Interim results part 2

RNS Number : 2704O

Kingfisher PLC

15 September 2011

 



KINGFISHER PLC

2011/12 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

		Half year ended 30 July 2011				Half year ended 31 July 2010
		Before	Exceptional			Before	Exceptional
		exceptional	items			exceptional	items
£ millions	Notes	items	(note 5)	Total		items	(note 5)	Total
Sales	4	5,662	-	5,662		5,454	-	5,454
Cost of sales		(3,559)	-	(3,559)		(3,455)	-	(3,455)
Gross profit		2,103	-	2,103		1,999	-	1,999
Selling and distribution expenses		(1,407)	-	(1,407)		(1,390)	(9)	(1,399)
Administrative expenses		(282)	-	(282)		(260)	-	(260)
Other income		16	-	16		14	2	16
Share of post-tax results of joint ventures and associates		13	-	13		11	-	11
Operating profit		443	-	443		374	(7)	367
Analysed as:
Retail profit	4	473	-	473		402	(7)	395
Central costs		(21)	-	(21)		(20)	-	(20)
Share of interest and tax of joint ventures and associates		(9)	-	(9)		(8)	-	(8)
Finance costs		(12)	-	(12)		(22)	-	(22)
Finance income		7	-	7		6	-	6
Net finance costs	6	(5)	-	(5)		(16)	-	(16)
Profit before taxation		438	-	438		358	(7)	351
Income tax expense	7	(118)	-	(118)		(107)	4	(103)
Profit for the period		320	-	320		251	(3)	248
Attributable to:
Equity shareholders of the Company				321				250
Non-controlling interests				(1)				(2)
				320				248
Earnings per share	8
Basic				13.7p				10.6p
Diluted				13.5p				10.5p
Adjusted basic				13.5p				10.6p
Adjusted diluted				13.2p				10.5p

The proposed interim dividend for the period ended 30 July 2011 is 2.47p per share.

KINGFISHER PLC

2011/12 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

		Year ended 29 January 2011
		Before	Exceptional
		exceptional	items
£ millions	Notes	items	(note 5)	Total
Sales	4	10,450	-	10,450
Cost of sales		(6,545)	-	(6,545)
Gross profit		3,905	-	3,905
Selling and distribution expenses		(2,739)	(9)	(2,748)
Administrative expenses		(527)	-	(527)
Other income		34	3	37
Share of post-tax results of joint ventures and associates		31	-	31
Operating profit		704	(6)	698
Analysed as:
Retail profit	4	762	(6)	756
Central costs		(41)	-	(41)
Share of interest and tax of joint ventures and associates		(17)	-	(17)
Finance costs		(46)	-	(46)
Finance income		19	-	19
Net finance costs	6	(27)	-	(27)
Profit before taxation		677	(6)	671
Income tax expense	7	(183)	3	(180)
Profit for the year		494	(3)	491
Attributable to:
Equity shareholders of the Company				494
Non-controlling interests				(3)
				491
Earnings per share	8
Basic				21.0p
Diluted				20.7p
Adjusted basic				20.5p
Adjusted diluted				20.2p

KINGFISHER PLC

2011/12 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

£ millions	Half year ended 30 July 2011	Half year ended 31 July 2010	Year ended 29 January 2011
Profit for the period	320	248	491
Actuarial (losses)/gains on post employment benefits	(19)	67	128
Currency translation differences
Group	16	(71)	32
Joint ventures and associates	3	(2)	-
Cash flow hedges
Fair value (losses)/gains	(13)	11	5
Losses/(gains) transferred to inventories	12	(11)	(14)
Tax on other comprehensive income	5	(15)	(33)
Other comprehensive income for the period	4	(21)	118
Total comprehensive income for the period	324	227	609
Attributable to:
Equity shareholders of the Company	325	229	611
Non-controlling interests	(1)	(2)	(2)
	324	227	609

KINGFISHER PLC

2011/12 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 12)	Total	Non-controlling interests	Total equity
At 30 January 2011	371	2,194	(42)	2,390	539	5,452	8	5,460
Profit for the period	-	-	-	321	-	321	(1)	320
Actuarial losses on post employment benefits	-	-	-	(19)	-	(19)	-	(19)
Currency translation differences Group	-	-	-	-	16	16	-	16
Joint ventures and associates	-	-	-	-	3	3	-	3
Cash flow hedges Fair value losses	-	-	-	-	(13)	(13)	-	(13)
Losses transferred to inventories	-	-	-	-	12	12	-	12
Tax on other comprehensive income	-	-	-	6	(1)	5	-	5
Other comprehensive income for the period	-	-	-	(13)	17	4	-	4
Total comprehensive income for the period	-	-	-	308	17	325	(1)	324
Share-based compensation	-	-	-	17	-	17	-	17
Shares issued under share schemes	1	-	-	-	-	1	-	1
Own shares purchased	-	-	(117)	-	-	(117)	-	(117)
Own shares disposed	-	-	21	(20)	-	1	-	1
Dividends	-	-	-	(121)	-	(121)	-	(121)
Purchase of non-controlling interests	-	-	-	(7)	-	(7)	-	(7)
At 30 July 2011	372	2,194	(138)	2,567	556	5,551	7	5,558
At 31 January 2010	371	2,191	(54)	1,921	516	4,945	10	4,955
Profit for the period	-	-	-	250	-	250	(2)	248
Actuarial gains on post employment benefits	-	-	-	67	-	67	-	67
Currency translation differences Group	-	-	-	-	(71)	(71)	-	(71)
Joint ventures and associates	-	-	-	-	(2)	(2)	-	(2)
Cash flow hedges Fair value gains	-	-	-	-	11	11	-	11
Gains transferred to inventories	-	-	-	-	(11)	(11)	-	(11)
Tax on other comprehensive income	-	-	-	(20)	5	(15)	-	(15)
Other comprehensive income for the period	-	-	-	47	(68)	(21)	-	(21)
Total comprehensive income for the period	-	-	-	297	(68)	229	(2)	227
Share-based compensation	-	-	-	12	-	12	-	12
Own shares disposed	-	-	8	(8)	-	-	-	-
Dividends	-	-	-	(84)	-	(84)	-	(84)
At 31 July 2010	371	2,191	(46)	2,138	448	5,102	8	5,110

KINGFISHER PLC

2011/12 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 12)	Total	Non-controlling interests	Total equity
At 31 January 2010	371	2,191	(54)	1,921	516	4,945	10	4,955
Profit for the year	-	-	-	494	-	494	(3)	491
Actuarial gains on post employment benefits	-	-	-	128	-	128	-	128
Currency translation differences Group	-	-	-	-	31	31	1	32
Cash flow hedges Fair value gains	-	-	-	-	5	5	-	5
Gains transferred to inventories	-	-	-	-	(14)	(14)	-	(14)
Tax on other comprehensive income	-	-	-	(34)	1	(33)	-	(33)
Other comprehensive income for the year	-	-	-	94	23	117	1	118
Total comprehensive income for the year	-	-	-	588	23	611	(2)	609
Share-based compensation	-	-	-	21	-	21	-	21
Shares issued under share schemes	-	3	-	-	-	3	-	3
Own shares disposed	-	-	12	(11)	-	1	-	1
Dividends	-	-	-	(129)	-	(129)	-	(129)
At 29 January 2011	371	2,194	(42)	2,390	539	5,452	8	5,460

KINGFISHER PLC

2011/12 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions	Notes	At 30 July 2011	At 31 July 2010	At 29 January 2011
Non-current assets
Goodwill		2,398	2,394	2,395
Other intangible assets		98	69	86
Property, plant and equipment		3,754	3,503	3,632
Investment property		40	25	32
Investments in joint ventures and associates		266	237	259
Deferred tax assets		24	25	27
Derivatives		56	103	62
Other receivables		19	22	15
		6,655	6,378	6,508
Current assets
Inventories		1,956	1,743	1,791
Trade and other receivables		574	504	513
Derivatives		11	34	15
Current tax assets		38	39	45
Cash and cash equivalents		594	1,380	731
		3,173	3,700	3,095
Total assets		9,828	10,078	9,603
Current liabilities
Trade and other payables		(2,558)	(2,625)	(2,519)
Borrowings		(253)	(571)	(196)
Derivatives		(19)	(8)	(11)
Current tax liabilities		(386)	(381)	(372)
Provisions		(26)	(19)	(27)
		(3,242)	(3,604)	(3,125)
Non-current liabilities
Other payables		(79)	(66)	(76)
Borrowings		(563)	(875)	(577)
Derivatives		(14)	(23)	(17)
Deferred tax liabilities		(262)	(205)	(238)
Provisions		(42)	(70)	(52)
Post employment benefits	11	(68)	(125)	(58)
		(1,028)	(1,364)	(1,018)
Total liabilities		(4,270)	(4,968)	(4,143)
Net assets		5,558	5,110	5,460
Equity
Share capital		372	371	371
Share premium		2,194	2,191	2,194
Own shares held		(138)	(46)	(42)
Retained earnings		2,567	2,138	2,390
Other reserves	12	556	448	539
Total attributable to equity shareholders of the Company		5,551	5,102	5,452
Non-controlling interests		7	8	8
Total equity		5,558	5,110	5,460

The interim financial report was approved by the Board of Directors on 14 September 2011 and signed on its behalf by:

Ian Cheshire, Group Chief Executive

Kevin O'Byrne, Group Finance Director

KINGFISHER PLC

2011/12 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

£ millions	Notes	Half year ended 30 July 2011	Half year ended 31 July 2010	Year ended 29 January 2011
Operating activities
Cash generated by operations	13	375	492	763
Income tax paid		(68)	(51)	(133)
Net cash flows from operating activities		307	441	630
Investing activities
Purchase of businesses and non-controlling interests		(9)	-	-
Purchase of property, plant and equipment, investment property and intangible assets		(263)	(127)	(310)
Disposal of property, plant and equipment, investment property and intangible assets		-	73	87
Interest received		6	6	19
Dividends received from joint ventures and associates		9	7	6
Net cash flows from investing activities		(257)	(41)	(198)
Financing activities
Interest paid		(9)	(15)	(33)
Interest element of finance lease rental payments		(2)	(3)	(5)
Repayment of bank loans		(8)	(37)	(57)
Repayment of Medium Term Notes and other fixed term debt		(10)	(124)	(696)
(Payment)/receipt on financing derivatives		(3)	2	6
Capital element of finance lease rental payments		(6)	(7)	(12)
Issue of share capital under share schemes		1	-	3
Purchase of own shares		(117)	-	-
Disposal of own shares		1	-	1
Dividends paid to equity shareholders of the Company		(121)	(84)	(129)
Net cash flows from financing activities		(274)	(268)	(922)
Net (decrease)/increase in cash and cash equivalents and bank overdrafts		(224)	132	(490)
Cash and cash equivalents and bank overdrafts at beginning of period		636	1,135	1,135
Exchange differences		22	(69)	(9)
Cash and cash equivalents and bank overdrafts at end of period	14	434	1,198	636

KINGFISHER PLC

2011/12 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, continental Europe and China.

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 29 January 2011 were approved by the Board of Directors on 23 March 2011 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 2011.

2.         Basis of preparation

The interim financial report for the 26 weeks ended 30 July 2011 ('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 29 January 2011, which have been prepared in accordance with IFRSs 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, '2010/11' refers to the prior half year.

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

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 30 July 2011.

Principal rates of exchange against Sterling

	Half year ended 30 July 2011		Half year ended 31 July  2010		Year ended 29 January 2011
	Average rate	Period end rate	Average rate	Period end rate	Average rate	Year end Rate
Euro	1.14	1.14	1.16	1.20	1.17	1.16
US Dollar	1.62	1.65	1.51	1.56	1.54	1.59
Polish Zloty	4.54	4.57	4.64	4.79	4.65	4.52
Chinese Renminbi	10.56	10.59	10.31	10.58	10.41	10.45

Use of non-GAAP measures

Kingfisher believes that retail profit, adjusted pre-tax profit, effective tax rate, adjusted post-tax profit 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.

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

·      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. 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 represents the effective income tax expense as a percentage of continuing profit before taxation excluding exceptional items. Effective income tax expense is the continuing income tax expense excluding tax on exceptional items and tax adjustments in respect of prior years and changes in tax rates.

Net debt (or net cash) comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and current other investments.

3.         Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 29 January 2011, as described in note 2 of those financial statements.

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

There are no standards, amendments to standards or interpretations that are both mandatory for the first time for the financial year ending 28 January 2012 and expected to have a material impact on the Group's results.

4.         Segmental analysis

Income statement

	Half year ended 30 July 2011
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	2,306	2,341	570	445	5,662
Retail profit	182	201	70	20	473
Central costs					(21)
Share of interest and tax of joint ventures and associates					(9)
Operating profit					443
Net finance costs					(5)
Profit before taxation					438

	Half year ended 31 July 2010
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	2,328	2,185	524	417	5,454
Retail profit	171	160	65	6	402
Exceptional items					(7)
Central costs					(20)
Share of interest and tax of joint ventures and associates					(8)
Operating profit					367
Net finance costs					(16)
Profit before taxation					351

	Year ended 29 January 2011
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	4,333	4,204	1,062	851	10,450
Retail profit	243	348	134	37	762
Exceptional items					(6)
Central costs					(41)
Share of interest and tax of joint ventures and associates					(17)
Operating profit					698
Net finance costs					(27)
Profit before taxation					671

Balance sheet

	At 30 July 2011
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,472	1,255	472	581	3,780
Central liabilities					(434)
Goodwill					2,398
Net debt					(186)
Net assets					5,558

	At 31 July 2010
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,068	1,108	406	516	3,098
Central liabilities					(401)
Goodwill					2,394
Net cash					19
Net assets					5,110

	At 29 January 2011
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,172	1,233	512	560	3,477
Central liabilities					(426)
Goodwill					2,395
Net cash					14
Net assets					5,460

The 'Other International' segment consists of Poland, China, Spain, Russia, the joint venture Koçtaş in Turkey and the associate Hornbach which has operations in Germany and other European countries. 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 not highly seasonal in nature, 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	30 July 2011	31 July 2010	29 January 2011
Included within selling and distribution expenses
UK stores acquisition integration	(2)	-	-
UK restructuring	2	(9)	(9)
	-	(9)	(9)
Included within other income Profit on disposal of properties	-	2	3
	-	2	3
Exceptional items before tax	-	(7)	(6)
Tax on exceptional items	-	4	3
Exceptional items	-	(3)	(3)

The Group acquired 29 Focus stores in the UK in May 2011 and has incurred £2m of costs during the period integrating these into the B&Q store network.

The UK restructuring credit of £2m reflects the release of an onerous property contract provision for an idle store previously included as part of the B&Q UK store closure and downsizing programme in 2005/06. This release followed the purchase of the store freehold in the period. The UK restructuring charge of £9m in the prior year reflected plans announced by the Group to consolidate its distribution network in the UK through the construction of a new regional distribution centre in the south of England and the closure of other sites. The provision covered primarily future costs of redundancies and dilapidations on the sites to be exited.

The profit on disposal of properties is £nil (2010/11: £2m) and for the year ended 29 January 2011 was £3m.

6.         Net finance costs

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July  2010	29 January 2011
Bank overdrafts and bank loans	(5)	(8)	(18)
Medium Term Notes and other fixed term debt	(5)	(11)	(21)
Finance leases	(2)	(3)	(5)
Financing fair value remeasurements	(1)	4	7
Unwinding of discount on provisions	-	(1)	(3)
Expected net interest charge on defined benefit pension schemes	-	(4)	(7)
Capitalised interest	1	1	1
Finance costs	(12)	(22)	(46)
Cash and cash equivalents and current other investments	6	6	19
Expected net interest return on defined benefit pension schemes	1	-	-
Finance income	7	6	19
Net finance costs	(5)	(16)	(27)

7.         Income tax expense

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July 2010	29 January 2011
UK corporation tax
Current tax on profits for the period	55	51	73
Adjustments in respect of prior years	2	-	(10)
	57	51	63
Overseas tax
Current tax on profits for the period	65	57	118
Adjustments in respect of prior years	-	-	(5)
	65	57	113
Deferred tax
Current period	4	(3)	-
Adjustments in respect of prior years	(3)	-	5
Adjustments in respect of changes in tax rates	(5)	(2)	(1)
	(4)	(5)	4
Income tax expense	118	103	180

The effective rate of tax on profit before exceptional items and excluding tax adjustments in respect of prior years and changes in tax rates is 28% (2010/11: 30%), representing the best estimate of the effective rate for the full financial year. The effective tax rate for the year ended 29 January 2011 was 29%. Tax on exceptional items for the current period is £nil (2010/11: credit of £4m, all of which related to current year items). Tax on exceptional items for the year ended 29 January 2011 was a credit of £3m, all of which related to current year items.

The revised half year comparatives in the table above reflect a reassessment of balances expected to be settled on behalf of UK and overseas operating companies.

Kingfisher paid €138m tax to the French tax authorities in the year ended 31 January 2004 as a consequence of the Kesa Electricals demerger and recorded this as an exceptional tax charge.  Kingfisher appealed against the tax liability and the tribunal found in favour of Kingfisher in June 2009. As a result a full refund, along with repayment supplement, was received in September 2009. The French tax authorities have appealed against this decision. The appeal hearing took place in May 2011 and the Court of Appeal found in Kingfisher's favour. The French tax authorities may appeal this decision to the final level of court and therefore no income has yet been recognised relating to this receipt.

8.         Earnings per share

	Half year ended	Half year ended	Year ended
Pence	30 July 2011	31 July 2010	29 January 2011
Basic earnings per share	13.7	10.6	21.0
Effect of dilutive share options	(0.2)	(0.1)	(0.3)
Diluted earnings per share	13.5	10.5	20.7
Basic earnings per share	13.7	10.6	21.0
Exceptional items	-	0.3	0.3
Tax on exceptional and prior year items	(0.3)	(0.2)	(0.6)
Financing fair value remeasurements	0.1	(0.1)	(0.3)
Tax on financing fair value remeasurements	-	-	0.1
Adjusted basic earnings per share	13.5	10.6	20.5
Diluted earnings per share	13.5	10.5	20.7
Exceptional items	-	0.3	0.3
Tax on exceptional and prior year items	(0.3)	(0.2)	(0.6)
Financing fair value remeasurements	-	(0.1)	(0.3)
Tax on financing fair value remeasurements	-	-	0.1
Adjusted diluted earnings per share	13.2	10.5	20.2

The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. Earnings for the period are £321m (2010/11: £250m) and for the year ended 29 January 2011 were £494m. Adjusted earnings for the period are £316m (2010/11: £248m) and for the year ended 29 January 2011 were £481m. A reconciliation of statutory earnings to adjusted earnings is set out in the Financial Review.

The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust (ESOP), is 2,339m (2010/11: 2,348m). The diluted weighted average number of shares in issue during the period is 2,385m (2010/11: 2,375m). For the year ended 29 January 2011, the weighted average number of shares in issue was 2,349m and the diluted weighted average number of shares in issue was 2,387m.

9.         Dividends

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July 2010	29 January 2011
Dividends to equity shareholders of the Company
Final dividend for the year ended 30 January 2010 of 3.575p per share	-	84	84
Interim dividend for the year ended 29 January 2011 of 1.925p per share	-	-	45
Final dividend for the year ended 29 January 2011 of 5.145p per share	121	-	-
	121	84	129

The proposed interim dividend for the period ended 30 July 2011 is 2.47p per share.

10.        Capital expenditure

Additions to the cost of property, plant and equipment, investment property and intangible assets are £238m (2010/11: £130m) and for the year ended 29 January 2011 were £361m. Disposals in net book value of property, plant and equipment, investment property and intangible assets are £1m (2010/11: £73m) and for the year ended 29 January 2011 were £91m.

Capital commitments contracted but not provided for at the end of the period are £84m (2010/11: £55m) and at 29 January 2011 were £83m.

11.        Post employment benefits

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July 2010	29 January 2011
Deficit in scheme at beginning of period	(58)	(198)	(198)
Current service cost	(14)	(14)	(27)
Interest on defined benefit obligations	(46)	(46)	(92)
Expected return on pension scheme assets	47	42	85
Actuarial (losses)/gains	(19)	67	128
Contributions paid by employer	23	23	46
Exchange differences	(1)	1	-
Deficit in scheme at end of period	(68)	(125)	(58)

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 29 January 2011.

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 bonds at the balance sheet date. The UK scheme discount rate is based on the yield on the iBoxx over 15 year AA-rated Sterling corporate bond index adjusted for the difference in term between iBoxx and scheme liabilities.

The discount rate and price inflation actuarial valuation assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:

	At	At	At
Annual % rate	30 July 2011	31 July 2010	29 January 2011
Discount rate	5.3	5.4	5.6
Price inflation	3.5	3.2	3.5

Two UK property assets with a market value of £119m were transferred in June 2011 into a property partnership (Kingfisher Scottish Limited Partnership) and leased back to B&Q plc. An investment of £106m was subsequently made by the scheme into the partnership, following a Group contribution of the same amount into the scheme. This follows a similar transaction in January 2011, in which property assets with a value of £83m were transferred into the partnership, followed by a Group contribution (into the scheme) and scheme investment (into the partnership) of £78m. Under IAS 19, 'Employee benefits', the investment held by the scheme in the partnership does not represent a plan asset and accordingly the pension deficit position above does not reflect the amounts invested under this arrangement.

12.        Other reserves

£ millions	Cash flow hedge reserve	Translation reserve	Other	Total
At 30 January 2011	(5)	385	159	539
Currency translation differences Group	-	16	-	16
Joint ventures and associates	-	3	-	3
Cash flow hedges Fair value losses	(13)	-	-	(13)
Losses transferred to inventories	12	-	-	12
Tax on other comprehensive income	-	(1)	-	(1)
Other comprehensive income for the period	(1)	18	-	17
At 30 July 2011	(6)	403	159	556
At 31 January 2010	1	356	159	516
Currency translation differences Group	-	(71)	-	(71)
Joint ventures and associates	-	(2)	-	(2)
Cash flow hedges Fair value gains	11	-	-	11
Gains transferred to inventories	(11)	-	-	(11)
Tax on other comprehensive income	-	5	-	5
Other comprehensive income for the period	-	(68)	-	(68)
At 31 July 2010	1	288	159	448
At 31 January 2010	1	356	159	516
Currency translation differences Group	-	31	-	31
Cash flow hedges Fair value gains	5	-	-	5
Gains transferred to inventories	(14)	-	-	(14)
Tax on other comprehensive income	3	(2)	-	1
Other comprehensive income for the year	(6)	29	-	23
At 29 January 2011	(5)	385	159	539

13.        Cash generated by operations

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July 2010	29 January 2011
Operating profit	443	367	698
Share of post-tax results of joint ventures and associates	(13)	(11)	(31)
Depreciation and amortisation	115	118	238
Impairment losses	-	-	14
Loss on disposal of property, plant and equipment, investment property and intangible assets	1	-	4
Share-based compensation charge	17	12	21
Increase in inventories	(155)	(227)	(238)
Increase in trade and other receivables	(63)	(17)	(10)
Increase in trade and other payables	50	269	107
Movement in provisions	(11)	(10)	(21)
Movement in post employment benefits	(9)	(9)	(19)
Cash generated by operations	375	492	763

14.        Net debt

	At	At	At
£ millions	30 July 2011	31 July 2010	29 January 2011
Cash and cash equivalents	594	1,380	731
Bank overdrafts	(160)	(182)	(95)
Cash and cash equivalents and bank overdrafts	434	1,198	636
Bank loans	(96)	(122)	(104)
Medium Term Notes and other fixed term debt	(493)	(1,079)	(504)
Financing derivatives	36	85	56
Finance leases	(67)	(63)	(70)
Net (debt)/cash	(186)	19	14

	Half year ended	Half year ended	Year ended
£ millions	30 July 2011	31 July 2010	29 January 2011
Net cash/(debt) at beginning of period	14	(250)	(250)
Net (decrease)/increase in cash and cash equivalents and bank overdrafts	(224)	132	(490)
Repayment of bank loans	8	37	57
Repayment of Medium Term Notes and other fixed term debt	10	124	696
Payment/(receipt) on financing derivatives	3	(2)	(6)
Capital element of finance lease rental payments	6	7	12
Cash flow movement in net debt	(197)	298	269
Exchange differences and other non-cash movements	(3)	(29)	(5)
Net (debt)/cash at end of period	(186)	19	14

During the prior year the Group repaid £679m nominal value of gross debt by repaying maturing debt, and by repurchasing significant proportions of 2014 Euro Medium Term Notes and US Private Placement debt.

15.        Contingent assets and liabilities

Kingfisher plc has an obligation to provide a bank guarantee for £50m (2010/11: £50m) to the liquidators of Kingfisher International France Limited in the event that Kingfisher plc's credit rating falls below 'BBB'. The obligation arises from an indemnity provided in June 2003 as a result of the demerger of Kesa Electricals. At 29 January 2011 the amount was £50m.

A guarantee of £58m (€66m) (2010/11: £55m) denominated in Euros has been provided to the Italian tax authorities in respect of a tax credit. This has been covered by a guarantee for the term of the contingent liability. At 29 January 2011 the amount was £57m.

The Group has arranged for certain bank guarantees to be provided to third parties in the ordinary course of business, which if realised are not expected to result in a material liability to the Group.

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.

16.        Related party transactions

The Group's significant related parties are its joint ventures, associates and pension schemes as disclosed in note 35 of the annual financial statements for the year ended 29 January 2011. 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 4.2.7 and DTR 4.2.8, 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 29 January 2011, with the only change up to the date of approval of the interim financial report being the resignation of John Nelson on 8 September 2011.

By order of the Board

Ian Cheshire                                                                        Kevin O'Byrne

Group Chief Executive                                                        Group Finance Director

14 September 2011                                                            14 September 2011

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 30 July 2011 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 16. 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 Services Authority.

As disclosed in note 2, the annual financial statements of Kingfisher plc 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 30 July 2011 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 Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

14 September 2011

 

END

 

 

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