Governance
Directors’ report
The Directors present their report and audited financial statements for the 52 weeks to 24 March 2007.
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 24 March 2007 and is set out in The Business Review.
Dividends
The Directors recommend the payment of a final dividend of 7.35 pence per share (2006: 5.85 pence), making a total dividend for the year of 9.75 pence per share (2006: 8.0 pence), an increase of 21.9 per cent over the previous year. Subject to shareholders approving this recommendation at the Annual General Meeting (“AGM”), the dividend will be paid on 20 July 2007 to shareholders on the register at the close of business on 25 May 2007.
Changes to the Board
As previously reported, Anna Ford and Val Gooding joined the Board as Non-Executive Directors on 2 May 2006 and 11 January 2007 respectively. Bridget Macaskill retired from the Board on 12 July 2006 following the AGM and Jamie Dundas left the Board on 2 February 2007.
Re-election of Directors
In accordance with the Articles of Association, Val Gooding, who was appointed to the Board since the last AGM, will retire and seek election at this year’s AGM. Justin King will also retire by rotation and seek re-election. Full biographical details of the current Directors are set out in Board of Directors.
Annual General Meeting
The AGM will be held on Wednesday 11 July 2007 at The Queen Elizabeth II Conference Centre, Broad Sanctuary, Westminster, London SW1P 3EE at 11.00am. The Chairman’s letter and the Notice of Meeting accompany this report, together with notes explaining the business to be transacted at the meeting.
At the meeting, resolutions will be proposed to declare a final dividend, to receive the Annual Report and Financial Statements and approve the Remuneration report, to 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 allow the Company to take advantage of the new legislation on electronic communications with shareholders. Other resolutions propose the renewal of the authority to make ‘political donations’ as defined by The Political Parties, Elections and Referendums Act 2000.
Share capital
Ordinary shares
Details of the changes to the ordinary issued share capital during the year are shown within the Notes to the Financial statement.
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 on 19 July 2004 of which 27,502,070 remain outstanding.
The final redemption date for B shares is 18 July 2007.
Major interests in shares
On 20 January 2007 the Companies Act 1985 provisions in respect of substantial shareholdings were repealed and the Disclosure and Transparency Rules of the Financial Services Authority came into force. As at 15 May 2007, the Company had been advised of the following notifiable interests in its voting rights:
| Brandes Investment Partners L.L.C. | 7.65% |
| Credit Suisse Securities (Europe) Limited | 18.30%1 |
| Judith Portrait (a trustee of various settlements, including charitable trusts and executor) | 5.97% |
| Legal and General Group plc | 3.48% |
| Lord Sainsbury of Turville | 7.75% |
| Vidacos Nominees Limited which holds the shares as a nominee for Razino Limited | 5.07% |
Going concern
The Directors confirm that they 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.
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 within the Remuneration report.
| Ordinary shares1 | |||
|---|---|---|---|
| 25 March 2006 | 24 March 2007 | 15 May 20074 | |
| Justin King | 231,915 | 274,047 | 274,088 |
| Darren Shapland | 51,243 | 70,241 | 70,241 |
| Anna Ford | — | 1,000 | 1,000 |
| Val Gooding | 1,3202 | 1,320 | 1,320 |
| Philip Hampton | 25,000 | 25,000 | 25,000 |
| Gary Hughes | 15,100 | 15,446 | 15,446 |
| John McAdam | 1,000 | 1,000 | 1,000 |
| Bob Stack | 2,8003 | 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 24 March 2007 and 15 May 2007.
- 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 are therefore treated as interested in the 23.5 million shares (2006: 23.8 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.
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 the Business review.
Colleagues, corporate responsibility and the environment
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 in Corporate Responsibility. The Company’s Corporate Responsibility Report, which will be published in June 2007 (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 43,500 colleagues are shareholders directly or through the Commitment Shares Plan Trust or the Sainsbury’s Share Purchase Plan Trust.
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.
Donations
During the year, cash and in-kind donations to charitable organisations and other community projects totalled £6.6 million (2006: £5.6 million). In addition, our Active Kids scheme donated £17.0 million worth of new activity equipment to over 26,000 schools and the Company made significant contributions to other community related initiatives. Sainsbury’s colleagues, customers and suppliers raised £12.4 million (2006: £3.25 million) for charities through events supported by the Company, including Comic and 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
There have been no significant post balance sheet events except as referred to in note 21 to the financial statements (Deferred taxation).
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. This confirmation is given and should be interpreted in accordance with the provisions of Section 234ZA of the Companies Act 1985.
By order of the Board
Tim Fallowfield
Company Secretary
15 May 2007