Directors' report
The Directors present their report and audited financial statements for the 52 weeks to 22 March 2008.
Principal activities
The Company’s principal activities are grocery and related retailing.
Business review
The Business review sets out a comprehensive review of the development and performance of the business for the year ended 22 March 2008 and future developments. The Business review is set out here.
Dividends
The Directors recommend the payment of a final dividend of 9.00 pence per share (2007: 7.35 pence), making a total dividend for the year of 12.00 pence per share (2007: 9.75 pence), an increase of 23.1 per cent over the previous year. Subject to shareholders approving this recommendation at the Annual General Meeting (“AGM”), the dividend will be paid on 18 July 2008 to shareholders on the register at the close of business on 23 May 2008.
Changes to the Board
As previously reported, Mike Coupe, Trading Director, and Mary Harris, Non-Executive Director, both joined the Board on 1 August 2007.
Re-election of Directors
In accordance with the Articles of Association, Mike Coupe and Mary Harris, who were appointed to the Board since the last AGM, will retire and seek election at this year’s AGM. Philip Hampton, Gary Hughes and Bob Stack will also retire by rotation and seek re-election.
Full biographical details of all of the current Directors.
Annual General Meeting
The AGM will be held on Tuesday, 15 July 2008 at The International Convention Centre, Broad Street, Birmingham B1 2EA 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 elect Directors 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 the authority to issue shares without applying the statutory pre-emption rights, and to authorise the Company to make market purchases of its own shares. No such purchase has been made during the last financial year. Shareholders will also be asked to adopt new Articles of Association to reflect changes introduced by the provisions of the 2006 Companies Act and other current market practice. A resolution to renew the authority to make “political donations” as defined by The Political Parties, Elections and Referendums Act 2000 will also be proposed.
Share capital and control
The following information is given pursuant to Section 992 of the Companies Act 2006.
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. 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 on 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 schemes rank pari passu with shares in issue and have no special rights. The J Sainsbury Employee Benefit Trust waives its right to vote and to dividends on the shares it holds.
At the AGM held in July 2007, 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.
On a takeover, options and awards granted to employees under the Company’s share schemes may vest. 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.
Ordinary shares
Details of the changes to the ordinary issued share capital during the year are shown on note 24. At the date of this report, 1,747,660,753 ordinary shares of 284/7 pence have been issued, are fully paid up and are listed on the London Stock Exchange.
B shares
At the Extraordinary General Meeting held on 12 July 2004, shareholders approved a Return of Capital to shareholders by way of a B Share Scheme. A total of 1,943,173,266 B shares were issued. The final redemption of the 27,502,070 outstanding B shares took place on 18 July 2007.
Major interests in shares
As at 13 May 2008, 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:
| Number of shares | % of voting rights | |
|---|---|---|
| Crédit Agricole Cheuvreux International Limited | 55,965,129 | 3.21 |
| Judith Portrait (a trustee of various settlements, including charitable trusts) | 71,332,495 | 4.09 |
| Legal & General Group plc | 69,825,844 | 4.00 |
| Lord Sainsbury of Turville* | 102,045,437 | 5.83 |
| Vidacos Nominees Limited (which holds the shares as a nominee for Razino Limited) | 88,000,000 | 5.07 |
| Qatar Holdings LLC | 435,164,241 | 24.97 |
* Innotech Advisers Limited, an investment company 100 per cent owned by Lord Sainsbury of Turville, holds 92,000,000 of his shares in J Sainsbury plc.
Directors’ interests
The beneficial interests of the Directors and their families in the shares of the Company are shown below. Options granted under the Company’s employee share plans are shown in the Remuneration report.
|
Ordinary shares 1 24 March 2007 |
Ordinary shares 1 22 March 2008 |
Ordinary shares 1,4 13 May 2008 |
|
|---|---|---|---|
| Mike Coupe | 98,175 2 | 98,870 | 98,870 |
| Justin King | 274,088 | 390,383 | 390,446 |
| Darren Shapland | 70,241 | 137,253 | 137,253 |
| Anna Ford | 1,000 | 1,000 | 1,000 |
| Val Gooding | 1,320 | 1,320 | 1,320 |
| Philip Hampton | 25,000 | 25,000 | 25,000 |
| Mary Harris | - 2 | 5,000 | 5,000 |
| Gary Hughes | 15,446 | 18,246 | 18,246 |
| John McAdam | 1,000 | 1,000 | 1,000 |
| Bob Stack 3 | 2,800 | 2,800 | 2,800 |
- Ordinary shares are beneficial holdings which include the Directors’ personal holdings and those of their spouses and minor children. They also include the beneficial interests in shares which are held in trust under the Sainsbury’s Share Purchase Plan.
- As at date of appointment.
- Held in the form of 700 American Depository Receipts.
- Includes shares purchased under the Sainsbury’s Share Purchase Plan between 22 March 2008 and 13 May 2008.
- The Executive Directors are potential beneficiaries of the Company’s employee benefit trusts, which are used to satisfy awards under the Company’s employee share plans, and they are therefore treated as interested in the 22.4 million shares (2007: 23.5 million) held by the Trustees.
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.
Directors’ indemnities
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 of the Company 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 2007, which was renewed for 2008/09. Neither the indemnities nor insurance provide cover in the event that the Director is proved to have acted fraudulently.
Market value of properties
The Directors believe that the aggregate open market value of Group properties exceeds the net book value as set out in note 11 of the financial statements.
Policy on payment of creditors
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.
Corporate Responsibility
Sainsbury’s has a strong record in its commitment to corporate responsibility, which is an everyday part of how the Company does business. Details of the Company’s principal corporate responsibility initiatives and activities are set out here. The Company’s Corporate Responsibility report, which will be published in June 2008 (www.j-sainsbury.co.uk/crreport), provides a comprehensive statement on corporate responsibility and describes the Company’s policies and activities in relation to its five 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.
The Company has well developed policies for fair and equal treatment of all colleagues, employment of disabled persons and colleague participation. During employment the Company seeks to work with each individual, taking into account their personal circumstances, to enable them to reach and maximise their potential.
The Company also actively works with a number of organisations, which seek to promote inclusion within the workplace, these include:
- Gold Card Members of the Employers’ Forum on Disability
- Signatories to the ‘two tick’ policy, which guarantees an interview to any disabled applicant meeting the minimum specification for the role
- Working with Shaw Trust, Remploy and Mencap.
The Company’s quarterly, 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 and over 39,500 colleagues are shareholders directly or through the Commitment Shares Plan Trust or the Sainsbury’s Share Purchase Plan Trust.
Donations
During the year, cash and in-kind donations to charitable organisations and other community projects totalled £7.6 million (2007: £6.6 million). Sainsbury’s colleagues, customers and suppliers raised £5.4 million (2007: £12.4 million which included Comic Relief) for charities through events supported by the Company, including Sports Relief, Home-Start, which supports families in local communities across the UK, and CLIC Sargent, a charity caring for children with cancer.
The Company made no political donations.
Post balance sheet events
Events after the balance sheet date are disclosed in note 38 to the financial statements.
Financial risk management
The financial risk management and policies of the Group are disclosed in note 29 of the financial statements.
Going concern
The Directors are satisfied 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 which are shown here.
Disclosure of information to auditors
Each of the Directors confirms 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.
Auditors
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
Tim Fallowfield
Company Secretary
13 May 2008