The Directors present their report and audited financial statements for the 52 weeks to 17 March 2012.
The Company’s principal activities are grocery and related retailing.
The Business review sets out a comprehensive review of the development and performance of the business for the 52 weeks ended 17 March 2012 and future developments. All the information detailed in these pages is incorporated by reference into this report and is deemed to form part of this report.
The corporate governance statement as required by the Disclosure and Transparency Rules 7.2.1 and is incorporated by reference into this report.
The Directors recommend the payment of a final dividend of 11.6 pence per share (2011: 10.8 pence), making a total dividend for the year of 16.1 pence per share (2011: 15.1 pence), an increase of 6.6 per cent over the previous year. Subject to shareholders approving this recommendation at the Annual General Meeting (‘AGM’), the dividend will be paid on 13 July 2012 to shareholders on the register at the close of business on 18 May 2012.
On 13 July 2011 Darren Shapland stood down from his position as a Director. He remains with Sainsbury’s as Non-Executive Chairman of Sainsbury’s Bank. Val Gooding, Non-Executive Director, also stepped down from the Board on 13 July 2011, to take up the position of Chairman of Premier Farnell plc.
In May we announced that Bob Stack had decided to stand down from his position as a Non-Executive Director with effect from the AGM on 11 July 2012.
The UK Corporate Governance Code provides for all directors of FTSE companies to stand for election or re-election by shareholders every year. Accordingly all members of the Board will retire and seek re-election at this year’s AGM. View the full biographical details of all of the current Directors.
The AGM will be held on Wednesday, 11 July 2012 at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE at 11.00am. The Chairman’s letter and the Notice of Meeting accompany this report, together with notes explaining the business to be transacted at the meeting.
At the meeting, resolutions will be proposed to declare a final dividend, to receive the Annual Report and Financial Statements and approve the Remuneration Report, to re-elect all of the Directors, other than Bob Stack, and to re-appoint PricewaterhouseCoopers LLP as auditors. In addition, shareholders will be asked to renew both the general authority of the Directors to issue shares and to authorise the Directors to issue shares without applying the statutory pre-emption rights. In this regard the Company will continue to adhere to the provisions in the Pre-emption Group’s Statement of Principles.
Shareholders will be asked to authorise the Company to make market purchases of its own shares. Shareholders will also be asked to authorise the Directors to hold general meetings at 14 clear days’ notice (where this flexibility is merited by the business of the meeting and is thought to be in the interests of shareholders as a whole). A resolution to renew the authority to make ‘political donations’ as defined by Part 14 of 2006 Companies Act, will also be proposed.
The following information is given pursuant to Section 992 of the 2006 Companies Act.
Except as described below in relation to the Company’s employee share schemes, 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 through the Company’s employee share plans 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 Trustee is the registered owner, the voting rights are normally exercised by the registered owner at the direction of the participants. The J Sainsbury Employee Benefit Trusts waive their right to vote and to dividends on the shares they hold which are unallocated. Some of the Company’s employee share plans include restrictions on transfer of shares while the shares are held within the plan.
At the AGM held in July 2011, the Company was authorised by shareholders to purchase its own shares, within certain limits and as permitted by the Articles of Association. The Company made no purchases of its own shares during the year and no shares were acquired by forfeiture or surrender or made subject to a lien or charge.
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.
The Company is not party to any significant agreements that would take effect, alter or terminate upon a change of control following a takeover bid.
Details of the changes to the ordinary issued share capital during the year are shown on page 95. At the date of this report, 1,884,064,677 ordinary shares of 28 4⁄7 pence have been issued, are fully paid up and are listed on the London Stock Exchange.
As at 9 May 2012, 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 Disclosure and Transparency Rule 5:
|% of voting rights|
|Judith Portrait (a trustee of various settlements, including charitable trusts)||3.92|
|Legal and General Group plc||3.99|
|Lord Sainsbury of Turville||4.99|
|M1 Capital Limited||3.02|
|Qatar Holdings LLC||25.99|
The beneficial interests of the Directors and their families in the shares of the Company are shown in the Remuneration Report. The Company’s Register of Directors’ Interests contains full details of Directors’ interests, shareholdings and options over ordinary shares of the Company.
During the year, no Director had any material interest in any contract of significance to the Group’s business.
The Directors are entitled to be indemnified by the Company to the extent permitted by law and the Company’s Articles of Association in respect of all losses arising out of or in connection with the execution of their powers, duties and responsibilities. The Company has executed deeds of indemnity for the benefit of each Director in respect of liabilities which may attach to them in their capacity as Directors of the Company. The Company purchased and maintained Directors’ and Officers’ liability insurance throughout 2011/12, which has been renewed for 2012/13. Neither the indemnities nor the insurance provide cover in the event that the Director is proved to have acted fraudulently.
The Directors believe that the aggregate open market value of Group properties exceeds the net book value as set out in note 11 on page 86 to the financial statements.
Sainsbury’s has contractual and other arrangements with numerous third parties in support of its business activities. None of the arrangements is individually considered to be essential to the business of Sainsbury’s.
The policy of the Company and its principal operating companies is to agree terms of payment prior to commencing trade with a supplier and to abide by those terms on the timely submission of satisfactory invoices. The Company is a holding company and therefore has no trade creditors. Statements on the operating companies’ payment of suppliers are contained in their financial statements.
Sainsbury’s continues its strong commitment to corporate responsibility, which is an everyday part of how the Company does business. Sainsbury’s company values underpin our goal to make all of our customers’ lives easier everyday by offering great quality and service at fair prices. In October, we announced our 20 by 20 Sustainability Plan a new cornerstone of our business strategy designed to accelerate Sainsbury’s commitment to social and environmental responsibility and excellence. This year, we have further integrated the reporting of corporate responsibility into this Annual Report and Financial Statements to illustrate how our values underpin and influence our broader business strategy.
The Company’s Corporate Responsibility Report will be issued later in the
year and will provide an update on our 20 by 20 Sustainability Plan. This report
will be available online
(www.j-sainsbury.co.uk/cr). We have five key corporate responsibility principles: ‘Best for food and health’, ‘Sourcing with integrity’, ‘Respect for our environment’, ‘Making a positive difference to our community’ and ‘A great place to work’. Each of our 20 by 20 Sustainability Plan commitments is aligned under one of these principles.
As part of ‘A great place to work’ the Company has well-developed policies for fair and equal treatment of all colleagues, employment of disadvantaged persons and colleague participation. It is our policy that people with disabilities are given full and just consideration for all vacancies and over the year we have conducted a number of training sessions to raise awareness and understanding of our customers and colleagues with disabilities and how we can better support them. Under the banner of You Can, the Company also actively works with a number of organisations which seek to promote employment for disadvantaged persons and inclusion within the workplace and has made one of our 20 by 20 Sustainability Plan commitments that by 2020 we will provide 30,000 people from disadvantaged groups with work opportunities. These include JobCentre Plus, A Fairer Chance, the Shaw Trust, Remploy and Mencap. Further details of Sainsbury’s diversity policy can be found at www.j-sainsbury.co.uk/diversity.
The Company’s quarterly trading statements, interim and annual results are presented to all senior management and are communicated to all colleagues. Colleagues have always been encouraged to hold shares in the Company.
Sainsbury’s is committed to making a positive difference to the communities in which it operates. We support many charitable organisations and community projects through either donating cash, making in-kind donations or through colleague volunteering.
During the year, Sainsbury’s colleagues, customers and suppliers raised £25.4 million (2011: £22.9 million) for charities through events supported by the Company, including Sport Relief. Cash and in-kind donations totalled £4.2 million (2011: £2.1 million).
The Company made no political donations in 2012 (2011: £nil).
There are no post balance sheet events.
The financial risk management and policies of the Group are disclosed in note 28 on pages 99 to 104 to the financial statements.
The Group’s business activities, together with the factors likely to affect its future development, performance and position are set out in the Business review. The financial position of the Group, its cash flows and liquidity are highlighted in the Financial review. The Group manages its financing by diversifying funding sources, maintaining core borrowings with long-term maturities and sufficient standby liquidity. Full details of the Group’s financing arrangements can be found in the financial statements. In addition, notes 28 and 29 on pages 99 to 108 to the financial statements include the Group’s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk.
The debt refinancing in March 2006 removed the Group’s reliance on unsecured credit markets for medium and long-term finance and the Group’s first significant re-financing exposure is not until 2014.
As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current challenging economic outlook. The Directors have a reasonable expectation that the Company has sufficient resources to continue in operation for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
Each of the Directors has confirmed that, so far as he/she is aware, there is no relevant audit information of which the auditors are unaware. Each Director has taken all steps that he/she ought to have taken as a Director in order to make himself/herself aware of any relevant audit information and to establish that the auditors are aware of that information.
PricewaterhouseCoopers LLP have expressed their willingness to be reappointed as auditors of the Company. Upon the recommendation of the Audit Committee, resolutions to reappoint them as auditors and to authorise the Directors to determine their remuneration will be proposed at the AGM.
By order of the Board
8 May 2012