J Sainsbury Plc · LSE:SBRY
J Sainsbury — Debt Investor Presentation (June 2021)
25 slides from J Sainsbury's debt investor presentation, Jun 8, 2021
Slide 1: Sainsbury's Bank Debt Investor Update
Sainsbury's Bank Debt Investor Update 8th June 2021 _ Store Cards Credit Cards
Slide 2: Agenda
Agenda Mortgages J Sainsbury plc Credit Cards Commissions Group Performance Financial Services
Slide 3: Group Performance
Group Performance James Collins Director of Investor Relations J Sainsbury plc
Slide 4: Retail sales growth by category
Retail sales growth by category Grocery FY Sales up 7.8% 10.5% 1 Exc. fuel General Merchandise FY Sales up 8.3% 176% Clothing FY Sales down 8.5% 4.2% 04 » QB a4 (7.5)% Total Retail FY Sales growth’ up 7.3% 8.5% 9.2% 73% Exc. Fuel sales growth
Slide 5: Strong digital platform, enabling scale transformation
Strong digital platform, enabling scale transformation Total Digital Groceries online Argos Digital Smartshop Nectar Sales up Sales up Sales up Sales up Users up 102% 120% 68% 173% 2.9m 3% C&C Delivery '%o 0.3% m Digital participation’ Digital participation” Digital participation? Sales participatio
Slide 6: Underlying profit before tax
Underlying profit before tax UPBT YoY movement £m Interest Retail (69) | +47 Financial Services 19/20 UPBT 1 Higher absence costs, pay for vulnerable colleagues isolating, front line colleague bonus 2 Customer and colleague protection measures, distribution cos! 3 Does not include business rates rel
Slide 7: Group performance overview
Group performance overview Free cash flow Working capital Net debt Dividend — movement excluding leases per share’ up 28% down £539m -—10.6p— -—10.6p—, 73p 74p 784 453 1,179 (97) All figures £m 1 Special dividend in 2020/21 paid in lieu of final dividend for 2019/20 following the deferral of dividen
Slide 8: Balance sheet targets
Balance sheet targets * Previous net debt reduction of £750m+ sp enegs from 18/19 to 22/23 updated to £950m+ NetidebtexcdLeacelliabilities, reduction by 22/23 €m * Medium leverage reduction target: Net debt/EBITDA’ less than 3x FY FY FY FY FY FY 15/16 18/19 19/20 20/21 9 21/22E =. 22/23E 1 Net debt
Slide 9: In the next years we will transform our business
In the next 3 years we will transform our business We are clear on our priorities Food CA First * Better value and innovation * Underpinned by buying benefits and lower cost to serve Connected to Customers ena) Brands that as Deliver * Customer and profit focus * Supporting the core food business Kn
Slide 10: Strategic cost reduction
Strategic cost reduction Reduce retail operating costs/ sales % by 200 bps+ £m Retail op. costs/ sales % D0 2017/18 2018/19 2019/20 2020/21 2021/22 2022/23 2023/24 i © cost savings,£m — Op. costs/ sales, % 10 Accelerated cost saving plans * Addressing inflationary cost pressures and volume related i
Slide 11: Delivering for shareholders
Delivering for shareholders i Profit inflection High returning capital projects Strong free cash flow * Cost transformation: 200bp+ reduction in cost to sales * Working with suppliers to unlock value * Funding stronger food performance * 2021/22 UPBT higher than 2019/20* * Reducing cost to serve and
Slide 12: Sainsbury's Bank
12 Sainsbury’s Bank Mike Larkin Chief Financial Officer _ Store Cards Credit Cards
Slide 13: Continued focus on our strategy
Continued focus on our strategy Objective An agile, capital and cost efficient provider of simple, mobile-led financial services Priorities To be the provider of Financial Services for loyal Sainsbury’s Group Customers Reshape Simplify Strengthen the Balance Sheet the Organisation the Business * Sto
Slide 14: Enhancing connectedness
Enhancing connectedness Over 77% Bank Argos Financial Doubled Pet customers have a Services funded over insurance sales nectar card £1bn Argos sales CARD Sains £0.5bn Credit Card Nectar Credit Card Extended proposition spend in Group Stores Launch in October to Habitat £ Arges 4
Slide 15: Strong digital presence
Strong digital presence 98% of Storecard 71% of all Argos c375k registered users sales through digital payment transactions on the credit card app channels through mobile app or website CARD CARD Two thirds Bank 60% of Car & Home 4.8 out of 5 apple store customers registered Insurance customers LEXI
Slide 16: Financials at Feb
Financials at Feb 21
Slide 17: Financials: UPBT bridge
Financials: UPBT bridge UPBT waterfall H1/H2 Split £m £m COVID 34 provision (H1) 20/21 H2 FY 19/20 Reduced Cost action Cy 20/21 UPBT lending Funding One-off FY 20/21 Travel Gas debt sale (H2) UPBT Money and ATMs He (55) Impairment impacts v7
Slide 18: Financials: management actions
Financials: management actions Savings blended rate Costs' Colleague costs pal down 74bps fm gown 16% m down 21% 118 300 99 251 78 1. Group contribution basis 18
Slide 19: Financials: balance sheet
Financials: balance sheet Customer assets fbn down 27% ] 54 Personal loans Credit cards — Mortgages — Store cards 19/20 20/21 19 Total Capital Ratio % up 320bps 20.2% Liquidity Coverage Ratio % + 49% 194%
Slide 20: Financials: credit quality
Financials: credit quality 90+ days past due at 18 months Total Unsecured IFRS 9 12mth PD % % Low quality 4% Satisfactory 5% Credit impaired quality 15% ~ 76% . High qualit AFS % Unsecured lending ee) High quality <=3.02% Low quality >11.11% Satisfactory quality >3.02%; <11.11% Credit impaired 100%
Slide 21: Financials: Group performance overview
Financials: Group performance overview Financial Services UPBT FY FY sas : £m, Group Contributi Group contribution basis 2020/21 2019/20 Change mm, roup conmmpusen 75 I AFS (recognised by Argos) Total income! £350m £457m y 23% 34 ME AFS (recognised by Bank) Underlying operating profit £(12)m gy 116%
Slide 22: Delivered / Work in Progress / Not yet begun
• • • • • • • • • • • KEY Delivered Work in Progress Not yet begun
Slide 23: Market Commitments
Market Commitments Material short term COVID-19 impact but on track to deliver FY24 strategic commitments 1 2 3 4 No capital input Double UPBT; Upstream cash within Cost to Income Mortgage acquisition Increase from the group* double digit ROCE 5 years * c.50% within ceased; stable balance connectivi
Slide 24: Outlook a brand that delivers
Outlook a brand that delivers Strong Profit Outlook Growing connectedness with Sainsbury’s and Argos customers On Track to Deliver FY’24 Strategic Commitments © 24
Slide 25: Questions
2 Qs _ Store Cards Credit Cards