TIDMSBRY

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 GBP34 million and statutory profit before tax reduces by GBP37 million. Underlying profit before tax therefore reduces from GBP635 million to GBP601 million, and statutory profit before tax reduces from GBP239 million to GBP202 million

-- This restatement comprises GBP747 million reduction in rent, GBP(470) million increase in depreciation, GBP(323) million increase in underlying net finance costs and GBP12 million reduction in other costs

-- The financial impact on the restated 2018/19 balance sheet includes the recognition of right-of-use assets of GBP4,993 million, recognition of IFRS 16 lease liabilities of GBP(5,822) million and recognition of deferred tax assets of GBP162 million. 2018/19 restated net assets reduce by GBP(673) million and retail net debt increases from GBP(1,142) million to GBP(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 +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) 
                                               GBPm      GBPm           GBPm         GBPm      GBPm         GBPm 
----------------------------------    -------------  --------  -------------  -----------  --------  ----------- 
 
 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      IFRS       28 weeks     52 weeks      IFRS     52 weeks 
                                                  to        16             to           to        16           to 
                                        22 September    Impact   22 September      9 March    Impact      9 March 
                                                2018                     2018         2019                   2019 
                                          (reported)               (restated)   (reported)             (restated) 
                                                GBPm      GBPm           GBPm         GBPm      GBPm         GBPm 
------------------------------------   -------------  --------  -------------  -----------  --------  ----------- 
 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                 28 weeks 
                                                   to   IFRS 16             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) 
                                                 GBPm      GBPm           GBPm          GBPm      GBPm          GBPm 
--------------------------------------  -------------  --------  -------------  ------------  --------  ------------ 
 
 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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