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Investor Briefing February 2006

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Investor Briefing February 2006 Powered By Docstoc
					        Investor Briefing
        February 2006




Certain statements made in this announcement are forward
looking statements. Such statements are based on current
expectations and are subject to a number of risks and
uncertainties that could cause actual events or results to differ
materially from any expected future events or results referred to
in these forward looking statements.
Making Sainsbury’s Great Again                   Making Sainsbury’s Great Again
Business review - 19 October 2004


§ Deliver sales growth of £2.5 billion           § Early stages of recovery - interim results
      - grocery - £1.4 billion                        - on track in challenging market
      - general merchandise - £700m                   - disappointing Bank performance
      - convenience - £400m                      § Continued progress
§ Focus on                                            - fixing the basics
     - fixing the basics                              - restoring universal appeal
     - restoring universal appeal                     - customer focussed culture
     - customer focussed culture                 § Sales and market share growing
§ Customer offer                                 § Availability at industry matching levels
     - £400m catch up price investment
                                                 § Continuing investment in customer offer
     - 100 - 150 bp annually
                                                 § Now 15m customer transactions per week
§ Operating cost savings
                                                     - 19m in Christmas week
    - £400m by 2007/08
§ Core strengths
     - quality offer
     - loyal customers
     - loyal colleagues
     - national, well invested store portfolio




Page 1                                           Page 2
  Early signs of improvement                                                            Sainsbury’s Supermarkets
                                                       (1)
  Quarterly sales growth                                                                Underlying operating performance


   %              Total               LfL   LfL deflation
   6
    5
                                                                                                                           H1        H1
    4                                                                                                                 2005/06   2004/05       Change
                                                                                                                           £m        £m (1)       %
    3
                                                                                        Sales (inc VAT)                 8,815     8,348           5.6
    2
                                                                                        Underlying operating profit      168        148          13.5
    1
                                                                                        Underlying operating margin %     1.9        1.8        0.1pp
    0                                                                                   (VAT inclusive)
   -1                                                                                                  (2)
                                                                                        LfL growth - inc petrol (%)       3.1        1.5
   -2                                                                                              - ex petrol (%)        2.1       (0.9)
                                (2)            (2)                    (3)
              Q3     Q4                     Q1        Q2     Q3
               2004/05                               2005/06                            (1)
                                                                                              §Restated under IFRS
                                                                                        (2)
   (1)
         All figures excluding petrol                                                         §Easter adjusted
   (2)
         Easter adjusted
   (3)
         New year’s day adjusted


LfL sales growth
                            2004/05                                  2005/06
%                 Q1 Q2 H1 Q3 Q4 H2 FY                          Q1     Q2 H1      Q3
Including petrol
Total            2.3 4.4 3.5 6.1 7.2 6.6 5.0                  5.7    6.6    6.2 5.6
LfL              1.0 1.8 1.5 2.4 3.7 3.0 2.2                  1.9    4.1    3.1 4.8
LfL inflation /  0.5 (0.5) (0.1) (0.8) (1.2) (1.0) (0.5)      0.1    0.9    0.5 0.5
(deflation)

Excluding petrol
Total               0.8 1.5 1.3 2.7 5.4 4.0 2.6                5.3 5.4 5.3 5.9
LfL                (0.6) (1.1) (0.9) (1.2) 1.7 0.2 (0.4)       1.3 2.8 2.1 5.2
LfL inflation /     0.2 (1.1) (0.5) (1.2) (1.6) (1.4) (1.0)   (1.1) (1.7) (1.4) (1.0)
(deflation)




  Page 3                                                                                 Page 4
Sainsbury’s Supermarkets                                             Sainsbury’s Supermarkets
Interim results - sales led recovery                                 Reducing underlying costs



                                                                     Operating cost savings          2005/06    2006/07         2007/08
                            Investment
                                                                     Supply chain
           Sales              in offer             Volumes
                                                                     IT systems
                                                                     Stock loss
                                                                     Store operations
                   (1)                       (1)               (1)   Marketing
        LFL +2.1%         Deflation -1.4%          LFL +3.5%
                                                                     Central
                                                                     Other
 § Investment in the customer offer funded by
                                                                     Cumulative total                     100          250        400
      - cost savings
      - terms improvement
                                                                     § Savings help fund investment in customer offer
 § Additional costs of better availability and extra volumes
                                                                     § Also offset cost pressures in rates and wages
(1)                                                                  § Additional savings in H2 2006/07 from insourcing IT
      Excluding petrol and Easter adjusted
                                                                     § Will help absorb additional energy costs in H2 2006/07
                                                                     § Expect to achieve £400m in total




                                                                     Total operating cost savings
                                                                     by 2007/08                     £m
                                                                     Supply chain                    50
                                                                     IT systems                      40
                                                                     Stock loss                     120
                                                                     Store operations                70
                                                                     Marketing                       40
                                                                     Central                         60
                                                                     Other                           20
                                                                     Cumulative total               400




Page 5                                                               Page 6
Sainsbury’s Bank                                                      Restoring universal appeal
                                                                      Great food at fair prices


§ Disappointing result                                                § Fresh, healthy, tasty and safe food
     - H1 underlying operating loss of £5m                            § Customer satisfaction highest for two years
       (2004/05 restated: profit £8m)
     - expect similar result in H2                                    § Significant investment in price since January 2004
                                                                           - 8,000 prices lowered
§ Bad debt charge up 68% year on year at £49m
     - maturing loan book                                             § Investment in quality and innovation
     - worsening economic environment                                      - ‘Taste the Difference’ relaunched - c.900 lines
     - continue to make prudent provisions                                 - ‘Basics’ - c.500 lines in over 300 stores
     - further tightened credit scoring                                    - ‘Organics’ - 300 products, 100 new, lower prices
                                                                           - 200 new Christmas lines
§ Moving to a more commission based model
                                                                           - ‘Be Good To Yourself’ - c.500 products, 100 new, 30 first to market
§ Investment in customer and offer
                                                                      § Category reviews and supplier business plans
§ Customer accounts up 16%                                                 - improved new product development
§ Original 3 year profit target not achievable
§ Rebranded to ‘Try something new today’ in January 2006




  Sainsbury’s Bank is a 55% subsidiary of J Sainsbury plc, with the
  remaining 45% owned by HBOS




Page 7                                                                Page 8
Restoring universal appeal                                          Restoring universal appeal
Health                                                              Try something new today


§ Active Kids
     - 30,000 orders placed in 2005
     - donated over £17m of sporting equipment and experiences to
       over 25,000 schools
                                                                    § Customers are ‘sleep shopping’
     - relaunches in February 2006 with new initiatives and a
       greater focus on healthy eating                              § New advertising campaign
§ Sainsbury’s Apple                                                     - colleague and customer sampling
     - launched January 2006                                            - in-store ideas
     - appears on every BGTY product plus 200 naturally healthy     § More than just advertising
       products                                                          - part of cultural change programme
                                                                    § Company wide training programme
                                                                        - improve service to customers
                                                                        - change leadership behaviours




See Appendix for details on Wheel of Health




Page 9                                                               Page 10
Restoring universal appeal                             Restoring universal appeal
Complementary non food                                 Convenience


§ Focus on core non food in existing space             § Core Locals now in LfL growth
§ Opened buying offices in Poland and Hong Kong        § Good progress on conversions
§ ‘TU’ performing strongly - 57% LfL                        - 57 stores trading as ‘Sainsbury’s at’ – sales uplift c.25%
     - strengthen buying and merchandising teams       § Over 100 stores to be refurbished in 2005/06
§ Driving sales in all stores through seasonal aisle   § Restructuring Bells and Jackson’s head offices
                                                       § Single service supply from Feltham for London and south east Locals




             Stores
Full offer     136
Children        49
               185




Page 11                                                Page 12
Restoring universal appeal                        Fixing the basics
Sainsbury’s on line                               In-store availability


§ Home delivery service                           § Steady improvement in forecast and inventory accuracy
§ Covers 77% of UK, 97 stores                     § Improved in-store processes
§ 38,000 orders a week, up 27%                         - effective use of night shift

§ Average basket size up 4%                       § Retail stores system in rollout
                                                       - 254 stores by Christmas
§ Customer satisfaction improved
                                                  § Average out of stocks reduced by 75%
§ Shopping time reduced by 50% for first orders




Page 13                                           Page 14
Fixing the basics                                                    Fixing the basics
Supply chain                                                         IT systems


§ Automated depot performance improved                               § Terminated contract with Accenture in October 2005
     - over 2m cases per week                                        § IT services and people to be integrated in house from Accenture
§ Optimising network                                                       - taking control of core competencies
     - Charlton transferred to Exel, which together with Allington         - commercially beneficial
       will provide consolidated south east hub
                                                                     § Termination and / or transition costs will be exceptional items in
     - Rotherham closed                                                2005/06
     - Northfleet in consultation
                                                                     § Drawing up detailed plans for migration and transfer of people
     - Basingstoke and St Albans now full composite sites
     - right stores and right depots                                 § Future cost savings pay back within 2 years

§ Flexible labour approach to serving stores                         § Full cost savings in H2 2006/07
                                                                     § Migration expected to complete during April 2006
                                                                     § Stabilising systems and developing simple good value solutions
                                                                     § Five year agreement with Siemens to service and maintain
                                                                       automated distribution centres
                                                                     § Outsourced in November 2000




Page 15                                                              Page 16
   Fixing the basics                                                                                Fixing the basics
   Organisation and people                                                                          Supermarket store estate


    § Operating board with proven retail experience                                                 § 453 supermarkets
                                                                                                            (1)
    § Darren Shapland joined on 1 August 2005                                                       § 14 stores from Morrisons
    § Senior appointments: Dean Clegg, Peter Baguley, Giles Willits                                      - annualising sales uplift over 20%
      and Roger Burnley                                                                             § Around 30% of 131 underinvested stores to be
    § Continuing change at senior management level                                                    refurbished in 2005/06
                                                                                                          - 24 completed to date
    § Attracting retail talent
                                                                                                    § Further 9 Safeway stores acquired from Morrisons
    § Top 1,000 leadership development
                                                                                                         - all open for Christmas




                                           Justin King
                                                         (1)
                                          Chief Executive                                           (1)
                                                                                                          13 Safeway branded stores and 1 Morrisons store


Customer            Retail          Finance (1)        HR              Bank
Gwyn                Ken             Darren             Imelda          Tim
Burr                McMeikan        Shapland           Walsh           Pile
Joined              Joined          Joined             Joined          Joined
June 2005           Feb 2005        August 2005        Oct 2001        Jan 2002

              Convenience      Trading            Change          Supply              Company
              Jim              Mike               Hamish          Chain               Secretariat
              McCarthy         Coupe              Elvidge         Lawrence            Tim
                                                  Joined                        (2)
              Joined           Joined                             Christensen         Fallowfield
              Jun 2004         Oct 2004           Jan 1980        Joined              Joined
                                                                  Sept 2004           Oct 2001            See Appendix for details of store estate

   (1)
         Executive Director
   (2)
         Roger Burnley will take over from Laurence in April 2006.
         Lawrence will become part time until December 2006.




    Strengthened plc board with appointment of new SID, John McAdam on
    1 September 2005




   Page 17                                                                                          Page 18
Looking forward                                                                     Making Sainsbury’s Great Again



§ Interim dividend maintained at 2.15p per share                                    § Four quarters of positive LfL growth
§ Sainsbury’s Supermarkets                                                               - 15m customer transactions per week
     - focus on sales growth                                                        § Customers have noticed difference
     - underlying cost savings on track                                             § Priority to continue to invest in customer offer
     - operational gearing largely in H2 2006/07                                          - price, quality and service
§ Sainsbury’s Bank                                                                  § Maintain improvements while continuing longer term change
     - loss in H1, similar result expected in H2                                         - operational gearing largely in second half of 2006/07
§ Cash flow                                                                         § Market expected to remain competitive
     - capital expenditure of £550m
                                                                                    § Good execution over Christmas
     - aim to be cash flow neutral based on adjusted net debt
     - interest similar pattern to H1
§ Tax
     - rate for 2005/06 of 35.5%
     - disallowable depreciation circa £60m pa




Underlying Tax Rate:
Tax charge attributable to profit from continuing operations before gain or
loss on the sale of properties and businesses, impairment of goodwill,
financing fair value movements and items that are material and infrequent in
nature, such as costs arising from the closure, relocation or re-structuring of a
significant operation, expressed as a percentage of those profits.




Page 19                                                                                Page 20
Appendices
Corporate responsibility                                                   Operating Board

                          Dow Jones Sustainability Index                                                                                                                11
                          Ranked best in sector for last three years




                          FTSE4 Good Index
                                                                                                                                                  9
                          Included                                                                                       6
                                                                                                             4


                                                                                                                     5
                                                                                                         3
                                                                                                                                          8
                                                                                                                              7                       10
                          Global 100
                          One of top 100 sustainable corporations
                                                                           7 Justin King, Chief Executive
                                                                           Appointed 29 March 2004. Chairman of the Operating Board and Director of Sainsbury’s
                                                                           Bank plc. Formerly Director of Food, Marks & Spencer. From 1994-2001 held senior positions
                                                                           at ASDA/Wal-Mart in Trading, Human Resources and Retail. Previously Managing Director of
                          Business in the Community Corporate              Häagen Dazs UK. Early career with Mars Confectionery and Pepsi International.
                          Responsibility Index
                          Ranked first in food retailing for second year   1 Ken McMeikan, Retail Director
                                                                           Appointed to the Operating Board in February 2005. Ken joined Sainsbury’s from Tesco PLC
                                                                           where he had worked for the last 14 years, where he had been Chief Executive for Tesco
Corporate Responsibility Exchange Index
                                                                           Japan, having previously been appointed Chief Executive of Admin Stores following its
Participating in The London Stock Exchange’s                               acquisition by Tesco. Prior roles include Stores Director in Scotland, Hertfordshire and Essex,
Corporate Responsibility Exchange                                          Store Management and H.R. Before joining Tesco, Ken worked for Sears plc for four years.

                                                                           2 Mike Coupe, Trading Director
                                                                           Appointed to the Operating Board in October 2004. Joined Sainsbury’s from Big Food Group
§ Plan to boost Fairtrade products by 50% in 2006                          where he was a Board Director of Big Food Group plc and Managing Director of Iceland Food
     - 75% of rose bouquets are now Fairtrade                              Stores. Previously worked for both Asda and Tesco plc.
     - Fairtrade market was worth £140m in 2004
                                                                           3 Gwyn Burr, Customer Director
                                                                           Gwyn Burr joined Sainsbury's in August 2004 as Director of Customer Services. In May 2005
Connecting with our communities                                            she was appointed Customer Director. Gwyn has over 20 years experience, including five
                                                                           with Nestle Rowntree and over 13 with Asda/Wal-Mart.
§ Active Kids - second year of scheme starts in February 2006
   - 30,000 orders placed                                                  4 Tim Pile, Chief Executive Officer of Sainsbury’s Bank.
   - donated over £17m of sporting equipment and experiences               Appointed January 2002 and joined the Operating Board in May 2004. Tim joined
                                                                           Sainsbury’s from Alliance & Leicester where he had been for five years, firstly as Marketing
§ Comic and Sports Relief                                                  and Sales Director and then as Director, Business Strategy & Marketing. Prior to this, worked
§ English Schools Athletics Association                                    for Lloyds TSB.
§ English Schools Football Association
                                                                           5 Hamish Elvidge, Director of Change.
                                                                           Appointed to the Operating Board when it was formed in May 2004. Prior to that was
                                                                           appointed to the Board of Sainsbury’s Supermarkets Ltd in February 1997. Hamish has worked
Corporate Responsibility Report published on 7 July 2005                   within Sainsbury’s since 1980. His duties have included Finance Director of Sainsbury’s
                                                                           Supermarkets and Director of Finance and IT Systems at Savacentre.
                                                                                                                                                            continued

APPENDIX Page 1                                                            APPENDIX Page 2
Operating Board                                                                                 Market share by region

                                                                                           11




                                                                                                        Sainsbury’s also has            Scotland
                                                                                                                                          5.5
                                                                                                                 9 stores in
                                                                                                                             (1)
                                                                                                           Northern Ireland
                                                                                                                                                  North East
                                                                       9                                                                              6.1
                                              6
                                 4                                                                                                         Lancashire
                   2
                                                                                                                                                                     Total market
                                                                                                                                              9.2
                                                                                                                                                    Yorkshire        share 14.7%
                                          5                                                                                                           8.6
                             3
                                                              8                                                                          Wales     Midlands     E England
              1                                                                                                                          & West      15.2          15.4
                                                                                                                                          11.0           London
                                                                                                                                                           25.0
6 Jim McCarthy, Managing Director of Convenience.                                                                                         South West     South
Appointed to the Operating Board in June 2004. He has over 30 years experience in                                                            15.5         19.1
retailing with Tesco plc, T&S Stores Plc where he was Chief Executive, Next Plc, and the
Birmingham Post and Mail where he was Managing Director of their retail estate.
                                                                                                                           For 52 weeks w/e 9 October 2005
8 Imelda Walsh, HR Director
                                                                                                  (1)
HR Director since October 2001 and appointed to the Operating Board when it was formed in               Market share of 14.3% for
May 2004. Before this was a member of the Board of Sainsbury’s Supermarkets Ltd from                    52 weeks to 22 May 2005
March 2003. Prior to joining Sainsbury’s, worked as the HR Director for Barclays Retail
Financial Services. Previous roles within the Barclays Group include Group Employee Policy
and Planning Director, HR Director, Corporate Banking and Group HR Development Director.
Previously worked for Coca Cola and Schweppes Beverages.
                                                                                                                      Total market                               Total Sainsbury
9 Tim Fallowfield, Company Secretary                                                                                                                                           SSL share
Company Secretary since 2001. Tim joined from Exel plc, (formerly NFC plc), the global                                                 Share of                        % of      of total
                                                                                                                       Spend                               Spend
logistics company where he was Company Secretary and Head of Legal Services (1994 –                                                 total region                       SSL    market (%)
                                                                                                                     (£000's)                            (£000's)
2001). Prior to this worked at Clifford Chance and is a qualified solicitor.
                                                                                                London       15,493,000                    21.0         3,871,641      35.7         25.0
10 Lawrence Christensen, Supply Chain Director.
                                                                                                Midlands     11,331,510                    15.4         1,726,451      15.9         15.2
Appointed to the Operating Board in September 2004. Lawrence was previously Group
Operations Director for Safeway having been appointed to its Board in 1987 as Logistics         North East    3,349,877                     4.5           203,208       1.9          6.1
Director. Lawrence joined Safeway (then Cavenham Foods) in 1974 as Distribution Controller;     Yorkshire     6,873,019                     9.3           589,941       5.4          8.6
Cavenham was acquired by Argyll the founding company of Safeway. Lawrence will become           Lancashire    8,245,284                    11.2           755,173       7.0          9.2
part time from April 2006. Roger Burnley joined in January 2006.                                South         7,726,213                    10.5         1,475,325      13.6         19.1
                                                                                                Scotland      7,122,605                     9.7           388,682       3.6          5.5
11 Darren Shapland, Chief Financial Officer                                                     E.England     5,325,626                     7.2           821,119       7.6         15.4
Appointed to the Board and Operating Board on 1 August 2005. Group Finance Director of          Wales & West 5,956,536                      8.1           657,577       6.1         11.0
Carpetright plc 2002 to 2005. Formerly Finance Director of Superdrug Stores plc (2000-02).
                                                                                                S.West        2,383,007                     3.2           368,846       3.4         15.5
Between 1988-2000 carried out a number of positions at Arcadia plc (formerly Burton
Group) including Joint Managing Director, Arcadia Home Shopping; Finance Director of            Total             73,806,677               100         10,857,963      100          14.7
Arcadia brands; Finance Director, Top Shop/Top Man (Burton Group) and Director of Supply
Chain Programme, (Burton Group).
                                                                                                Source: TNS: total grocery




APPENDIX Page 3                                                                                 APPENDIX Page 4
Product labelling                                                     Recent awards
                                                                      § Meat Retailer of the year - Meat and Poultry News
                                                                        Awarded December 2004
                                                                      § Supermeat Awards overall winner 2005
                                                                        TtD Beef in Ale with mustard and thyme dumpling
                                                                      § Supermeat Awards lamb product winner 2005
                                                                        TtD Lebanese Style Five Spice Lamb Bukhari Rice
The Wheel of Health                                                   § Seafood Retailer of the year 2005, Best new whitefish product
                                                                        TtD smoked haddock fishcakes
§ Need to provide customers with honest, accurate and easy to read    § Nantwich 2005 supreme champion
  labelling                                                             TtD Stilton (from Tuxford and Tebbit)
§ The Wheel of Health appears on front of pack labelling, featuring   § Nantwich 2005 retailer organic cheese
                                                                        Organic Somerset Brie won the Gold [previous gold Q winner]
  five key nutrients that are colour coded, red, orange or green
                                                                      § World Juice Awards (Oct 05)
§ The contribution of 5 nutrients to the guideline daily amounts is     Probiotic Juice won the most innovative juice
  shown                                                               § British Turkey Awards Best BBQ Product
                                                                        Turkey Kebab with Chinese Drizzle
§ Relaunch of BGTY resulted in Wheel of Health appearing on over
  600 products                                                        § Great Taste Awards
                                                                        TtD San Daniele and the Italian Arista both won gold
     - all BGTY products                                              § Bakery Industry Awards
     - many naturally healthy products                                  In store bakery store of the year (Springfield, Chelmsford)
                                                                      § Cosmopolitan Beauty Awards, Best Bathtime Treat
                                                                        Champneys Oriental Bubble Float
                                                                      § Free Range Good Egg Award British Free Range Egg producers Association
                                                                        for commitment to Food Quality and Animal Welfare
                                                                      § Decanter, Best Sherry under £10
                                                                        Sainsbury’s Manzanilla
                                                                      § Q award (Gold) for TtD Lemon Butter Thins
                                                                      § Q Awards for
                                                                         - in store bakery donuts
                                                                         - Sainsbury’s Amarone 2000
                                                                         - Asado Prawn King Prawn Curry
                                                                         - Organic Traditional Farmhouse Cheddar
                                                                         - Indian Vegetable Masala
                                                                         - Single Cru XO Cognac
                                                                         - TtD All Butter Fudge
                                                                         - TtD AOC Camembert de Normandie
                                                                         - Reserve selection Chilean Cabinet Sauvignon 2003
                                                                      § British Frozen Food Federation
                                                                         - Thin & Crispy Hawiian Pizza (Bronze Award)
                                                                          - Thin & Crispy Margherita Pizza (Silver Award)
                                                                      § Off-Licence News Drinks Retailing Awards
                                                                        Spirits Retailer of the Year
                                                                      § International Wine and Spirits Competition 2004
                                                                        European Retailer of the Year
                                                                      § The Drinks Business Awards 2005
                                                                        Retailer of the Year
                                                                      § International Wine Challenge 2005
                                                                        Supermarket of the Year
                                                                      § International Spirits Challenge 2005
                                                                        Sainsbury’s Single Speyside Malt
APPENDIX Page 5                                                       APPENDIX Page 6
Supplementary financial details                                                                         Supplementary financial details


                                                                                                                             (1)
1. Group performance                                                                                  2. IFRS update
                                                                          H1               H1
                                                                     2005/06          2004/05
                                                                          £m               £m          § Underlying profits
                                                                                                       § Impact of IFRS H1 2005/06 £(2)m (2004/05: £(2)m)
Sales (inc VAT) - continuing operations                                   8,978            8,481            - includes fixed rent adjustment £(2)m (2004/05: £(2)m)
Underlying operating profit (2)                                             163               156      § Impact full year 2005/06 expected at £(5)m
                                                                                                                                                               (2)

                          (3)
Finance charges                                                              (45)              (39)         - includes fixed rent adjustment of £(4)m (2004/05: £(4)m)
                                          (4)
Underlying profit before tax                                                118               117      § 2004/05 restated full year profits £238m
Profit / (loss) before tax                                                    87             (292)
                                                                                                       § IAS 32 and IAS 39 mark to market adjustments
Underlying tax rate                                                      35.5%             36.0%
                                                                                                       § Arises from ineffective hedges
Profit after tax                                                              53             (226)
                                 (5)                                                                                               H1 2005/06
Underlying basic EPS                                                        4.8p              3.9p              - PLC                   £4m
Dividend                                                                  2.15p             2.15p               - Sainsbury’s Bank      £6m
                                                                                                                                       £10m
                                                                                                       § No adjustment in 2004/05
(1)
      Under IFRS, with 2004/05 restated
(2)
                                                                                                       § Year on year volatility, excluded from underlying profits
      Underlying operating profit
      Profit before tax from continuing operations before finance income, finance costs, gain or       § No cash impact, will unwind over time
      loss on the sale of properties and businesses, impairment of goodwill, and items that are
      material and infrequent in nature, such as costs arising from the closure, relocation or re-
      structuring of a significant operation.
(3)
      Pre financing fair value movements
(4)
      Underlying profit before tax:                                                                   (1)   Full reconciliation between IFRS and UK GAAP is shown in Appendix
      Underlying profit before tax from continuing operations: Profit before tax from continuing      (2)
                                                                                                            IFRS and International Financial Reporting Interpretations Committee
      operations before gain or loss on the sale of properties and businesses, impairment of
      goodwill, financing fair value movements and items that are material and infrequent in                (IFRIC) interpretations are still subject to ongoing review and possible
      nature, such as costs arising from the closure, relocation or re-structuring of a significant         amendment
      operation.
(5)
      Underlying basic earnings per share:
      Profit after tax from continuing operations attributable to equity holders before non-
      equity dividends, gain or loss on the sale of properties and businesses, impairment of
      goodwill, financing fair value movements and items that are material and infrequent in
      nature, such as costs arising from the closure, relocation or re-structuring of a significant
      operation, divided by the weighted average number of ordinary shares in issue during the
      year, excluding those held by the ESOP Trusts, which are treated as cancelled.




APPENDIX Page 7                                                                                         APPENDIX Page 8
Supplementary financial details                                                      Supplementary financial details

3. IFRS to UK GAAP reconciliation                                                   5. Average weighted number of shares for H1 2005/06
                                                 2005                  2004            was 1,677.3 (and 1,682.8 diluted)
                                           £m               £m   £m           £m
Underlying PBT-IFRS                                     118                   117
Fixed rent
               (1)
                                            2                     2                 6. Dividend
                                                                                                               H1              H1
Property costs on finance leases           (1)                   (2)                                      2005/06         2004/05
Depreciation on impaired assets            (3)                   (1)
                                                                                    Interim                    2.15p         2.15p
Share based payment charge                 12                     5
                                                                                    Final                                    5.65p
Lease incentives                            1                     1
                                                                                    Total                                    7.80p
                                           11                     5
Sainsbury’s Bank                            1                     -
                                           12                     5
                                                                                    The interim dividend dates:
Pension plan service charge               (12)                   (5)                              Ordinary shares                 ADRs
Interest on finance leases                  2                     2                 Ex dividend 23 November 2005                  25 November 2005
                                                             2                  2   Record         25 November 2005               25 November 2005
Underlying PBIT – UK GAAP                                                           Payment        6 January 2006                 13 January 2006
                                                        120                   119

(1)
      Adjustment arising from emerging interpretation of IAS 17, subsequent to
      previous IFRS restatements for y/e 2004/05 in June 2005 and H1 2004/05
      in October 2005. The impact of this on a full year basis will be to reduce    7. Property
                                                                                                                           H1             H1
      underlying profit before tax from continuing operations by £4m to £238m                                          2005/06       2004/05
                                                                                                                            £m            £m
                                                                                    Property (loss) / profit                (7)            8
4. Finance charges
                                       2005       2004
                                         £m         £m                              § Losses in H1 driven by Greenham Common sale

      Pension plan finance charges       (12)       (6)                             § Proceeds in H1 2005/06 £121m (2004/05: £88m)

      Interest on finance leases           2            6                           § Forecast proceeds for full year 2005/06 £150m (2004/05: £266m)
      IAS32/39 mark to market             10            -
      Capitalised interest                (2)       (3)
      Interest on bank deposits           (3)      (30)
      Bank loans and overdrafts           60        72
 Total finance charge                     55        39


APPENDIX Page 9                                                                      APPENDIX Page 10
Supplementary financial details                                      Supplementary financial details


8. Exceptional items                                                 10. Credit ratings
                                                                             Long term     Outlook     Short term
                                         H1           H1
                                     2005/06     2004/05             Moody’s       Baa3     negative           A-3
                                          £m          £m
                                                                     S&P           BBB-     negative           P-3
                                                               (1)
Business Review costs                     14           395           Fitch         BBB      negative            F3
Business Transformation                    -              22
Total                                     14           417


§ Estimated £50m Business Review costs in 2005/06, excludes
                                                                     11. Pensions update
  any exceptionals arising from insourcing IT costs                  § 2003 actuarial valuation deficit of £161m
§ Full year cash outflow expected to be £80m                         § Next actuarial valuation due as at March 2006
§ H1 2005/06 charge of £14m for employee related costs               § IAS 19 pension deficit now recognised on the balance sheet
§ Cash outflow in H1 2005/06 was £39m                                § Net pension obligations (net of deferred tax asset) are:
(1)
      Restated under IFRS
                                                                                                28 weeks to       28 weeks to        56 weeks to
                                                                                             8 October 2005    9 October 2004     26 March 2005
                                                                                                         £m                £m                £m
9. Business Review exceptionals
                             Charged in   Charged in                 Retirement benefit obligation     (582)            (603)              (527)
                            H1 2005/06     2004/05                   Deferred taxation                  174              181                158
                                    £m          £m                   Net pension scheme deficit        (408)            (422)              (369)
 IT systems                          -          145
 Employee-related                   13           41
 Stock                               -           90
 Supply Chain                        -          119
 Property                            -           65 (1)
 Other                               1           15
 Operating exceptionals             14          475
 Property write-downs                -           25
 Total                              14          500

(1)
      Restated under IFRS


APPENDIX Page 11                                                     APPENDIX Page 12
Supplementary financial details                                              Supplementary financial details
                                                                             13. Cash flow                                                               (1)
                                                                                                                               H1              H1
12. Capital expenditure                                                                                                   2005/06         2004/05
                                                                                                                               £m              £m
 Sainsbury’s Supermarkets capital expenditure                                Operating profit / (loss)                          142            (253)
      £m                                                                     Depreciation / amortisation / write-offs           270                519
      600                                                                    Operating cash flow pre working capital            412                266

      500                                 IT and supply chain                Working capital movement                            (43)              244

                                          Refurbishments                     Operating cash flows                               369                510
      400                                 and extensions
                                                                             Net interest                                        (85)              (55)
      300                                                                    Taxation                                             18               (71)
                                          New stores
                                                                             Cash flow before appropriations                    302                384
      200
                                                                             Purchase of fixed assets / operations             (301)           (607)
      100                                                                    Sale of fixed assets / operations                  112          1,435

                                          Other                              Equity dividends                                    (95)          (218)
        0
            H1 2005/06      H1 2004/05                                       Capital redemption                                   (6)          (641)

  § Expected £550m for the 2005/06                                           Net cash flow pre IAS 32 and IAS 39                  12               353

                                           H1                H1              § On track for cash neutral in 2005/06, after adjusting for
                                      2005/06           2004/05                2004/05 Easter timing benefits
                                           £m                £m
                                                                             § 2006/07 cash positive
IT and supply chain                           43                 79          § IAS 32 & IAS 39 increase to net debt £61m
Refurbishments and extensions               103                  94          (1)
                                                                                   Restated for IFRS                                      Restated
                                                                      (1)                                                 8 October       26 March
New stores                                    63                355                                                           2005           2005
Other                                             4               9                                                             £m             £m

                                                                             Underlying IFRS Group net debt                  (1,429)        (1,441)
Sainsbury’s Supermarkets                    213                 537          IAS 32 & IAS 39 adjustments to net debt            (61)               -
                                                                             IFRS Group net debt                             (1,490)        (1,441)
Sainsbury’s Bank                                  3               6
                                                                             UK GAAP Group net debt                          (1,376)        (1,388)
Shaw’s Supermarkets                            -                 10
(discontinued activities)                                                    § Underlying IFRS net debt down by £12m to £1,429m
Total Group                                 216                 553          § Sainsbury’s Bank change in presentation of assets and liabilities
                                                                                - now consolidated line by line
(1)
      Includes £305m on acquisitions of stores – 13 Safeway branded stores      - no impact on Group net assets
      and 1 Morrisons store


APPENDIX Page 13                                                             APPENDIX Page 14
Store estate                                                                                    Sales area and store numbers
                                                                                                At January 2006

                                                                                                                                 H1
Number of stores                                                                                                              2005/06
                           Over         25,000 to    15,000 to      Under                                                       Area
                         40,000           40,000       25,000      15,000                                                (‘000 sq ft)   Number
                           sq ft             sq ft        sq ft      sq ft        Total
                                                                                               Supermarkets
Convenience                   -                -            -         288          288         Opening figures              15,547             443
                                  (1)
Supermarkets                 159              175           87         32          453         New stores                      201              10
Total stores                 159              175           87        320          741         Centrals                          -               -
                                                                                               Closures                          -               -
(1)
      Includes 25 stores over 55,000 sq ft                                                     Net new added                   201              10
                                                                                               Extensions / downsize /
                                                                                               refurbishments                   57      [25]
                                                                                               Closing figures              15,805             453
Underinvested stores
                                                     Extended     Refurbished       Total
                                                                                                                                Area
Number to be invested in at 19 October 2004                                          131                                 (‘000 sq ft)   Number
Completed to date                                           4                20           24
                                                                                               Convenience
                                                                                     107
                                                                                               Opening figures                  795            287
Forecast H2 2005/06                                         5                33           38
                                                                                               New stores                         5              2
To be completed                                                                           69   Centrals                           -              -
                                                                                               Closures                          (9)            (1)
                                                                                               Net new added                     (4)             1
                                                                                               Extensions / downsize /
                                                                                               refurbishments                     -     [71]     -
                                                                                               Closing figures                  791            288


                                                                                                                                Area
                                                                                                                         (‘000 sq ft)   Number

                                                                                               Total stores
                                                                                               Opening figures              16,342             730
                                                                                               New stores                      206              12
                                                                                               Closures                         (9)             (1)
                                                                                               Net new added                   197              11
                                                                                               Extensions / downsize /
                                                                                               refurbishments                           [96]
                                                                                               Closing figures              16,539             741



APPENDIX Page 15                                                                               APPENDIX Page 16
Net new space for 2005/06                                              Sainsbury’s ADR
                                             Total sales
                                   Date      area (sq ft)
Supermarkets
Openings
Willesden Green                    Jun 05        21,000
Forest Hill                        Dec 05        22,800
                                                             43,800    § Ticker is JSAIY
Acquisitions - Morrison
Slough                             Nov 05        17,900                § CUISIP 466 249 208
Andover                            Nov 05        17,400
Eastleigh                          Nov 05        23,240                § Depository Bank is BNY
Midsomer Norton                    Nov 05        17,450
Hammersmith                        Dec 05        18,620                § Ratio is 4:1
Bitterne West                      Dec 05        18,955
East Kilbride                      Dec 05        24,400                § Trades OTC
Ackocks Green                      Dec 05        19,208
Morden                             Dec 05        20,900
                                                            178,073
Closures
Maidenhead                         Jun 05       (20,000)
Meadowhall                          Jul 05      (37,670)
Bluebird                           Sep 05        (9,064)
Forest Hill                        Sep 05       (16,517)
                                                            (83,251)
Extensions / downsizes
Clapham Common                     July 05       13,000
Haywards Heath                     Sept 05       12,700
Ripley                             July 05       14,000
Leeds White Rose                   May 05       (22,000)
Street                                           10,100
Chafford Hundred                                 16,100
Leicester, Fosse Park                            24,700
Guisborough                                       6,000
                                                             74,600

Convenience
Openings
Harrogate (Jacksons)               May 05         2,700
Eaglescliffe (Bells)               Apr 05         2,800
Crowborough (Local)                 Jul 05        2,400
Brighton (Local)                   Oct 05         1,872
Deansgate (Local)                  Oct 05         2,000
Seaham (Sainsburys@Bells)          Dec 05         2,990
                                                             14,762
Acquisitions - Shaw’s
Maidenhead                         Apr 05         2,600
Stanwell                           Apr 05         3,000
Woking                             Apr 05         2,650
Camberley                          Apr 05         4,165
Chessington                        Apr 05         4,105
                                                             16,520
Closures
Harrogate (Jacksons)               May 05        (1,400)
Birmingham Bennetts Hill (Local)   Jun 05        (2,900)
Glasgow Shawlands (Local)          Jun 05        (3,000)
Hammersmith Central                              (8,800)
                                                            (16,100)
Extensions / downsizes
Beaumonts (size adjustment)                      (2,000)
                                                             (2,000)
                                                            226,404

APPENDIX Page 17                                                       APPENDIX Page 18
  Broker consensus forecasts


                                        year end
                                        2005/06
                                                                year end
                                                                2006/07
                                                                                           year end
                                                                                           2007/08
                                                                                                             Key dates for your diary
                         Price
                        target           PBT     DPS            PBT       DPS            PBT        DPS

 Total consensus 282p                £258m 7.8p             £343m         8.4p       £468m 10.0p
 Minimum                 230p        £233m 7.3p             £279m         7.8p       £326m         7.8p
 Maximum                 345p        £297m 8.4p             £385m 10.3p              £650m 15.2p
                                                                                                                                                                2006
                                                                                                             Q4 Trading Statement (2005/06)                  29 March
Where Brokers' PBT forecasts use different accounting basis, the above numbers have been adjusted to
be consistent with J Sainsbury plc's accounting basis under IFRS, that is they are pre amortisation of       Preliminary Results Announcement (2005/06)        17 May
goodwill, exceptional costs and non-operating items i.e. £238m in 2004/05

The forecasts above have been provided to J Sainsbury plc (Sainsbury's), by a number of registered
                                                                                                             Annual General Meeting                            12 July
investment analysts and are, as such, publicly available information. Sainsbury's has not commented on
any individual forecasts, nor does it intend to do so in future.
                                                                                                             Q1 Trading Statement (2006/07)                   21 June

It should be noted that forecasts are by definition forward looking and are therefore subject to risks and
                                                                                                             Q2 Trading Statement (2006/07)                 11 October
uncertainties that may materially affect eventual results. Although Sainsbury's will endeavour to procure
that the information is kept updated, Sainsbury's assumes no obligation to update or revise such             Interim Results Announcement (2006/07)       16 November
information to reflect circumstances existing after the date hereof.

Updated on 27 January 2006.

This is regularly updated and can be found on our website at www.j-sainsbury.co.uk




  APPENDIX Page 19                                                                                            APPENDIX Page 20
Contacts



Lynda Ashton
Head of Investor Relations
Tel / fax: + 44 (0) 20 7695 7162
lynda.ashton@sainsburys.co.uk

Kally Wilde
Investor Relations Executive
Tel / fax: + 44 (0) 20 7695 6431
kally.wilde@sainsburys.co.uk

Laurence Jones
Investor Relations Administrator
Tel / fax: + 44 (0) 20 7695 5790
laurence.jones@sainsburys.co.uk




www.j-sainsbury.co.uk

J Sainsbury plc, 33 Holborn, London EC1N 2HT

				
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