Preliminary Results - Part 2

RNS Number : 8322Z

Kingfisher PLC

22 March 2012

 



Consolidated income statement
Year ended 28 January 2012
				2011/12			2010/11
		Before	Exceptional		Before	Exceptional
		exceptional	items		exceptional	items
£ millions	Notes	items	(note 4)	Total	items	(note 4)	Total
Continuing operations:
Sales	3	10,831	-	10,831	10,450	-	10,450
Cost of sales		(6,748)	-	(6,748)	(6,545)	-	(6,545)
Gross profit		4,083	-	4,083	3,905	-	3,905
Selling and distribution expenses		(2,769)	(9)	(2,778)	(2,739)	(9)	(2,748)
Administrative expenses		(560)	-	(560)	(527)	-	(527)
Other income		33	(3)	30	34	3	37
Share of post-tax results of joint ventures and associates		32	-	32	31	-	31
Operating profit		819	(12)	807	704	(6)	698
Analysed as:
Retail profit	3	882	(12)	870	762	(6)	756
Central costs		(43)	-	(43)	(41)	-	(41)
Share of interest and tax of joint ventures and associates		(20)	-	(20)	(17)	-	(17)
Finance costs		(31)	-	(31)	(46)	-	(46)
Finance income		21	-	21	19	-	19
Net finance costs	5	(10)	-	(10)	(27)	-	(27)
Profit before taxation		809	(12)	797	677	(6)	671
Income tax expense	6	(165)	7	(158)	(183)	3	(180)
Profit for the year		644	(5)	639	494	(3)	491
Attributable to:
Equity shareholders of the Company				640			494
Non-controlling interests				(1)			(3)
				639			491
Earnings per share	7
Basic				27.5p			21.0p
Diluted				26.9p			20.7p
Adjusted basic				25.1p			20.5p
Adjusted diluted				24.6p			20.2p

The proposed final dividend for the year ended 28 January 2012, subject to approval by shareholders at the Annual General Meeting, is 6.37p per share.

Consolidated statement of comprehensive income Year ended 28 January 2012
£ millions	Notes		2011/12	2010/11
Profit for the year			639	491
Actuarial gains on post employment benefits	9		20	128
Currency translation differences
Group			(128)	32
Joint ventures and associates			(10)	-
Cash flow hedges
Fair value gains			10	5
Losses/(gains) transferred to inventories			8	(14)
Tax on other comprehensive income			(9)	(33)
Other comprehensive income for the year			(109)	118
Total comprehensive income for the year			530	609
Attributable to:
Equity shareholders of the Company			530	611
Non-controlling interests			-	(2)
			530	609

Consolidated statement of changes in equity Year ended 28 January 2012
	Attributable to equity shareholders of the Company
£ millions	Notes	Share capital	Share premium	Own shares held	Retained earnings	Other reserves	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 year		-	-	-	640	-	640	(1)	639
Actuarial gains on post employment benefits	9	-	-	-	20	-	20	-	20
Currency translation differences Group		-	-	-	-	(129)	(129)	1	(128)
Joint ventures and associates		-	-	-	-	(10)	(10)	-	(10)
Cash flow hedges Fair value gains		-	-	-	-	10	10	-	10
Losses transferred to inventories		-	-	-	-	8	8	-	8
Tax on other comprehensive income		-	-	-	(4)	(5)	(9)	-	(9)
Other comprehensive income for the year		-	-	-	16	(126)	(110)	1	(109)
Total comprehensive income for the year		-	-	-	656	(126)	530	-	530
Share-based compensation		-	-	-	32	-	32	-	32
New shares issued under share schemes		1	5	-	-	-	6	-	6
Own shares issued under share schemes		-	-	25	(23)	-	2	-	2
Own shares purchased		-	-	(117)	-	-	(117)	-	(117)
Dividends		-	-	-	(178)	-	(178)	-	(178)
Purchase of non-controlling interests		-	-	-	(8)	-	(8)	-	(8)
At 28 January 2012		372	2,199	(134)	2,869	413	5,719	8	5,727
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	9	-	-	-	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
New shares issued under share schemes		-	3	-	-	-	3	-	3
Own shares issued under share schemes		-	-	12	(11)	-	1	-	1
Dividends		-	-	-	(129)	-	(129)	-	(129)
At 29 January 2011		371	2,194	(42)	2,390	539	5,452	8	5,460

Consolidated balance sheet
At 28 January 2012
£ millions	Notes	2011/12	2010/11
Non-current assets
Goodwill		2,397	2,395
Other intangible assets		123	86
Property, plant and equipment		3,667	3,632
Investment property		55	32
Investments in joint ventures and associates		271	259
Post employment benefits	9	25	-
Deferred tax assets		23	27
Derivatives		66	62
Other receivables		17	15
		6,644	6,508
Current assets
Inventories		1,844	1,791
Trade and other receivables		531	513
Derivatives		26	15
Current tax assets		1	45
Cash and cash equivalents		587	731
		2,989	3,095
Total assets		9,633	9,603
Current liabilities
Trade and other payables		(2,356)	(2,519)
Borrowings		(367)	(196)
Derivatives		(6)	(11)
Current tax liabilities		(305)	(372)
Provisions		(16)	(27)
		(3,050)	(3,125)
Non-current liabilities
Other payables		(121)	(76)
Borrowings		(375)	(577)
Derivatives		(8)	(17)
Deferred tax liabilities		(269)	(238)
Provisions		(43)	(52)
Post employment benefits	9	(40)	(58)
		(856)	(1,018)
Total liabilities		(3,906)	(4,143)
Net assets		5,727	5,460
Equity
Share capital		372	371
Share premium		2,199	2,194
Own shares held		(134)	(42)
Retained earnings		2,869	2,390
Other reserves		413	539
Total attributable to equity shareholders of the Company		5,719	5,452
Non-controlling interests		8	8
Total equity		5,727	5,460

The financial statements were approved by the Board of Directors on 21 March 2012 and signed on its behalf by:

Ian Cheshire                                                                        Kevin O'Byrne

Group Chief Executive                                                        Group Finance Director

Consolidated cash flow statement
Year ended 28 January 2012
£ millions	Notes	2011/12	2010/11
Operating activities
Cash generated by operations	10	827	763
Income tax paid		(148)	(133)
Net cash flows from operating activities		679	630
Investing activities
Purchase of businesses		(2)	-
Purchase of property, plant and equipment, investment property and intangible assets		(450)	(310)
Disposal of property, plant and equipment, investment property and intangible assets		9	87
Interest received		19	19
Dividends received from joint ventures and associates		10	6
Net cash flows from investing activities		(414)	(198)
Financing activities
Interest paid		(22)	(33)
Interest element of finance lease rental payments		(5)	(5)
Repayment of bank loans		(10)	(57)
Repayment of Medium Term Notes and other fixed term debt		(30)	(696)
(Payment)/receipt on financing derivatives		(5)	6
Capital element of finance lease rental payments		(16)	(12)
New shares issued under share schemes		6	3
Own shares issued under share schemes		2	1
Own shares purchased		(117)	-
Purchase of non-controlling interests		(8)	-
Dividends paid to equity shareholders of the Company		(178)	(129)
Net cash flows from financing activities		(383)	(922)
Net decrease in cash and cash equivalents and bank overdrafts		(118)	(490)
Cash and cash equivalents and bank overdrafts at beginning of year		636	1,135
Exchange differences		(33)	(9)
Cash and cash equivalents and bank overdrafts at end of year	11	485	636

Notes to the 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.

2          Basis of preparation

The consolidated financial statements of the Company, its subsidiaries, joint ventures and associates are made up to the nearest Saturday to 31 January each year.  The current financial year is the 52 weeks ended 28 January 2012 ('the year').  The comparative financial year is the 52 weeks ended 29 January 2011 ('the prior year'). This only impacts the UK operations with all the other operations reporting on a calendar basis as a result of local statutory requirements.

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 consolidated financial statements for the year ended 28 January 2012.

The condensed financial information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated balance sheet, consolidated cash flow statement and related notes do not constitute statutory financial statements for the 52 weeks ended 28 January 2012, but are derived from those statements. Statutory financial statements for 2011/12 will be filed with the Registrar of Companies in due course. The Group's auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006. Statutory financial statements for 2010/11 have been filed with the Registrar of Companies. The Group's auditors have reported on those accounts; their reports were unqualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006. 

The condensed financial information has been abridged from the 2011/12 statutory financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS and therefore the consolidated financial statements comply with Article 4 of the EU IAS legislation. The condensed financial information has been prepared under the historical cost convention, as modified by the use of valuations for certain financial instruments, share-based payments and post employment benefits.

There are no new standards, amendments or interpretations, which are mandatory for the first time for the financial year ended 28 January 2012, that are relevant and material for the Group.   

Principal rates of exchange

		2011/12		2010/11
	Average rate	Year end rate	Average rate	Year end rate
Euro/£	1.15	1.19	1.17	1.16
US Dollar/£	1.60	1.57	1.54	1.59
Polish Zloty/£	4.80	5.04	4.65	4.52
Chinese Renminbi/£	10.31	9.94	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/cash comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and current other investments.

3          Segmental analysis

Income statement

	2011/12
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	4,338	4,470	1,094	929	10,831
Retail profit	271	423	135	53	882
Exceptional items					(12)
Central costs					(43)
Share of interest and tax of joint ventures and associates					(20)
Operating profit					807
Net finance costs					(10)
Profit before taxation					797

	2010/11
£ 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

 

The operating segments disclosed above are based on the information reported internally to the Board of Directors and Group Executive. This information is predominantly based on the geographical areas in which the Group operates and which are managed separately. The Group only has one business segment being the supply of home improvement products and services.

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.

 

4        Exceptional items

£ millions	2011/12	2010/11
Included within selling and distribution expenses
UK stores acquisition integration	(11)	-
UK restructuring	2	(9)
	(9)	(9)
Included within other income
(Loss)/profit on disposal of properties	(3)	3
	(3)	3
Exceptional items before tax	(12)	(6)
Tax on exceptional items	7	3
Exceptional items	(5)	(3)

The Group acquired 29 ex-Focus DIY stores in the UK in the year and has incurred £11m of costs integrating these into the B&Q store network.

The UK restructuring credit of £2m reflects the release of onerous property contract provisions for idle stores previously included as part of the B&Q UK store closure and downsizing programme in 2005/06. In the prior year, the UK restructuring charge of £9m reflected plans to consolidate the Group's 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 Group has recorded a net exceptional loss of £3m on the disposal of properties (2010/11: £3m net profit).

5        Net finance costs

 

£ millions	2011/12	2010/11
Bank overdrafts and bank loans	(12)	(18)
Medium Term Notes and other fixed term debt	(10)	(21)
Finance leases	(5)	(5)
Financing fair value remeasurements	2	7
Unwinding of discount on provisions	(4)	(3)
Expected net interest charge on defined benefit pension schemes	-	(7)
Other interest payable	(3)	-
Capitalised interest	1	1
Finance costs	(31)	(46)
Cash and cash equivalents and current other investments	19	19
Expected net interest return on defined benefit pension schemes	2	-
Finance income	21	19
Net finance costs	(10)	(27)

6        Income tax expense

£ millions	2011/12	2010/11
UK corporation tax
Current tax on profits for the year	68	73
Adjustments in respect of prior years	(16)	(10)
	52	63
Overseas tax
Current tax on profits for the year	142	118
Adjustments in respect of prior years	(31)	(5)
	111	113
Deferred tax
Current year	12	-
Adjustments in respect of prior years	(12)	5
Adjustments in respect of changes in tax rates	(5)	(1)
	(5)	4
Income tax expense	158	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: 29%). Tax on exceptional items for the year is a credit of £7m, £5m of which relates to prior year items. In 2010/11 tax on exceptional items was a credit of £3m, all of which related to current year items.

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 successfully against this tax liability and as a result received €169m from the French tax authorities in September 2009, representing a refund of the €138m and €31m of repayment settlement. The French tax authorities appealed this decision and the hearing took place in May 2011 with the Court of Appeal finding in Kingfisher's favour. The French tax authorities have appealed this decision to the final level of court although a date for this hearing has not yet been set. Therefore no income has yet been recognised relating to this receipt.

7          Earnings per share

		2011/12			2010/11
	Earnings	Weighted average number of shares	Earnings per share	Earnings	Weighted average number of shares	Earnings per share
	£ millions	millions	pence	£ millions	millions	pence
Basic earnings per share	640	2,331	27.5	494	2,349	21.0
Dilutive share options		44	(0.6)		38	(0.3)
Diluted earnings per share	640	2,375	26.9	494	2,387	20.7
Basic earnings per share	640	2,331	27.5	494	2,349	21.0
Exceptional items	12		0.5	6		0.3
Tax on exceptional and prior year items	(66)		(2.8)	(14)		(0.6)
Financing fair value remeasurements	(2)		(0.1)	(7)		(0.3)
Tax on financing fair value remeasurements	-		-	2		0.1
Adjusted basic earnings per share	584	2,331	25.1	481	2,349	20.5
Diluted earnings per share	640	2,375	26.9	494	2,387	20.7
Exceptional items	12		0.5	6		0.3
Tax on exceptional and prior year items	(66)		(2.7)	(14)		(0.6)
Financing fair value remeasurements	(2)		(0.1)	(7)		(0.3)
Tax on financing fair value remeasurements	-		-	2		0.1
Adjusted diluted earnings per share	584	2,375	24.6	481	2,387	20.2

Basic earnings per share is calculated by dividing the profit for the year attributable to equity shareholders of the Company by the weighted average number of shares in issue during the year, excluding those held in the Employee Share Ownership Plan Trust ('ESOP') which for the purpose of this calculation are treated as cancelled.

For diluted earnings per share, the weighted average number of shares is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees where both the exercise price is less than the average market price of the Company's shares during the year and any related performance conditions have been met.

8          Dividends

£ millions	2011/12	2010/11
Dividends to equity shareholders of the Company
Final dividend for the year ended 29 January 2011 of 5.145p per share (30 January 2010: 3.575p per share)	121	84
Interim dividend for the year ended 28 January 2012 of 2.47p per share (29 January 2011: 1.925p per share)	57	45
	178	129

The proposed final dividend for the year ended 28 January 2012 of 6.37p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability.

 9             Post employment benefits

	2011/12			2010/11
£ millions	UK	Other	Total	UK	Other	Total
Deficit in scheme at beginning of year	(21)	(37)	(58)	(171)	(27)	(198)
Current service cost	(24)	(5)	(29)	(23)	(4)	(27)
Interest on defined benefit obligations	(90)	(3)	(93)	(90)	(2)	(92)
Expected return on pension scheme assets	94	1	95	84	1	85
Actuarial gains/(losses)	18	2	20	134	(6)	128
Contributions paid by employer	48	1	49	45	1	46
Exchange differences	-	1	1	-	-	-
Surplus/(deficit) in scheme at end of year	25	(40)	(15)	(21)	(37)	(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.

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 overall expected rate of return on scheme assets reflects market expectations at the valuation date of long term asset returns and the mix of assets in the schemes.

		2011/12		2010/11
Annual % rate		UK	Other	UK	Other
Discount rate		4.5	4.6	5.6	4.4
Salary escalation		3.8	2.0 to 6.7	4.3	2.0 to 6.7
Rate of pension increases		3.0	-	3.5	-
Price inflation		3.0	2.0	3.5	2.0
Overall expected rate of return on assets		4.5	3.5	6.0	3.5

For the UK scheme, the mortality assumptions used in the actuarial valuations have been selected with regard to the characteristics and experience of the membership of the scheme from 2007 to 2010. The assumptions for life expectancy of UK scheme members are as follows:

Years	2011/12	2010/11
Age to which current pensioners are expected to live (60 now)
- Male	86.4	86.4
- Female	87.1	87.1
Age to which future pensioners are expected to live (60 in 15 years' time)
- Male	87.1	87.1
- Female	88.7	88.7

The following sensitivity analysis for the UK scheme shows the estimated impact on obligations resulting from changes to key actuarial assumptions, whilst holding all other assumptions constant.

Assumption	Change in assumption	Impact on defined benefit obligation
Discount rate	Increase/decrease by 0.1%	Decrease/increase by £36m
Salary escalation	Increase/decrease by 0.1%	Increase/decrease by £3m
Rate of pension increases	Increase/decrease by 0.1%	Increase/decrease by £24m
Price inflation	Increase/decrease by 0.1%	Increase/decrease by £36m
Mortality	Increase in life expectancy by one year	Increase by £57m

10       Cash generated by operations

£ millions	2011/12	2010/11
Operating profit	807	698
Share of post-tax results of joint ventures and associates	(32)	(31)
Depreciation and amortisation	237	238
Impairment losses	7	14
Loss on disposal of property, plant and equipment, investment property and intangible assets	7	4
Share-based compensation	32	21
Increase in inventories	(94)	(238)
Increase in trade and other receivables	(28)	(10)
(Decrease)/increase in trade and other payables	(65)	107
Movement in provisions	(24)	(21)
Movement in post employment benefits	(20)	(19)
Cash generated by operations	827	763

11        Net debt

£ millions	2011/12	2010/11
Cash and cash equivalents	587	731
Bank overdrafts	(102)	(95)
Cash and cash equivalents and bank overdrafts	485	636
Bank loans	(98)	(104)
Medium Term Notes and other fixed term debt	(478)	(504)
Financing derivatives	67	56
Finance leases	(64)	(70)
Net (debt)/cash	(88)	14
£ millions	2011/12	2010/11
Net cash/(debt) at beginning of year	14	(250)
Net decrease in cash and cash equivalents and bank overdrafts	(118)	(490)
Repayment of bank loans	10	57
Repayment of Medium Term Notes and other fixed term debt	30	696
Payment/(receipt) on financing derivatives	5	(6)
Capital element of finance lease rental payments	16	12
Cash flow movement in net debt	(57)	269
Exchange differences and other non-cash movements	(45)	(5)
Net (debt)/cash at end of year	(88)	14

 

END

 

 

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