Property disposals
The Group recorded a profit of £57 million on the sale of surplus properties during the year (including eight supermarkets where no further development was achievable, sold at an average yield of 5.2 per cent). This compares to a £7 million profit in 2008.
Taxation
The income tax charge was £(177) million (2008: £(150) million), with
an underlying rate of
29.1 per cent (2008: 30.9 per cent) and an effective rate
of 38.0 per cent (2008: 31.3 per cent).
The underlying rate is lower than last year due to a reduction in the statutory rate of corporation tax from 30 per cent to 28 per cent on 1 April 2008 and the resolution of a number of other items. Disallowable depreciation amounted to £73 million in 2009 (2008: £71 million).
Despite the reduction in the statutory rate, the effective rate is higher than in the previous year due to the £(124) million non-cash investment property fair value movements, which reduce profits, but for which no tax relief is available.
|
Underlying tax rate calculation for the 52 weeks to 21 March 2009 |
Profit £m |
Tax £m |
|---|---|---|
| Profit before tax | 466 | (177) |
| Less: profit on sale of properties | (57) | 21 |
| Add: investment property fair value movements | 124 | – |
| Add: financing fair value movements | 10 | (2) |
| Underlying profit before tax | 543 | (158) |
| Underlying tax rate (%) | 29.1 |
Sainsbury’s expects the underlying rate of tax in 2010 to be broadly in line with 2009.
Earnings per share
Underlying basic earnings per share increased by 12.8 per cent from 19.6 pence in
2008 to
22.1 pence in 2009, reflecting the improvement in underlying profit after
tax attributable to equity holders.
The weighted average number of shares in issue increased by 19.8 million due to the vesting of share option schemes during the year. However, the total number of shares for calculating diluted earnings per share decreased by four million in the same period, through the exercise or lapse of share options.
Basic earnings per share were down 13.1 per cent, at 16.6 pence (2008: 19.1 pence) as a result of the non-cash investment property fair value movements (which are disallowable for tax purposes).
|
Underlying earnings per share calculation for the 52 weeks to 21 March 2009 |
2009 pence |
2008 pence |
|---|---|---|
| Basic earnings per share | 16.6 | 19.1 |
| Profit on sale of properties, net of tax | (2.1) | (0.4) |
| Investment property fair value movements, net of tax | 7.1 | – |
| Financing fair value movements, net of tax | 0.5 | 0.2 |
| Other one-off items, net of tax | - | 0.7 |
| Underlying basic earnings per share | 22.1 | 19.6 |
Dividends
The Board proposes a final dividend of 9.6 pence per share (2008: 9.0 pence), which will be paid on 17 July 2009 to shareholders on the Register of Members at the close of business on 22 May, subject to approval. This will increase the full year dividend by 10.0 per cent, to 13.2 pence per share (2008: 12.0 pence per share).
The dividend is covered 1.67 times (2008: 1.63 times) by underlying earnings, in line with Sainsbury’s policy of providing cover of between 1.50 and 1.75 times.
The proposed final dividend was recommended by the Board on 12 May 2009, and as such, has not been included as a liability as at 21 March 2009.
Net debt and cash flows
Sainsbury’s net debt as at 21 March 2009 was £(1,671) million (2008: £(1,503) million), an increase of £168 million from the 2008 year-end position. The increase was driven primarily by core capital expenditure, weighted towards the first half of the financial year, the investment in the British Land JV, and increased outflows for taxation and interest.
|
Summary cash flow statement for the 52 weeks to 21 March 2009 |
2009 £m |
2008 £m |
|---|---|---|
| Cash generated from operations | 1,206 | 998 |
| Net interest paid | (118) | (97) |
| Corporation tax paid | (160) | (64) |
| Cash flow before appropriations | 928 | 837 |
| Purchase of non-current assets | (994) | (986) |
| Investment in joint ventures | (291) | (31) |
| Disposal of non-current assets/operations | 390 | 197 |
| Proceeds from issuance of ordinary shares | 15 | 43 |
| Capital redemption | - | (10) |
| Proceeds from/(repayment of) borrowings | 165 | (36) |
| Net dividends paid | (215) | (178) |
| Decrease in cash and cash equivalents | (2) | (164) |
| (Increase)/decrease in debt | (157) | 46 |
| Other non-cash movements | (9) | (5) |
| Movement in net debt | (168) | (123) |
| Opening net debt | (1,503) | (1,380) |
| Closing net debt | (1,671) | (1,503) |