Last checked at 16 Oct 2019 07:00
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.
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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 |