9th Feb 2007 07:01
Sainsbury(J) PLC09 February 2007 9 February 2007 Sale of five per cent of Sainsbury's Bank Sainsbury's today announces that it has sold five per cent of its shareholdingin Sainsbury's Bank for £21 million to HBOS. This sale will give rise to aprofit on disposal of around £10 million. The proceeds will be used forgeneral business purposes. As a result of this transaction the Bank will become a 50:50 joint venturebetween Sainsbury's and HBOS with equal control and input at shareholder andBoard level. Both parties believe that the 50:50 joint venture structure ismore appropriate and reflects the shared commitment each partner has to growingthe business for the long-term. The Board of Sainsbury's Bank will comprise eight directors with three from bothSainsbury's and HBOS and two executives from the Bank. Benny Higgins, HBOSretail chief executive, will be the new chairman for a period of two years,after which Darren Shapland, Sainsbury's chief financial officer will assume therole. The Sainsbury's directors will be Darren Shapland, Gwyn Burr, customerdirector and Imelda Walsh, HR director. Darren Shapland, said, "We are committed to growing the Bank's business and areincreasing our presence in the financial services sector. The Bank's chiefexecutive, Rob Walker, is streamlining the operational structure and developinga broader business plan. The sale of our five per cent for £21 milliondemonstrates the value of the Bank and a 50:50 structure reflects the continuedcommitment of both shareholders'." Benny Higgins, said, "Sainsbury's Bank has strong customer loyalty. Thebusiness has demonstrated it can acquire and retain customers very effectively.There is significant potential to grow the business. We aim to do just that." Notes 1. Certain statements made in this announcement are forward lookingstatements. Such statements are based on current expectations and are subjectto a number of risks and uncertainties that could cause actual results to differmaterially from any expected future events or results referred to in theseforward looking statements. 2. Until 8 February 2007 Sainsbury's Bank performance will be fullyconsolidated into the Group results and will be included in Group underlyingprofit before tax. A minority interest will be shown for the minority share ofthis performance to the date of the transaction. The profit on disposal will beexcluded from underlying profit before tax. Following this transaction,Sainsburys Bank will be treated as a Joint Venture and accounted for under theEquity Accounting method. Sainsbury's equity share (i.e. 50%) of the Bank'spost tax profit or loss will be disclosed through the line "Share of post taxprofit from joint ventures". This is outside operating profit but withinunderlying profit before tax. 3. After the transaction the assets and liabilities of the Bank will notbe consolidated line by line in the Group Balance Sheet but will be shown as asingle line representing Sainsbury's equity share (i.e. 50%) of the Bank's netassets at the balance sheet date. Net assets will increase by profit ondisposal. The £21 million proceeds will increase cash flow in 2006/07. TheBank's net funds will be excluded from Group net debt resulting in an increasein Group net debt offset by the cash receipt. 4. Sainsbury's Bank plc commenced trading in February 1997 and was 55 percent owned by J Sainsbury plc and 45 per cent by The Governor and Company of theBank of Scotland. The Governor and Company of the Bank of Scotland is a whollyowned subsidiary of HBOS plc. The Bank provides a range of quality financialproducts including insurance, credit cards, savings and loans. With access toover 16 million customers per week, the Bank model is an effective proposition.As at 31 March 2006 Sainsbury's Bank had net assets of £178m and generated anoperating loss of £10m for the year to 31 March 2006. Enquiries: Investor Relations MediaLynda Ashton / Elliot Jordan Pip Wood+44 (0) 20 7695 7162 / +44 (0) 20 7695 4931 +44 (0) 20 7695 6127 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Sainsbury's