British supermarket chain Sainsbury(J) Plc (SBRY.L, JSAIY.PK) Wednesday reported a decline in profit before tax for the full year, while excluding certain items, underlying pre-tax profit increased about 6 percent from last year.
The company also announced the acquisition of the remaining 50 percent shareholding in Sainsbury's Bank joint venture from Lloyds Banking Group Plc (LYG, LLOY.L) for 248 million pounds.
The firm noted that the full ownership of Sainsbury's Bank will add further momentum to its strategy of developing complementary channels.
Justin King, chief executive of the company stated, "We continue to invest in offering customers choices of how they shop with us, bringing our food, clothing and general merchandise to more customers."
Further, Sainsbury said it delivered over 100 million pounds of operational cost savings during the year.
Announcing its preliminary results for the 52 weeks ended March 16, 2013, the company said its profit before tax declined to 788 million pounds from 799 million pounds in the previous year. Excluding items, underlying profit before tax improved 6.2 per cent to 756 million pounds.
On a per share basis, earnings increased to 32.1 pence from 31.5 pence per share reported last year. Underlying earnings per share were 30.2 pence, up from 27.8 pence in the prior year.
Annual revenues, excluding value added tax or VAT, and including fuel, grew 4.5 percent to 23.30 billion pounds.
The board has proposed a final dividend of 11.9 pence per share, up from 11.6 pence paid last year, to shareholders of record on May 17, 2013, payable on July 12. This will increase the full year dividend by 3.7 per cent to 16.7 pence per share.
As of March 16, 2013, the company had 1,106 stores, including 583 supermarkets and 523 convenience stores.
In a separate announcement, Sainsbury said it will buy remaining 50 per cent shareholding in Sainsbury's Bank joint venture from Lloyds Banking Group and take sole ownership. 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.
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 will be funded from internal resources and is accretive to underlying earnings per share and highly cash generative in later years, Sainsbury stated.
The company also announced that Lady Susan Rice CBE will be joining the board as a non-executive director on June 1. Susan is currently Managing Director of Lloyds Banking Group Scotland.
In London, Sainsbury shares are currently trading at 385.09 pence, down 11.41 pence or 2.88 percent, on a volume of 5.53 million shares.
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