REG - Sainsbury(J) PLC - Interim Results <Origin Href="QuoteRef">SBRY.L</Origin> - Part 3
12/11/2014 08:01
- Part 3: For the preceding part double click ID:nRSL7745Wb
joint venture 4 - 4
Interest received 9 9 20
Dividends received 14 - -
Net cash (used in)/generated from investing activities (555) (323) 426
Cash flows from financing activities
Proceeds from issuance of ordinary shares 8 5 19
Proceeds from short-term borrowings - 100 200
Repayment of short-term borrowings (255) - (200)
Proceeds from long-term borrowings 530 50 250
Repayment of long-term borrowings (47) (63) (206)
Purchase of own shares (3) - -
Repayment of capital element of obligations under finance lease payments (15) (13) (25)
Interest elements of obligations under finance lease payments (5) (4) (8)
Dividends paid (234) (225) (320)
Net cash used in financing activities (21) (150) (290)
Net (decrease)/increase in cash and cash equivalents (178) 93 1,075
Net opening cash and cash equivalents 1,579 504 504
Closing cash and cash equivalents 9b 1,401 597 1,579
The notes on pages 29 to 46 form an integral part of these Condensed Consolidated Interim Financial Statements.
Group statement of changes in equity (unaudited)
for the 28 weeks to 27 September 2014
Called up share capital Share premium account Capital redemption and other reserves Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m £m
At 16 March 2014 545 1,091 807 3,560 6,003 2 6,005
(Loss) for the period - - - (344) (344) - (344)
Other comprehensive income/(expense):
Remeasurements on defined benefit pension schemes (net of tax) - - - 49 49 - 49
Available-for-sale financial assets fair value movements (net of tax):
Group - - 11 - 11 - 11
Cash flow hedges effective portion of changes in fair value (net of tax):
Group - - (4) - (4) - (4)
Joint ventures - - 1 - 1 - 1
Items reclassified from cash flow hedge reserve - - 17 - 17 - 17
Total comprehensive income/(expense) for the period ended 27 September 2014 - - 25 (295) (270) - (270)
Transactions with owners:
Dividends paid - - - (234) (234) - (234)
Amortisation of convertible bond equity component - - (2) 2 - - -
Share-based payment (net of tax) - - - 11 11 - 11
Purchase of own shares - - - (3) (3) - (3)
Purchase of non-controlling interest - - - 2 2 (2) -
Allotted in respect of share option schemes 2 7 - (1) 8 - 8
At 27 September 2014 547 1,098 830 3,042 5,517 - 5,517
At 17 March 2013 541 1,075 820 3,401 5,837 1 5,838
Profit for the period - - - 340 340 - 340
Other comprehensive (expense)/income:
Currency translation differences - - (1) - (1) - (1)
Remeasurements on defined benefit pension schemes (net of tax) - - - (202) (202) - (202)
Available-for-sale financial assets fair value movements (net of tax):
Group - - 23 - 23 - 23
Cash flow hedges effective portion of changes in fair value (net of tax):
Group - - (30) - (30) - (30)
Joint ventures - - 1 - 1 - 1
Items reclassified from cash flow hedge reserve - - (6) - (6) - (6)
Total comprehensive (expense)/income for the period ended 28 September 2013 - - (13) 138 125 - 125
Transactions with owners:
Dividends paid - - - (225) (225) - (225)
Amortisation of convertible bond equity component - - (4) 3 (1) - (1)
Share-based payment (net of tax) - - - 20 20 - 20
Allotted in respect of share option schemes 2 4 - (1) 5 - 5
At 28 September 2013 543 1,079 803 3,336 5,761 1 5,762
The notes on pages 29 to 46 form an integral part of these Condensed Consolidated Interim Financial Statements.
Group statement of changes in equity (continued) (unaudited)
for the 28 weeks to 27 September 2014
Called up share capital Share premium account Capital redemption and other reserves Retained earnings Total Non-controlling interests Total equity
£m £m £m £m £m £m £m
At 17 March 2013 541 1,075 820 3,401 5,837 1 5,838
Profit for the period - - - 716 716 - 716
Other comprehensive (expense)/income:
Currency translation differences - - (2) - (2) - (2)
Remeasurements on defined benefit pension schemes (net of tax) - - - (273) (273) - (273)
Available-for-sale financial assets fair value movements (net of tax):
Group - - 31 - 31 - 31
Cash flow hedges effective portion of changes in fair value (net of tax):
Group - - (43) - (43) - (43)
Joint ventures - - 2 - 2 - 2
Items reclassified from cash flow hedge reserve - - 4 - 4 - 4
Total comprehensive (expense)/income for the 52 weeks to 15 March 2014 - - (8) 443 435 - 435
Transactions with owners:
Dividends paid - - - (320) (320) - (320)
Amortisation of convertible bond equity component - - (5) 5 - - -
Share-based payment (net of tax) - - - 31 31 - 31
Shares issued - - - - - 1 1
Shares vested - - - 12 12 - 12
Allotted in respect of share option schemes 4 16 - (12) 8 - 8
At 15 March 2014 545 1,091 807 3,560 6,003 2 6,005
The notes on pages 29 to 46 form an integral part of these Condensed Consolidated Interim Financial Statements.
Notes to the Condensed Consolidated Interim Financial Statements (unaudited)
1 General information
J Sainsbury plc is a public limited company ('Company') incorporated in the United Kingdom, whose shares are publicly
traded on the London Stock Exchange. The Company is domiciled in the United Kingdom and its registered address is 33
Holborn, London EC1N 2HT, United Kingdom.
The Condensed Consolidated Interim Financial Statements are unaudited but have been reviewed by the auditors whose report
is set out on pages 48 to 49. The financial information presented herein does not amount to full statutory accounts within
the meaning of Section 434 of the Companies Act 2006. The Annual Report and Financial Statements 2014 have been filed with
the Registrar of Companies. The Independent Auditors' report on the Annual Report and Financial Statements 2014 was
unqualified and did not contain a statement under Section 498 of the Companies Act 2006.
The financial period represents the 28 weeks to 27 September 2014 (prior financial period 28 weeks to 28 September 2013;
prior financial year 52 weeks to 15 March 2014). The financial information comprises the results of the Company and its
subsidiaries (the 'Group') and the Group's interests in joint ventures and associates.
The Group's principal activities are grocery related retailing and retail banking.
2 Basis of preparation
The Interim Results, comprising the Condensed Consolidated Interim Financial Statements and the Interim Management Report,
have been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS
34 'Interim Financial Reporting' as adopted by the European Union.
The financial information contained in the Interim Results is presented in sterling, rounded to the nearest million (£m)
unless otherwise stated.
The financial information contained in the Condensed Consolidated Interim Financial Statements should be read in
conjunction with the Annual Report and Financial Statements 2014, which were prepared in accordance with International
Financial Reporting Standards ('IFRSs') as adopted by the European Union. The accounting policies have remained unchanged
since the prior financial year ended on 15 March 2014 other than the adoption of the accounting standards set out below
which have not had any impact on the interim financial statements.
The preparation of interim financial statements requires management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these Condensed Consolidated Interim Financial Statements, the significant judgements made by management in
applying the group's accounting policies and the key sources of estimation uncertainty were the same as those that applied
to the Consolidated Financial Statements for the year ended 15 March 2014, with the exception of changes in estimates that
are required in determining the provision for income taxes. Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to expected total annual earnings adjusted for the impact of the impairment and onerous
contract charge.
Sainsbury's Bank plc has been consolidated for six months to 31 August 2014 (15 March 2014: four weeks to 28 February 2014
and 46 weeks equity accounted as a joint venture, 28 September 2013: 28 weeks equity accounted as a joint venture).
Adjustments have been made for the effects of significant transactions or events that occurred between this date and the
Group's balance sheet date.
The Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in preparing the financial statements.
2 Basis of preparation (continued)
The Group has considered the following new standards, interpretations and amendments to published standards that are
effective for the Group for the financial year beginning 16 March 2014 and concluded that they are either not relevant to
the Group or that they do not have a significant impact on the Group's financial statements.
· IFRS 10, 'Consolidated financial statements'*
· IFRS 11, 'Joint arrangements'*
· IFRS 12, 'Disclosures of interests in other entities'*
· IAS 27 (revised 2011) 'Separate financial statements'*
· IAS 28 (revised 2011) 'Associates and joint ventures'*
· Amendments to IFRS 10, 11 and 12 on transition guidance*
· Amendment to IAS 36, 'Impairment of assets' on recoverable amount disclosures*
· Amendments to IAS 32 'Financial instruments: Presentation' on Financial instruments asset and liability offsetting*
· Amendment to IAS 39 'Financial instruments: Recognition and measurement', on novation of derivatives and hedge
accounting*
* These standards and interpretations have been endorsed by the EU.
3 Non-GAAP performance measures
Certain items recognised in reported profit before tax can vary significantly from year to year and therefore create
volatility in reported earnings which does not reflect the Group's underlying performance. Similarly, whilst defined
benefit pension scheme expenses may not vary significantly, they no longer relate to the Group's ongoing activities given
the closure of the defined benefit pension scheme to future accrual. The Directors believe that the 'underlying revenue',
'underlying profit before tax' ('UPBT') and 'underlying diluted and basic earnings per share' measures presented provide a
clear and consistent presentation of the underlying performance of Sainsbury's ongoing business for shareholders.
Underlying profit is not defined by IFRS and therefore may not be directly comparable with the 'adjusted' profit measures
of other companies. The adjusted items are:
· Profit/loss on disposal of properties;
· Investment property fair value movements - these reflect the difference between the fair value of an investment
property at the reporting date and its carrying amount at the previous reporting date;
· Retail financing fair value movements - includes net fair value movements on derivative financial instruments not
designated in a hedging relationship, fair value movements on early repayment of loans carried at amortised cost and hedge
ineffectiveness on fair value hedging relationships;
· Impairment of goodwill;
· The financing element of IAS 19 Revised;
· Defined benefit pension scheme expenses;
· Acquisition adjustments - these reflect the adjustments arising from the Sainsbury's Bank acquisition including the
fair value unwind, the remeasurement of the previously held equity interest in Sainsbury's Bank and the amortisation of
acquired intangibles; and
· One-off items - these are items which are material and infrequent in nature and do not relate to the Group's
underlying performance.
3 Non-GAAP performance measures (continued)
The adjustments made to reported (loss)/profit before tax to arrive at underlying profit before tax are:
28 weeks to 28 weeks to 52 weeks to
27 September 28 September 15 March
2014 2013 2014
£m £m £m
Underlying profit before tax 375 400 798
Profit on disposal of properties1 4 18 52
Investment property fair value movements 18 1 -
Retail financing fair value movements2 (12) (3) (8)
IAS 19 Revised pension financing charge (16) (14) (23)
Defined benefit pension scheme expenses (2) (5) (7)
Acquisition adjustments 6 - 18
One-off items3 (663) 36 68
Total adjustments (665) 33 100
(Loss)/profit before tax (290) 433 898
1 Profit on disposal of properties for the 28 weeks to 27 September 2014 comprised £2 million for the Group (28
September 2013: £18 million) and £2 million for the joint ventures (28 September 2013: £nil).
2 Retail financing fair value movements for the 28 weeks to 27 September 2014 comprised £(10) million for the Group
(28 September 2013: £(2) million) and £(2) million for the joint ventures (28 September 2013: £(1) million).
3 Includes impairment of goodwill.
One-off items
One-off items of £663 million for the 28 week period to 27 September 2014 includes: a non-cash impairment and onerous
contract charge of £628 million; costs of £23 million in relation to transitioning Sainsbury's Bank to a new, more flexible
banking platform and £12 million of pension compensation payments.
As part of adapting to our changing customer needs, we have reassessed our store pipeline and the potential to achieve an
appropriate return on capital, which resulted in a decision that some sites will no longer be developed. A charge of £287
million has been recognised within administration expenses, including £255 million of property plant and equipment which is
all land and buildings, £1 million of goodwill, and £31 million of onerous contract provisions.
A charge of £341 million has also been recognised, £310 million within cost of sales and £31 million within administrative
expenses, in relation to unprofitable and marginally profitable trading stores. This includes £283 million of property
plant and equipment, comprised of £162 million of land and buildings and £121 million of fixtures and fittings, £7 million
of intangible assets, comprised of £2 million goodwill and £5 million of other intangibles, and onerous lease provisions of
£51 million.
The recoverable amount of these assets has been determined as the higher of value-in-use or fair-value less costs to
dispose.
Compensation payments of £12 million were made to employees on transition to the Group's defined contribution pension
schemes resulting from the closure of the Sainsbury's defined benefit pension scheme to future accrual in the prior year.
4 Operating segments
The Group's businesses are organised into three operating segments:
· Retailing (Supermarkets and Convenience);
· Financial services (Sainsbury's Bank); and
· Property investments (The British Land Company PLC joint venture and Land Securities Group PLC joint venture).
Management have determined the operating segments based on the information provided to the Operating Board (the Chief
Operating Decision Maker for the Group) to make operational decisions on the management of the Group. All material
operations and assets are in the UK. The business of the Group is not subject to highly seasonal fluctuations although
there is an increase in retail trading in the period leading up to Christmas.
The Group has continued to include additional disclosure analysing the Group's financial services and property investment
joint ventures into separate reportable segments.
Revenue from operating segments is measured on a basis consistent with the revenue number in the income statement. All
revenue is generated by the sale of goods and services.
Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be
allocated on a reasonable basis.
The Operating Board assesses the performance of all segments on the basis of underlying profit before tax. The
reconciliation provided below reconciles underlying operating profit from each of the segments disclosed to profit before
tax.
28 weeks to 27 September 2014 Retailing£m Financial services£m Property investment£m Group£m
Segment revenue
Retail sales to external customers 12,497 - - 12,497
Financial services sales to external customers - 159 - 159
Underlying revenue 12,497 159 - 12,656
Acquisition adjustment fair value unwind1 - 11 - 11
Revenue 12,497 170 - 12,667
Underlying operating profit 388 35 - 423
Underlying finance income 10 - - 10
Underlying finance costs (64) - - (64)
Underlying share of post-tax profit from joint ventures and associates (2) - 8 6
Underlying profit before tax 332 35 8 375
Profit on disposal of properties 2 - 2 4
Investment property fair value movements - - 18 18
Retail financing fair value movements (10) - (2) (12)
IAS 19 Revised pension financing charge (16) - - (16)
Defined benefit pension scheme expenses (2) - - (2)
Acquisition adjustments - 6 - 6
One-off items (640) (23) - (663)
(Loss)/profit before tax (334) 18 26 (290)
Income tax expense (54)
Loss for the financial period (344)
Assets 12,085 3,993 - 16,078
Investment in joint ventures and associates 1 - 412 413
Segment assets 12,086 3,993 412 16,491
Segment liabilities (7,513) (3,461) - (10,974)
(10,974)
1 Represents fair value unwind on loans and advances to customers resulting from the Sainsbury's Bank acquisition.
4 Operating segments (continued)
28 weeks to 28 September 2013 Retailing£m Financial services£m Property investment£m Group£m
Segment revenue 12,684 - - 12,684
Underlying operating profit 440 - - 440
Underlying finance income 10 - - 10
Underlying finance costs (68) - - (68)
Underlying share of post-tax (loss)/profit from joint ventures and associates (2) 12 8 18
Underlying profit before tax 380 12 8 400
Profit on disposal of properties 18 - - 18
Investment property fair value movements - - 1 1
Retail financing fair value movements (2) - (1) (3)
IAS 19 Revised pension financing charge (14) - - (14)
Defined benefit pension scheme expenses (5) - - (5)
One-off items 53 (17) - 36
Profit before tax 430 (5) 8 433
Income tax expense (93)
Profit for the financial period 340
Assets 12,351 - - 12,351
Investment in joint ventures and associates 3 171 383 557
Segment assets 12,354 171 383 12,908
Segment liabilities (7,146) - - (7,146)
-
(7,146)
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