m £m
Cash and liquid funds 742 (190) (1) 551
Overdrafts (128) (34) (162)
(224)
Debt due within 1 year (532) (79) (76) (2) (689)
Debt due after 1 year (653) (173) (2) (828)
Finance leases (133) 4 (7) - (136)
(248)
Total (704) (472) (76) (7) (5) (1,264)
9. Acquisitions of and investment in subsidiary and associates undertakings
Three companies became subsidiaries during the year.
2000 1999
Cash Cash Cash
consideration balances Overdrafts Total consideration
plus costs acquired acquired plus costs
£m £m £m £m £m
Star Markets Holdings Inc. (235) 1 - (234) -
Hampden Group PLC (14) 3 - (11) -
Egyptian Distribution Group SAE (40) - (8) (48) (11)
(289) 4 (8) (293) (11)
a) Star Markets
On 28 June 1999, Shaw's Supermarkets acquired Star Markets for a total
consideration of £311 million including debt acquired of £76 million. Star
Markets now operates 44 supermarkets, mainly in the Greater Boston area. In
the 40 weeks to 1 April 2000, Star Markets contributed £446 million to Group
turnover and an operating loss of £19 million (including exceptional operating
costs of £14 million (note 4.1) and amortisation of goodwill of £9.5 million).
Provisional goodwill arising amounted to £250 million after fair value
adjustments downwards of £22 million on net assets acquired of £83 million.
The goodwill is being amortised over 20 years with the charge in the year to 1
April 2000 being £9.5 million.
b) Other acquisitions
Following a public offer in October 1999, the Group acquired full ownership of
Hampden in which it previously had a holding of 29.2 per cent. The
consideration was £14 million. Hampden operates seven Homebase stores in
Northern Ireland and three stores in the Republic of Ireland through a
franchise agreement.
On 20 October 1999, the Group increased its ownership in Egyptian Distribution
Group SAE (EDGE) from 25.1 per cent to 80.1 per cent. The consideration
comprised an initial cost of £29 million with a further potential payment of
£11 million contingent on future performance.
Provisional goodwill arising from these two acquisitions amounted to £57
million after fair value adjustments downwards of £4 million on net assets
acquired of £11 million. The goodwill is being amortised over 20 years with
the charge in the year to 1 April 2000 being £0.2 million for Hampden and £1.2
million for EDGE.
10. Financial statements
This financial information is derived from the full Group Financial Statements
for the 52 weeks to 1 April 2000 and does not constitute full accounts within
the meaning of section 240 of the Companies Act 1985 (as amended). The Group
Accounts on which the auditors have given an unqualified report which does not
contain a statement under section 237(2) or (3) of the Companies Act 1985,
will be delivered to the Registrar of Companies in due course, and posted to
shareholders next month. Copies will be available from J Sainsbury plc,
Stamford House, Stamford Street, London SE1 9LL and its paying agents
Citibank, N.A., 336 Strand, London WC2R 1HB, Morgan Guaranty Trust Company of
New York, 60 Victoria Embankment, London EC4Y OJP and 1 Chase Manhattan Bank,
Trinity Tower, 9 Thomas More Street, London E1 9YT.
For enquiries
Investor Relations: Roger Matthews / Amanda Cobb - 020 7695 6215
Press Office: Pip Wood / Anita Scott - 020 7695 7295
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