Pensions
The retirement benefit obligations as at 21 March 2009 have been calculated on a consistent basis with the previous year, with updates provided on market-based assumptions.
As at 21 March 2009, the present value of retirement benefit obligations less the fair value of plan assets was a deficit after deferred tax of £(222) million (2008: a surplus of £366 million). The movement into deficit mainly reflects the change in asset values in the year, in line with market performance.
Sainsbury’s is currently commencing its 2009 triennial funding valuation, which will provide an updated estimate of funding obligations, for which the statutory completion date is June 2010.
|
Pensions at 21 March 2009 |
2009 £m |
2008 £m |
|---|---|---|
| Present value of funded obligations | (3,610) | (3,668) |
| Fair value of plan assets | 3,310 | 4,171 |
| (300) | 503 | |
| Present value of unfunded obligations | (9) | (8) |
| Retirement benefit (obligations)/assets | (309) | 495 |
| Deferred income tax asset/(liability) | 87 | (129) |
| Net retirement benefit (obligations)/assets | (222) | 366 |
Change in Accounting Reference Date
Sainsbury’s will change its accounting reference date from 28 March to 20 March with effect from 2010, and will report its 2010 results for the 52 weeks to 20 March 2010. This change is to ensure that each half-year and full-year results includes one complete Easter period, and to avoid any volatility that might otherwise be caused by the variable timing of Easter.
Updated Pensions Accounting in 2010
The financing element of IAS 19 ‘Employee Benefits’ pensions accounting generates significant volatility in the income statement. In line with the way in which external commentators and other companies view and prepare accounts, Sainsbury’s will be removing the IAS 19 financing element from its UPBT in 2010.
The 2010 IAS 19 service charge (included in operating profit) will remain within UPBT. The charge in 2010 is expected to be similar to the £(53) million cost in 2009.
For reference, the effect of this accounting change on UPBT for 2009 and 2008 is shown below:
|
Impact on UPBT of pension accounting change for the 52 weeks to 21 March 2009 |
2009 £m |
2008 £m |
Change % |
|---|---|---|---|
| Reported UPBT | 543 | 488 | 11.3 |
| Less: IAS19 financing element | (24) | (54) | (55.6) |
| Revised UPBT | 519 | 434 | 19.6 |
| Reported underlying basic earnings per share | 22.1p | 19.6p | 12.8 |
| Revised underlying basic earnings per share | 21.2p | 17.5p | 21.1 |
Underlying profit before tax will now be defined as: profit before tax from continuing operations before any profit or loss on sale of properties, investment property fair value movements, impairment of goodwill, financing fair value movements, IAS 19 net return on pension schemes and one-off items that are material and infrequent in nature.