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. Seehttps://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 +44 (0) 7801 813 074 Rebecca Reilly +44 (0) 20 7695 7295

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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J. Sainsbury plc published this content on 16 October 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 October 2019 06:22:05 UTC