• Chairman's statement
• Business review
  • Our business and its markets
  • Corporate objectives
  • Operating review
  • Financial review
  • Principal risks and uncertainties
• Board of Directors
• Operating Board
• Governance
  • Statement of corporate governance
  • Remuneration report
  • Statement of Directors' responsiblities
• Financial statements
  • Group income statement
  • Statements of recognised income and expense
  • Balance sheets
  • Cash flow statements
  • Notes to the financial statements
  • Five year financial record
• Additional shareholder information
• Financial calendar

Chairman's statement

This year has been particularly significant for Sainsbury's since it marked the completion of the Making Sainsbury's Great Again (“MSGA”) recovery plan announced in October 2004. The plan was based on improving our customer offer and operational efficiency to achieve sustained improvement in our level of sales and profit growth. I am happy to report that actual sales growth in the last three years exceeded our expectations with £2.7 billion additional sales by March 2008 against the original stretching target of £2.5 billion. This is a great achievement in a challenging market. Our sales growth is also reflected in substantially improved profits. Our underlying profit before tax for the year was up 28.4 per cent to £488 million, more than double the £238 million reported for the year to March 2005, prior to our recovery plan.

The Board is recommending a final dividend of 9.00 pence per share, making the full year dividend 12.00 pence, an increase of 23.1 per cent compared to last year. This is covered 1.63 times by earnings which is in line with our stated policy of dividend cover in the range of between 1.5 times and 1.75 times.

It is a credit to the management team and colleagues at Sainsbury's that our performance over the past 12 months was delivered against an extended backdrop of speculation concerning the potential take-over of the Company which lasted for the majority of 2007. In April 2007 a private equity consortium, led by CVC, decided not to proceed with plans to make an offer for the Company, as the pre-conditions to their financing arrangements, which were outside the control of the Board, could not be satisfied. In November 2007, Delta Two's plans to make an offer were also withdrawn following a final review by them of their financing plans. Throughout this period the business continued to perform, well reflecting the exceptional leadership and commitment from the management team.

We have also made progress in managing our property assets with the creation of two strategic joint ventures. These unlock the opportunity to develop stores significantly and improve customers' shopping experience and support our belief that effective property management is closely aligned to building shareholder value.

We have a strong heritage and brand which is proving to be both resilient and increasingly relevant as consumers and shareholders are becoming more concerned with the social, environmental and ethical backdrop against which companies now have to operate. It is however, also evident that business conditions have become tougher in the last nine months as a result of the consumer slowdown now in evidence in the UK. The causes of the slowdown appear largely linked to the weaker prospects for economic growth in the light of the credit squeeze which gathered pace in the second half of 2007. The grocery retail sector is extremely competitive but the improvement in our performance in the last few years, together with 139 years of high quality and great value for customers, leaves us well placed to deal with these tougher conditions.

The findings published by the Competition Commission (“CC”) at the end of April 2008 brought its investigation to a conclusion. We welcomed its finding that the UK groceries market is ‘delivering a good deal for consumers’. This is consistent with the significant improvements Sainsbury's customers have experienced in product quality, availability, service and price over recent years. The CC recommended that a competition assessment should be introduced into the planning system. We argued for this for new stores throughout the inquiry to protect local markets from exploitation in the future. The CC also stated its intention to require more retailers to adhere to a new Grocery Suppliers' Code of Practice, a proposal welcomed by Sainsbury's. However, we believe the creation of an ombudsman to look into aspects of relationships between suppliers and grocery retailers is unnecessary. We will continue to play a full part in discussions with the CC and other parties, to ensure remedies are implemented in the most effective and efficient way to improve choice for UK consumers. The OFT is currently investigating a possible competition infringement in the tobacco industry and also making early enquiries into the pricing of a number of other products sold by supermarkets. Sainsbury's has strict guidelines for compliance with competition law and is cooperating with the OFT in each of its enquiries.

In August we welcomed Mary Harris and Mike Coupe to the Board. Mary joined as a
Non-Executive Director. She has previously spent much of her career with McKinsey, most recently as a partner, and has extensive strategic experience in consumer goods industries including retail. Mary will also be a member of Sainsbury's Audit, Corporate Responsibility and Nomination Committees. Mike joined as Executive Director. He has been with Sainsbury's since 2004 as trading director on our Operating Board. With over 20 years' experience in the retail industry including senior roles at Big Food Group, Asda and Tesco, Mike's range and depth of knowledge of the UK retail market bring real value to our Board.

I am delighted that we have successfully delivered against the MSGA targets set in October 2004 and that our business is a fundamentally more stable and robust business than it was when the recovery was launched. We are now focused on delivering the Recovery to Growth targets outlined in May 2007. These are summarised within Corporate objectives and were covered in detail in last year's annual report.

Philip Hampton

Chairman

Philip Hampton

Chairman