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Implementation of IFRS 16 Leases, Kesko Group’s restated comparison figures for January-December 2018

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IFRS 16 Leases, which took effect on 1 January 2019, addresses the definition, recognition and measurement of lease agreements and other information given in relation to lease agreements in financial statements. According to the standard, the lessee recognises in its balance sheet right-of-use assets and financial liabilities. This release presents Kesko Group’s restated comparison figures for January-December 2018, calculated in accordance with the standard that took effect on 1 January 2019.

Kesko Corporation has provided information on the implementation of IFRS 16 Leases in a 19 December 2018 release containing comparison figures for January-September 2018, in the 2018 financial statements release published on 6 February 2019, and in the 2018 financial statements published on 8 March 2019. The Group adopts the standard using a full retrospective method, and the impact on the date of transition (1 January 2018) has been calculated as if the standard had always been in effect. More detailed information on the impact of the standard has been provided in aforementioned releases.

In the consolidated balance sheet of 31 December 2018 drawn in accordance with IFRS 16, right-of-use-assets total €2,062 million, and the corresponding interest-bearing liabilities €2,294 million. The implementation of the standard results in a €96 million increase in the comparable operating profit for continuing operations in January-December 2018, as the operating profit is burdened by depreciation of right-of-use assets instead of rents. The interest costs on interest-bearing liabilities calculated in accordance with the standard are recognised recognised in financial items in the income statement, and these interest expenses amounted to €99 million for 2018. Consequently, the net impact of the implementation of the standard on the Group’s profit before taxes was €-2.3 million in 2018. The impact on the January-December comparable earnings per share was €-0.02/share.

Further information is available from Jukka Erlund, Executive Vice President, Chief Financial Officer, telephone +358 105 322 113, and Eva Kaukinen, Vice President, Group Controller, telephone +358 105 322 338.

Kesko Corporation

ATTACHMENTS 

Consolidated income statement 1-12/2018, 10-12/2018

Consolidated statement of financial position 31.12.2018

Consolidated statement of cash flows, condensed 1-12/2018

Group's performance indicators 10-12/2018, 1-12/2018

Segment information, continuing operations, 10-12/2018, 1-12/2018

Reconciliation of restated performance indicators to restated IFRS financial statements 10-12/2018, 1-12/2018

DISTRIBUTION
Nasdaq Helsinki Ltd
Main news media
www.kesko.fi 

Attachments

Consolidated income statement (€ million), condensed 1-12/2018
reported		 Impact of
IFRS 16 		1-12/2018
restated
Continuing operations 
Net sales 10,383 10,383
Cost of goods sold -8,990 -8,990
Gross profit 1,393 1,393
Other operating income 790 790
Employee benefit expense -694 -694
Depreciations and impairment charges -147 -315 -462
Other operating expenses -1,034 412 -622
Operating profit 308 96 404
Interest income and other finance income 14 14
Interest expense and other finance costs -12 -99 -111
Foreign exchange differences -3 -3
Share of results of associates and joint ventures -10 -10
Profit before tax 297 -2 295
Income tax -62 0 -62
Net profit for the period from continuing operations 235 -2 232
Discontinued operations 
Net profit for the period from discontinued operations -56 -56
Net profit for the period  179 -2 177
Attributable to
Owners of the parent 160 -2 158
Non-controlling interest 19 -1 18
Earnings per share (€) for profit attributable to owners of the parent 
Basic and diluted, continuing operations 2.18 -0.02 2.16
Basic and diluted, discontinued operations -0.56 -0.56
Basic and diluted, Group total 1.61 -0.02 1.59
Consolidated statement of comprehensive income
(€ million) 
Net profit for the period 179 -2 177
Continuing operations
Items that will not be reclassified subsequently to profit or loss 
Actuarial gains/losses  -2 -2
Items that may be reclassified subsequently to profit or loss 
Currency translation differences related to a foreign operation -10 0 -10
Cash flow hedge revaluation 2 2
Other items 0 0
Total other comprehensive income for the period, net of tax, continuing operations -10 0 -10
Total other comprehensive income for the period, net of tax, discontinued operations 35 35
Total comprehensive income for the period 204 -2 202
Attributable to 
Owners of the parent 186 -2 185
  Non-controlling interests 18 -1 17


Consolidated income statement (€ million), condensed 10-12/2018
reported		 Impact of
IFRS 16 		10-12/2018
restated
Continuing operations 
Net sales 2,655 2,655
Cost of goods sold -2,272 -2,272
Gross profit 383 383
Other operating income 207 207
Employee benefit expense -188 -188
Depreciations and impairment charges -41 -84 -124
Other operating expenses -282 108 -174
Operating profit 80 24 104
Interest income and other finance income 4 4
Interest expense and other finance costs -3 -23 -26
Foreign exchange differences -1 -1
Share of results of associates and joint ventures -7 -7
Profit before tax 73 1 74
Income tax -15 -1 -16
Net profit for the period from continuing operations 58 0 58
Discontinued operations 
Net profit for the period from discontinued operations -2 -2
Net profit for the period  56 0 56
Attributable to
Owners of the parent 52 0 52
Non-controlling interest 4 0 4
Earnings per share (€) for profit attributable to owners of the parent 
Basic and diluted, continuing operations 0.54 0.00 0.55
Basic and diluted, discontinued operations -0.02 -0.02
Basic and diluted, Group total 0.52 0.00 0.53
Consolidated statement of comprehensive income
(€ million) 
Net profit for the period 56 0 56
Continuing operations
Items that will not be reclassified subsequently to profit or loss 
Actuarial gains/losses  -14 -14
Items that may be reclassified subsequently to profit or loss 
Currency translation differences related to a foreign operation -9 0 -9
Cash flow hedge revaluation 1 1
Other items - -
Total other comprehensive income for the period, net of tax, continuing operations -22 0 -22
Total other comprehensive income for the period, net of tax, discontinued operations 0 0
Total comprehensive income for the period  34 0 34
Attributable to 
Owners of the parent 30 0 31
  Non-controlling interests 4 0 4


Consolidated statement of financial position (€ million), condensed 31.12.2018 
reported 		 Impact of
IFRS 16		 31.12.2018
restated 
ASSETS
Non-current assets
Tangible assets 1,191 1,191
Intangible assets 492 492
Right-of use assets* 5 2,057 2,062
Shares in associates and joint ventures and other financial assets 144 144
Loans and receivables 71 3 74
Pension assets 148 148
Total 2,052 2,060 4,112
Current assets
Inventories 913 913
Trade receivables 820 820
Other receivables 197 197
Financial assets at fair value through profit or loss 51 51
Financial assets at amortised cost 59 59
Cash and cash equivalents 139 139
Total 2,180 2,180
Non-current assets classified as held for sale 71 4 76
Total assets 4,303 2,064 6,367
EQUITY AND LIABILITIES
Equity 2,085 -171 1,914
Non-controlling interests 113 -6 107
Total equity 2,198 -177 2,021
Non-current liabilities
Interest-bearing liabilities 175 175
Lease liabilities* 3 1,980 1,983
Non-interest-bearing liabilities 29 29
Deferred tax liabilities 45 -40 5
Pension obligations 0 0
Provisions 27 -3 24
Total 280 1,937 2,216
Current liabilities
Interest-bearing liabilities 231 231
Lease liabilities* 2 309 312
Trade payables 983 983
Other non-interest-bearing liabilities 568 1 569
Provisions 25 -6 19
Total 1,810 305 2,114
Liabilities related to non-current assets held for sale 15 15
Total equity and liabilities  4,303 2,064 6,367

* Tangible assets and corresponding liabilities that were previously categorised as finance lease assets and liabilities have been moved to the lines “Right-of use assets” and “Lease liabilities” in the ”31.12.2018 reported” column.

Consolidated statement of cash flows (€ million), condensed 
1-12/2018
reported 		 Impact of
IFRS 16 		 1-12/2018
restated 
Net cash from operating activities, total  414 311 725
Net cash used in investing activities, total -209 - -209
Net cash used in financing activities, total -234 -311 -546
Change in cash and cash equivalents -30 0 -30


Group’s performance indicators 10-12/2018 
reported		 10-12/2018 
restated 		1-12/2018 
reported 		1-12/2018 
restated
EBITDA, comparable, € million*  129.0 232.1 472.4 875.8
Operating profit, € million*  79.8 103.8 307.9 404.3
Operating profit, comparable, € million* 90.5 114.5 332.2 428.5
Operating margin, comparable, %* 3.4 4.3 3.2 4.1
Finance income/costs, € million* 0.0 -23.1 -1.1 -99.7
Profit before tax, € million* 72.6 73.6 296.8 294.5
Profit before tax, comparable, € million* 89.8 90.8 327.5 325.2
Return on capital employed, %* 13.0 9.2 12.9 9.2
Return on capital employed, comparable, %* 14.7 10.2 14.0 9.8
Return on equity, % 10.2 11.2 8.1 8.7
Return on equity, comparable, % 13.3 14.5 11.7 12.5
Equity ratio, % 51.4 31.9 51.4 31.9
Gearing, % 7.4 121.3 7.4 121.3
Interest-bearing net debt, € million 162 2,451 162 2,451
Earnings per share, basic and diluted, €
   Continuing operations 0.54 0.55 2.18 2.16
   Discontinued operations -0.02 -0.02 -0.56 -0.56
   Group total 0.52 0.53 1.61 1.59
Earnings per share, comparable, basic, €
   Continuing operations 0.70 0.70 2.47 2.45

*Continuing operations

Segment information, continuing operations

Operating profit by segment, (€ million) 10-12/2018 1-12/2018 
Grocery trade 
    Reported 69.9 219.3
   Impact of IFRS 16 on leases and depreciations 16.8 66.6
    Restated 86.7 285.9
Building and technical trade 
    Reported 13.5 84.9
   Impact of IFRS 16 on leases and depreciations 6.9 28.4
    Restated 20.4 113.3
Car trade 
    Reported 6.8 34.4
   Impact of IFRS 16 on leases and depreciations 0.2 0.7
    Restated 7.0 35.1
Common functions and eliminations 
    Reported -10.5 -30.6
   Impact of IFRS 16 on leases and depreciations 0.2 0.7
    Restated -10.3 -30.0
Continuing operations, total
   Reported 79.8 307.9
   Impact of IFRS 16 on leases and depreciations 24.0 96.4
   Restated  103.8 404.3


Operating profit by segment, comparable, (€ million) 10-12/2018 1-12/2018 
Grocery trade 
    Reported 71.8 228.0
   Impact of IFRS 16 on leases and depreciations 16.8 66.6
    Restated 88.6 294.5
Building and technical trade 
    Reported 21.3 98.4
   Impact of IFRS 16 on leases and depreciations 6.9 28.4
    Restated 28.3 126.8
Car trade 
    Reported 7.0 34.5
   Impact of IFRS 16 on leases and depreciations 0.2 0.7
    Restated 7.2 35.2
Common functions and eliminations 
    Reported -9.6 -28.7
   Impact of IFRS 16 on leases and depreciations 0.2 0.7
    Restated -9.5 -28.1
Continuing operations, total
   Reported 90.5 332.2
   Impact of IFRS 16 on leases and depreciations 24.0 96.4
   Restated 114.5 428.5


Operating margin by segment, comparable (%) 10-12/2018 1-12/2018 
Grocery trade 
    Reported 5.0 4.2
    Restated 6.2 5.5
Building and technical trade 
    Reported 2.1 2.4
    Restated 2.7 3.1
Car trade 
    Reported 3.7 3.9
    Restated 3.8 3.9
Continuing operations, total
   Reported 3.4 3.2
   Restated 4.3 4.1


EBITDA by segment, comparable, (€ million) 10-12/2018 1-12/2018 
Grocery trade 
    Reported 90.0 294.5
   Impact of IFRS 16 on leases 66.4 263.4
    Restated 156.5 557.9
Building and technical trade 
    Reported 30.4 133.5
   Impact of IFRS 16 on leases 35.0 133.5
    Restated 65.5 267.0
Car trade 
    Reported 10.7 46.7
   Impact of IFRS 16 on leases 1.0 3.9
    Restated 11.7 50.6
Common functions and eliminations 
    Reported -2.1 -2.4
   Impact of IFRS 16 on leases 0.7 2.7
    Restated -1.5 0.2
Continuing operations, total
   Reported 129.0 472.4
   Impact of IFRS 16 on leases 103.1 403.4
   Restated 232.1 875.8


Capital employed by segment, cumulative average,(€ million)  10-12/2018 1-12/2018 
Grocery trade 
    Reported 901 908
    Restated 2,228 2,243
Building and technical trade 
    Reported 1,033 951
    Restated 1,726 1,611
Car trade 
    Reported 162 163
    Restated 168 170
Common functions and eliminations 
    Reported 365 356
Restated 368 359
Continuing operations, total
   Reported 2,462 2,378
   Restated 4,490 4,384


Return on capital employed by segment, comparable (%) 1-12/2018
Grocery trade 
    Reported 25.1
    Restated 13.1
Building and technical trade 
    Reported 10.3
    Restated 7.9
Car trade 
    Reported 21.2
    Restated 20.8
Continuing operations, total
   Reported 14.0
   Restated 9.8

Reconciliation of restated performance indicators to restated IFRS financial statements

€ million 10-12/2018 1-12/2018
Continuing operations
Items affecting comparability
Gains on disposal 0.0 6.7
Losses on disposal - -0.1
Impairment charges -2.2 -5.6
Structural arrangements -8.5 -25.3
Items in operating profit affecting comparability  -10.7 -24.2
Items in financial items affecting comparability -6.5 -6.5
Items in income taxes affecting comparability 1.8 4.5
Items in net profit attributable to non-controlling interests affecting comparability - -3.2
Total items affecting comparability -15.4 -29.4
Items in EBITDA affecting comparability   -4.0 -9.2
Operating profit, comparable 
Operating profit 103.8 404.3
Net of
Items in operating profit affecting comparability -10.7 -24.2
Operating profit, comparable 114.5 428.5


EBITDA 
Operating profit 103.8 404.3
Plus
Depreciation and impairment charges 124.3 462.3
EBITDA 228.1 866.6
EBITDA, comparable
EBITDA 228.1 866.6
Net of
Items in EBITDA affecting comparability -4.0 -9.2
EBITDA, comparable 232.1 875.8
Profit before tax, comparable 
Profit before tax 73.6 294.5
Net of
Items in operating profit affecting comparability -10.7 -24.2
Items in financial items affecting comparability -6.5 -6.5
Profit before tax, comparable 90.8 325.2
Net profit, comparable 
Profit before tax, comparable 90.8 325.2
Net of
Income tax 15.5 62.1
Items in income tax affecting comparability 1.8 4.5
Net profit, comparable 73.4 258.7
Net profit attributable to owners of the parent, comparable 
Net profit, comparable 73.4 258.7
Net of
Net profit attributable to non-controlling interests 3.9 18.5
Items in net profit attributable to non-controlling interests affecting comparability - -3.2
Net profit attributable to owners of the parent, comparable 69.5 243.4
Earnings per share, comparable, € 
Net profit attributable to the owners of the parent, comparable 69.5 243.4
Average number of shares, basic, 1,000 pcs 99,182 99,182
Earnings per share, comparable, € 0.70 2.45
Group 
Equity ratio, % 
Shareholders’ equity 2,021 2,021
Total assets 6,367 6,367
Advances received 26 26
Equity ratio, % 31.9 31.9


Return on capital employed, comparable, %  1-12/2018
Continuing operations 
Operating profit, comparable 428.5
Capital employed, average 4,384
Return on capital employed, comparable, %  9.8

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