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23 Provisions for liabilities and charges
Group
Total Other Deferred tax
£m £m £m
At 8 March 1998 24 39 (15)
Prior year adjustment (see below) (15) (21) 6
9 18 (9)
Profit and loss account
Deferred tax – UK 9 9
Deferred tax – US (4) (4)
New provisions 3 3
Utilised (5) (5)
Released (4) (4)
At 3 April 1999 8 12 (4)
The total of other provisions of £12 million consists of a new provision of £2 million relating to provisions for onerous leases on properties,
£3 million relating to unutilised provisions made in 1994 for losses on realisation of surplus land and stores due for closure, £5 million
representing the balance of the provision for store closure costs of Texas Homecare and £2 million relating to unfunded pension liabilities.
In accordance with FRS 12, Provisions, Contingent Liabilities and Contingent Assets, the Group’s accounting policy for provisions has been
changed. FRS 12 prohibits certain provisions including those made on the acquisition of a business that relate to the estimated cost of
integrating the business with a company’s existing operations. The Texas Homecare provision, which was established in the year ended
9 March 1996 (£48 million) and in the year ended 8 March 1997 (£50 million), is such a provision. Under the new accounting standard the
current and prior year accounts have been adjusted by reversing the original provision and instead charging the Profit and Loss Account
with the actual costs incurred in the respective periods. The adjustments following adoption of the new accounting standard are set out below:
Reversal of Amount to be
original provision charged under FRS 12
£m £m
Year ended:
9 March 1996 48 (5)
8 March 1997 50 (44)
7 March 1998 – (28)
56 weeks ended
3 April 1999 – (21)
Total 98 (98)
Accordingly, profit before tax in the year ended 7 March 1998 has been restated and is reduced by £28 million (profit after tax – £18 million).
Retained profit reserves brought forward at 8 March 1998 have increased by £15 million, being a reduction of brought forward provisions
of £21 million less the related deferred tax asset of £6 million. Retained profit reserves brought forward at 9 March 1997 have increased
by £33 million.
The provided and unprovided liabilities for deferred tax are as follows:
Group
Provided Unprovided Provided* Unprovided
1999 1999 1998 1998
£m £m £m £m
Timing differences between depreciation and capital allowances 12 172 11 169
Other timing differences (16) 4 (20) 5
(4) 176 (9) 174
* Restated for FRS 12
The potential liability for tax which might arise on disposal of the Group’s properties has not been quantified. In the opinion of the Directors
the likelihood of any such liability arising is remote.
J Sainsbury plc Annual report and accounts 1999 53