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Sainsbury(J) PLC Annual Report and Notice of AGM 2021

07/06/2021 3:25pm

UK Regulatory (RNS & others)


Sainsbury (j) (LSE:SBRY)
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TIDMSBRY

RNS Number : 0751B

Sainsbury(J) PLC

07 June 2021

7 June 2021

J Sainsbury plc

(the "Company")

Annual Report and Financial Statements

AND NOTICE OF ANNUAL GENEral meeting 2021

The following documents have today been posted or otherwise made available to shareholders:

   --    Annual Report and Financial Statements 2021 for the year ended 6 March 2021; 
   --    Notice of Annual General Meeting to be held on 9 July 2021; and 
   --    Form of Proxy for the 2021 Annual General Meeting. 

In accordance with Listing Rule 9.6.1R, a copy of each of these documents will be uploaded to the National Storage Mechanism and will be available for viewing shortly at https://data.fca.org.uk/#/nsm/nationalstoragemechanism .

   The above documents may also be viewed online at   www.about.sainsburys.co.uk/ar2021   and www.about.sainsburys.co.uk/agm2021 . 

A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in the Company's Preliminary Results Announcement on 28 April 2021.

That information together with the information set out below which is extracted from the Annual Report and Financial Statements 2021 (the "Annual Report 2021") constitute the material required by Disclosure Guidance and Transparency Rule 6.3.5R, which is required to be communicated to the media in full unedited text through a Regulatory Information Service.

This announcement is not a substitute for reading the full Annual Report 2021. Page and note references in the text below refer to page numbers in the Annual Report 2021. To view the preliminary announcement, slides of the results presentation, the transcript of the presentation and the webcast please visit www.about.sainsburys.co.uk/investors/results-reports-and-presentations .

Enquiries

 
 Investor Relations     Media 
 James Collins          Rebecca Reilly 
 +44 (0) 20 7695 0080   +44 (0) 20 7695 7295 
 

Our Principal Risks and Uncertainties

Below and on the following pages, we set out an overview of our risk management framework, the principal risks at year end, ongoing mitigations and how these align to our strategy. The Board monitors these principal risks on an ongoing basis and flexes mitigations where appropriate. Particular focus is currently given to how we adapt and respond to the medium and longer-term impacts of the COVID-19 pandemic, as they become clearer.

Risk management framework

The management of risk is based on the balance between risk and reward, determined through a careful assessment of both the potential outcomes and impact as well as risk appetite. Consideration is given to both reputational and financial impact, recognising the significant commercial value of the Sainsbury's brand. The risk management process is aligned to our strategy and each principal risk and uncertainty is considered in the context of how it relates to the achievement of our strategic objectives.

The following diagram provides an overview of the key risk management activities undertaken by leadership that allow the Board to fulfil its obligations under the UK Corporate Governance Code 2018. Please refer to page 53 for the role and remit of these governance bodies.

 
 Divisional leadership teams               - Divisional risk maps reviewed 
  Bottom-up risk identification             and challenged 
                                            - Divisional emerging risk 
                                            map reviewed 
                                            - Monitor risk actions 
 Governance forums                         - Divisional risks relevant 
  Risk identification and monitoring        to forums' area of scope reviewed 
                                            - Governance forum risk maps 
                                            reviewed 
                                          ----------------------------------------- 
 Operating Board                           - Corporate risk map updated 
  Bi-annual Corporate risk updates          and actions monitored 
  and deep dives                            - Risk deep dives received 
                                            - Emerging risk map reviewed 
                                          ----------------------------------------- 
 Audit Committee                                      - Corporate and emerging risk 
  Corporate risk updates, deep                         maps reviewed 
  dives and approve risk framework                     - Risk deep dives received 
                                                       - Risk policy and framework 
                                                       approved 
                                                       - Internal audit reporting 
                                          ----------------------------------------- 
 plc Board                                 - Annual internal controls 
  Review of risk process, corporate         certification by management 
  risks and approval of risk disclosures    - Principal Risk and Uncertainty 
                                            disclosures 
                                          ----------------------------------------- 
 

Our risk management process is designed to identify key risks and to provide reasonable but not absolute assurance that they are fully understood and managed in line with management's risk appetite.

The plc Board has overall responsibility for risk management and internal controls, and for reviewing their effectiveness at least annually. Certain responsibilities have been delegated to the Audit Committee, as outlined on page 64.

The risk management process is embedded at the Operating Board level and is supported by the bottom-up risk process within divisions and governance forums. The Operating Board maintains an overall corporate risk map, which captures the key risks to achieving our strategic objectives and identifies the potential impact and likelihood at both a gross and net level.

The Operating Board formally reviews the risk map twice a year to discuss and agree the level of risk that the business is prepared to accept for each key risk. The target risk position is also captured to reflect management's risk appetite where this differs to the current net position. This enables the Operating Board to agree and monitor appropriate actions as required.

Operating Board members confirm annually that they are responsible for managing their business objectives and internal controls to provide reasonable, but not absolute, assurance that the risks in their areas of responsibility are appropriately identified, evaluated and managed. This is reported to the plc Board.

The Risk and Internal Audit team provide the Audit Committee with a risk management update at each meeting, which includes changes to the corporate risk map agreed by the Operating Board as well as the key risk activities undertaken within functions, governance forums and at divisional and corporate levels. The corporate risk map is formally discussed with the Board.

The COVID-19 pandemic has demonstrated that risk and issue management is an inherent part of doing business and has tested our risk and resilience processes. The impact of COVID-19 on our principal risks continues to be assessed by the Board and is set out, where relevant, in our risk disclosures.

 
 Developments in our risk management process 
  Following the update of our strategy (see the 'Our Strategy' 
  section on page 9), the corporate risk map was refreshed. 
  The Risk and Internal Audit team met members of the Operating 
  Board to discuss key risks associated with the updated strategy. 
  The outputs were discussed with the Operating Board and the 
  corporate risk map was refreshed. This revised corporate risk 
  map was shared with the Audit Committee. Key changes include: 
  - The 'Business strategy and change' risk associated with 
  delivery of the updated strategic priorities was updated to 
  include new risk descriptions and associated mitigations, 
  with future actions to further mitigate the risk agreed by 
  the 
  Operating Board member owning the risk. 
  - In previous years, we reported the 'Product safety and sourcing' 
  risk as part of a broader 'Health and safety - people and 
  product' principal risk. In recognition of the importance 
  of this area, we have separated this risk out and are now 
  monitoring and reporting on it individually. The health and 
  safety of our colleagues and customers remains a principal 
  risk. 
  - Brexit was removed as a specific principal risk, reflecting 
  that the future trading arrangements with the EU are known. 
  Residual risks associated with Brexit are set out in the 'Political 
  and Regulatory' principal risk. 
 
  The revised corporate risks have been mapped to the principal 
  risks included in this report to ensure completeness. 
 
  Emerging risks and opportunities were also formally reviewed 
  in the year through the risk assessment process. This allows 
  emerging risks to be regularly discussed and identified by 
  each division and then to be collated into a business-wide 
  assessment of risks and opportunities. The review assessed 
  how emerging risks and opportunities may impact our business, 
  considering their potential timeframe and degree of certainty. 
  The outcomes were reported to the Operating Board and Audit 
  Committee and relevant actions were agreed. 
 
  Climate change risks are assessed in terms of the impact 
  on our business model (climate resilience) and our impact 
  on the environment. Risks are identified from the bottom-up 
  and emerging risk assessments across the business and then 
  reviewed in a specific climate change risk workshop to assess 
  completeness. Climate resilience risks identified form an 
  integral part of a number of our corporate risks and have 
  been referenced in the existing principal risks we are disclosing, 
  where appropriate. Risks around our impact on the environment 
  are considered in the 'Environment and sustainability' principal 
  risk. See page 15 for more information on our ongoing implementation 
  of the TCFD recommendations. 
 

The specific risk management activities undertaken in the financial year to 6 March 2021 include:

- The Risk and Internal Audit team facilitated risk workshops with divisional leadership teams to identify the key risks which may prevent the achievement of objectives. A risk map is maintained for each division, setting out key risks and their gross, net and target positions. A consolidated view of relevant risks was then discussed at each key governance forum - safety, data governance and operational resilience

- Divisional management and governance forums reviewed key risks and the effectiveness and robustness of the mitigating controls as part of their normal business activities

- Emerging risks and opportunities were formally assessed and will continue to be monitored

- Risks to the delivery of our updated strategy were discussed with Operating Board members to identify themes for broader discussion with the full Operating Board

- The Operating Board reviewed and challenged the output of the bottom-up risk process including new risks, risk movements and key themes

- The plc Board reviewed the risk management process and corporate risks at the year end and approved our principal risks and uncertainties disclosure, as set out on pages 34 to 43

- Internal Audit provided independent assurance to management and the Audit Committee over specific risk areas as part of their annual audit plan

- As set out over the following pages, deeper risk discussions were undertaken with the Operating Board and/or Audit Committee for a selection of principal risks. Deep dives will continue, with focus on assessing whether we are within our risk appetite

The most significant principal risks identified by the Board and the mitigations are set out on the following pages in no order of priority.

The net risk movement from the prior year for each principal risk and uncertainty has been assessed.

Mitigations in place, supporting the management of the risk to a net risk position, are also described for each principal risk and uncertainty.

Where principal risks have been included in the risk modelling undertaken as part of the preparation of the viability statement (see page 44), this has been indicated with the following symbol: *

Key risk movements

As noted, the principal and emerging risks are discussed and monitored throughout the year to identify changes to the risk landscape. Risks are reviewed in line with the strategic objectives of the business.

The key risk movements disclosed relate to increases in the net risk position for:

a. business continuity, operational resilience and major incident response - the risk position regressed to reflect the business disruption and costs associated with responding to COVID-19

b. business strategy and change - the risk position regressed following the strategy update. The overall impact of not delivering the strategy was assessed as being higher, although due to the mitigations in place, the likelihood was assessed as lower

Business continuity, operational resilience and major incident response*

RISK DEEP DIVE

 
 Risk 
  A major incident or catastrophic event could affect the business 
  or its individual brands' ability to trade. Sainsbury's exposure 
  to operational resilience and major incident risks may be 
  greater because of operational complexities and some ageing 
  systems. 
 
  In the last year, the impact of and response to COVID-19 has 
  affected most, if not all, of our business operations. This 
  was and continues to be actively managed, although many of 
  our mitigations are now part of day-to-day ways of working. 
 
  The level of business disruption caused by COVID-19 is outside 
  of our risk appetite. We will continue to monitor the situation 
  and return to pre-COVID business practices in line with government 
  guidance and customer sentiment. 
 Direct oversight 
  Group Operational Resilience Committee 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  Increased net risk exposure 
  The risk position regressed to reflect the business disruption 
  and costs associated with COVID-19 
 Mitigations 
  - The Group Operational Resilience Committee (GORC) meets 
  quarterly, chaired by the CFO, with support from our Company 
  Secretary and Chief Information Officer. The GORC sets the 
  operational resilience strategy for the business and monitors 
  progress against this 
  - To support this, the Operational Resilience Committee, which 
  includes representatives from functions across Sainsbury's, 
  including the Bank, meets regularly to ensure that the operational 
  resilience policy and strategy is implemented 
  - Business-wide resilience exercises are undertaken to imitate 
  real life business continuity scenarios and test our ability 
  to respond effectively. Actions in response to lessons learnt 
  are agreed 
  - Key strategic locations have an automated emergency call 
  cascade solution implemented which allows for emergency communications 
  to be made to all colleagues and for responses to be received 
  back when required 
  - COVID-19 confirmed that colleagues can work from home if 
  required. Sainsbury's Bank has arrangements with a third-party 
  to provide secondary back-up sites 
  - Key business processes are assessed for operational resilience 
  against a set of minimum standards and contingency measures 
  are tested 
 
  Crisis management 
  - In the event of any unplanned or unforeseen events, the 
  Incident Response Team ('the IRT') is convened to manage the 
  response and any associated risk to the business 
  - The business has plans in place, supported by senior representatives 
  who have the experience and the authority levels to make decisions 
  in the event of a potentially disruptive incident 
  - The IRT was convened at various times through the year to 
  co-ordinate our response to changing COVID-19 guidance across 
  the devolved nations. The Chair reports to the Operating Board, 
  which provided strategic direction and decision making across 
  financial, operational and regulatory matters, considering 
  all stakeholders. The IRT was also briefly convened at year-end 
  in response to Brexit but was stood down as our response was 
  managed by existing business forums 
  - We recognise that there is an increasing risk to our supply 
  chains from extreme weather events due to climate change, 
  which we will continue to manage through diversification of 
  our supply chain. Our operations will also continue to be 
  more impacted by flood risks due to climate change, leading 
  to the need to prevent and/or respond to such events effectively. 
  These risks are managed to limit the impact on customers and 
  our business 
 

Business strategy and change*

RISK DEEP DIVE

 
 Risk 
  The strategy requires significant, concurrent change activities 
  to be delivered in the right sequence and at pace to drive 
  business value. Key risks associated with this include an 
  inability to prioritise resources to deliver competing change 
  activities and/or not having the right skills, capabilities 
  and culture in place to deliver and embed the required changes/within 
  required timescales. 
 Direct oversight 
  Business Performance Review, Operating Board 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  Increased net risk exposure 
  The risk position changed following the strategy update. The 
  overall impact of not delivering the strategy was assessed 
  as being higher, although due to the mitigations in place, 
  the likelihood was assessed as lower. On balance, this represents 
  a regression to the risk position. The Operating Board continues 
  to monitor this. 
     Mitigations 
      - Our business strategy, as set out in this Strategic Report, 
      is focussed on the following priorities: 
      - Food First 
      - Brands that Deliver 
      - Save to Invest 
      - Connected to Customers 
      - Net Zero 2040 
      - The Operating Board has regular sessions to discuss strategy, 
      supported by a dedicated Strategy team. The strategy is communicated 
      and the business continually engages with a wide range of 
      stakeholders, including shareholders, colleagues, customers 
      and suppliers 
      - To ensure focus is maintained on delivering the strategic 
      priorities of the business, new transformational change projects 
      are approved by the Business Performance Review (BPR) forum, 
      once they have been through robust challenge on expected costs 
      and benefits, proposed timeframes for achieving the benefits 
      and risks associated with their delivery. The BPR also monitors 
      and reviews the "in year" implementation of the plans to meet 
      budget targets 
      - During the year, the Operating Board reviewed roles and 
      responsibilities and defined clear operational accountability 
      for delivering our strategic priorities. Governance forums 
      were also reviewed and refreshed to simplify the business's 
      review and decision making process. See the Board Leadership 
      and Company Purpose section on page 53 for more information 
      - The Operating Board also reviewed our culture to identify 
      strengths to build on and opportunities to enhance the behaviours 
      required to embed the changes required to deliver our strategic 
      objectives. As a result, our performance management process 
      has been refreshed and rolled out 
      - We defined 8 key operational and financial metrics, linked 
      to Executive Director incentives (see page 80), that will 
      be used to measure and report on our strategic performance 
      in a clear and consistent manner. We will continue to monitor 
      these metrics and respond as appropriate to how they change 
      over time 
 

Colleague engagement, retention and capability

 
 Risk 
  The business employs 189,000 colleagues who are critical to 
  the success of our business. Attracting talented colleagues, 
  investing in training and development, maintaining good relations 
  and rewarding colleagues fairly are essential to the efficiency 
  and sustainability of business operations. An inability to 
  attract, motivate and retain talent, specific skillsets and 
  capability impacts our ability to deliver our strategic objectives, 
  thus increasing its impact. 
 
  In the last year, the impact of COVID-19 has affected most, 
  if not all, of our store, depot and office-based colleagues. 
  This was and continues to be actively managed, although many 
  of our mitigations are now part of day-to-day ways of working. 
 
  The challenging trading environment requires a focus on efficient 
  operations, which may include change initiatives affecting 
  colleagues, therefore presenting a risk of loss of colleague 
  trust or engagement. 
 Direct oversight 
  Operating Board 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  No change 
 Mitigations 
  - During the last year, we enhanced our regular and transparent 
  communication with colleagues so they understand the actions 
  we are taking to support them and customers through the pandemic. 
  As part of this, we made additional resources and guidance 
  available 
  - We flexed our policies to support our colleagues and managers 
  during COVID-19. From the very start of the pandemic, we committed 
  to paying all colleagues that were required to shield full 
  pay for each of the shielding periods. We also supported colleagues 
  self-isolating or with COVID-19-related sickness 
  - Colleagues were redeployed across the business and we recruited 
  additional temporary and permanent colleagues to support during 
  the pandemic 
  - We invested in a series of additional recognition activities 
  for colleagues across all areas of the business. We also made 
  three special payments to frontline colleagues in our stores, 
  depots and contact centres, and two payments to frontline 
  managers, to acknowledge their hard work and commitment this 
  year 
  - Physical and mental wellbeing support, including guides, 
  tips and webinars, plus remote working guides are provided 
  to colleagues, along with financial payments for furniture 
  and peripherals to support home working 
  - Employment policies and remuneration and benefits packages 
  are regularly reviewed and are designed to be competitive 
  with other companies, fair and consistent, as well as providing 
  colleagues with fulfilling career opportunities 
  - Reviews are performed to help develop the skills colleagues 
  need to deliver objectives and this is supported by embracing 
  new ways of attracting talent 
  - In addition to strong leadership and nurturing of talent 
  by line managers, formal processes are also in place to identify 
  talent and actively manage succession planning throughout 
  the business 
  - Our business priority, 'Be a place where we all love to 
  work' reinforces our commitment to giving people the opportunity 
  to be the best they can be 
  - We continue to work tirelessly to be an inclusive place 
  to work for all. Over the last 12 months we increased our 
  focus on ethnic diversity, rolling out race fluency development 
  to our top 1400 leaders, tripling our investment in development 
  programmes for ethnically diverse colleagues and publishing 
  our first ethnicity pay gap report 
  - We continue to listen closely to colleagues to inform and 
  adapt our future plans and actions. We use regular online 
  surveys, analysis of Yammer activity and engagement with trade 
  unions and our Great Place to Work groups to understand colleague 
  sentiment 
  - As change initiatives are implemented, the methods described 
  above will continue to be employed to understand and maintain 
  colleague trust and engagement 
  - One of our key metrics used to measure and report on our 
  strategic performance is to "maintain strong colleague engagement" 
  as explained in the "Our KPIs" section of this report. We 
  will continue to monitor this metric and respond as appropriate 
  to how it changes over time 
 

Customer*

 
 Risk 
  We are a business incorporating Sainsbury's, Argos, Habitat, 
  Tu clothing, Nectar and Sainsbury's Bank; our business must 
  continue to evolve to meet customer needs and maintain customer 
  loyalty. A failure to align with, and respond to changes in 
  customer sentiment, behaviours, expectations and circumstances, 
  exacerbated by uncertainties around customer behaviours post 
  the COVID-19 pandemic, will impact our ability to retain existing 
  and attract new customers. 
 Direct oversight 
  Operating Board and Sainsbury's Bank Management Board; Customer, 
  Commercial and Channels Forum 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Connected to Customers 
 Movement 
  No change 
 Mitigations 
  - Customer trends, attitudes and behaviours are continually 
  monitored over time through their response to our propositions 
  and feedback, as well as reviewing future customer and macro 
  trends on a quarterly basis, to help set our future direction 
  - We implemented a proactive quality and pricing strategy 
  that focuses both on what our existing customers want and 
  on what will attract new customers. As part of this, we launched 
  our Sainsbury's Quality, Aldi Price Match campaign in February 
  2021 
  - We change and evolve to meet the needs of our customers. 
  To react to customer demand during the COVID-19 pandemic, 
  we more than doubled our Groceries Online and Click & Collect 
  capacity over the last year. We continue to invest in these 
  arrangements for now and the future, monitoring customer behaviour 
  closely so that we respond appropriately as we move out of 
  the COVID-19 pandemic 
  - Nectar supports our strategy of being Connected to Customers, 
  allowing us to know and serve our customers better. The launch 
  of Digital Nectar has given us more control over how we reward 
  and recognise our customers, with focus on personalising specific 
  offers and rewards. Customers can now collect and spend their 
  Nectar rewards with hundreds of brands online as well as with 
  our core partners 
  - We continue to review our products and services to ensure 
  that we respond to the increasingly environmentally conscious 
  expectations of our customer. We are taking a leading role 
  in offering delicious, affordable food that supports healthy 
  and sustainable diets and helps customers reduce their impact 
  on the environment one plate at a time 
  - One of our key metrics used to measure and report on our 
  strategic performance is to deliver "strong customer satisfaction 
  scores" as explained in the "Our KPIs" section of this report. 
  We will continue to monitor this metric and respond as appropriate 
  to how it changes over time 
 

Data security*

RISK DEEP DIVE

 
 Risk 
  It is essential that the security of customer, colleague and 
  company confidential data be maintained. A major information 
  security breach could have a significant negative financial 
  and reputational impact on the business. The risk landscape 
  is increasingly challenging with deliberate acts of cybercrime 
  on the rise, targeting all markets and heightening the risk 
  exposure to broader business disruption as well as to data 
  breaches. 
 Direct oversight 
  Data Governance Committee 
      Link to strategy 
        *    Connected to Customers 
 Movement 
  No change 
 Mitigations 
  - A Data Governance Committee (DGC) is established and is 
  supported by focussed working groups looking at the management 
  of colleague, customer and commercial data, information security 
  and associated awareness and training 
  - The Data Governance and Information Security function, with 
  the support of colleagues in the Technology division, continue 
  to develop information security strategies and to build the 
  necessary capability to respond to the increasing number and 
  sophistication of attacks, alongside focusing on improving 
  how we handle data and protect systems across the organisation 
  - A suite of information security policies are in place, which 
  focus on encryption, network security, access controls, system 
  security, data protection and information handling 
  - All colleagues are required to complete mandatory training 
  on how to keep our information safe. This is supplemented 
  by regular awareness campaigns, focusing on specific aspects 
  of data and information security 
  - Reviews of key third parties who hold sensitive customer 
  or colleague data continue to take place and progress is monitored 
  by the DGC 
  - A risk based security testing approach across IT infrastructure 
  and systems is in place to identify ongoing vulnerabilities 
  and allow us to adapt and improve our defences 
 

Environment and sustainability

 
 Risk 
  The environment and sustainability are core to Sainsbury's 
  values, with our Net Zero 2040 commitments forming a key pillar 
  of our strategic priorities. The key focus of the business 
  in this area relates to reducing our environmental impact, 
  which, if not achieved, could result in a financial and/or 
  reputational risk. 
 Direct oversight 
  Net Zero Steerco, Corporate Responsibility and Sustainability 
  Committee 
      Link to strategy 
        *    Net Zero by 2040 
 Movement 
  No change 
 Mitigations 
  - In line with our commitment made in 2020, we continue to 
  invest GBP1 billion over 20 years to deliver on our Net Zero 
  strategy, which focuses on becoming Net Zero across our operations 
  by 2040, see page 14 for more information. Specific working 
  groups are responsible for driving and executing the Net Zero 
  Strategy, through delivering on seven commitments: 
  Reducing 
  Carbon emissions 
  Plastic packaging 
  Water usage 
  Food waste 
  Increasing 
  Recycling 
  Biodiversity 
  Healthy and sustainable diets 
  - In February 2021, we cemented our commitment to reducing 
  greenhouse gas emissions by having our Scope 1, 2 and 3 targets 
  approved by the Science Based Targets Initiative which shows 
  our approach is aligned with the climate science and the ambitions 
  of the Paris agreement 
  - The Net Zero Steering Group, which leads the operational 
  execution of the Net Zero plan and oversees working group 
  activity, met 8 times during the year. In each meeting, the 
  working groups provided the Steering Group with an update 
  on progress being made towards our Net Zero commitments 
  - The Corporate Responsibility and Sustainability (CR&S) Committee, 
  which oversees the delivery of our Corporate Social Responsibility 
  agenda, met three times during the year. In each meeting, 
  the Net Zero Steering Group provided the Committee with an 
  update on progress being made on delivering our Net Zero strategy. 
  The CR&S Committee also receives progress updates on wider 
  sustainability initiatives. See page 62 for more information 
  - One of our key metrics used to measure and report on our 
  strategic performance is to "deliver our Net Zero commitment" 
  as explained in the "Our KPIs" section of this report. We 
  will continue to monitor this metric and respond as appropriate 
  to how it changes over time. We also publicly report on progress 
  towards achieving our Net Zero targets twice a year, to ensure 
  transparency 
  - See page 15 for more information on our ongoing implementation 
  of the TCFD recommendations 
 

Financial and treasury*

RISK DEEP DIVE

 
 Risk 
  The main financial risk relates to availability of short and 
  long-term funding to meet business needs and fluctuations 
  in interest, commodity and foreign currency rates. 
 Direct oversight 
  The Board of J Sainsbury plc 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  No change 
 Mitigations 
  - The plc Board approved Treasury policies are in place to 
  address liquidity risk, refinancing risk, financial markets 
  risk and counterparty credit risk. In addition, the business 
  funding strategy is approved annually by the plc Board 
  - The Treasury function is responsible for managing liquid 
  resources, funding requirements, commodity, interest rate 
  and currency exposures as set out in line with the Treasury 
  policy and overseen by the Treasury Committee 
  - The Treasury function has clear operating procedures, which 
  are regularly reviewed and audited 
  - A long-term funding plan is formed as part of the annual 
  corporate plan process, which includes an assessment of short 
  and long-term core funding requirements and contingent funding 
  requirements 
  - A short-term funding plan is formalised as part of the annual 
  budget process, which includes an assessment of the core and 
  contingent funding requirements for the following year and 
  the market conditions for each of the debt markets accessible 
  to the business 
  - Annually, the Audit Committee reviews and approves the viability 
  and going concern statements and reports to the plc Board 
  - Finance commercial reviews are held each period, chaired 
  by the CFO, to review the balance sheet, P&L and net debt, 
  with relevant actions and mitigations agreed 
  - There is a long-term funding framework in place for the 
  pension deficit and there is ongoing communication and engagement 
  with the Pension Trustees 
  - We use 8 key metrics to measure and report on our strategic 
  performance, including "200bp+ reduction in retail operating 
  cost to sales" and "dependable retail free cash flow: GBP500m 
  pa average" as explained in the "Our KPIs" section of this 
  report. We will continue to monitor these metrics and respond 
  as appropriate to how they change over time 
  - Financial and Treasury risk in respect of Sainsbury's Bank 
  are detailed separately 
 

Health and safety*

RISK DEEP DIVE

 
 Risk 
  Prevention of injury or loss of life for both colleagues and 
  customers is of utmost importance and is paramount to maintaining 
  the confidence our customers have in our business. 
 
  In the last year, the impact of COVID-19 has affected the 
  health and safety of our customers and colleagues. This was 
  and continues to be actively managed, although many of our 
  mitigations are now part of day-to-day ways of working. 
 Direct oversight 
  Group Safety Committee 
      Link to strategy 
        *    Connected to Customers 
 Movement 
  No change 
  This risk included Product Safety in last year's Principal 
  Risks and Uncertainties, but this year only relates to Health 
  & Safety. The Product Safety risk is reported on separately, 
  given the importance of this risk area and its increased profile. 
 Mitigations 
  - Clear policies and procedures are in place detailing the 
  controls required to manage health and safety across the business 
  and comply with all applicable regulations. These cover the 
  end-to-end operations, including the auditing and vetting 
  of construction contractors and the health and safety processes 
  in place in our depots, stores and offices 
  - The Operating Board were regularly updated on colleague 
  and customer health and safety matters throughout the COVID-19 
  pandemic. Policies and procedures were adjusted in response, 
  particularly focused on increased cleaning and monitoring 
  and limiting customer numbers in stores, in line with government 
  guidance. Significant investment was made in providing colleagues 
  and customers with facemasks, hand sanitiser and protective 
  screens 
  - With the need for remote working in response to COVID-19 
  lockdown requirements, individual workplace risk assessments 
  were performed and equipment provided to colleagues where 
  required for health and safety purposes 
  - Process compliance is supported through oversight from our 
  Primary Authority partners, internal training programmes and 
  management monitoring, all which align to both health and 
  safety laws and our internal policies. We invested in technology 
  solutions to direct and monitor process completion, with oversight 
  provided by field teams in both Safety and Internal Audit 
  - The Group Safety Committee (GSC) met four times during the 
  year, receiving detailed reports on a wide range of topics 
  including COVID management and control, growth of online operations, 
  building fabric review and safety training. The GSC were also 
  supported by additional working groups to manage the ever 
  changing 
  risk the COVID-19 pandemic presented 
  - The Operating Board and plc Board receive quarterly reports 
  on safety and also receive an annual safety update and deep 
  dive facilitated by the Head of Group Safety 
 

Political and regulatory environment*

 
 Risk 
  There is a trend of increasing regulation, together with enforcement 
  action, across all areas of our business. This increases the 
  risk of non-compliance, adds additional cost as we respond 
  to the regulations and drives complexity into our business 
  processes. 
 Direct oversight 
  Operating Board 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  No change 
  We reported a separate Brexit risk in last year's Principal 
  Risks and Uncertainties. Now the trading arrangements with 
  the EU are agreed and managed as part of our day-to-day ways 
  of working, we removed the specific risk but included the 
  impact of future Brexit related uncertainty in this risk. 
     Mitigations 
      - We continually monitor for changes to existing regulations 
      that would impact the business, so that we can respond appropriately. 
      Areas in the last year where the risk profile has changed 
      include: 
      - the impact of complying with the post-Brexit regulatory 
      and enforcement regime, including what it means to be trading 
      under both UK and EU regulations in Ireland 
      - responding to proposed new rules associated with obesity, 
      plastic, packaging and food waste 
      - anticipating and responding to emerging areas of regulatory 
      focus on environment and climate change, and associated reporting 
      requirements 
      - We regularly review the implications of Brexit on our supply 
      chain activities, particularly in relation to new customs 
      regulations and our ability to both import products from the 
      EU into the UK and maintain supplies to our stores in Northern 
      Ireland 
      - We complete an annual regulatory risk assessment with key 
      areas of the organisation to identify emerging regulation 
      that may impact the business, so that we can plan and implement 
      an appropriate response 
      - As a responsible business, we proactively engage with Government, 
      devolved administrations, regulators and industry bodies in 
      the areas in which we operate, on public policy issues impacting 
      our customers and colleagues. Our engagement is transparent, 
      and we allow our responses to government consultations to 
      be made public 
 

Product safety and sourcing *

 
 Risk 
  Failure to manage safety and sourcing risks for both food 
  and non-food products leads to injury or loss of life, breach 
  of regulation and/or reputational damage. 
 Direct oversight 
  Group Safety Committee 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 
 
        *    Connected to Customers 
 
 
        *    Net Zero by 2040 
 Movement 
  New risk 
  Given the importance of this risk area and its increased profile, 
  we are now reporting on this risk separately, where last year 
  it was included with the health and safety risk. 
 Mitigations 
  - Clear policies and procedures are in place detailing the 
  controls required to manage product safety, fraud and ethical 
  risks across the business and comply with all applicable regulations 
  - These cover the end-to-end operations, including product 
  safety processes in place in our depots and stores and the 
  quality management controls in place to ensure product safety 
  and integrity 
  - In addition, established supplier audit and product testing 
  programmes are in place to support rigorous monitoring of 
  supplier sites, product safety, traceability, integrity and 
  ethical issues, including modern slavery 
  - Supplier terms, conditions and product specifications set 
  clear standards for product/raw material safety and quality 
  with which suppliers are expected to comply 
  - The Group Safety Committee receive regular reports on product 
  safety from the Head of Technical Operations and from the 
  Head of Group Safety on operational food safety risks. In 
  addition, the Corporate Responsibility and Sustainability 
  Committee discussed matters related to product sourcing risk, 
  including supply chain transparency, modern slavery and human 
  trafficking 
  - We work collaboratively with our suppliers to manage any 
  challenges associated with product availability. This received 
  additional focus during both the COVID-19 pandemic and the 
  Brexit transition period 
 

Sainsbury's Bank*

 
 Risk 
  Sainsbury's Bank is exposed to a number of risks. These include 
  operational risk, regulatory risk, credit risk, capital risk, 
  funding, liquidity risk, and market risk. 
 Direct oversight 
  The Boards of J Sainsbury plc and Sainsbury's Bank plc 
      Link to strategy 
        *    Brands that Deliver 
 Movement 
  No change 
     Mitigations 
      - The Bank is managed through defined governance structures 
      that include the Board of Sainsbury's Bank plc, its Risk Committee 
      and Audit Committee. The Board of Sainsbury's Bank plc is 
      comprised of Executive Directors, Non-Executive Directors 
      and a J Sainsbury plc Executive Director 
      - The Bank has a defined risk appetite aligned to delivery 
      of strategic objectives and has implemented a risk management 
      framework that is overseen by its Risk Committee. This Committee 
      monitors the effectiveness of risk management activities against 
      strategic, operational, compliance and financial risks, and 
      is updated on, and discusses, emerging risk areas. In particular, 
      the Risk Committee reviews the results of stress testing including 
      the internal Liquidity and Capital Adequacy Assessments 
      - The actual management of risks is through an executive governance 
      structure, which manages the day-to-day operations of the 
      business. This includes the Sainsbury's Bank Management Board, 
      an Executive Risk Committee and an Asset and Liability Committee 
      - Oversight by J Sainsbury plc is provided through: 
      - Membership of the Board of Sainsbury's Bank plc - one J 
      Sainsbury plc Operating Board member is on the Board of Sainsbury's 
      Bank plc and provides updates to the Board of J Sainsbury 
      plc on Bank matters 
      - Updates on key matters arising from meetings of the Risk 
      Committee and Audit Committee are reported to the J Sainsbury 
      plc Audit Committee 
      - There are a number of reserved matters where Sainsbury's 
      Bank plc needs to obtain permission from J Sainsbury plc 
 

Trading environment and competitive landscape*

 
 Risk 
  We operate in a highly competitive market during a time of 
  economic uncertainty, primarily driven by the COVID-19 pandemic. 
  With the outlook set to remain the same for the immediate 
  future, we need to respond appropriately to external market 
  conditions while maintaining clear focus on delivering our 
  strategic objectives. We also need to be mindful of the ongoing 
  risk of supplier failure and the operational and/or financial 
  consequences for our business. 
 Direct oversight 
  Customer, Commercial and Channels Forum; Operating Board 
      Link to strategy 
        *    Food First 
 
 
        *    Brands that Deliver 
 
 
        *    Save to Invest 
 Movement 
  No change 
 Mitigations 
  - We have a wide, differentiated product offer, incorporating 
  Sainsbury's, Argos, Habitat, Tu clothing, Nectar and Sainsbury's 
  Bank 
  - We continually monitor current market trends and price points 
  across competitors, and respond through actively managing 
  price positions, developing sales propositions and adjusting 
  promotional and marketing activity 
  - We implemented a proactive quality and pricing strategy 
  that focuses on what our existing customers want and that 
  will attract new customers. As part of this, we launched our 
  Sainsbury's Quality, Aldi Price Match campaign in February 
  2021 
  - Related to supplier continuity specifically, we maintain 
  regular, open dialogue with key suppliers concerning their 
  ability to trade. During the height of the COVID-19 pandemic, 
  we supported our smaller suppliers by expediting payments 
  to help maintain continuity of supply in light of the ongoing 
  uncertainty 
  - One of our key metrics used to measure and report on our 
  strategic performance is "grocery market share performance" 
  as explained in the "Our KPIs" section of this report. We 
  will continue to monitor this metric and respond as appropriate 
  to how it changes over time 
 

DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial assets and liabilities by category

Set out below are the accounting classification of each class of financial assets and liabilities as at 6 March 2021 and 7 March 2020.

 
                                                                 Fair value 
                                                    Fair value      through 
                                        Amortised      through       profit 
                                             cost          OCI      or loss     Total 
 Group                                       GBPm         GBPm         GBPm      GBPm 
-------------------------------------  ----------  -----------  -----------  -------- 
 At 6 March 2021 
 Cash and cash equivalents                  1,477            -            -     1,477 
 Trade and other receivables                  609            -            -       609 
 Amounts due from Financial Services 
  customers                                 5,407            -            -     5,407 
 Financial assets at FVOCI                      -          844            -       844 
 Trade and other payables                 (4,102)            -            -   (4,102) 
 Current borrowings                         (258)            -            -     (258) 
 Non-current borrowings                     (748)            -            -     (748) 
 Amounts due to Financial Services 
  customers and banks                     (6,289)            -            -   (6,289) 
 Derivative financial instruments               -            -        (124)     (124) 
 Lease liabilities                        (5,834)            -            -   (5,834) 
-------------------------------------  ----------  -----------  -----------  -------- 
                                          (9,738)          844        (124)   (9,018) 
-------------------------------------  ----------  -----------  -----------  -------- 
 
 
                                                                 Fair value 
                                                    Fair value      through 
                                        Amortised      through       profit 
                                             cost          OCI      or loss     Total 
 Group                                       GBPm         GBPm         GBPm      GBPm 
-------------------------------------  ----------  -----------  -----------  -------- 
 At 7 March 2020 
 Cash and cash equivalents                    841            -          153       994 
 Trade and other receivables                  506            -          169       675 
 Amounts due from Financial Services 
  customers                                 7,404            -            -     7,404 
 Financial assets at FVOCI                      -        1,054            -     1,054 
 Trade and other payables                 (3,835)            -            -   (3,835) 
 Current borrowings                          (48)            -            -      (48) 
 Non-current borrowings                   (1,248)            -            -   (1,248) 
 Amounts due to Financial Services 
  customers and banks                     (8,094)            -            -   (8,094) 
 Derivative financial instruments               -            -         (71)      (71) 
 Lease liabilities                        (5,774)            -            -   (5,774) 
-------------------------------------  ----------  -----------  -----------  -------- 
                                         (10,248)        1,054          251   (8,943) 
-------------------------------------  ----------  -----------  -----------  -------- 
 

Travel Money, cash in ATMs and ATM cash in transit (included in cash, balances with central banks and other demand deposits) of GBP322 million as at 7 March 2020 were previously classified as fair value through profit or loss and have been reclassified as amortised cost. There were no changes to amounts recognised as a result of the classification due to the book value of cash equalling its fair value.

c) Fair value estimation

Set out below is a comparison of the carrying amount and the fair value of financial instruments that are carried in the financial statements at a value other than fair value. The fair values of financial assets and liabilities are based on prices available from the market on which the instruments are traded. Where market values are not available, the fair values of financial assets and liabilities have been calculated by discounting expected future cash flows at prevailing interest rates. The fair values of short-term deposits, trade receivables, other receivables, overdrafts and payables and lease liabilities are assumed to approximate to their book values.

 
                                                      Group     Group 
                                                   Carrying      Fair 
                                                     amount     value 
                                                       GBPm      GBPm 
-----------------------------------------------------------  -------- 
 At 6 March 2021 
 Financial assets 
 Amounts due from Financial Services customers 
  and other banks(1)                                  5,407     5,418 
 Financial liabilities 
 Loans due 2031                                       (627)     (761) 
 Bank loans due 2021                                  (199)     (199) 
 Tier 2 capital due 2023                              (179)     (183) 
 Amounts due to Financial Services customers and 
  other banks                                       (6,289)   (6,298) 
-------------------------------------------------  --------  -------- 
                                                    (1,887)   (2,023) 
-------------------------------------------------  --------  -------- 
 
 
                                                       Group     Group 
                                                    Carrying      Fair 
                                                      amount     value 
                                                        GBPm      GBPm 
 At 7 March 2020 
 Financial assets 
 Amounts due from Financial Services customers(1)      7,405     7,455 
 Financial liabilities 
 Loans due 2031                                        (667)     (888) 
 Bank loans due 2021                                   (199)     (199) 
 Bank loans due 2024                                   (250)     (250) 
 Tier 2 capital due 2023                               (180)     (177) 
 Amounts due to Financial Services customers and 
  other banks                                        (8,093)   (8,100) 
--------------------------------------------------  --------  -------- 
                                                     (1,984)   (2,159) 
--------------------------------------------------  --------  -------- 
 

1 Included within a portfolio fair value hedging relationship with GBP3,984 million (2020: GBP4,512 million) of interest rate swaps.

The fair value of financial assets as disclosed in the table above as at 6 March 2021 was GBP5,455 million (2020: GBP7,455 million). The fair value of the financial assets has been calculated by discounting cash flows at prevailing interest rates and is within Level 2 of the fair value hierarchy (see below for fair value hierarchy description). The fair value of financial liabilities was GBP7,441 million (2020: GBP9,614 million) which has been calculated by discounting cash flows at prevailing interest rates and is within Level 2 of the fair value hierarchy.

Fair value measurements recognised in the balance sheet

The following table provides an analysis of financial instruments that are recognised at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable:

Level 1 fair value measurements are derived from quoted market prices (unadjusted) in active markets for identical assets or liabilities at the balance sheet date. This level includes listed equity securities and debt instruments on public exchanges;

Level 2 fair value measurements are derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). The fair value of financial instruments is determined by discounting expected cash flows at prevailing interest rates; and

Level 3 fair value measurements are derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

 
                                           Level    Level   Level   Total 
                                               1        2       3    GBPm 
 Group                                      GBPm     GBPm    GBPm 
---------------------------------------  -------  -------  ------  ------ 
 At 6 March 2021 
 Financial instruments at fair value through other comprehensive 
  income 
 Interest bearing financial assets             -        1       -       1 
 Other financial assets                        -       15     291     306 
 Investment securities                       537        -       -     537 
 Derivative financial assets                   -        7       6      13 
 Derivative financial liabilities              -    (137)       -   (137) 
---------------------------------------  -------  -------  ------  ------ 
 At 7 March 2020 
 Financial instruments at fair value through other comprehensive 
  income 
 Interest bearing financial assets             -        1       -       1 
 Other financial assets                        -       14     237     251 
 Investment securities                       802        -       -     802 
 Derivative financial assets                   -       18       -      18 
 Derivative financial liabilities              -     (86)     (3)    (89) 
---------------------------------------  -------  -------  ------  ------ 
 

Reconciliation of Level 3 fair value measurements of financial assets and liabilities:

 
                                      Financial 
                                    instruments      Commodity 
                                      at FVTOCI    derivatives    Total 
                                           GBPm           GBPm     GBPm 
-----------------------------------------------  -------------  ------- 
 At 7 March 2020                            237            (3)      234 
 In finance cost in the Group income 
  statement                                   -              9        9 
 In other comprehensive income               54              -       54 
-------------------------------------  --------  -------------  ------- 
 At 6 March 2021                            291              6      297 
-------------------------------------  --------  -------------  ------- 
 
 
 
                                      Financial 
                                    instruments      Commodity 
                                      at FVTOCI    derivatives    Total 
                                           GBPm           GBPm     GBPm 
-----------------------------------------------  -------------  ------- 
 At 9 March 2019                            220              1      221 
 In finance cost in the Group income 
  statement                                   -            (4)      (4) 
 In other comprehensive income               17              -       17 
-------------------------------------  --------  -------------  ------- 
 At 7 March 2020                            237            (3)      234 
-------------------------------------  --------  -------------  ------- 
 
 

The financial instruments at fair value through OCI relate to the Group's beneficial interest in a property investment pool. The net present value of the Group's interest in the various freehold reversions owned by the property investment pool has been derived by assuming a property growth rate of zero per cent per annum (2020: 0.6 per cent) and a discount rate of seven per cent (2020: nine per cent) (see note 19). The sensitivity of this balance to changes of one per cent in the assumed rate of property rental growth and one per cent in the discount rate holding other assumptions constant is shown below:

 
                                                                          2020 Change 
                    2021 Change in     2021 Change                        in discount 
                       growth rate     in discount         2020 Change           rate 
                           +/-1.0%    rate +/-1.0%           in growth        +/-1.0% 
                              GBPm            GBPm    rate +/-1.0%GBPm           GBPm 
----------------------------------  --------------  ------------------  ------------- 
 Financial instruments 
  at fair value through 
  OCI                        9/(9)           (6)/6             11/(10)          (7)/7 
------------------------  --------  --------------  ------------------  ------------- 
 
 

The Group has entered into several long-term fixed price Power Purchase agreements with independent producers. Included within derivative financial liabilities is GBP6 million (2020: GBP(4) million) relating to these agreements. The Group values its Power Purchase agreements as the net present value of the estimated future usage at the contracted fixed price less the market implied forward energy price discounted at the prevailing swap rate. The Group also makes an assumption regarding expected energy output based on the historical performance and the producer's estimate of expected electricity output. The sensitivity of this balance to changes of 20 per cent in the assumed rate of energy output and 20 per cent in the implied forward energy prices holding other assumptions constant is shown below:

 
                                                   2021 Change                     2020 Change 
                                 2021 Change    in electricity   2020 Change    in electricity 
                                   in volume           forward     in volume           forward 
                                    +/-20.0%    price +/-20.0%      +/-20.0%    price +/-20.0% 
                                        GBPm              GBPm          GBPm              GBPm 
--------------------------------------------  ----------------  ------------  ---------------- 
 Derivative financial instruments      1/(1)             7/(7)         (1)/1             6/(8) 
----------------------------------  --------  ----------------  ------------  ---------------- 
 
 

Related party transactions

a) Key management personnel

The key management personnel of the Group comprise members of the J Sainsbury plc Board of Directors and the Operating Board. The key management personnel compensation is as follows:

 
                                      2021    2020 
                                       GBPm    GBPm 
 Short-term employee benefits           9      12 
 Post-employment employee benefits      1       1 
 Share-based payments                   5       6 
                                     ------  ------ 
                                       15      19 
 

Five key management personnel had credit card balances with Financial Services (2020: two). These arose in the normal course of business and were immaterial to the Group and the individuals. Three key management personnel held saving deposit accounts with Financial Services (2020: one). These balances arose in the normal course of business and were immaterial to the Group and the individuals.

b) Joint ventures and associates

Transactions with joint ventures and associates

For the 52 weeks to 6 March 2021, the Group entered into various transactions with joint ventures and associates as set out below. All transactions with joint ventures and associates are at arms-length.

 
                                         2021    2020 
                                          GBPm    GBPm 
 Dividends and distributions received      4      141 
 Disposals of joint ventures               -     (21) 
 Rental expenses paid                     (6)    (14) 
 

Year-end balances arising from transactions with joint ventures and associates

 
                   2021    2020 
                    GBPm    GBPm 
 Payables 
 Other payables     (2)     18 
 

c) Retirement benefit obligations

As discussed in note 38, the Group has entered into an arrangement with the Pension Scheme Trustee as part of the funding plan for the actuarial deficit in the Scheme. Full details of this arrangement are set out in note 38 to these financial statements.

S tatement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year, and of the profit or loss of the Group for the financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Accounting Standards (IASs) in conformity with the requirements of the Companies Act 2006 and additionally in accordance with International Financial Reporting Standards (IFRSs) adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union. The Directors have elected to prepare the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 101 'Reduced Disclosure Framework' (UK Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether IASs in conformity with the requirements of the Companies Act 2006, IFRSs adopted pursuant to Regulation (EC) No. 1606/2002 as it applies in the European Union, and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and Company financial statements respectively; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Having taken all the matters considered by the Board and brought to the attention of the Board during the year into account, we are satisfied that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable.

The Board believes that the disclosures set out in this Annual Report provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on pages 46 to 49, confirms that, to the best of their knowledge:

- the financial statements, which have been prepared in accordance with the relevant financial reporting framework give a true and fair view of the assets, liabilities, financial position and profit of the Group and Company; and

- the Strategic Report and Directors' Report contained in the Annual Report and Financial Statements include a fair review of the development and performance of the business and the position of the Group, together with a description of the emerging and principal risks and uncertainties that it faces; and

- the Annual Report and Financial Statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Group's position and performance, business model and strategy.

By order of the Board

Tim Fallowfield

Company Secretary and Corporate Services Director

27 April 2021

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