J Sainsbury : Annual Report and Financial Statements 2024

Annual Report and Financial Statements 2024

Good food for all of us

We make good food joyful, accessible and affordable for everyone, every day

Offering delicious, great quality food at competitive prices has been at the heart of what we do since Sainsbury's was founded in 1869. Today, inspiring and delighting our customers with tasty food remains our priority.

Our Next Level Sainsbury's strategy is about giving customers more of what they come to Sainsbury's for

- outstanding value, consistently excellent quality and great service.

Strategic Report		Governance Report		Financial Statements

Performance highlights

Financial highlights

6.8%

Retail sales growth (excl. fuel) versus the 2022/23 financial year. Including fuel sales increased 3.2%

£701m

Underlying profit before tax, up 1.6% versus the 2022/23 financial year

22.1p

Underlying basic earnings per share, down 3.9% versus 23.0p in the 2022/23 financial year. Basic earnings per share 5.9p

£639m

Retail free cash flow, versus £645 million in the 2022/23 financial year. Statutory net cash generated from operating activities was £1,965 million, versus £2,170 million in the 2022/23 financial year

£966m

Retail underlying operating profit, up 4.3% versus the 2022/23 financial year

£277m

Statutory profit before tax down 15.3% versus the 2022/23 financial year

8.3%

Return on capital employed, up 70 basis points versus the 2022/23 financial year

Non-financial highlights

£780m

Invested in lowering prices over the past three years, since the launch of Food First strategy

£500m

Invested into colleague pay over three years

51.7%

Reduction in absolute greenhouse gas emissions within our own operations, from our 2018/19 baseline

£36m

Raised for good causes

12.9%

Relative reduction in own brand plastic packaging, from our baselines in 2018 for food and 2020 for general merchandise

See our KPIs

on pages 44 to 45

Strategic Report	Governance Report	Financial Statements
1	Performance highlights	66	Introduction to the governance report	123	Statement of Directors' responsibilities
2	Chair's letter	68	J Sainsbury plc - Board of Directors 2024/25	124	Independent auditor's report to the
4	Chief Executive's letter	71	J Sainsbury plc - Operating Board 2024/25		members of J Sainsbury plc
8	Our business model	73	Board leadership and Company purpose	132	Consolidated income statement
10	Our strategy	81	Composition, succession and evaluation	133	Consolidated statement of comprehensive
12	Delivering on our outcomes	84	Division of responsibilities		income/(loss)
15	Plan for better	85	Nomination and Governance	134	Consolidated balance sheet
18	Our people		Committee report	135	Consolidated statement of changes
22	Our Section 172 statement	89	Corporate Responsibility and Sustainability		in equity
23	Engaging with our stakeholders		Committee report	136	Consolidated cash flow statement
30	Climate change and Task Force on	92	Audit Committee report	137	Notes to the consolidated financial
	Climate-related Financial Disclosures	99	Annual Statement from the Remuneration		statements
	(TCFD)		Committee Chair	194	Company balance sheet
41	Climate Transition Plan (TCFD)	102	Summary of 2023/24 remuneration	195	Company statement of changes in equity
44	Key performance indicators		decisions	196	Notes to the Company financial statements
46	Financial review	103	Summary of remuneration for 2024/25	199	Alternative performance measures (APMs)
53	Principal risks and uncertainties	104	Remuneration in context	204	Additional shareholder information
62	Statement of viability	106	Annual Report on Remuneration	206	Glossary
64	Non-financial and sustainability	118	Additional statutory information
	information statement

J Sainsbury plc Annual Report and Financial Statements 2024  1

Strategic Report		Governance Report		Financial Statements

Chair's letter

We had another strong year at Sainsbury's, continuing to deliver for our customers, colleagues and shareholders and deepening our relationships with suppliers.

As we look back on our performance over the last year, our results reflect the success of our three-year Food First strategy and provide a strong platform from which to grow as we progress our new Next Level Sainsbury's plan.

Reflecting on Food First

The Food First strategy has transformed Sainsbury's, creating a stronger business with a much sharper value position and a refreshed focus on innovation. Customers have recognised the progress we've made, as our market share gains have shown.

The sector continues to face huge pressures, with an increasingly complex and cost-heavy legislative environment. We have proven our resilience against significant macroeconomic challenges and, against this backdrop, we have supported our customers and colleagues. We invested £780 million over the last three years in value and passing on cost savings to customers, helping transform our value proposition. We also invested £500 million in colleague pay over three years, including our biggest ever single investment in colleague pay in March of this year.

We delivered on our priorities and continue to make bold decisions to speed up the pace of change and development across the business. Over the course of Food First, we delivered a £1.3 billion cost savings programme, improving the structural efficiency of the business and enabling us to continue to invest at scale where it matters most. Our programme to transform our Argos store estate has also been significantly progressed, driving the digitisation and resilience of Argos.

Over the last year, we have also made necessary decisions to improve our business model. In January, we announced the completion of a strategic review of our Financial Services division which will, over time, result in a phased withdrawal from our core Banking business.

We remain firmly committed to protecting our planet, helping customers move to healthier and more sustainable diets and supporting our suppliers, colleagues and the broader communities we operate in. Our accelerated carbon reduction targets have been approved by the Science Based Targets Initiative and we have reduced plastic packaging from our own brand products by 12.9 per cent in relative terms versus our baseline. Read more on our Plan for Better progress on page 15.

Our updated strategy and commitments

We have spent the past three years putting food back at the heart of the business and now, as we look ahead at the next three years, our new Next Level Sainsbury's strategy will build on this momentum. We have reset our competitive position and created a strong financial platform from which we will grow, invest in further strengthening the business and deliver enhanced returns to shareholders.

To progress our Next Level Sainsbury's plan, we are making eight commitments that we will deliver over the three years to March 2027. First, we will deliver grocery volume growth ahead of the market. This commitment is underpinned by our transformed value perception, great range and consistently high levels of customer service.

Next, we commit to deliver profit leverage from sales growth. This means we'll put more volume over our largely fixed cost base. We will invest to bring more of our range to more customers, particularly enhancing choice in fresh food, and will create more space for food in many locations.

We expect this to be a key driver of grocery volume gains.

We've built a leadership position on customer satisfaction over the other full choice competitors in the market and we're really committed, over the life of this plan, to build on this level of performance. Our core belief is that well-motivated and engaged colleagues deliver excellent service, leading to higher productivity. This is why we will maintain our commitment to invest in our people and continue to improve productivity over the course of this plan, with colleague engagement ahead of where we are now by March 2027.

We're fully committed to our goal of reaching net zero by 2035 in our own operations and to delivering all of our commitments across healthier diets, climate, nature and people. This is why Plan for Better is integrated into each of our four key outcomes and will continue to underpin our ambitions into the future.

We're also committing to deliver £1 billion of structural cost savings over the life of this plan, improving efficiency, offsetting operating cost inflation and enabling us to continue to invest in the customer offer.

Our strong financial position and momentum mean we're able to invest more capital to drive growth and strengthen the key strategic capabilities of this business in areas like technology and automation. We will be investing with a clear focus on efficiencies and productivity, helping drive higher returns. We will capitalise on our scale and invest at a time when many others can't, further building on our competitive advantage and reducing our cost base.

This higher level of capital investment is balanced with a reinforced commitment to strong free cash flow generation- at least £500 million every year, growing as we deliver higher profits.

We have committed to delivering stronger returns for our shareholders. Specifically, a progressive dividend from the start of the next financial year and a share buyback programme, starting with a £200 million buyback this financial year.

Building a business for the future

As we look ahead to the next three years and well beyond, we're driven by a clear purpose: to make good food joyful, accessible and affordable for everyone, every day. Our new purpose is all about how we deliver for our customers, how we do business and how we work right across our industry to create a more sustainable UK food system. Central to this is our Plan for Better. It is a core part of our broader strategy and is fully integrated into the way we operate as a business, driving improved commercial and sustainability outcomes. The way we partner with our suppliers is vital to this, with longer term relationships that will help to drive the resilience of our businesses and the broader food system.

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Through our Plan for Better, we have reduced our carbon emissions by transitioning to 100 per cent renewable electricity across the whole of our store estate through the long-term purchasing of new-to-planet energy, significantly reducing our reliance on fossil fuels. In February, we were the only UK supermarket awarded an A rating for our environmental commitments on climate change for the tenth consecutive year by the Carbon Disclosure Project and we were also recognised as a 2023 Supplier Engagement Leader.

We continue to build on this progress and to evolve our ambitions around key issues, including healthy, sustainable diets; plastic and nature - growing sales of plant-rich foods, improving protein diversity, considering packaging holistically and protecting and restoring nature. We will continue to work with our entire value chain, supporting our suppliers wherever

we can - including through longer-term partnerships. We also remain committed to supporting our colleagues and will be setting out new gender and ethnicity targets to further increase diverse representation.

Financial Review

We delivered another strong performance this year, demonstrating the success of our Food First strategy, with profit and free cash flow results above the top end of our guidance range. Our grocery performance was particularly strong, with record market share gains and volume growth accelerating every quarter. This delivered better profit leverage, with retail underlying operating profit of £966 million, up 4.3 per cent versus 2022/23 as the strong grocery performance and continued strong delivery of cost savings more than offset softer Argos trading. Including a weaker contribution year-on-year from Financial Services and higher finance costs, underlying profit before tax of £701 million, up 1.6 per cent versus 2022/23.

Statutory profit before tax was £277 million, which was down 15.3 per cent on 2022/23, with non underlying items predominantly reflecting impairments relating to the restructuring of the Financial Services division. Retail free cashflow was £639 million, broadly flat year-on-year.

Net debt including leases reduced by £790 million to £5,554 million, reflecting strong cash generation and a £372 million reduction as a result of the Highbury and Dragon property transaction. Underlying basic earnings per share was 22.1 pence and basic earnings per share was 5.9 pence, with both reflecting the impact of the increase in the corporation tax rate.

It should also be noted that over the last three years we have paid over £2.8 billion in taxes borne. This includes £1.38 billion of business rates,

£646 million in Employer's National Insurance Contributions and £181 million in Corporation Tax, as well as other tax obligations. As we strive to invest in our colleagues and deliver consistently great value, a reformed business rates system would enable us to do even more. Long-term reform will not only benefit Sainsbury's, but boost growth, create jobs and revitalise our high streets.

More information on our financial performance can be found in the Financial Review on page 46.

Delivering for our shareholders

The Board proposed a final dividend of 9.2 pence, bringing the full-year dividend to 13.1 pence per share, which is in line with last year. Our policy of paying a dividend of around 60 per cent of underlying earnings has allowed us to maintain a full-year dividend which is flat year-on-year, despite the impact on underlying earnings per share of the higher corporation tax rate.

Remuneration

When determining incentive outcomes and total remuneration received by the Executive Directors, the Remuneration Committee carefully assesses performance against a framework - including several factors, like executive pay in the context of the broader workforce and investments - to ensure that incentive outcomes are aligned to the underlying performance of the business and the experience of shareholders.

Simon's remuneration for the year reflects the strong performance of the business over the period and considers the prevailing market and economic conditions. Under Simon's leadership, Sainsbury's has made great progress in delivering the Food First strategy as well as developing the Next Level strategy, including operating model changes that will deliver further

cost savings.

For more information on this year's remuneration awards, please see pages 99 to 117.

Operating board changes

We move into the next phase of our strategy with a more focused structure for our Operating Board, now with eight members.

To help drive Next Level Sainsbury's, Graham Biggart has taken on new responsibilities as Chief Transformation Officer and General Merchandise Commercial Officer, helping to further accelerate both our transformation and our performance. Rhian Bartlett's role on the Operating Board is now Chief Food Commercial Officer, recognising the continued acceleration of our Food First strategy. This change to our leadership came as Paula Nickolds, General Merchandise Commercial Director, made the decision to leave the business, having led much progress across Argos, Habitat and Tu.

Jim Brown, Chief Executive Officer of Sainsbury's Bank, decided to retire. Jim joined the business in 2019 and his strategy to align Financial Services to loyal Sainsbury's customers resulted in the Bank paying its first dividend in 2022. Robert Mulhall has been appointed as CEO of Sainsbury's Bank, reporting into the Bank Board and connecting into the Sainsbury's Operating Board via Bláthnaid Bergin, our Chief Financial Officer.

Finally, Tim Fallowfield has decided to retire from his role as Company Secretary and Corporate Services Director at our AGM in July, after more than 22 years with Sainsbury's. Tim joined the business in 2001, becoming an Operating Board Director in 2004 and he has made a major contribution to Sainsbury's. His role as our Board sponsor for disability and carers and his leadership and support to the Government in raising awareness of the benefits of recruiting, retaining and developing disabled people led to his being awarded an OBE in the 2020 New Years Honours List.

I would like to personally thank Jim, Paula and Tim, who have each made an outstanding contribution to the success of Sainsbury's and we wish them all the very best for the future.

Final thoughts

I would like to thank all of my colleagues; you are at the heart of everything we do at Sainsbury's and your dedication to serving and helping every customer is critical to the long-term success of our business.

I also want to thank the Operating Board and Simon for their huge efforts and support over the past year. There is no clearer demonstration of the ability of this management team to execute than the progress the business has made in the last three years. The Board and I have seen the impact this has made throughout the organisation. When I look to the new Next Level Sainsbury's strategy we've set out, it is ambitious but it is also grounded in the progress we've made and I have every confidence in the ability of Simon and his team to deliver.

Martin Scicluna

Chair

24 April 2024

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Chief Executive's letter

As we embark on the next phase of our strategy, Next Level Sainsbury's, Simon Roberts reflects on the last three years, why food is now firmly back at the heart of Sainsbury's and how we are delivering for customers, colleagues, communities and shareholders.

£780m

investment in lowering prices

over three years

When John James and Mary Ann Sainsbury opened their very first store in 1869, their purpose was clear: to provide good quality food at affordable prices. More than 150 years later, I am proud to say Sainsbury's has stayed true to these values.

Over the last three years, we have reset the business and food is now firmly back at its heart. It's from this position that in February, we launched our new purpose: We make good food joyful, accessible and affordable for everyone, every day. This is a clear statement of our intent and commitment about what Sainsbury's is here to do consistently, every day. Above all else, it sets a high bar for our future ambition.

It is our purpose that has driven every decision we have made in building our strategy for Next Level Sainsbury's - and we believe that to deliver on our plan and purpose means us taking a leading role in building a more resilient UK food system. We are, first and foremost, a food company and we know that making the difference here will be fundamental to ensuring we develop and grow our business for decades to come.

The last three years

Food First was all about refocusing and resetting Sainsbury's core food business.

And we have delivered. We have significantly improved our value, innovation, availability and service. More customers are now doing more of their grocery shopping with us and this is driving record market share gains and volume growth.

When we launched Food First in November 2020 we were just too expensive. Since then we have invested £780 million into lowering our prices, fundamentally resetting our competitive position. While some of this investment has been in specific response to support our customers through a period of higher food inflation, our major strategic focus since 2020 has been to consistently deliver much better value for all our customers. We have transformed our value position and significantly improved price perception with customers.

Nectar Prices has been a game changer, bringing market leading offers across our food and grocery range: launched in April 2023 with just a few hundred products, Nectar Prices are now available on around 7,000 products across our stores and online, saving customers £12 on a typical £80 shop. We have also continued to grow Aldi Price Match, now with over 600 products, at least 75 per cent of which are Healthy or Better for you products. Most recently, we launched our newest value proposition, Low Everyday Prices, on over 1,000 big brand products, giving customers the reassurance that whatever is in their basket and trolley, they can always be sure of great value at Sainsbury's.

7,000Nectar Prices on around

products

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While significantly improving our value position, we have not compromised on quality. In fact, we have made a step-change in our quality and product innovation, launching over 4,000 new products over the last three years and at the same time reformulating, or improving, thousands more. Our Taste the Difference product ranges have been particularly popular with customers and sales have grown to £1.6 billion this year. Taste the Difference is proportionately the biggest premium own label brand of the full choice grocers and has contributed to our market outperformance through every key seasonal event of the year.

Over the last three years, our Brands that Deliver - Argos, Nectar, Tu, Habitat, Sainsbury's Bank - have been refocused to ensure that they contribute positively in their own right and support our core food business. We have made real progress, but we still have further to go here.

Argos has been through a major transformation in the past three years, moving from a catalogue business to become a digital-first retailer - we have integrated Nectar, improved our same-day coverage and now 70 per cent of Argos sales start online. As a result of these changes and in response to changing customer shopping behaviours, nearly 70 per cent of online Click & Collect orders are now available for immediate collection from over 1,000 Argos collection points. All of this has enabled Argos to become a structurally more resilient business with a lower cost to serve than in previous years. We have taken more than three percentage points out of our costs to sales ratio and improved the core profitability of the business. The job of continuing to transform and improve Argos, of course, continues as this will always be a cyclical business. As technology and customer behaviour continues to change, there will always be more to do, which

we are addressing through Next Level Sainsbury's.

Looking to our other brands, our trading approach on Tu over the period of Food First has delivered a more profitable sales mix, with higher full price sales and stronger gross margins. However, clothing sales declined over the last year, given both the more promotional market dynamics and more periods of unseasonable weather. Some of our clothing ranges also weren't where they needed to be and we had interruptions in availability in the final quarter. We have taken action to improve our ranges and availability as we look ahead.

Turning to our Financial Services business, we announced in January a phased withdrawal from core banking, so while it is business as usual for our customers for now, the financial services we continue to offer in the future will be provided by dedicated financial services providers through a distributed model.

We are really clear we are a food first, people first business. I am proud we again led our industry in improving colleague pay and in making the right decisions to support and invest in our people over the last three years. This is because we fundamentally believe that the more engaged our colleagues are, the better customer service we deliver and the more productive we can become. Our approach has led us to achieve improved customer satisfaction, ahead of our competitors over the last three years and more people are now choosing Sainsbury's more often.

Since 2018, we have increased colleague pay at Sainsbury's by 50 per cent. In January this year we became the first full choice supermarket to announce we would pay colleagues £12 per hour nationally, £13.15 in London. This brings our rate of pay in line with the new Real Living Wage and takes our three-year total investment in colleague pay to over £500 million.

We also announced that we would extend free food during shifts and increase the frequency of additional colleague discounts.

Having a diverse workforce is so important to us. Three years ago we set ourselves ambitious gender and ethnicity targets because it matters that Sainsbury's is a place where everyone can thrive and where our leadership reflects the colleagues and communities we serve. While we haven't met all of our targets given the high bar we set, I am pleased to report we have made significant progress. Representation of women, ethnically diverse and black colleagues in senior leadership have all increased and we were one of only two retailers in the Times Top 50 list for gender equality. There is clearly still much more to do in working to build on our industry leading position and we will be setting out our gender and ethnicity targets for the next three years as part of Next Level Sainsbury's.

15,000We work with over British farmers

We are a food first, people first business.

Simon Roberts

Chief Executive

50%We have increased colleague pay by

since 2018

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Chief Executive's letter continued

The last three years continued

Turning to our suppliers, we recognise the significant pressures faced in food supply chains, particularly with our farmers and growers. We work with over 15,000 British farmers, sourcing £2 billion worth of produce every year

• and our close relationships give us real insight into the issues they are facing. From increasing business operating costs and climate change to policy challenges, we are committed to working together with our suppliers to build resilience in their businesses, benefitting not just our supply chain but ultimately, the resilience of the UK food system. That's why, over the past two years, we have moved increasingly to offering longer term contracts with a number of our key suppliers, providing them with the security they need to plan and invest in their businesses. We are also working in collaboration with many of our suppliers on new and emerging methods of production and with new technologies, allowing us to develop better surety of supply, while helping us towards achieving targets across our Plan for Better. For example, working with ABP Food Group and more than 540 trusted British farmers, in September we launched a new, first to market reduced carbon beef range, offering high quality, great tasting steak, with 25 per cent reduced carbon compared to the industry average.

I've addressed the investments and the consistent and balanced choices we have prioritised for our customers, colleagues, suppliers and communities over the last three years. None of these would have been possible without the significant cost savings delivered through our Save to Invest programme. We have achieved the £1.3 billion of cost savings we targeted since March 2021, doubling the rate of cost savings compared to the three years prior to Food First.

We have transformed and simplified our logistics operations and continued to implement leading automation and machine learning into our food supply chain, with new systems driving end-to-end efficiencies, reducing manual tasks and leading to better outcomes across supply chain, commercial and retail teams.

We made clear choices and deliberate investments over the course of our Food First strategy to become a more profitable and sustainable business, doing the right thing for our customers, colleagues and suppliers while ensuring we deliver for our shareholders. More customers are doing more of their shopping with us, we have more engaged and productive colleagues and strong relationships with our suppliers and partners. We continue to invest where it matters, growing our volumes and market share versus our key competitors and delivering strong financial results, creating long-term value for our shareholders.

Moving to the Next Level

Our updated strategy, Next Level Sainsbury's, is driven by our reset and refreshed purpose. Underpinning our strategy are four outcomes: First choice for food, Loyalty everyone loves, More Argos, more often and Save and invest to win. These build on the success of our Food First strategy and ultimately, will give customers more of what they come to Sainsbury's for

- outstanding value, unbeatable quality and great service.

First choice for food

While Food First was about refocusing and resetting back on the core food business, First choice for food represents a very different ambition to bring more customers to do more of their shopping with us. Currently, only 15 per cent of our 600 supermarkets offer our full food range and so our key focus is investing to bring more of our range to more customers. We will be adding more chilled space to offer more choice from our fresh food range and improving the look and feel of 180 of our highest potential stores. Through making more of our food range available to more of our customers, we have a unique opportunity to drive grocery volume gains by becoming first choice for more customers.

Within the 180 stores, we will tighten the range and space allocated to general merchandise , aligning our offer more closely to customers' grocery shopping missions. By providing customers with more of the right products they want and in combination with improved profit densities from food, we will generate significantly better sales and profit returns from our store space.

We will also build on the strength of our supermarket locations and customer traffic, by investing in our Smart Charge ultra-rapid EV charging network. We launched Smart Charge at 40 supermarkets this year and will increase our network over the new financial year as we build on the strength of our supermarket locations and customer traffic, helping customers to reduce their carbon emissions.

Over the last three years, we have fully integrated our Plan for Better into the way we operate and work as a business to drive improved customer, commercial and sustainability outcomes - and in the way we partner with our suppliers. Our new purpose is about how we show up for customers, how we do business and how we work right across our industry. The UK food system requires significant change - we all know that - and we're committed to play a leading role in improving it, focusing on how we source our products and how we help our customers to have access to good food.

Over the next three years, we are making a clear commitment to enable and drive food system change, collaborating with all parts of our industry, our suppliers and policy makers to begin to realise the change we need to see.

Loyalty everyone loves

Our Nectar ecosystem is split in two halves: our customer-facing Nectar loyalty scheme, rewarding customers with pricing and reward points to be spent at Sainsbury's or with one of our nine redemption partners, and Nectar360, our fully integrated loyalty, insights and media services agency.

Over the last three years, we have made strong progress in developing our Nectar loyalty scheme, moving towards a more digital customer experience and building our personalisation capability. However, the major transformational change has been the introduction of Nectar Prices, which has been one of the key drivers in our improved value perception.

We are learning more about the importance of loyalty in grocery for customers and we have a clear plan to continue growing and strengthening Nectar within our business, increasing personalisation, improving digital integration and growing the coalition, while always remaining transparent with customers over how we use their data.

Our retail media business, part of Nectar360, allows brands to advertise to our customers in a tailored way to ensure both brands and customers benefit. We believe retail media has huge untapped potential in the UK and we aim to build on our first-mover advantage and become world-leading in our capabilities. We expect Nectar360 to deliver an incremental £100 million of profit contribution over the next three years.

More Argos, more often

We have been progressing well with our plans to transform Argos, significantly reducing the standalone store estate and opening many more Argos stores and collection points inside Sainsbury's making it a more profitable business. We have also made changes to how and where we move and hold our stock, driving efficiencies through our local fulfilment network and making sure we have the right stock close to customers, at the right time.

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Looking ahead, we have a real opportunity. Half of households in the UK shop with Argos and the customer feedback on what is most important is clear: value, convenience and ease. But we are not always front of mind for customers. By providing a more inspiring range of desirable brands and design-led own label and encouraging more frequent browsing occasions, we have ambitions to grow customer basket sizes, frequency of visits and encourage customers to shop across our full range of products. We also have plans in improving our digital proposition, increasing awareness of our market-leading Click and Collect service and will be continuing our programme of transforming our operating model, benefitting customers while providing efficiencies in our business.

Save and invest to win

Our Save to Invest programme has been at the very heart of delivering Food First, creating the fuel to reinvest back in the customer proposition and reset our value position. We've changed the way this business approaches cost and we've made bold decisions as a team about what really matters, doubling the rate of our cost saving delivery.

We achieved some big structural wins early in Food First, saving £1.3 billion over the course of the strategy, and we will continue this momentum with our new Save and invest to win outcome.

We're confident we can maintain our current run rate of cost savings, and so unlock another £1 billion worth of cost savings over the next three years. Our high returning investments in technology and automation will drive big steps forward in our efficiency and in improving what we deliver for customers. We've signalled before that we will be unlocking productivity benefits more and more through these end-to-end programmes, taking cost out of an entire cross functional chain of costs, rather than just looking at siloed divisional savings.

We enter this next phase of our strategy with a clear plan, strong momentum and the necessary focus to realise our goals, deliver for our customers, colleagues, communities and shareholders and take Sainsbury's to the Next Level.

Simon Roberts

Chief Executive

And it's not just cost and productivity that are benefitting: Plan for Better targets are integrated across all our outcomes. We are rolling out the latest in integrated refrigeration and heating technology, removing the need for fossil fuel gas heating and running on natural CO2 refrigeration. We have also committed to buy 100 per cent of the electricity produced by Longhill Burn Wind Farm, which when all turbines are operating at maximum capacity has the capability to power up to 33 per cent of our estate. We have also started to roll out double-decker trailers in our fleet, which will reduce the number of vehicles on the road, thereby reducing our carbon footprint, while maintaining the same levels of stock movement.

Save and invest to win is about driving more cost out of our business, improving our people and technology capabilities, fuelling investment in our customer proposition and as a result, improving our performance. In moving to the next level, we are making strategic and deliberate choices to invest capital in a very targeted way and with a clear focus on unlocking further efficiency, driving new capabilities and productivity and enabling our growth.

Taking Sainsbury's to the Next Level

We firmly believe that our plan for the next three years will lead to strong delivery and returns for our shareholders. We are also committing to a progressive dividend policy from the start of 2024/25 and to the start

of a share buyback programme, with £200 million of share capital to be bought back over the course of the year.

We have a fantastic team right across Sainsbury's. Our people are at the heart of everything we do and I want to thank every one of my colleagues for the brilliant job they do in delivering for our customers, supporting each other and looking after this business.

I feel inspired by our renewed purpose, to make good food joyful, accessible and affordable for everyone, every day. And to deliver on this, we will be ambitious and proactive in collaborating with all our stakeholders to drive the change that will enable a more resilient UK food system.

We enter this next phase of our strategy with a clear plan, strong momentum and the necessary focus to realise our goals, deliver for our customers, colleagues, communities and shareholders and take Sainsbury's to the Next Level.

Simon Roberts

Chief Executive

24 April 2024

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Our business model

We make good food joyful, accessible and affordable for everyone, every day

We want to be first choice for food, attracting many more people to choose Sainsbury's as the place they come to for good food

• and play a leading role in creating a sustainable food system in the UK. We create value for stakeholders by building on the heritage and scale of our food business and our strong assets. Everything we do is underpinned by data and technology innovation. And the infrastructure that supports our brands enables us to drive value and efficiency.
• • Find out more about Plan for Better on page 15

Building on our brand and strong assets

Sainsbury's	Scale	Reputation for	Growing	Volume growth
brand and own	advantage	service, quality	customer base
brand heritage	Second largest	and range
	full choice
	supermarket

Nectar and	Financial	Strength in	Strong supplier	Winning culture
Nectar360	real estate
strength	relationships	and higher
investment in	and online scale
		productivity
loyalty and		and capability
personalisation
	Underpinned by data, technology innovation and capability

Our Plan for Better is integrated into everything we do and critical to building long-term resilience in our business and across our supply chains. We are committed to playing a leading role in creating a more sustainable UK food system.

Creating value for our stakeholders

Customers

Colleagues

Communities

Suppliers

Shareholders

8J Sainsbury plc Annual Report and Financial Statements 2024