REG - Sainsbury(J) PLC - Half-year Report <Origin Href="QuoteRef">SBRY.L</Origin> - Part 5
09/11/2017 07:07
- Part 5: For the preceding part double click ID:nRSI9865Vd
European Union. The condensed consolidated set of financial statements
included in this interim financial report has been prepared in accordance with International Accounting Standard 34,
"Interim Financial Reporting", as adopted by the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed consolidated set of financial statements in
the interim financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board
for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated set of
financial statements in the interim financial report for the 28 weeks ended 23 September 2017 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the
Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Services Conduct Authority.
Ernst & Young LLP
London
8 November 2017
Alternative performance measures (APMs)
In the reporting of financial information, the Directors use various APMs which they believe provide additional useful
information for understanding the financial performance and financial health of the Group. These APMs should be considered
in addition to, and are not intended to be a substitute for IFRS measurements. As they are not defined by International
Financial Reporting Standards, they may not be directly comparable with other companies who use similar measures.
All of the following APMs relate the current period's results and comparative periods where provided.
APM Definition Reconciliation
Cash flows and net debt
Cash flow items in Financial Review To help the reader understand cash flows of the business a summarised cash flow statement is included within the financial review. As part of this a number of line items have been combined. The cash flow in note 4 of the accounts includes a reference to show what has been combined in these line items. 23 Sep 24 Sep 11 Mar Ref 2017 2016 2017 £m £m £m Net interest paid a (61) (64) (108) Property-related
including strategic capital expenditure b 25 (36) 28 HRG acquisition and AFS loan book refinancing c
- 457 457 Repayment of borrowings d (81) (81) (211) Other e (17) (13) (10)
Retail free cash flow Net cash generated from retail operations, adjusted for exceptional pension contributions, after cash capital expenditure but before strategic capital expenditure. 23 Sep 24 Sep 11 Mar 2017 2016 2017 Reconciliation of retail free cash flow £m £m £m Cash generated
from retail operations 872 593 929 Add back: Exceptional pension contribution - 199 199 Net interest
paid (ref (a) above) (61) (64) (108) Corporation tax (40) (51) (87) Retail purchase of property,
plant and equipment (280) (303) (622) Retail purchase of intangible assets (32) (28) (58) Add back:
strategic capital expenditure 35 74 92 Free cash flow 494 420 345
Cash generated from retail operations (per Financial Review) Retail cash generated from operations after changes in working capital but before pension contributions and exceptional contributions. A reconciliation between retail and Group cash generated from operations is provided in note 4 of the
accounts.
Core retail capital expenditure Capital expenditure excludes Sainsbury's Bank, Argos exceptional capital expenditure, proceeds from sale and leasebacks and strategic capital expenditure. A reconciliation from the cash flow statement is included here. 23 Sep 24 Sep 2017 2016 £m £m Purchase of property, plant and equipment (245) (229) Purchase of
intangibles (32) (27) Cash capital expenditure before strategic capital expenditure (note 4) (277)
(256) Property-related including strategic capital expenditure (ref (b) above) 25 (36) Less: dividends
received from joint ventures (included within property- related above) (16) (23) Cash capital
expenditure including strategic capital expenditure (268) (315) Capitalised interest (4) (4) Less:
debtor/creditor movements (2) 1 Other (including strategic capital expenditure) 35 81 Total retail
core capital expenditure (239) (237)
£m
Net interest paid
a
(61)
(64)
(108)
Property-related including strategic capital expenditure
b
25
(36)
28
HRG acquisition and AFS loan book refinancing
c
-
457
457
Repayment of borrowings
d
(81)
(81)
(211)
Other
e
(17)
(13)
(10)
Retail free cash flow
Net cash generated from retail operations, adjusted for exceptional pension contributions, after cash capital expenditure
but before strategic capital expenditure.
23 Sep 24 Sep 11 Mar
2017 2016 2017
Reconciliation of retail free cash flow £m £m £m
Cash generated from retail operations 872 593 929
Add back: Exceptional pension contribution - 199 199
Net interest paid (ref (a) above) (61) (64) (108)
Corporation tax (40) (51) (87)
Retail purchase of property, plant and equipment (280) (303) (622)
Retail purchase of intangible assets (32) (28) (58)
Add back: strategic capital expenditure 35 74 92
Free cash flow 494 420 345
Cash generated from retail operations (per Financial Review)
Retail cash generated from operations after changes in working capital but before pension contributions and exceptional
contributions.
A reconciliation between retail and Group cash generated from operations is provided in note 4 of the accounts.
Core retail capital expenditure
Capital expenditure excludes Sainsbury's Bank, Argos exceptional capital expenditure, proceeds from sale and leasebacks and
strategic capital expenditure. A reconciliation from the cash flow statement is included here.
23 Sep 24 Sep
2017 2016
£m £m
Purchase of property, plant and equipment (245) (229)
Purchase of intangibles (32) (27)
Cash capital expenditure before strategic capital expenditure (note 4) (277) (256)
Property-related including strategic capital expenditure (ref (b) above) 25 (36)
Less: dividends received from joint ventures (included within property- related above) (16) (23)
Cash capital expenditure including strategic capital expenditure (268) (315)
Capitalised interest (4) (4)
Less: debtor/creditor movements (2) 1
Other (including strategic capital expenditure) 35 81
Total retail core capital expenditure (239) (237)
APM Definition Reconciliation
Net debt Net debt includes the capital injections in to Sainsbury's Bank, but excludes the net debt of Sainsbury's Bank and its subsidiaries. Sainsbury's Bank's net debt balances are excluded because they are required for business as usual activities.It is calculated as: available for sale assets (excluding equity investments) + net derivatives + net cash and cash equivalents + loans + finance lease obligations. A reconciliation of net debt is provided in note 5 of the accounts.
Gearing Retail net debt divided by net assets. Retail net debt as per above and net assets as per the Group balance sheet.
Income statement
Like-for-like sales Year-on-year growth in sales including VAT, excluding fuel, excluding Financial Services, for stores that have been open for more than one year. The measure is used widely in the retail industry as an indicator of sales performance. The reported retail like-for-like sales growth of 1.6 per cent is based on a combination of Sainsbury's like-for-like sales and Argos like-for-like sales for the 28 weeks
to 23 September 2017, i.e. assuming that Argos sales are in the base. Additionally, the impact of the disposal of Pharmacy is not treated as like-for-like. See movements
below: 23 Sep 2017 24 Sep 2016 % % Underlying retail like-for-like (exc. Fuel, inc. Argos in base) 1.6 (1.0) Underlying net new space impact (exc. Pharmacy, inc. Argos
in base) 0.3 0.9 Underlying total retail sales growth (exc. fuel, exc. Pharmacy, inc. Argos in base) 1.9 (0.1) Argos consolidation & Pharmacy impact 18.0 2.5 Total retail
sales growth (exc. fuel, inc. pharmacy impact, exc. Argos in base) 19.9 2.4 Fuel impact (3.1) (0.4) Total retail sales growth (inc. fuel) 16.8 2.0 Bank impact 0.3 0.1
Group sales inc. VAT 17.1 2.1
Underlying Group sales Total sales less acquisition fair value unwinds on Sainsbury's Bank and Argos Financial Services. A reconciliation of this measure can be found in note 4 of the accounts.
Underlying profit before tax Profit or loss before tax before any items recognised which, by virtue of their size and or nature, do not reflect the Group's underlying performance. A reconciliation of underlying profit before tax is provided in note 3 of the accounts.
Retail underlying operating profit Underlying earnings before interest, tax, Financial Services operating profit and Sainsbury's underlying share of post-tax profit from joint ventures and associates. A reconciliation of these measures can be found in note 4 of the accounts.
Underlying basic earnings per share Earnings per share using underlying profit as described above. A reconciliation of underlying earnings per share is included in note 9.
Retail underlying EBITDAR Retail underlying operating profit as above, before rent, depreciation and amortisation. A reconciliation is provided in the Financial Review on page 13.
Other
Lease adjusted net debt / underlying EBITDAR Net debt plus capitalised lease obligations (5.5% discount rate) divided by Group underlying EBITDAR. A reconciliation of this is provided in the Financial Review on page 18.
19.9
2.4
Fuel impact
(3.1)
(0.4)
Total retail sales growth (inc. fuel)
16.8
2.0
Bank impact
0.3
0.1
Group sales inc. VAT
17.1
2.1
Underlying Group sales
Total sales less acquisition fair value unwinds on Sainsbury's Bank and Argos Financial Services.
A reconciliation of this measure can be found in note 4 of the accounts.
Underlying profit before tax
Profit or loss before tax before any items recognised which, by virtue of their size and or nature, do not reflect the
Group's underlying performance.
A reconciliation of underlying profit before tax is provided in note 3 of the accounts.
Retail underlying operating profit
Underlying earnings before interest, tax, Financial Services operating profit and Sainsbury's underlying share of post-tax
profit from joint ventures and associates.
A reconciliation of these measures can be found in note 4 of the accounts.
Underlying basic earnings per share
Earnings per share using underlying profit as described above.
A reconciliation of underlying earnings per share is included in note 9.
Retail underlying EBITDAR
Retail underlying operating profit as above, before rent, depreciation and amortisation.
A reconciliation is provided in the Financial Review on page 13.
Other
Lease adjusted net debt / underlying EBITDAR
Net debt plus capitalised lease obligations (5.5% discount rate) divided by Group underlying EBITDAR.
A reconciliation of this is provided in the Financial Review on page 18.
APM Definition Reconciliation
Return on capital employed Return on capital employed is calculated as return divided by average capital employed.Return is defined as underlying profit before interest and tax.Capital employed is defined as net assets excluding net debt. The average is calculated on a 14 point basis. No direct reconciliation to a statutory financial statement line item. An explanation of the calculation is provided in the Financial Review on page 18.
Interest cover Underlying profit before interest and tax divided by underlying net finance costs, where interest on perpetual securities is included in underlying finance costs. Underlying profit before interest and tax as per note 4 of the accounts.Underlying net finance costs as per note 4 of the accounts.
Fixed charge cover Group underlying EBITDAR divided by net rent and underlying net finance costs, where interest on perpetual securities is included in underlying finance costs. EBITDAR is reconciled in the Financial Review on page 13.Underlying net finance costs as per note 4 of the accounts.
This information is provided by RNS
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