RNS Number : 0269Z
Kingfisher PLC
15 September 2015
 



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 








Half year ended 1 August 2015

 


Half year ended 2 August 2014

(restated - note 2)



Before

Exceptional



Before

Exceptional




exceptional

items



exceptional

items


£ millions

Notes

items

(note 5)

Total


items

(note 5)

Total

Sales

4

5,492

-

5,492


5,768

-

5,768

Cost of sales


(3,474)

-

(3,474)


(3,660)

-

(3,660)

Gross profit


2,018

-

2,018


2,108

-

2,108

Selling and distribution expenses


(1,360)

(151)

(1,511)


(1,446)

(11)

(1,457)

Administrative expenses


(288)

-

(288)


(297)

-

(297)

Other income


15

160

175


19

21

40

Share of post-tax results of joint ventures and associates

 

 

-

-

-


2

-

2

Operating profit


385

9

394


386

10

396










Analysed as:









Retail profit

410

9

419


419

10

429

Central costs


(19)

-

(19)


(19)

-

(19)

Share of interest and tax of joint ventures and associates


(2)

-

(2)


(3)

-

(3)

B&Q China operating loss


(4)

-

(4)


(11)

-

(11)










Finance costs


(11)

-

(11)


(6)

-

(6)

Finance income


3

-

3


3

-

3

Net finance costs

6

(8)

-

(8)


(3)

-

(3)

Profit before taxation


377

9

386


383

10

393

Income tax expense

7

(97)

29

(68)


(104)

1

(103)

Profit for the period


280

38

318


279

11

290










Attributable to:









Equity shareholders of the Company




318




291

Non-controlling interests




-




(1)





318




290










Earnings per share

8








Basic




13.6p




12.3p

Diluted




13.6p




12.2p

Adjusted basic




12.3p




12.3p

Adjusted diluted




12.3p




12.2p

 

The proposed interim ordinary dividend for the period ended 1 August 2015 is 3.18p per share.



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

 



Year ended 31 January 2015

(restated - note 2)

 



Before

Exceptional


 



exceptional

items


 

£ millions

Notes

items

(note 5)

Total

 

Sales

4

10,966

-

10,966

 

Cost of sales


(6,918)

-

(6,918)

 

Gross profit


4,048

-

4,048

 

Selling and distribution

expenses


(2,835)

(32)

(2,867)

 

Administrative expenses


(571)

-

(571)

 

Other income


40

(3)

37

 

Share of post-tax results of joint

ventures and associates


5

-

5

 

Operating profit


687

(35)

652

 






 

Analysed as:





 

Retail profit

4

742

(35)

707

 

Central costs


(40)

-

(40)

 

Share of interest and tax of joint

ventures and associates


(6)

-

(6)

 

B&Q China operating loss


(9)

-

(9)

 






 

Finance costs


(13)

-

(13)

 

Finance income


5

-

5

 

Net finance costs

6

(8)

-

(8)

 

Profit before taxation


679

(35)

644

 

Income tax expense

7

(177)

106

(71)

 

Profit for the year


502

71

573

 






 

Attributable to:





 

Equity shareholders of the Company




573

 

Non-controlling interests




-

 





573

 






 

Earnings per share

8




 

Basic




24.3p

 

Diluted




24.2p

 

Adjusted basic




21.3p

 

Adjusted diluted




21.2p

 



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

£ millions

 

 

Notes

Half year ended

1 August 2015

Half year ended

2 August 2014
(restated - note 2)

Year ended

31 January 2015

Profit for the period


318

290

573

Actuarial (losses)/gains on post employment benefits

11

(72)

42

175

Tax on items that will not be reclassified


23

(39)

(85)

Total items that will not be reclassified

subsequently to profit or loss


(49)

3

 

90

Currency translation differences





Group


(136)

(77)

(308)

Joint ventures and associates


(3)

-

(2)

Transferred to income statement

16

(7)

-

-

Cash flow hedges





Fair value (losses)/gains


(21)

(6)

70

(Gains)/losses transferred to inventories


(30)

16

(5)

Tax on items that may be reclassified


12

(3)

(14)

Total items that may be reclassified

subsequently to profit or loss


(185)

(70)

 

(259)

Other comprehensive income for the period


(234)

(67)

(169)

Total comprehensive income for the period


84

223

404






Attributable to:





Equity shareholders of the Company


84

224

403

Non-controlling interests


-

(1)

1



84

223

404



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 


Attributable to equity shareholders of the Company

 

 

£ millions

Share capital

 

Share

premium

Own shares held

 

Retained earnings

Other reserves (note 13)

Total

Non-controlling interests

Total equity

At 1 February 2015 (restated - note 2)

369

2,214

(26)

3,652

11

6,220

10

6,230

Profit for the period

-

-

-

318

-

318

-

318

Other comprehensive income for the period

-

-

-

(49)

(185)

(234)

-

(234)

Total comprehensive income for the period

-

-

-

269

(185)

84

-

84

Disposal of B&Q China (note 16)

-

-

-

-

-

-

(10)

(10)

Share-based compensation

-

-

-

7

-

7

-

7

New shares issued under share schemes

-

1

-

-

-

1

-

1

Own shares issued under share schemes

-

-

15

(14)

-

1

-

1

Purchase of own shares for cancellation

(6)

-

-

(111)

6

(111)

-

(111)

Purchase of own shares for ESOP trust

-

-

(11)

-

-

(11)

-

(11)

Dividends

-

-

-

(160)

-

(160)

-

(160)

At 1 August 2015

363

2,215

(22)

3,643

(168)

6,031

-

6,031










At 2 February 2014 (restated - note 2)

373

2,209

(35)

3,486

266

6,299

9

6,308

Profit for the period (restated - note 2)

-

-

-

291

-

291

(1)

290

Other comprehensive income for the period

-

-

-

3

(70)

(67)

-

(67)

Total comprehensive income for the period

-

-

-

294

(70)

224

(1)

223

Share-based compensation

-

-

-

6

-

6

-

6

New shares issued under share schemes

-

1

-

-

-

1

-

1

Own shares issued under share schemes

-

-

11

(10)

-

1

-

1

Purchase of own shares for cancellation

(1)

-

-

(35)

1

(35)

-

(35)

Dividends

-

-

-

(259)

-

(259)

-

(259)

At 2 August 2014 (restated - note 2)

372

2,210

(24)

3,482

197

6,237

8

6,245










At 2 February 2014 (restated - note 2)

373

2,209

(35)

3,486

266

6,299

9

6,308

Profit for the year

-

-

-

573

-

573

-

573

Other comprehensive income for the year

-

-

-

90

(260)

(170)

1

(169)

Total comprehensive income for the year

-

-

-

663

(260)

403

1

404

Share-based compensation

-

-

-

11

-

11

-

11

New shares issued under share schemes

1

5

-

-

-

6

-

6

Own shares issued under share schemes

-

-

26

(24)

-

2

-

2

Purchase of own shares for cancellation

(5)

-

-

(150)

5

(150)

-

(150)

Purchase of own shares for ESOP trust

-

-

(17)

-

-

(17)

-

(17)

Dividends

-

-

-

(334)

-

(334)

-

(334)

At 31 January 2015 (restated - note 2)

369

2,214

(26)

3,652

11

6,220

10

6,230



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions

Notes

At 1 August 2015

At 2 August 2014

(restated - note 2)

At 31 January 2015

(restated - note 2)

Non-current assets





Goodwill


2,412

2,416

2,414

Other intangible assets

10

270

240

258

Property, plant and equipment

10

3,088

3,526

3,203

Investment property

10

53

40

30

Investments in joint ventures and associates


19

26

28

B&Q China investment

12

60

-

-

Post employment benefits

11

140

28

194

Deferred tax assets


9

11

10

Derivative assets

12

31

33

52

Other receivables


7

14

7



6,089

6,334

6,196

Current assets





Inventories


2,064

2,199

2,021

Trade and other receivables


558

610

537

Derivative assets

12

33

11

70

Current tax assets


7

11

6

Short-term deposits


123

167

48

Cash and cash equivalents


537

627

561

Assets held for sale


-

11

274



3,322

3,636

3,517

Total assets


9,411

9,970

9,713

Current liabilities





Trade and other payables


(2,431)

(2,687)

(2,337)

Borrowings

12

(102)

(103)

(105)

Derivative liabilities

12

(17)

(18)

(10)

Current tax liabilities


(97)

(203)

(87)

Provisions


(40)

(9)

(13)

Liabilities held for sale


-

-

(195)



(2,687)

(3,020)

(2,747)

Non-current liabilities





Other payables


(62)

(85)

(64)

Borrowings

12

(168)

(218)

(232)

Deferred tax liabilities


(276)

(286)

(324)

Provisions


(106)

(42)

(34)

Post employment benefits

11

(81)

(74)

(82)



(693)

(705)

(736)

Total liabilities


(3,380)

(3,725)

(3,483)

Net assets


6,031

6,230






Equity





Share capital


363

372

369

Share premium


2,215

2,210

2,214

Own shares held in ESOP trust


(22)

(24)

(26)

Retained earnings


3,643

3,482

3,652

Other reserves

13

(168)

197

11

Total attributable to equity shareholders of the Company


6,031

6,237

6,220

Non-controlling interests


-

8

10

Total equity


6,031

6,245

6,230

 

The interim financial report was approved by the Board of Directors on 14 September 2015 and signed on its behalf by:

 

Véronique Laury, Chief Executive Officer

Karen Witts, Chief Financial Officer

 

 

KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

 

£ millions

Notes

Half year ended

1 August 2015

Half year ended

2 August 2014

Year ended

31 January 2015

Operating activities





Cash generated by operations

14

531

512

806

Income tax paid


(65)

(65)

(146)

Net cash flows from operating activities


466

447

660






Investing activities





Purchase of property, plant and equipment and intangible assets


(177)

(119)

(275)

Disposal of property, plant and equipment and property held for sale


2

47

50

Disposal of property company

16

18

-

-

Disposal of B&Q China

16




-     Proceeds (net of costs and cash disposed)


105

-

-

-     Deposit (repaid)/received


(12)

-

12

Disposal of Hornbach

16

-

198

198

Increase in short-term deposits


(75)

(167)

(48)

Interest received


1

2

5

Dividends received from joint ventures and associates


6

7

7

Net cash flows from investing activities


(132)

(32)

(51)






Financing activities





Interest paid


(6)

(3)

(10)

Interest element of finance lease rental payments


(2)

(2)

(3)

Repayment of bank loans


(1)

(2)

(2)

Repayment of Medium Term Notes and

other fixed term debt


-

-

(73)

Payment on financing derivatives


-

-

(9)

Capital element of finance lease rental payments


(6)

(7)

(14)

New shares issued under share schemes


1

1

6

Own shares issued under share schemes


1

1

2

Purchase of own shares for ESOP trust


(11)

-

(17)

Purchase of own shares for cancellation


(139)

(35)

(100)

Special dividend paid to equity shareholders of the Company


-

(100)

(100)

Ordinary dividends paid to equity shareholders of the Company


(160)

(159)

(234)

Net cash flows from financing activities


(323)

(306)

(554)






Net increase in cash and cash equivalents and bank overdrafts, including amounts classified as held for sale


11

109

55

Cash and cash equivalents and bank overdrafts, including amounts classified as held for sale, at beginning of period


527

534

534

Exchange differences


(44)

(31)

(62)

Cash and cash equivalents and bank overdrafts, including amounts classified as held for sale, at end of period

Cash and cash equivalents classified as held for sale (B&Q China)

 

 

 

494

 

-

612

 

-

 

527

 

(57)

Cash and cash equivalents and bank overdrafts at end of period

15

494

612

470



KINGFISHER PLC

2015/16 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.         General information

Kingfisher plc ('the Company'), its subsidiaries, joint ventures and associates (together 'the Group') supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom and continental Europe.

 

Kingfisher plc is a company incorporated in the United Kingdom. The address of its registered office is 3 Sheldon Square, Paddington, London W2 6PX. The Company is listed on the London Stock Exchange.

 

The interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Audited statutory accounts for the year ended 31 January 2015 were approved by the Board of Directors on 30 March 2015 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006. The interim financial report has been reviewed, not audited, and was approved by the Board of Directors on 14 September 2015.

 

2.         Basis of preparation

 

The interim financial report for the 26 weeks ended 1 August 2015 ('the half year') has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting', as adopted by the European Union. It should be read in conjunction with the annual financial statements for the year ended 31 January 2015, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. Where comparatives are given, '2014/15' refers to the prior half year.

 

The Directors of Kingfisher plc, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed consolidated financial statements for the half year ended 1 August 2015.

 

The following statutory (GAAP) measures have been restated following the adoption of IFRIC 21 'Levies', in the current period (see note 3):


Half year ended 2 August 2014

Year ended 31 January 2015

£ millions

Before restatement

IFRIC 21

After

restatement

Before restatement

IFRIC 21

After

restatement

Selling and distribution expenses

(1,475)

18

(1,457)

(2,867)

-

(2,867)

Income tax expense

(98)

(5)

(103)

(71)

-

(71)

Trade and other payables

(2,691)

4

(2,687)

(2,323)

(14)

(2,337)

Deferred tax liabilities

(286)

-

(286)

(329)

5

(324)

Retained earnings at beginning of period

3,495

(9)

3,486

3,495

(9)

3,486

Retained earnings at end of period

3,478

4

3,482

3,661

(9)

3,652

Basic earnings per share

11.8p

0.5p

12.3p

24.3p

-

24.3p

Diluted earnings per share

11.7p

0.5p

12.2p

24.2p

-

24.2p

 

In addition to the adoption of IFRIC 21, the following adjusted (non-GAAP) measures have also been restated in the comparatives to exclude B&Q China's operating results, in order to improve comparability following the disposal of the Group's controlling interest in the current period (see note 16):

 


Half year ended 2 August 2014

Year ended 31 January 2015

£ millions

Before restatement

IFRIC 21

B&Q China

After

restatement

Before restatement

 

IFRIC 21

B&Q China

After

restatement

Adjusted sales

5,768

-

(163)

5,605

10,966

-

(361)

10,605

Retail profit

390

18

11

419

733

-

9

742

Adjusted pre-tax profit

364

18

11

393

675

-

9

684

Adjusted earnings

267

13

11

291

493

-

9

502

Adjusted basic earnings per share

11.3p

0.5p

0.5p

12.3p

20.9p

-

0.4p

21.3p

Adjusted diluted earnings per share

11.2p

0.5p

0.5p

12.2p

20.8p

-

0.4p

21.2p

Segment assets

3,554

4

(19)

3,539

3,679

(9)

(72)

3,598

 

The IFRIC 21 and B&Q China restatements have only impacted the France and Other International segments respectively. Refer to the data tables for the full year 2014/15 results at www.kingfisher.com for the impact of the restatements on quarterly segmental sales and retail profit comparatives.

 

There have been no changes in estimates of amounts reported in prior periods that have had a material effect in the current period.

 

Principal rates of exchange against Sterling

 


Half year ended
1 August 2015

Half year ended
2 August 2014

Year ended
31 January 2015


Average

rate

Period end

rate

Average

rate

Period end

rate

Average

rate

Year end

rate

Euro

1.38

1.41

1.23

1.25

1.25

1.33

US Dollar

1.53

1.57

1.68

1.68

1.64

1.50

Polish Zloty

5.70

5.87

5.11

5.24

5.23

5.57

Russian Rouble

86.58

95.18

59.05

60.18

66.70

105.58

 

Use of non-GAAP measures

 

In the reporting of financial information, the Group uses certain measures that are not required under IFRS, the generally accepted accounting principles (GAAP) under which the Group reports. Kingfisher believes that adjusted sales, retail profit, adjusted pre-tax profit, effective tax rate, adjusted earnings and adjusted earnings per share provide additional useful information on underlying trends to shareholders. These and other non-GAAP measures such as net debt/cash are used by Kingfisher for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'exceptional items', 'adjusted', 'effective tax rate' and 'net debt/cash' are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

 

Retail profit is defined as continuing operating profit before central costs (principally the costs of the Group's head office), exceptional items, amortisation of acquisition intangibles and the Group's share of interest and tax of joint ventures and associates. 2014/15 comparatives have been restated for the adoption of IFRIC 21 (impacting only the half year) and to exclude B&Q China's operating results.

 

The separate reporting of non-recurring exceptional items, which are presented as exceptional within their relevant income statement category, helps provide an indication of the Group's underlying business performance. The principal items which are included as exceptional items are:

·      non-trading items included in operating profit such as profits and losses on the disposal, closure or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group's trading activities;

·      profits and losses on the disposal of properties and impairment losses on non-operational assets; and

·      the costs of significant restructuring and incremental acquisition integration costs.

 

The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and prior year tax items (including the impact of changes in tax rates on deferred tax). 2014/15 comparatives have been restated for the adoption of IFRIC 21 (impacting only the half year) and to exclude B&Q China's operating results. Financing fair value remeasurements represent changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value hedge relationships. Financing derivatives are those that relate to underlying items of a financing nature.

 

The effective tax rate is calculated as continuing income tax expense excluding tax on exceptional items and adjustments in respect of prior years and the impact of changes in tax rates on deferred tax, divided by continuing profit before taxation excluding exceptional items.

 

Net debt/cash comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and short-term deposits. It excludes balances classified as assets and liabilities held for sale.

 

3.         Accounting policies

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2015, as described in note 2 of those financial statements, with the exception of the adoption in the period of IFRIC 21 'Levies'.

 

IFRIC 21 sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation changes the timing of when such liabilities are recognised, particularly in connection with levies that are triggered by circumstances on a specific date. This applies from the start of the current financial year, with restatement of 2014/15 comparatives. It will have no material impact on the annual results, but has had a significant impact on the phasing of operating profit (and related deferred tax) in France, with fewer costs recognised in the first half (and third quarter) but more costs to be recognised in the final quarter of the year. It has also resulted in a restatement of balance sheet payables and deferred tax.

 

Taxes on income for interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

The most significant areas of accounting estimates and judgements are set out in note 3 of the annual financial statements for the year ended 31 January 2015 and remain unchanged.

 

The directors intend to prepare the Kingfisher plc parent company financial statements under the accounting standard FRS 101, 'Reduced disclosure framework', for the first time for the year ended 30 January 2016. These have previously been prepared under existing UK GAAP but will need to be prepared under FRS 101 or an alternative standard in 2015/16. FRS 101 allows qualifying UK companies to apply the recognition and measurement requirements of IFRS, but with reduced disclosures, and the directors consider it is in the best interests of the Group for Kingfisher plc to adopt this standard. A shareholder or shareholders holding in aggregate 5% or more of the total issued shares in Kingfisher plc may object to the use of the disclosure exemptions, in writing, to the Company Secretary at the registered office no later than 31 December 2015. The consolidated financial statements for the Group will continue to be prepared under IFRS as adopted by the European Union.

 

4.         Segmental analysis

 

Income statement


Half year ended 1 August 2015

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Adjusted sales

1,976

2,527

508

371

5,382

B&Q China sales





110

Sales





5,492

Retail profit

167

194

53

(4)

410

Central costs





(19)

Share of interest and tax of joint ventures and associates





(2)

B&Q China operating loss





(4)

Exceptional items





9

Operating profit





394

Net finance costs





(8)

Profit before taxation





386

 


Half year ended 2 August 2014 (restated - note 2)

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Adjusted sales

2,205

2,419

554

427

5,605

B&Q China sales





163

Sales





5,768

Retail profit

200

166

54

(1)

419

Central costs





(19)

Share of interest and tax of joint ventures and associates





(3)

B&Q China operating loss





(11)

Exceptional items





10

Operating profit





396

Net finance costs





(3)

Profit before taxation





393

 


Year ended 31 January 2015 (restated - note 2)

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Adjusted sales

4,132

4,600

1,055

818

10,605

B&Q China sales





361

Sales





10,966

Retail profit

349

276

118

(1)

742

Central costs





(40)

Share of interest and tax of joint ventures and associates





(6)

B&Q China operating loss





(9)

Exceptional items





(35)

Operating profit





652

Net finance costs





(8)

Profit before taxation





644



Balance sheet


At 1 August 2015

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Segment assets

1,162

1,343

463

340

3,308

B&Q China investment





60

Central liabilities





(184)

Goodwill





2,412

Net cash





435

Net assets





6,031

 


At 2 August 2014 (restated - note 2)

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Segment assets

1,283

1,366

518

372

3,539

B&Q China assets (excluding cash) and liabilities





19

Central liabilities





(225)

Goodwill





2,416

Net cash





496

Net assets





6,245

 


At 31 January 2015 (restated - note 2)

£ millions

France

 

UK & Ireland

Other International

 

Total

Poland

Other

Segment assets

1,231

1,543

501

323

3,598

B&Q China assets (including cash) and liabilities held for sale





72

Central liabilities





(183)

Goodwill





2,414

Net cash





329

Net assets





6,230

 

The 'Other International' segment consists of Poland, Spain, Portugal, Germany, Russia, Romania and the joint venture Koçtaş in Turkey. Poland has been shown separately due to its significance.

 

Central costs principally comprise the costs of the Group's head office. Central liabilities comprise unallocated head office and other central items including pensions, interest and tax.

 

The Group's sales, although generally not highly seasonal on a half-yearly basis, do increase over the Easter period and during the summer months leading to slightly higher sales usually being recognised in the first half of the year.

5.         Exceptional items

 

 

Half year ended

Half year ended

Year ended

£ millions

1 August 2015

2 August 2014

31 January 2015

Included within selling and distribution expenses




UK & Ireland and continental Europe restructuring

(151)

(6)

(17)

Transaction costs

-

(5)

(15)


(151)

(11)

(32)

Included within other income




Profit on disposal of B&Q China

143

-

-

Profit on disposal of property company

16

-

-

Disposal of properties and non-operational asset losses

1

21

(3)


160

21

(3)

Exceptional items before tax

9

10

(35)

Exceptional tax items

29

1

106

Exceptional items

38

11

71

 

Current period exceptional items include a £151m restructuring charge relating to the transformation of B&Q in the UK and the announced closure of two loss-making stores in France. In the UK, the transformation of B&Q involves the closure of stores in over-spaced catchments and optimisation of vacant space, and productivity initiatives aimed at delivering a simpler, more efficient business with a lower cost operating model. The exceptional loss includes lease exit costs, store asset impairments, inventory write downs and employee redundancy costs. In the prior year, transformation costs amounted to £17m. In France, the exceptional charge includes lease exit costs and store asset impairments.

 

In the prior year, exceptional transaction costs were incurred relating to the potential acquisition of Mr Bricolage, which ultimately did not proceed, and the agreement to dispose of a controlling stake in the B&Q China business.

 

Profits were recorded in the period on the disposal of the Group's controlling 70% stake in B&Q China and the sale of a property company. Refer to note 16 for further information.

 

Exceptional tax items for the period amount to a credit of £29m. In the prior year, exceptional tax credits included the tax impact on exceptional items and the release of prior year provisions, which had either been agreed with the tax authorities, reassessed or time expired.

 

6.         Net finance costs


Half year ended

Half year ended

Year ended  

£ millions

1 August 2015

2 August 2014

31 January 2015

Bank overdrafts and bank loans

(5)

(3)

(7)

Medium Term Notes and other fixed term debt

(1)

(1)

(3)

Finance leases

(2)

(2)

(3)

Financing fair value remeasurements

(3)

1

4

Net interest expense on defined benefit pension schemes

-

(1)

(3)

Other interest payable

-

-

(1)

Finance costs

(11)

(6)

(13)





Cash and cash equivalents and short-term deposits

1

3

5

Net interest income on defined benefit pension schemes

2

-

-

Finance income

3

3

5





(8)

(3)

(8)

 

7.         Income tax expense



Half year ended


£ millions

Half year ended
1 August 2015

2 August 2014

(restated - note 2)

Year ended
31 January  2015

UK corporation tax




Current tax on profits for the period

(15)

(35)

(46)

Adjustments in respect of prior years

-

-

96


(15)

(35)

50

Overseas tax




Current tax on profits for the period

(59)

(64)

(138)

Adjustments in respect of prior years

1

(1)

6


(58)

(65)

(132)

Deferred tax




Current period

5

(3)

12

Adjustments in respect of changes in tax rates

-

-

(1)


5

(3)

11





Income tax expense

(68)

(103)

(71)

 

The effective rate of tax on profit before exceptional items and excluding prior year tax adjustments and the impact of changes in tax rates on deferred tax is 26% (2014/15: 27%), representing the best estimate of the effective rate for the full financial year. The effective tax rate on the same basis for the year ended 31 January 2015 was 27%. Exceptional tax items for the current period amount to a credit of £29m, none of which relates to prior year items (2014/15: £1m credit, none of which related to prior year items). Exceptional tax items for the year ended 31 January 2015 amounted to a credit of £106m, £95m of which related to prior year items.

 



 

8.         Earnings per share

 



Half year ended

Year ended  

Pence

Half year ended
1 August 2015

 2 August 2014
(restated - note 2)

31 January 2015
(restated - note 2)

Basic earnings per share

13.6

12.3

24.3

Effect of dilutive share options

-

(0.1)

(0.1)

Diluted earnings per share

13.6

12.2

24.2





Basic earnings per share

13.6

12.3

24.3

B&Q China operating loss

0.2

0.5

0.4

Exceptional items before tax

(0.4)

(0.4)

1.5

Tax on exceptional and prior year items

(1.2)

-

(4.8)

Financing fair value remeasurements

0.2

(0.1)

(0.2)

Tax on financing fair value remeasurements

(0.1)

-

0.1

Adjusted basic earnings per share

12.3

12.3

21.3





Diluted earnings per share

13.6

12.2

24.2

B&Q China operating loss

0.2

0.5

0.4

Exceptional items before tax

(0.4)

(0.4)

1.5

Tax on exceptional and prior year items

(1.2)

-

(4.8)

Financing fair value remeasurements

0.2

(0.1)

(0.2)

Tax on financing fair value remeasurements

(0.1)

-

0.1

Adjusted diluted earnings per share

12.3

12.2

21.2

 

The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. A reconciliation of statutory earnings to adjusted earnings is set out below:

 



Half year ended

Year ended  

£ millions

Half year ended
1 August 2015

2 August 2014
(restated - note 2)

31 January 2015
(restated - note 2)

Earnings

318

291

573

B&Q China operating loss

4

11

9

Exceptional items before tax

(9)

(10)

35

Tax on exceptional and prior year items

(30)

-

(112)

Financing fair value remeasurements

3

(1)

(4)

Tax on financing fair value remeasurements

(1)

-

1

Adjusted earnings

285

291

502

 

The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust ('ESOP trust'), is 2,327m (2014/15: 2,364m). The diluted weighted average number of shares in issue during the period is 2,329m (2014/15: 2,375m). For the year ended 31 January 2015, the weighted average number of shares in issue was 2,358m and the diluted weighted average number of shares in issue was 2,369m.

 

9.         Dividends

 


Half year ended

Half year ended

Year ended  

£ millions

1 August 2015

2 August 2014

31 January 2015

Dividends to equity shareholders of the Company




Ordinary final dividend for the year ended 31 January 2015 of

6.85p per share

160

-

-

Special interim dividend of 4.2p per share paid 25 July 2014

-

100

100

Ordinary interim dividend for the year ended 31 January 2015 of

3.15p per share

-

-

75

Ordinary final dividend for the year ended 1 February 2014 of

6.78p per share

-

159

159


160

259

334

 

The proposed ordinary interim dividend for the period ended 1 August 2015 is 3.18p per share.

 



 

10.        Property, plant and equipment, investment property and other intangible assets

 

Additions to the cost of property, plant and equipment, investment property and other intangible assets are £178m (2014/15: £124m) and for the year ended 31 January 2015 were £291m. Disposals in net book value of property, plant and equipment, investment property, property assets held for sale and other intangible assets are £2m (2014/15: £24m) and for the year ended 31 January 2015 were £26m.

 

Store asset impairment losses of £39m were recorded in the period as part of the UK and continental Europe exceptional restructuring programmes set out in note 5. These were based on a determination of recoverable amounts of the stores as the net present value of future pre-tax cash flows ('value-in-use') or fair value less costs to sell (using market valuations performed by independent external valuers) if higher.

 

Capital commitments contracted but not provided for at the end of the period are £50m (2014/15: £54m) and at 31 January 2015 were £57m.

 

11.        Post employment benefits

 


Half year ended

Half year ended

Year ended  

£ millions

1 August 2015

2 August 2014

31 January 2015

Net surplus/(deficit) in schemes at beginning of period

112

(100)

(100)

Current service cost

(4)

(4)

(9)

Administration costs

(2)

(2)

(3)

Curtailment gain

-

-

9

Net interest income/(expense)

2

(1)

(3)

Net actuarial (losses)/gains

(72)

42

175

Contributions paid by employer

18

18

36

Exchange differences

5

1

7

Net surplus/(deficit) in schemes at end of period

59

(46)

112

 


At

At

At  

£ millions

1 August 2015

2 August 2014

31 January 2015

UK

140

28

194

Overseas

(81)

(74)

(82)

Net surplus/(deficit) in schemes

59

(46)

112

 

The assumptions used in calculating the costs and obligations of the Group's defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis provided in note 27 of the annual financial statements for the year ended 31 January 2015.

 

A key assumption in valuing the pension obligation is the discount rate. Accounting standards require this to be set based on market yields on high quality corporate bonds at the balance sheet date. The UK scheme discount rate is derived using a single equivalent discount rate approach, based on the yields available on a portfolio of high-quality Sterling corporate bonds with the same duration to that of the scheme liabilities.

 

The principal financial assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:

 


At 

At 

At 

Annual % rate

1 August 2015

2 August 2014

31 January 2015

Discount rate

3.6

4.2

3.0

Price inflation

3.3

3.2

2.8

 



 

12.        Financial instruments

 

The Group holds the following derivative financial instruments at fair value:


At

At

At  



£ millions

1 August 2015

2 August 2014

31 January 2015



Cross-currency interest rate swaps

42

37

54



Foreign exchange contracts

22

7

68



Derivative assets

64

44

122



 


At

At

At  



£ millions

1 August 2015

2 August 2014

31 January 2015



Cross-currency interest rate swaps

-

(8)

-



Foreign exchange contracts

(17)

(10)

(10)



Derivative liabilities

(17)

(18)

(10)



 

The fair values are calculated by discounting future cash flows arising from the instruments and adjusted for credit risk. These fair value measurements are all made using observable market rates of interest, foreign exchange and credit risk. All the derivatives held by the Group at fair value are considered to have fair values determined by 'level 2' inputs as defined by the fair value hierarchy of IFRS 13 'Fair value measurement', representing significant observable inputs other than quoted prices in active markets for identical assets or liabilities. There are no non-recurring fair value measurements nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy.

 

The Group has a 30% interest in B&Q China, along with an option to sell this interest in the future - refer to note 16 for further details. At 1 August 2015 the fair value of this 30% B&Q China investment is judged to be £60m, based on a consideration of the economic value attributed to the B&Q China business, and the fair value of the option is judged not to be significant. The value of the option is based on the value of the investment, which incorporates non-observable inputs that would be classified as 'level 3' in the IFRS 13 fair value hierarchy.

 

Except as detailed in the following table of borrowings, the directors consider that the carrying amounts of financial instruments recorded at amortised cost in the financial statements are approximately equal to their fair values. Where available, market values have been used to determine the fair values of borrowings. Where market values are not available or are not reliable, fair values have been calculated by discounting cash flows at prevailing interest and foreign exchange rates. This has resulted in 'level 1' inputs for the Medium Term Notes and 'level 2' inputs for other borrowings as defined by the IFRS 13 fair value hierarchy.

 




Carrying amount




At

At

At  



£ millions

1 August 2015

2 August 2014

31 January 2015



Bank overdrafts

43

15

91



Bank loans

10

12

11



Medium Term Notes and other fixed term debt

170

238

183



Finance leases

47

56

52



Borrowings

270

321

337












Fair value




At

At

At  



£ millions

1 August 2015

2 August 2014

31 January 2015



Bank overdrafts

43

15

91



Bank loans

10

13

12



Medium Term Notes and other fixed term debt

177

245

190



Finance leases

59

70

68



Borrowings

289

343

361



 



 

13.        Other reserves

 

 

£ millions

Cash flow hedge reserve

Translation reserve

 

  Other

 

Total

At 1 February 2015

41

(194)

164

11

Currency translation differences

Group

Joint ventures and associates

Transferred to income statement

-

-

-

(136)

(3)

(7)

-

-

-

(136)

(3)

(7)

Cash flow hedges

Fair value losses

(21)

-

-

(21)

Gains transferred to inventories

(30)

-

-

(30)

Tax on items that may be reclassified

14

(2)

-

12

Other comprehensive income for the period

(37)

(148)

-

(185)

Purchase of own shares for cancellation

-

-

6

6

At 1 August 2015

4

(342)

170

(168)






At 2 February 2014

(5)

112

159

266

Currency translation differences

Group

-

(77)

-

(77)

Cash flow hedges

Fair value losses

(6)

-

-

(6)

Losses transferred to inventories

16

-

-

16

Tax on items that may be reclassified

(3)

-

-

(3)

Other comprehensive income for the period

7

(77)

-

(70)

Purchase of own shares for cancellation

-

-

1

1

At 2 August 2014

2

35

160

197






At 2 February 2014

(5)

112

159

266

Currency translation differences

Group

-

(309)

-

(309)

     Joint ventures and associates

-

(2)

-

(2)

Cash flow hedges

Fair value gains

70

-

-

70

Gains transferred to inventories

(5)

-

-

(5)

Tax on items that may be reclassified

(19)

5

-

(14)

Other comprehensive income for the year

46

(306)

-

(260)

Purchase of own shares for cancellation

-

-

5

5

At 31 January 2015

41

(194)

164

11



14.        Cash generated by operations

 



Half year ended

 

£ millions

Half year ended
1 August 2015

2 August 2014

(restated - note 2)

Year ended
31 January 2015

Operating profit

394

396

652

Share of post-tax results of joint ventures and associates

-

(2)

(5)

Depreciation and amortisation

120

132

262

Impairment losses

39

-

30

Profit on disposal of property, plant and equipment, property held for sale and intangible assets

-

(22)

(20)

Profit on disposal of property company

(16)

-

-

Profit on disposal of B&Q China

(143)

-

-

Share-based compensation charge

7

6

11

Increase in inventories

(111)

(179)

(150)

(Increase)/decrease in trade and other receivables

(40)

(28)

12

Increase in trade and other payables

191

225

53

Movement in provisions

102

(4)

(6)

Movement in post employment benefits

(12)

(12)

(33)

Cash generated by operations

531

512

806

 

15.        Net cash

 


At 

At 

At 

£ millions

1 August 2015

2 August 2014

31 January 2015

Cash and cash equivalents

537

627

561

Bank overdrafts

(43)

(15)

(91)

Cash and cash equivalents and bank overdrafts

494

612

470

Short-term deposits

123

167

48

Bank loans

(10)

(12)

(11)

Medium Term Notes and other fixed term debt

(170)

(238)

(183)

Financing derivatives

45

23

57

Finance leases

(47)

(56)

(52)

Net cash

435

496

329

 


Half year ended 

Half year ended 

Year ended 

£ millions

1 August 2015

2 August 2014

31 January 2015

Net cash at beginning of period

329

238

238

Net increase in cash and cash equivalents and

bank overdrafts, including amounts classified as held for sale

11

109

55

Increase in short-term deposits

75

167

48

Repayment of bank loans

1

2

2

Repayment of Medium Term Notes and other fixed term debt

-

-

73

Payment on financing derivatives

-

-

9

Capital element of finance lease rental payments

6

7

14

Cash flow movement in net cash

93

285

201

Adjustment for cash classified as held for sale (B&Q China)

57

-

(57)

Exchange differences and other non-cash movements

(44)

(27)

(53)

Net cash at end of period

435

496

329

 



 

16.        Disposals

 

On 30 April 2015 Wumei Holdings Inc acquired a controlling 70% stake in the B&Q China business from the Group for a gross cash consideration of £140m, and a £12m deposit received in the prior year was repaid. As part of the terms of the transaction, Kingfisher has the option from 1 May 2017, or sooner where agreed by both parties, to require Wumei Holdings Inc to acquire the Group's remaining 30% interest for a fixed price of the Sterling equivalent of RMB 582m.

 

The profit on disposal of £143m is analysed as follows:

 

£ millions




Proceeds (net of disposal costs paid of £3m)



137

Cash disposed



(32)

Net disposal proceeds received



105

Other disposal costs



(3)

Net disposal proceeds



102

Fair value of 30% interest retained



60




162

Net assets disposed excluding cash (see below)



(32)

Non-controlling interests disposed



10

Currency translation gains transferred from translation reserve



3

Exceptional profit on disposal



143

 

£ millions




Property, plant and equipment



150

Inventories, trade and other receivables/(payables)



(108)

Provisions



(3)

Deferred tax liabilities



(9)

Other net assets



2

Net assets disposed excluding cash



32

 

The Group does not have the ability to exert significant influence on the B&Q China operations, for example, as part of the terms agreed with Wumei Holdings Inc, the Group currently does not have the right to appoint directors to the board. The remaining 30% B&Q China investment is therefore classified as a financial asset and not as an associate, with no share of B&Q China's results being recognised in the income statement after the disposal date. Included within the profit on disposal is a gain of £44m attributable to measuring this retained 30% investment at fair value. The B&Q China' business had been classified as a disposal group held for sale from 22 December 2014 (the date of announcement of the transaction agreement) up to the 30 April 2015 disposal date. Accordingly, depreciation of £4m was not charged with respect to B&Q China during the period.

 

In April 2015 the Group also completed the sale of a property company for proceeds of £18m and a profit of £16m. At disposal, the freehold properties had a net book value of £6m and £4m of currency translation gains were transferred from the translation reserve.

 

In the prior year the Group received proceeds of €236m (£198m) following the sale of its 21% stake in Hornbach in March 2014.

 

17.        Contingent assets and liabilities

 

The Group has arranged for certain guarantees to be provided to third parties in the ordinary course of business. Of these guarantees, only £1m (2014/15: £1m) would crystallise due to possible future events not wholly within the Group's control. At 31 January 2015 the amount was £1m.

 

The Group is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are considered likely to arise on the basis of current information and legal advice.

 

18.        Related party transactions

 

The Group's significant related parties are its joint ventures, associates and pension schemes as disclosed in note 37 of the annual financial statements for the year ended 31 January 2015. There have been no significant changes in related parties or related party transactions in the period.



STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors confirm that this set of interim condensed financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

 

·      an indication of important events that have occurred during the period and their impact on the interim condensed financial statements, and a description of the principal risks and uncertainties for the remainder of the financial year; and

·      material related party transactions in the period and any material changes in the related party transactions described in the last annual report.

 

The Directors of Kingfisher plc were listed in the Kingfisher plc Annual Report for the year ended 31 January 2015. With the exception of Kevin O'Byrne, who stepped down as a Director of Kingfisher plc on 15 May 2015, there have been no changes in the period.

 

By order of the Board

 

 

 

Véronique Laury                                                                  Karen Witts

Chief Executive Officer                                                        Chief Financial Officer

14 September 2015                                                            14 September 2015

 



 

INDEPENDENT REVIEW REPORT TO KINGFISHER PLC

 

We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the half year ended 1 August 2015 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

 

This report is made solely to the Company 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.  Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

 

Directors' responsibilities

 

The interim financial report is the responsibility of, and has been approved by, the Directors.  The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed 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 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 inquiries, 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 Ireland) 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 set of financial statements in the interim financial report for the half year ended 1 August 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

 

 

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

14 September 2015


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