8 June 2018

J Sainsbury plc (the "Company")

Annual Report and Financial Statements AND NOTICE OF ANNUAL GENEral meeting 2018

The following documents have today been posted or otherwise made available to shareholders:

· Annual Report and Financial Statements 2018

· Notice of Annual General Meeting

· Form of Proxy

In accordance with Listing Rule 9.6.1R, a copy of each of these documents will be uploaded to the National Storage Mechanism and will be available for viewing shortly at www.morningstar.co.uk/uk/NSM

The above documents may be viewed online at

www.about.sainsburys.co.uk/investors/annual-report-2018 and

www.about.sainsburys.co.uk/investors/shareholder-information/agm respectively.

A condensed set of the Company's financial statements and information on important events that have occurred during the financial year and their impact on the financial statements were included in J Sainsbury plc's Preliminary Results Announcement on 2 May 2018. That information together with the information set out below which is extracted from the Annual Report and Financial Statements 2018 (the "Annual Report 2018") constitute the material required by Disclosure Guidance and Transparency Rule 6.3.5 which is required to be communicated to the media in full unedited text through a Regulatory Information Service. This announcement is not a substitute for reading the full Annual Report 2018. Page and note references in the text below refer to page numbers in the Annual Report 2018. To view the preliminary announcement, slides of the results presentation, the transcript of the presentation and the webcast please visit www.about.sainsburys.co.uk/investors/results-reports-and-presentations .

Enquiries

Investor Relations	Media
James Collins	Rebecca Reilly
+44 (0) 20 7695 0080	+44 (0) 20 7695 7295

Our Principal Risks and Uncertainties

Risk is an inherent part of doing business. The management of risk is based on the balance between risk and reward, determined through careful assessment of both the potential outcomes and impact as well as risk appetite. Consideration is given to both reputational as well as financial impact, recognising the significant commercial value of the Sainsbury's brand. The risk management process is aligned to our strategy and each principal risk and uncertainty is considered in the context of how it relates to the achievement of the Group's strategic objectives. As outlined in our business strategy on page 7, the current business strategy and objectives are categorised into the following areas:

· Colleagues making the difference;

· Great products and services at fair prices; and

· There for our customers.

Our corporate risk map captures the principal risks to achieving Sainsbury's business objectives and this is formally reviewed by the Sainsbury's Operating Board twice a year.

The appetite for each key risk is also discussed and assessed with a target risk position agreed to reflect the level of risk that the business is willing to accept. Risk dashboards are reviewed during the year, which comprised of key risk indicators, to ensure any potential risk movement towards or away from their risk appetite is identified. This enables the Board to agree and monitor appropriate actions as required. Please see the risk framework on page 63 for further detail.

Mitigations in place supporting the management of the risk to a net risk position are also described for each principal risk and uncertainty.

Where principal risks have been included in the risk modelling undertaken as part of the preparation of the viability statement (see page 35), this has been indicated with the following symbol *

Key risk movements

The principal and emerging risks are discussed and monitored throughout the year to identify changes to the risk landscape. Risks are reviewed in line with the Company's strategic objectives. A new principal risk was disclosed in 2017/18 regarding brand perception, including the need to protect it.

All principal risks reflect the risk across the Sainsbury's Group, including the acquired Nectar business. It is considered that all of the risks are incorporated within the principal risks and uncertainties disclosed below.

The most significant principal risks identified by the Board and the corresponding mitigating controls are set out below in no order of priority.

Brand Perception (New risk)

Risk

Mitigation

Our brand must continue to evolve to meet customer needs and maintain customer loyalty. Customer lifestyles, behaviours and expectations are changing and we need to continue to differentiate our offer to retain and attract customers. We also need to protect our brand so that customers, suppliers and stakeholders continue to trust us.

We have a broad, differentiated product offer, which gives our customers more reasons to shop with us. We will change and evolve to meet the needs of our customers, so that we are there for them whenever and wherever they want us, with great products and services at fair prices. To deliver this, we need to continue to listen to and understand our customers.

To achieve this, in June 2017 we asked over 8,000 people, who are representative of the UK population, together with 1,500 of our colleagues to complete our survey which was designed to find out how they behave, feel and live every day. This resulted in the Sainsbury's Living Well Index launched in September, which helps us to understand what 'living well' means to people across the UK. The Index helps us to understand and engage with the issues that concern our colleagues and customers most in their everyday lives. Our acquisition of Nectar will also play a key part in this strategy. Making Nectar part of the Sainsbury's Group allows us to continue to get to know our customers even better so we can reward and recognise then with offers and deals they love, making sure they keep coming back to shop with us again and again.

In terms of brand protection, many of the mitigation activities set out against the risks below also help prevent or reduce the risk of losing the trust and loyalty of customers, suppliers and broader stakeholders.

Business continuity and major incidents response (increased gross risk exposure)

Risk

Mitigation

A major incident or catastrophic event could impact on the Group's ability to trade. Sainsbury's exposure to business continuity and major incident risks may be greater following the acquisition of Argos and Nectar, given the increased size and complexity of the business.

The Group has detailed plans in place, supported by senior representatives who have the experience and the authority levels to make decisions in the event of a potentially disruptive incident.

The business continuity strategy, including incident management, resilience exercises and testing, has been aligned across the Group. The Business Continuity Steering Group, which includes representatives from the Bank, Argos and Habitat, meets regularly to ensure that the business continuity (BC) policy and strategy is implemented. In addition, they oversee the mitigation of all risks associated with BC and IT disaster recovery. In the event of any unplanned or unforeseen events, the Business Continuity Management Team is convened at short notice to manage the response and any associated risk to the business.

Group-wide resilience exercises are undertaken to imitate real life business continuity scenarios and test the Group's ability to respond effectively.

Key strategic locations have secondary backup sites which would be made available within pre-defined timescales and are regularly tested.

Business strategy and change (gross risk exposure no change) *

Risk

Mitigation

If the Board adopts the wrong business strategy or does not communicate or implement its strategies effectively, the business may be negatively impacted. Risks to delivering the strategy, change initiatives forming part of the strategy and other significant supporting change such as the integration with Argos need to be properly understood and managed to deliver long-term growth for the benefit of all stakeholders alongside management of business as usual.

The business strategy is focused on the following:

- We know our customers better than anyone else;

- We will be there wherever and whenever they need us;

- We will offer great products and services at fair prices;

- Our colleagues make the difference; and

- Our values make us different.

The progress against strategic programmes and any risks to delivery, such as the ability to implement and deliver change and new business initiatives, are regularly reviewed by the Board and the overall strategy is reviewed at the annual two-day Strategy Conference. The Operating Board also holds regular sessions to discuss strategy and is supported by a dedicated strategy team. To ensure the strategy is communicated and understood, the Group engages with a wide range of stakeholders including shareholders, colleagues, customers and suppliers on a continual basis. In addition, management performs ongoing monitoring of business as usual performance to determine indicators of potential negative performance as a result of change initiatives.

Colleague engagement, retention and capability (gross risk exposure no change)

Risk

Mitigation

The Group employs over 185,000 colleagues who are critical to the success of our business. Attracting talented colleagues, investing in training and development, maintaining good relations and rewarding colleagues fairly are essential to the efficiency and sustainability of the Group's operations. Delivery of the strategic objectives, including integration with Argos, increases the impact of an inability to attract, motivate and retain talent, specific skill sets and capability. In addition, the challenging trading environment requires a focus on efficient operations which may include change initiatives impacting colleagues, therefore presenting a risk of loss of colleague trust or engagement.

The Group's employment policies and remuneration and benefits packages are regularly reviewed and are designed to be competitive fair and consistent, as well as providing colleagues with fulfilling career opportunities. In addition to strong leadership and nurturing of talent by line managers, processes are also in place to identify talent and actively manage succession planning throughout the business. Reviews are performed to help develop the skills colleagues need to deliver objectives and this is supported by embracing new ways of attracting talent. Our corporate value 'Great Place to Work' reinforces our commitment to giving people the opportunity to be the best they can be.

Colleague surveys, performance reviews, listening groups, communications with trade unions, regular communication of business activities and colleague networking forums such as Yammer, the updated colleague portal (Our Sainsbury's) and the colleague learning portal are some of the methods the Group uses to understand and respond to colleagues' needs. As change initiatives are implemented, the methods described above will continue to be employed to understand and maintain colleague trust and engagement.

Data security (gross risk exposure no change) *

Risk

Mitigation

It is essential that the security of customer, colleague and company confidential data is maintained. A major breach of information security could have a major negative financial and reputational impact on the business. The risk landscape

is increasingly challenging with deliberate acts of cybercrime on the rise, targeting all markets and heightening the risk exposure.

A Group Data Governance Committee is established and is supported by focused working groups looking at the management of colleague data, customer data, information security, commercial data and awareness and training. Senior appointments have been made into roles specifically focused on data governance and information security. The Chief Information Security Officer continues to develop information security strategies and to build the necessary capability to deliver against those strategies. The Head of Data Governance focuses on improving how we handle data across the organisation. Various information security policies and standards are in place which focus on encryption, network security, access controls, system security, data protection and information handling. A review of key third parties who hold sensitive customer or colleague data continues to take place, and progress is monitored by the Data Governance Committee. A risk based security testing approach across Group IT infrastructure and applications is in place to identify ongoing vulnerabilities.

Reflecting the importance of data security, the Chief Information Security Officer and the Head of Data Governance provide regular updates to the Audit Committee on mitigating controls and activities to manage this risk. These discussions are conveyed to the Board as part of our normal governance processes.

Environment and sustainability (gross risk exposure no change)

Risk

Mitigation

Environment and sustainability are core to Sainsbury's values. The key risk facing the Group in this area relates to reducing the environmental impact of the business which could result in a financial and/or reputational risk.

A number of initiatives are in place, which are being led by the Environmental Action Team and the Corporate Responsibility Steering Group, to reduce our environmental impact and to meet our customers' expectations in this area. The main focus is on reducing packaging and identifying new ways of reducing waste and energy usage across stores, depots and offices.

Further details are included in the Our values make us different section on pages 18 to 27.

Financial and treasury risk (gross risk exposure no change) *

Risk

Mitigation

The main financial risks are the availability of short and long-term funding to meet business needs and fluctuations in interest, commodity and foreign currency rates. In addition, there remains a risk around pensions as the Group now operates one defined benefit pension arrangement that is subject to risks in relation to liabilities as a result of changes in interest rates, life expectancy and inflation and their alignment to the value of investments and the returns derived from such investments.

The Group Treasury function is responsible for managing the Group's liquid resources, funding requirements, interest rate and currency exposures. The Group Treasury function has clear policies and operating procedures which are regularly reviewed and audited.

Sainsbury's Bank operates an enterprise wide risk management framework. The principal financial risks relating to the Bank and associated mitigations are set out in note 27 to the financial statements on page 148.

With regard to pensions, investment strategies are in place which have been developed by the pension trustees, in consultation with the Company, to manage the volatility risk of liabilities, to diversify investment risk and to manage cash. Both Group defined benefit schemes are closed to future accrual. On 20 March, following the end of the financial year, the two pension schemes have merged.

Health and safety - people and product (gross risk exposure no change) *

Risk

Mitigation

Prevention of injury or loss of life for both colleagues and customers is of utmost importance. In addition, it is paramount to maintaining the confidence our customers have in our business.

Clear policies and procedures are in place detailing the controls required to manage health and safety and product safety risks across the business and comply with all applicable regulations. These cover the end-to-end operation, from the auditing and vetting of construction contractors, to the health and safety processes in place in our depots, stores and offices to the controls in place to ensure people and product safety and integrity.

In addition, established product testing programmes are also in place to support rigorous monitoring of product traceability and provide assurance over product safety and integrity. Supplier terms and conditions and product specifications set clear standards for product/raw material safety and quality which suppliers are expected to comply with.

Process compliance is supported by external accreditation and internal training programmes, which are aligned to both health and safety laws and Sainsbury's internal policies. In addition, resource is dedicated to manage the risk effectively, in the form of the Group Safety Committee and specialist safety teams.

Political and regulatory environment (gross risk exposure no change) *

Risk

Mitigation

There remain heightened levels of political and regulatory uncertainty in the UK following the referendum vote to leave the EU in June 2016, the triggering of Article 50 in March 2017 and the general election in June 2017. This uncertainty is expected to continue for the foreseeable future until EU exit negotiations have been completed and alternative trade deals have been put in place. This situation may adversely impact trading performance across the sector. An increasing focus on localism to drive and deliver policy and current legislative requirements including Business Rates, Workplace Pensions, the National Living Wage and Apprenticeship Levy place a cumulative burden on Sainsbury's.

We continue to engage actively with governments, administrations and regulatory bodies. We publically communicate matters where we believe industry change is required with a view to enabling fair competition that is beneficial to our customers. We communicate our views, and those of our customers and colleagues, regarding geopolitical issues with the aim of informing the debate and ensuring our opinions are represented in the policy and decision making processes.

Trading environment and competitive landscape (gross risk exposure no change) *

Risk

Mitigation

Effective management of the trading account is key to the achievement of performance targets. The sector outlook has been and is set to remain competitive. The trading environment, driven by ongoing competitive retail pricing combined with growing inflationary cost pressures, may adversely impact performance. There is also an ongoing risk of supplier failure, with possible operational or financial consequences for the Group.

We adopt a differentiated strategy with a continued focus on delivering quality products and services with universal appeal, at fair prices, helping our customers live well for less. This is achieved through the continuous review of our product quality, key customer metrics, monitoring of current market trends and price points across competitors, active management of price positions, development of sales propositions and increased promotion and marketing activity. We continue with our commitment to provide customers even better value with lower regular prices. In delivering our strategic plan, including our price investment, we will maintain the strength of our balance sheet and have therefore identified a series of measures to conserve cash in the business. Through these measures we will deliver sustainable operating cost savings. With regards to supplier continuity, Sainsbury's maintains regular, open dialogue with key suppliers concerning their ability to trade.

Related party transactions

a) Key management personnel

The key management personnel of the Group comprise members of the J Sainsbury plc Board of Directors and the Operating Board. The key management personnel compensation is as follows:

	2018	2017
	£m	£m
Short-term employee benefits	9	10
Post-employment employee benefits	1	1
Share-based payments	5	6
	15	17

Eight key management personnel had credit card balances with Financial Services (2017: nine). These arose in the normal course of business and were immaterial to the Group and the individuals. Three key management personnel held saving deposit accounts with Financial Services (2017: five). These balances arose in the normal course of business and were immaterial to the Group and the individuals.

b) Joint ventures and associates

Transactions with joint ventures and associates

For the 52 weeks to 10 March 2018, the Group entered into various transactions with joint ventures and associates as set out below.

	2018	2017
	£m	£m
Management services provided	1	8
Income share received from joint ventures and associates	26	29
Dividend and distributions received	37	65
Proceeds from repayment of loan to joint ventures	-	2
Investment in joint ventures	(9)	(18)
Disposals of joint ventures	2	-
Rental expenses paid	(46)	(57)

Year-end balances arising from transactions with joint ventures and associates

	2018	2017
	£m	£m
Receivables
Other receivables	6	12
Loans due from joint ventures	-	3

Payables
Loans due to joint ventures	(5)	(5)

Insight 2 Communication LLP became a wholly owned subsidiary as at 1 February 2018; up until this point it was a joint venture. All transactions up to the acquisition date have been included above. Outstanding balances as at 10 March 2018 have been excluded as it has now been fully consolidated.

Loans with joint ventures are interest bearing and repayable on demand.

c) Retirement benefit obligations

As discussed in note 29, the Group has entered into an arrangement with the Pension Scheme Trustee as part of the funding plan for the actuarial deficit in the Scheme. Full details of this arrangement are set out in note 29 to these financial statements.

S tatement of Directors' responsibilities

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year, and of the profit or loss of the Group for the financial year. Under that law, the Directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union (EU) and have elected to prepare the Parent Company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice, including FRS 101 'Reduced Disclosure Framework' (UK Accounting Standards and applicable law). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period. In preparing these financial statements, the Directors are required to:

- select suitable accounting policies and then apply them consistently;

- make judgements and accounting estimates that are reasonable and prudent;

- state whether IFRSs as adopted by the European Union and applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the Group and Company financial statements respectively; and

- prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Having taken all the matters considered by the Board and brought to the attention of the Board during the year into account, we are satisfied that the Annual Report and Financial Statements, taken as a whole, is fair, balanced and understandable.

The Board believes that the disclosures set in this Annual Report provide the information necessary for shareholders to assess the Group's performance, business model and strategy.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names and functions are listed on pages 54 to 55, confirms that, to the best of their knowledge:

- the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

- the Strategic Report and Directors' Report contained in the Annual Report and Financial Statements include a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

By order of the Board

Tim Fallowfield

Company Secretary and Corporate Services Director

1 May 2018