British Supermarket chain Sainsbury(J) Plc. (SBRY.L,JSAIY.PK) reported that profit before taxation for the 52-weeks to 16 March 2013 declined to 788 million pounds from last year's 799 million pounds.
Profit attributable to Owners of the parent increased to 614 million pounds from the previous year's 598 million pounds, with earnings per share improving to 32.1 pence from 31.5 pence last year.
Underlying profit before tax grew to 756 million pounds from 712 million pounds in the previous year. Underlying earnings per share were 30.2 pence, up 27.8 pence in the prior year.
Annual revenue was 23.30 billion pounds, up from 22.29 billion pounds in the prior year.
Total sales including VAT increased 4.6 per cent to 25.63 billion pounds last year's 24.51 billion pounds. Sales, excluding fuel, grew by 4.3 per cent, with LFL growth of 1.8 per cent, which was lower than the sales including fuel number due to the growth in fuel volume and fuel price inflation.
The company said its board has recommended a final dividend of 11.9 pence per share, compared to 11.6 pence paid last year. The final dividend will be paid on 12 July 2013 to shareholders on the Register of Members at the close of business on 17 May 2013, subject to approval. This will increase the full year dividend by 3.7 per cent to 16.7 pence per share, from last year's 16.1 pence.
In a separate press release, Sainsbury said it will buy remaining 50 per cent shareholding in Sainsbury's Bank from Lloyds Banking Group for 248 million pounds.
The acquisition price of 248 million pounds is comprised of a cash consideration of 193 million pounds for the shares and the purchase of 55 million pounds of loan stock at par value.
According to the company, a capital injection of 100 million pounds will be made into the Bank by Sainsbury's over three years in order to maintain appropriate capital ratios. This will be offset by a 60 million pounds repayment of dated loan stock. Therefore, the total cash investment made by Sainsbury's is 288 million pounds.
The company said over a four year period, the Bank will also incur non-underlying transition revenue costs of 170 million pounds and transition capital expenditure of 90 million pounds, in order to build and move onto the new banking platform.
The transaction is expected to deliver cash payback within eight years, with returns above IRR hurdle and is accretive to underlying earnings per share. The transaction is projected to be highly cash generative in later years and dividend payments from the Bank to Sainsbury's are anticipated from year five onwards. Sainsbury stated that it intends to fund the transaction from internal resources.
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