Annual Report 2020 01

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Annual Report 2020 01 Annual Report and Financial Statements 2020 Live well for less Our purpose is to help our customers live well for less. It’s about helping our customers get the most out of life, no matter how much money or time they have. We do this by giving them easy, affordable access to the things they need: like healthy food, quality clothes, stylish homewares, the latest technology and more ways to manage their money. We do all of this sustainably, so we can help our customers live well today and tomorrow. We offer our customers distinctive, quality products at competitive prices across food, general merchandise, clothing and financial services. Driving efficiency in our day-to-day operations enables us to invest in our customer offer in areas that they value: choice, quality, low prices, convenience and great service. We have created a multi brand, multi channel business that provides choice, flexibility and convenience for our customers. We will continue to invest in both our digital offer and our stores so that customers can buy more and save time as well as money by shopping with us. J Sainsbury plc Annual Report 2020 01 Strategic Report Performance highlights 01 Contents page 02 Chairman’s letter 04 Chief Executive Officer’s letter 06 Response to COVID-19 10 Business Model 12 The Market £32,394m £586m 14 Our stakeholders 18 Our 2020 Sustainability Plan Group sales (inc VAT), Underlying profit before tax, 20 Our strategy down 0.1 per cent down 2 per cent 21 Our priorities 28 Our KPIs 30 Financial Review 36 Our principal risks and uncertainties (0.6)% 19.8p Governance Report 48 Board of Directors Group like-for-like sales Underlying basic earnings per share, 52 Operating Board down 4.3 per cent 55 Board leadership and Company purpose 58 Division of responsibilities 59 Composition, succession and evaluation 64 Corporate Responsibility and Sustainability Committee Report 7.4% £255m 66 Audit, risk and internal control 72 Remuneration Return on capital employed Statutory profit before tax, 78 Annual Report on Remuneration up 26 per cent 90 Remuneration Policy 96 Additional statutory information Financial Statements 100 Statement of Directors’ Responsibilities £29m 42% 101 Independent auditor’s report to the members of J Sainsbury plc Raised this year for local and national Absolute reduction in carbon emissions 107 Consolidated Financial Statements causes, bringing the total to £359m against our 2005 baseline 112 Notes to the Consolidated Financial Statements 122 Income Statement Notes 136 Financial Position Notes 173 Cash Flow Notes 75% 177 Employee Remuneration Notes 188 Additional Disclosures Percentage of colleagues engaged, 194 Company Financial Statements based on results from our colleague 196 Notes to the Company Financial Statements engagement survey 201 Additional shareholder information 205 Alternative performance measures 209 Glossary Read more about our financial KPIs on page 28. Non-financial information statement We are pleased to set out below where you can find information relating to non-financial matters in our Strategic Report, as required under sections 414CA and 414CB of the Companies Act 2006. Environmental matters 18 Our 2020 Sustainability Plan 27 Net Zero by 2040 Colleagues 14 Our stakeholders 26 Be a place where we all love to work Social matters 18 Our 2020 Sustainability Plan 26 Be a place where we all love to work 27 Net Zero by 2040 Human rights 26 Be a place where we all love to work Anti-corruption and anti-bribery 26 Be a place where we all love to work Reference to our policies, due diligence processes and information Find out more at on how we are performing on various measures in these areas are www.about.sainsburys.co.uk/ar2020 contained throughout the Strategic Report. Information on our principal risks and uncertainties can be found on pages 36 to 47, information on our non-financial key performance indicators can be found on 29 and a description of our business model can be found on pages 10 and 11. 02 Strategic Report J Sainsbury plc Annual Report 2020 Chairman’s letter Chairman Martin Scicluna reviews the business activity in the year. 2019/20 highlights In my first full year as Chairman of the Sainsbury’s Board I have been hugely “Throughout the past three impressed by the quality of our months we have pulled leadership and our colleagues’ passion for providing our customers with together to protect our £586m outstanding service every day. This customers and colleagues, has been particularly evident to me Underlying profit before tax to feed the nation throughout the past three months as we have pulled together to protect our and to navigate the customers and colleagues, to feed the business through the nation and to navigate the business COVID-19 pandemic.” 7.4% through the COVID-19 pandemic. Return on capital employed Throughout this time, the Board and Review of the year Operating Board, led by Mike Coupe, have In a competitive market, underlying profit been working tirelessly, guided by a clear before tax was £586 million, a decline sense of purpose. Now, more than ever, we of two per cent. Basic earnings per share 19.8p have been trying to help our customers live decreased 23.7 per cent to 5.8 pence well for less. This has meant taking difficult (2018/19: 7.6 pence) due to the £331 million Underlying basic earnings decisions along the way and I must say charge recognised outside of underlying per share that Mike has shown himself to be a truly results. Underlying basic earnings per share exceptional leader. I would like to thank Mike decreased 4.3 per cent to 19.8 pence for his hard work over these past few months (2018/19: 20.7 pence). and also for his excellent stewardship as Chief Executive over the past six years. Our purpose £611m Sainsbury’s purpose is to help customers to Simon Roberts became the Chief Executive Free cash flow live well for less and we recognise that living Officer effective on 1 June 2020. He and well means living sustainably. This year we Mike have worked closely together for a announced our commitment to be Net Zero number of years and have been working across all our operations by 2040 and that on a thorough handover over the past we will invest £1 billion over the next 20 years few months. to achieve this. The Board is accountable This is a time unlike any other in retail. for the delivery of the seven pillars of our COVID-19 has put our colleagues on the front Net Zero plan and we will report progress line and they are working around the clock against each of them at our interim results to get food and other essential items onto in November. In a further demonstration the shelves for customers. I feel extremely of the importance we place on helping proud of colleagues throughout our business customers to live sustainably, we became who have risen to the challenge and have signatories of the Task Force on Climate- achieved so much in such challenging related Financial Disclosures, to provide circumstances. consistent information to our stakeholders. We have had three clear priorities throughout: keeping our customers and colleagues safe; helping to feed the nation; and supporting our communities and the most vulnerable in society. For that reason, whilst complying with all of the relevant requirements, we have produced a simpler, scaled down version of our Annual Report. Strategic Report J Sainsbury plc Annual Report 2020 03 The Board also plays an active role in making Board Dividend Strategic Report Sainsbury’s a place where colleagues love to After 15 years at Sainsbury’s, almost six Given a wide range of potential profit and work and the welfare of our colleagues is a of those leading the business, Mike Coupe cash flow outcomes, the Board believes key priority for us. As part of this activity, confirmed his intention to retire as it is prudent to defer any dividend payment the Board discussed the results of the Chief Executive Officer on 31 May. Mike’s decisions until later in the financial year, ‘We’re Listening’ colleague engagement knowledge and understanding of the retail when there will be improved visibility on the survey, which invites every colleague across sector and customer behaviour are second potential impact of COVID-19 on the business. the business to give honest, confidential to none. Mike has been bold and ambitious feedback on what it is like to work for on behalf of our shareholders, customers Sainsbury’s. This survey and our engagement and our colleagues. Investing in convenience, with our Great Place to Work groups (which online and our digital capability, selling are our Workforce Advisory Panels) informs Sainsbury’s pharmacy business and Martin Scicluna many of the decisions we make. acquiring Argos and Nectar have all proved Chairman to be sound strategic moves which have Governance Report We also aim to be the most inclusive retailer. set us up well as we come together to create The Board has a good balance of gender one multi brand, multi channel business for Alternative performance measures (APMs) and ethnic backgrounds and we are our customers. referred to in this statement are defined in committed to supporting the business to pages 205 to 208. build female and BAME representation at I was delighted to announce Simon Roberts senior manager level. as Mike’s successor. Simon is a dedicated, determined and enthusiastic champion of Business activity in the year the customer and of our colleagues and has We are making strong progress against overseen sustained improvements in the the strategy that we set out at our Capital grocery business during his time so far.
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