Research shows a marked improvement in customer satisfaction. This is the result of the many changes we are making every day.

In addition to our core offer we've also been working on non-food ranges which currently account for around ten per cent of our total sales. We concentrate on things customers now want to find in a supermarket like greetings cards, DVDs and clothes and accessories.

Our target is to generate £700 million of additional sales from non-food products. The focus this year was to make the space already dedicated to these products work harder and we tested new products, fixtures and layouts in 20 stores.

The results were pleasing and we're now introducing more space for non-food products as stores are extended and reformatted, and we estimate that around 50 stores will be altered in this way over the next 12 months.

'TU', our own label clothing range has been incredibly successful this year, with sales up by more than 40 per cent. As part of our refurbishment and extension programme we plan to introduce 'TU' into around 40 more stores in 2006 and extend the current 'TU' offer in around 60 stores.

We have also added 41 pharmacies during the year taking the total number in our stores to 169. In total we grew sales of non-food items by eight per cent which was ahead of the market.

Our Bank is an important part of our customer offer but it had a difficult year, making an underlying operating loss of £10 million due to additional charges for bad debt. The debt relates largely to loans made two and three years ago when the Bank was taking on lots of new customers seeking loans. Sainsbury's Bank has been particularly affected because the type of products in its offer were those most likely to be affected as the consumer credit environment worsened this year. The position is now stabilising and we have put processes in place to tighten our credit policy and associated risk controls.

On a more positive note, customer numbers are growing and accounts were up eight per cent to 2.5 million and we continue to grow the part of the business for which we receive commission.

Tim Pile stepped down as Chief Executive of the Bank in March 2006 and we appointed Rob Walker as our new Chief Executive in May 2006. We believe that the supermarket banking model is robust and the move to more commission-based products is appropriate for long-term growth and profitability.

Together with our partner, HBOS, we're committed to the Bank and on working together to return it to profitability. Our target is for the Bank to breakeven in the 2006/07 financial year and return to profitability in 2007/08.

In fashion

Our 'TU' range of adult and children's clothing and accessories is now available in 202 stores. It's very popular with customers and sales are up over 40 per cent this year.