SUPERMARKET chain Sainsbury's said yesterday that its three-year recovery was ahead of plan as it reported underlying annual profits up 42 per cent to £380m.

The UK's third largest supermarket group is to share out a record £56m bonus pot for staff after delivering the full-year profits haul and its ninth consecutive quarter of like-for-like sales growth.

Sainsbury's, which fought off a private equity takeover approach earlier this year, has also set itself new targets for the next three years, with aims to generate £3.5bn of sales growth.

The group reported like-for-like supermarket sales, excluding petrol, up 5.9 per cent in the year to March 24. Total sales have grown by £1.8bn since the group put in place its ''Making Sainsbury's Great Again'' recovery plan in October 2004 - leaving the chain ahead of its target to reach £2.5bn sales growth by next March.

Sainsbury's said it was also on target to reduce costs by £440m by next March.

Anthony Platts, assistant director and investment manager at Tees Valley-based Wise Speke, said: "Sainsbury has completely evolved over recent years. Three years into the recovery programme, these results speak for themselves as to how the group has been transformed.

"It has been of little surprise that Sainsbury has attracted takeover approaches, which so far it has managed to fend off.

"It is valued in the market currently at £10.3bn. The group's property portfolio has a historic net book value of £5.2bn, but this is now thought to be worth nearer £8.6bn, making the company attractive to property-focussed predators."