2018/19 Financial Statements restated for IFRS 16

RNS Number : 9973P

Sainsbury(J) PLC

16 October 2019

 

16 October 2019

J Sainsbury plc

 2018/19 Financial Statements - restated for IFRS 16

As previously announced, J Sainsbury plc is adopting the fully retrospective approach to the new IFRS 16 lease standard, effective for the Group for the 52 weeks ending 7 March 2020.

IFRS 16 will have no economic effect on the business or cash. It does however impact the way assets, liabilities and the income statement are presented.

Our first Financial Statements to be prepared under IFRS 16 will be Interims 2019/20, to be reported on 7 November 2019. Ahead of those results, we are today publishing first half and full year restated 2018/19 results on a post-IFRS 16 basis.

·     In line with prior guidance, restated underlying profit before tax for 2018/19 reduces by £34 million and statutory profit before tax reduces by £37 million. Underlying profit before tax therefore reduces from £635 million to £601 million, and statutory profit before tax reduces from £239 million to £202 million

·     This restatement comprises £747 million reduction in rent, £(470) million increase in depreciation, £(323) million increase in underlying net finance costs and £12 million reduction in other costs

·     The financial impact on the restated 2018/19 balance sheet includes the recognition of right-of-use assets of £4,993 million, recognition of IFRS 16 lease liabilities of £(5,822) million and recognition of deferred tax assets of £162 million. 2018/19 restated net assets reduce by £(673) million and retail net debt increases from £(1,142) million to £(6,844) million

·     2018/19 Net debt to EBITDAR of 3.1 times compares to previously reported adjusted Net debt to EBITDAR of 3.2 times

See below for 2018/19 full year and half year restated Financial Statements. See https://www.about.sainsburys.co.uk/investors/results-reports-and-presentations for a more detailed disclosure on the impact of IFRS 16.

Investor Relations Enquiries                                      Media Enquiries

James Collins   [phone]                            Rebecca Reilly   [phone]

These condensed consolidated financial statements for the 52 weeks ended 9 March 2019 do not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for the 52 weeks ended 9 March 2019 (as reported) have been filed with the Registrar of Companies following their approval at the AGM. The auditor's report on those accounts was not qualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

Group income statement
			28 weeks to	IFRS 16	28 weeks to		52 weeks	IFRS 16	52 weeks
			22 September	Impact	22 September		9 March	Impact	9 March
			2018		2018		2019		2019
			(reported)		(restated)		(reported)		(restated)
			£m	£m	£m		£m	£m	£m
Revenue			15,127	-	15,127		29,007	-	29,007
Cost of sales			(14,100)	146	(13,954)		(27,000)	281	(26,719)
Gross profit			1,027	146	1,173		2,007	281	2,288
Administrative expenses			(891)	5	(886)		(1,733)	8	(1,725)
Other income			16	-	16		38	-	38
Operating profit			152	151	303		312	289	601
Finance income			28	1	29		22	2	24
Finance costs			(49)	(177)	(226)		(99)	(328)	(427)
Share of post-tax profit from joint ventures and associates			1	-	1		4	-	4
Profit before tax			132	(25)	107		239	(37)	202
Analysed as:
Underlying profit before tax			302	(23)	279		635	(34)	601
Non-underlying items			(170)	(2)	(172)		(396)	(3)	(399)
			132	(25)	107		239	(37)	202
Income tax credit/(expense)			12	4	16		(20)	4	(16)
Profit for the financial period			144	(21)	123		219	(33)	186
Earnings per share			pence		pence		pence		pence
Basic earnings			6.1	(1.0)	5.1		9.1	(1.5)	7.6
Diluted earnings			5.8	(0.9)	4.9		8.9	(1.3)	7.5
Underlying basic earnings			10.3	(0.9)	9.4		22.0	(1.4)	20.7
Underlying diluted earnings			9.5	(0.7)	8.8		20.3	(1.2)	19.1

Group balance sheet
		28 weeks to	IFRS 16	28 weeks to		52 weeks to	IFRS 16	52 weeks to
		22 September	Impact	22 September		9 March	Impact	9 March
		2018		2018		2019		2019
		(reported)		(restated)		(reported)		(restated)
		£m	£m	£m		£m	£m	£m
Non-current assets
Property, plant and equipment		9,782	(498)	9,284		9,708	(515)	9,193
Right-of-use asset		-	5,055	5,055		-	4,993	4,993
Intangible assets		1,052	(1)	1,051		1,044	(1)	1,043
Investments in joint ventures and associates		209	-	209		205	-	205
Financial assets at fair value through other comprehensive income		541	-	541		645	-	645
Other receivables		30	28	58		33	24	57
Amounts due from Financial Services customers		2,752	-	2,752		3,349	-	3,349
Derivative financial instruments		18	-	18		9	-	9
Net retirement benefit surplus		266	-	266		959	-	959
		14,650	4,584	19,234		15,952	4,501	20,453
Current assets
Inventories		1,879	-	1,879		1,929	-	1,929
Trade and other receivables		659	(6)	653		661	(31)	630
Amounts due from Financial Services customers		3,482	-	3,482		3,638	-	3,638
Financial assets at fair value through other comprehensive income		353	-	353		211	-	211
Derivative financial instruments		47	-	47		21	-	21
Cash and cash equivalents		1,463	-	1,463		1,121	-	1,121
		7,883	(6)	7,877		7,581	(31)	7,550
Assets held for sale		8	-	8		8	-	8
		7,891	(6)	7,885		7,589	(31)	7,558
Total assets		22,541	4,578	27,119		23,541	4,470	28,011
Current liabilities
Trade and other payables		(4,824)	42	(4,782)		(4,444)	71	(4,373)
Amounts due to Financial Services customers and other deposits		(5,336)	-	(5,336)		(5,797)	-	(5,797)
Borrowings		(255)	(510)	(765)		(832)	(517)	(1,349)
Derivative financial instruments		(6)	-	(6)		(17)	-	(17)
Taxes payable		(123)	-	(123)		(204)	-	(204)
Provisions		(133)	22	(111)		(123)	14	(109)
		(10,677)	(446)	(11,123)		(11,417)	(432)	(11,849)
Net current liabilities		(2,786)	(452)	(3,238)		(3,828)	(463)	(4,291)
Non-current liabilities
Other payables		(333)	250	(83)		(340)	253	(87)
Amounts due to Financial Services customers and other deposits		(1,850)	-	(1,850)		(1,804)	-	(1,804)
Borrowings		(1,388)	(5,263)	(6,651)		(950)	(5,192)	(6,142)
Derivative financial instruments		(9)	-	(9)		(17)	-	(17)
Deferred income tax liability		(287)	162	(125)		(397)	162	(235)
Provisions		(161)	57	(104)		(160)	65	(95)
Net retirement benefit obligations		-	-	-		-	-	-
		(4,028)	(4,794)	(8,822)		(3,668)	(4,712)	(8,380)
Net assets		7,836	(662)	7,174		8,456	(674)	7,782
Equity
Called up share capital		629	-	629		630	-	630
Share premium account		1,140	-	1,140		1,147	-	1,147
Capital redemption reserve		680	-	680		680	-	680
Merger reserve		568	-	568		568	-	568
Other reserves		170	-	170		172	-	172
Retained earnings		4,153	(662)	3,491		4,763	(674)	4,089
Total equity before perpetual securities		7,340	(662)	6,678		7,960	(674)	7,286
Perpetual capital securities		248	-	248		248	-	248
Perpetual convertible bonds		248	-	248		248	-	248
Total equity		7,836	(662)	7,174		8,456	(674)	7,782

Group cash flow statement
	28 weeks to	IFRS 16	28 weeks to		52 weeks to	IFRS 16	52 weeks to
	22 September	Impact	22 September		9 March	Impact	9 March
	2018		2018		2019		2019
	(reported)		(restated)		(reported)		(restated)
	£m	£m	£m		£m	£m	£m
Cash flows from operating activities
Profit before tax	132	(25)	107		239	(37)	202
Net finance costs	21	176	197		77	326	403
Share of post-tax-profit from joint ventures and associates	(1)	-	(1)		(4)	-	(4)
Operating profit	152	151	303		312	289	601
Adjustments for:
Depreciation expense	354	252	606		649	470	1,119
Amortisation expense	75	-	75		143	-	143
Non-cash adjustments arising from acquisitions	-	-	-		(2)	-	(2)
Financial Services impairment losses on loans and advances	49	-	49		98	-	98
Loss/(profit) on sale of properties	12	-	12		17	-	17
Loss on disposal of intangibles	1	-	1		-	-	-
Impairment charge of property, plant and equipment	-	-	-		3	-	3
Share-based payments expense	19	-	19		39	-	39
Retirement benefit obligations	(25)	-	(25)		45	-	45
Operating cash flows before changes in working capital	637	403	1,040		1,304	759	2,063
Changes in working capital
Increase in inventories	(69)	-	(69)		(118)	-	(118)
Increase in current financial assets	(180)	-	(180)		(97)	-	(97)
Decrease/(increase) in trade and other receivables	67	(13)	54		74	18	92
Increase in amounts due from Financial Services customers and other deposits	(672)	-	(672)		(1,480)	-	(1,480)
Increase in trade and other payables	415	9	424		94	(23)	71
Increase in amounts due to Financial Services customers and other deposits	662	-	662		1,077	-	1,077
(Decrease)/increase in provisions and other liabilities	(75)	9	(66)		(105)	12	(93)
Cash generated from operations	785	408	1,193		749	766	1,515
Interest paid	(33)	-	(33)		(63)	-	(63)
Corporation tax paid	(22)	-	(22)		(68)	-	(68)
Net cash generated from operating activities	730	408	1,138		618	766	1,384
Cash flows from investing activities
Purchase of property, plant and equipment	(237)	2	(235)		(478)	4	(474)
Initial direct costs on right-of-use assets	-	(6)	(6)		-	(11)	(11)
Purchase of intangible assets	(58)	-	(58)		(116)	-	(116)
Proceeds from disposal of property, plant and equipment	34	-	34		64	-	64
Proceeds from financial assets at fair value through other comprehensive income	-	-	-		39	-	39
Acquisition of subsidiaries, net of cash acquired	-	-	-		-	-	-
Investment in joint ventures	(5)	-	(5)		(5)	-	(5)
Interest received	2	-	2		4	-	4
Dividends and distributions received	16	-	16		18	-	18
Net cash used in investing activities	(248)	(4)	(252)		(474)	(7)	(481)
Cash flows from financing activities
Proceeds from issuance of ordinary shares	11	-	11		22	-	22
Proceeds from borrowings	-	-	-		135	-	135
Proceeds from financial assets	39	-	39		-	-	-
Repayment of borrowings	(581)	-	(581)		(593)	-	(593)
Purchase of own shares	(12)	-	(12)		(30)	-	(30)
Repayment of capital element of obligations under finance lease borrowings	(25)	(224)	(249)		(32)	(425)	(457)
Interest elements of obligations under finance lease payments	(4)	(180)	(184)		(7)	(334)	(341)
Dividends paid on ordinary shares	(156)	-	(156)		(224)	-	(224)
Dividends paid on perpetual securities	(20)	-	(20)		(23)	-	(23)
Net cash used in financing activities	(748)	(404)	(1,152)		(752)	(759)	(1,511)
Net (decrease)/increase in cash and cash equivalents	(266)	-	(266)		(608)	-	(608)
Opening cash and cash equivalents	1,728	-	1,728		1,728	-	1,728
Closing cash and cash equivalents	1,462	-	1,462		1,120	-	1,120

 

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