Notes to the financial statements
34 Related party transactions
Group
(a) Key management personnel
The key management personnel of the Group comprise members of the J Sainsbury plc’s Board of Directors and the Operating Board.
The key management personnel compensation is as follows:
| 2008 £m |
2007 £m |
|
|---|---|---|
| Short-term employee benefits | 7 | 7 |
| Post-employment employee benefits | 1 | 1 |
| Share-based payments | 9 | 7 |
| 17 | 15 |
Details of transactions, in the normal course of business, with the key management personnel are provided below. For this purpose, key management personnel include Group key management personnel and members of their close family.
| Credit card balances Number of key management personnel |
Credit card balances £000 |
Saving deposit accounts Number of key management personnel |
Saving deposit accounts £000 |
|
|---|---|---|---|---|
| At 25 March 2007 | 4 | 8 | 2 | (287) |
| Amounts advanced/(received)1 | 3 | 113 | 4 | (722) |
| Interest earned/(paid) | 1 | – | 1 | – |
| Amounts (repaid)/withdrawn2 | 4 | (111) | 3 | 392 |
| At 22 March 2008 | 4 | 10 | 2 | (617) |
At 26 March 2006 |
4 | 9 | 2 | (1) |
| Amounts advanced/(received)1 | 4 | 115 | 1 | (769) |
| Interest earned/(paid) | 1 | – | 2 | (3) |
| Amounts (repaid)/withdrawn2 | 4 | (116) | 1 | 486 |
| At 24 March 2007 | 4 | 8 | 2 | (287) |
- Includes existing balances of new appointments.
- Includes existing balances of resignations.
(b) Joint ventures
Transactions with joint ventures
For the 52 weeks to 22 March 2008, the Group entered into various transactions with joint ventures as set out below.
| 2008 £m |
2007 £m |
|
|---|---|---|
| Sales of inventories | 6 | 4 |
| Management services provided | 20 | 3 |
| Interest income received in respect of interest bearing loans | 3 | – |
| Sale of assets | 74 | – |
| Rental expenses paid | (4) | – |
Year-end balances arising from transactions with joint ventures
| 2008 £m |
2007 £m |
|
|---|---|---|
| Receivables | ||
| Other receivables | 7 | 8 |
| Loans due from joint ventures | ||
| Floating rate subordinated undated loan capital1 | 25 | 20 |
| Floating rate subordinated dated loan capital2 | 30 | 30 |
Payables |
||
| Loans due to joint ventures | (5) | (5) |
- The undated subordinated loan capital shall be repaid on such date as the Financial Services Authority shall agree in writing for such repayment and in any event not less than five years and one day from the dates of draw down. In the event of a winding up of Sainsbury’s Bank plc, the loan is subordinated to ordinary unsecured liabilities. Interest is payable three months in arrears at LIBOR plus a margin of 1.0 per cent per annum for the duration of the loan.
- No repayment of dated subordinated debt prior to its stated maturity may be made without the consent of the Financial Services Authority. In the event of a winding up of Sainsbury’s Bank plc, the loan is subordinated to ordinary unsecured liabilities. Interest is payable three months in arrears at LIBOR plus a margin of 0.6 per cent per annum for the duration of the loan.
(c) HBOS plc group
In the prior financial year up to 8 February 2007, Sainsbury’s Bank plc was a subsidiary of the Company and had as shareholders the Company and Bank of Scotland (part of the HBOS plc group), which held 55 per cent and 45 per cent respectively of the issued share capital.
Transaction with the HBOS plc group
Companies within the HBOS plc group provided both management and banking services to Sainsbury’s Bank. Sainsbury’s Bank also entered into financial transactions with, and earned commission from, companies within the HBOS plc group, all under normal commercial terms.
| 2008 £m |
2007 £m |
|
|---|---|---|
| Loans given to, and commission received from HBOS plc group | ||
| Total loans and advances made during the year | - | 5,589 |
| Net interest received in respect of interest rate swaps, loans and advances | - | 40 |
| Commission income earned | - | 18 |
Services and loans provided by HBOS plc group |
||
| Management and banking services | - | (40) |
| Interest expense paid in respect of subordinated loan capital | - | (2) |
| Deposits by banks | ||
| Fixed-term borrowing | - | (79) |
| Net interest paid in respect of interest rate swaps, loans and advances | - | (36) |
Company
(a) Key management personnel
The key management personnel of the Company comprise members of the J Sainsbury plc’s Board of Directors. The Directors do not receive any remuneration from the Company (2007: £nil) as their emoluments are borne by subsidiaries. The Company did not have any transactions with the Directors during the financial year (2007: £nil).
(b) Subsidiaries
The Company enters into loans with its subsidiaries at both fixed and floating rates of interest on a commercial basis. Hence, the Company incurs interest expense and earns interest income on these loans and advances. The Company also received dividend income from its subsidiaries during the financial year.
Transactions with subsidiaries
| 2008 £m |
2007 £m |
|
|---|---|---|
| Loans and advances given to, and dividend income received from subsidiaries | ||
| Loans and advances given | 284 | 69 |
| Loans and advances repaid by subsidiaries | (360) | (802) |
| Loans and advances disposed of with part disposal of Sainsbury’s Bank | - | (50) |
| Interest income received in respect of interest bearing loans and advances | 115 | 127 |
| Dividend income received | 250 | 270 |
Loans and advances received from subsidiaries |
||
| Loans and advances received | (321) | (1,559) |
| Loans and advances repaid | 202 | 2,167 |
| Interest expense paid in respect of interest bearing loans and advances | (277) | (224) |
Year-end balances arising from transactions with subsidiaries
| 2008 £m |
2007 £m |
|
|---|---|---|
| Receivables | ||
| Loans and advances due from subsidiaries | 1,279 | 1,243 |
Payables |
||
| Loans and advances due to subsidiaries | (5,315) | (5,203) |
(c) Joint ventures
Transactions with joint ventures
For the 52 weeks to 22 March 2008, the Company entered into transactions with joint ventures as set out below.
| 2008 £m |
2007 £m |
|
|---|---|---|
| Services and loans provided to joint ventures | ||
| Interest income received in respect of interest bearing loans | 3 | – |
Year-end balances arising from transactions with joint ventures
| 2008 £m |
2007 £m |
|
|---|---|---|
| Receivables | ||
| Other receivables | 1 | 1 |
| Loans due from joint ventures | ||
| Floating rate subordinated undated loan capital1 | 25 | 20 |
| Floating rate subordinated dated loan capital2 | 30 | 30 |
| Payables | ||
| Loans due to joint ventures | (5) | (5) |
- The undated subordinated loan capital shall be repaid on such date as the Financial Services Authority shall agree in writing for such repayment and in any event not less than five years and one day from the dates of draw down. In the event of a winding up of Sainsbury’s Bank plc, the loan is subordinated to ordinary unsecured liabilities. Interest is payable three months in arrears at LIBOR plus a margin of 1.0 per cent per annum for the duration of the loan.
- No repayment of dated subordinated debt prior to its stated maturity may be made without the consent of the Financial Services Authority. In the event of a winding up of Sainsbury’s Bank plc, the loan is subordinated to ordinary unsecured liabilities. Interest is payable three months in arrears at LIBOR plus a margin of 0.6 per cent per annum for the duration of the loan.