Interim results part 2

RNS Number : 0450M

Kingfisher PLC

12 September 2012

 



KINGFISHER PLC

2012/13 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

		Half year ended 28 July 2012				Half year ended 30 July 2011
		Before	Exceptional			Before	Exceptional
		exceptional	items			exceptional	items
£ millions	Notes	items	(note 5)	Total		items	(note 5)	Total
Sales	4	5,478	-	5,478		5,662	-	5,662
Cost of sales		(3,453)	-	(3,453)		(3,559)	-	(3,559)
Gross profit		2,025	-	2,025		2,103	-	2,103
Selling and distribution expenses		(1,406)	4	(1,402)		(1,407)	-	(1,407)
Administrative expenses		(271)	(11)	(282)		(282)	-	(282)
Other income		19	1	20		16	-	16
Share of post-tax results of joint ventures and associates		7	-	7		13	-	13
Operating profit		374	(6)	368		443	-	443
Analysed as:
Retail profit	4	403	(6)	397		473	-	473
Central costs		(22)	-	(22)		(21)	-	(21)
Share of interest and tax of joint ventures and associates		(7)	-	(7)		(9)	-	(9)
Finance costs		(11)	-	(11)		(12)	-	(12)
Finance income		7	-	7		7	-	7
Net finance costs	6	(4)	-	(4)		(5)	-	(5)
Profit before taxation		370	(6)	364		438	-	438
Income tax expense	7	(106)	1	(105)		(118)	-	(118)
Profit for the period		264	(5)	259		320	-	320
Attributable to:
Equity shareholders of the Company				259				321
Non-controlling interests				-				(1)
				259				320
Earnings per share	8
Basic				11.1p				13.7p
Diluted				10.9p				13.5p
Adjusted basic				11.5p				13.5p
Adjusted diluted				11.2p				13.2p

The proposed interim dividend for the period ended 28 July 2012 is 3.09p per share.

KINGFISHER PLC

2012/13 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

		Year ended 28 January 2012
		Before	Exceptional
		exceptional	items
£ millions	Notes	items	(note 5)	Total
Sales	4	10,831	-	10,831
Cost of sales		(6,748)	-	(6,748)
Gross profit		4,083	-	4,083
Selling and distribution expenses		(2,769)	(9)	(2,778)
Administrative expenses		(560)	-	(560)
Other income		33	(3)	30
Share of post-tax results of joint ventures and associates		32	-	32
Operating profit		819	(12)	807
Analysed as:
Retail profit	4	882	(12)	870
Central costs		(43)	-	(43)
Share of interest and tax of joint ventures and associates		(20)	-	(20)
Finance costs		(31)	-	(31)
Finance income		21	-	21
Net finance costs	6	(10)	-	(10)
Profit before taxation		809	(12)	797
Income tax expense	7	(165)	7	(158)
Profit for the year		644	(5)	639
Attributable to:
Equity shareholders of the Company				640
Non-controlling interests				(1)
				639
Earnings per share	8
Basic				27.5p
Diluted				26.9p
Adjusted basic				25.1p
Adjusted diluted				24.6p

KINGFISHER PLC

2012/13 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

£ millions	Half year ended 28 July 2012	Half year ended 30 July 2011	Year ended 28 January 2012
Profit for the period	259	320	639
Actuarial (losses)/gains on post employment benefits	(66)	(19)	20
Currency translation differences
Group	(144)	16	(128)
Joint ventures and associates	(12)	3	(10)
Cash flow hedges
Fair value gains/(losses)	10	(13)	10
(Gains)/losses transferred to inventories	(8)	12	8
Tax on other comprehensive income	21	5	(9)
Other comprehensive income for the period	(199)	4	(109)
Total comprehensive income for the period	60	324	530
Attributable to:
Equity shareholders of the Company	61	325	530
Non-controlling interests	(1)	(1)	-
	60	324	530

KINGFISHER PLC

2012/13 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 29 January 2012	372	2,199	(134)	2,869	413	5,719	8	5,727
Profit for the period	-	-	-	259	-	259	-	259
Actuarial losses on post employment benefits	-	-	-	(66)	-	(66)	-	(66)
Currency translation differences Group	-	-	-	-	(143)	(143)	(1)	(144)
Joint ventures and associates	-	-	-	-	(12)	(12)	-	(12)
Cash flow hedges Fair value gains	-	-	-	-	10	10	-	10
Gains transferred to inventories	-	-	-	-	(8)	(8)	-	(8)
Tax on other comprehensive income	-	-	-	19	2	21	-	21
Other comprehensive income for the period	-	-	-	(47)	(151)	(198)	(1)	(199)
Total comprehensive income for the period	-	-	-	212	(151)	61	(1)	60
Share-based compensation	-	-	-	11	-	11	-	11
New shares issued under share schemes	-	1	-	-	-	1	-	1
Own shares issued under share schemes	-	-	61	(57)	-	4	-	4
Dividends	-	-	-	(148)	-	(148)	-	(148)
At 28 July 2012	372	2,200	(73)	2,887	262	5,648	7	5,655
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
New shares issued under share schemes	1	-	-	-	-	1	-	1
Own shares issued under share schemes	-	-	21	(20)	-	1	-	1
Own shares purchased	-	-	(117)	-	-	(117)	-	(117)
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

KINGFISHER PLC

2012/13 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 year	-	-	-	640	-	640	(1)	639
Actuarial gains on post employment benefits	-	-	-	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

KINGFISHER PLC

2012/13 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions	Notes	At 28 July 2012	At 30 July 2011	At 28 January 2012
Non-current assets
Goodwill		2,396	2,398	2,397
Other intangible assets		148	98	123
Property, plant and equipment		3,573	3,754	3,667
Investment property		52	40	55
Investments in joint ventures and associates		256	266	271
Post employment benefits	11	-	-	25
Deferred tax assets		20	24	23
Derivatives		57	56	66
Other receivables		18	19	17
		6,520	6,655	6,644
Current assets
Inventories		1,932	1,956	1,844
Trade and other receivables		567	574	531
Derivatives		33	11	26
Current tax assets		2	38	1
Cash and cash equivalents		613	594	587
		3,147	3,173	2,989
Total assets		9,667	9,828	9,633
Current liabilities
Trade and other payables		(2,558)	(2,558)	(2,356)
Borrowings		(315)	(253)	(367)
Derivatives		(5)	(19)	(6)
Current tax liabilities		(314)	(386)	(305)
Provisions		(45)	(26)	(16)
		(3,237)	(3,242)	(3,050)
Non-current liabilities
Other payables		(107)	(79)	(121)
Borrowings		(334)	(563)	(375)
Derivatives		(2)	(14)	(8)
Deferred tax liabilities		(252)	(262)	(269)
Provisions		(36)	(42)	(43)
Post employment benefits	11	(44)	(68)	(40)
		(775)	(1,028)	(856)
Total liabilities		(4,012)	(4,270)	(3,906)
Net assets		5,655	5,558	5,727
Equity
Share capital		372	372	372
Share premium		2,200	2,194	2,199
Own shares held		(73)	(138)	(134)
Retained earnings		2,887	2,567	2,869
Other reserves	12	262	556	413
Total attributable to equity shareholders of the Company		5,648	5,551	5,719
Non-controlling interests		7	7	8
Total equity		5,655	5,558	5,727

The interim financial report was approved by the Board of Directors on 11 September 2012 and signed on its behalf by:

Ian Cheshire, Group Chief Executive

Kevin O'Byrne, Group Finance Director

KINGFISHER PLC

2012/13 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

£ millions	Notes	Half year ended 28 July 2012	Half year ended 30 July 2011	Year ended 28 January 2012
Operating activities
Cash generated by operations	13	535	375	827
Income tax paid		(74)	(68)	(148)
Net cash flows from operating activities		461	307	679
Investing activities
Purchase of businesses		-	(2)	(2)
Purchase of property, plant and equipment, investment property and intangible assets		(172)	(263)	(450)
Disposal of property, plant and equipment, investment property and intangible assets		6	-	9
Interest received		7	6	19
Dividends received from joint ventures and associates		10	9	10
Net cash flows from investing activities		(149)	(250)	(414)
Financing activities
Interest paid		(9)	(9)	(22)
Interest element of finance lease rental payments		(2)	(2)	(5)
Repayment of bank loans		(5)	(8)	(10)
Repayment of Medium Term Notes and other fixed term debt		-	(10)	(30)
Payment on financing derivatives		-	(3)	(5)
Capital element of finance lease rental payments		(6)	(6)	(16)
New shares issued under share schemes		1	1	6
Own shares issued under share schemes		4	1	2
Own shares purchased		-	(117)	(117)
Purchase of non-controlling interests		-	(7)	(8)
Dividends paid to equity shareholders of the Company		(148)	(121)	(178)
Net cash flows from financing activities		(165)	(281)	(383)
Net increase/(decrease) in cash and cash equivalents and bank overdrafts		147	(224)	(118)
Cash and cash equivalents and bank overdrafts at beginning of period		485	636	636
Exchange differences		(51)	22	(33)
Cash and cash equivalents and bank overdrafts at end of period	14	581	434	485

KINGFISHER PLC

2012/13 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 28 January 2012 were approved by the Board of Directors on 21 March 2012 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 11 September 2012.

2.         Basis of preparation

The interim financial report for the 26 weeks ended 28 July 2012 ('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 28 January 2012, 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, '2011/12' 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 28 July 2012.

Principal rates of exchange against Sterling

	Half year ended 28 July 2012		Half year ended 30 July 2011		Year ended 28 January 2012
	Average rate	Period end rate	Average rate	Period end rate	Average rate	Year end rate
Euro	1.23	1.27	1.14	1.14	1.15	1.19
US Dollar	1.58	1.57	1.62	1.65	1.60	1.57
Polish Zloty	5.16	5.24	4.54	4.57	4.80	5.04
Chinese Renminbi	9.99	10.02	10.56	10.59	10.31	9.94

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 the impact of changes in tax rates on deferred tax.

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 28 January 2012, 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 2 February 2013 and expected to have a material impact on the Group's results.

4.         Segmental analysis

Income statement

	Half year ended 28 July 2012
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Sales	2,264	2,206	513	495	5,478
Retail profit	145	191	54	13	403
Exceptional items					(6)
Central costs					(22)
Share of interest and tax of joint ventures and associates					(7)
Operating profit					368
Net finance costs					(4)
Profit before taxation					364

	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

	Year ended 28 January 2012
£ 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

Balance sheet

	At 28 July 2012
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,350	1,237	480	564	3,631
Central liabilities					(401)
Goodwill					2,396
Net cash					29
Net assets					5,655

	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 28 January 2012
£ millions	UK & Ireland	France	Other International		Total
			Poland	Other
Segment assets	1,403	1,309	505	596	3,813
Central liabilities					(395)
Goodwill					2,397
Net debt					(88)
Net assets					5,727

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	28 July 2012	30 July 2011	28 January 2012
Included within selling and distribution expenses
UK restructuring	4	2	2
UK stores acquisition integration	-	(2)	(11)
	4	-	(9)
Included within administrative expenses
UK restructuring	(22)	-	-
Net pension gain	11	-	-
	(11)	-	-
Included within other income
Profit/(loss) on disposal of properties	1	-	(3)
	1	-	(3)
Exceptional items before tax	(6)	-	(12)
Tax on exceptional items	1	-	7
Exceptional items	(5)	-	(5)

The UK restructuring net charge of £18m principally reflects the streamlining of B&Q UK & Ireland's store support office and kitchen, bathroom and bedroom business as well as IT services. It also includes a £4m release (2011/12: £2m) of an onerous property contract provision for idle stores either sublet or exited in the period, which had previously been included as part of the B&Q UK store closure and downsizing programme in 2005/06.

In the prior year the Group acquired 29 Focus stores in the UK and incurred £2m of costs in the first half, £11m for the full year, integrating these into the B&Q store network.

The net pension gain of £11m includes a £27m curtailment gain arising due to the closure of the UK final salary scheme to future benefit accrual. Offsetting the gain is a charge of £16m for transitional payments to scheme members.

The gain on disposal of properties is £1m (2011/12: £nil) and for the year ended 28 January 2012 was a loss of £3m.

6.         Net finance costs

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Bank overdrafts and bank loans	(3)	(5)	(12)
Medium Term Notes and other fixed term debt	(4)	(5)	(10)
Finance leases	(2)	(2)	(5)
Financing fair value remeasurements	(1)	(1)	2
Unwinding of discount on provisions	-	-	(4)
Expected net interest charge on defined benefit pension schemes	(2)	-	-
Other interest payable	-	-	(3)
Capitalised interest	1	1	1
Finance costs	(11)	(12)	(31)
Cash and cash equivalents and current other investments	7	6	19
Expected net interest return on defined benefit pension schemes	-	1	2
Finance income	7	7	21
Net finance costs	(4)	(5)	(10)

7.         Income tax expense

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
UK corporation tax
Current tax on profits for the period	30	55	68
Adjustments in respect of prior years	3	2	(16)
	33	57	52
Overseas tax
Current tax on profits for the period	65	65	142
Adjustments in respect of prior years	(1)	-	(31)
	64	65	111
Deferred tax
Current period	8	4	12
Adjustments in respect of prior years	3	(3)	(12)
Adjustments in respect of changes in tax rates	(3)	(5)	(5)
	8	(4)	(5)
Income tax expense	105	118	158

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 28% (2011/12: 28%), representing the best estimate of the effective rate for the full financial year. The effective tax rate for the year ended 28 January 2012 was 28%. Tax on exceptional items for the current period is a credit of £1m (2011/12: £nil). Tax on exceptional items for the year ended 28 January 2012 was a credit of £7m, £5m of which related to prior 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 supplement. 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.

8.         Earnings per share

	Half year ended	Half year ended	Year ended
Pence	28 July 2012	30 July 2011	28 January 2012
Basic earnings per share	11.1	13.7	27.5
Effect of dilutive share options	(0.2)	(0.2)	(0.6)
Diluted earnings per share	10.9	13.5	26.9
Basic earnings per share	11.1	13.7	27.5
Exceptional items	0.3	-	0.5
Tax on exceptional and prior year items	0.1	(0.3)	(2.8)
Financing fair value remeasurements	-	0.1	(0.1)
Adjusted basic earnings per share	11.5	13.5	25.1
Diluted earnings per share	10.9	13.5	26.9
Exceptional items	0.2	-	0.5
Tax on exceptional and prior year items	0.1	(0.3)	(2.7)
Financing fair value remeasurements	-	-	(0.1)
Adjusted diluted earnings per share	11.2	13.2	24.6

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	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Earnings	259	321	640
Exceptional items	6	-	12
Tax on exceptional and prior year items	1	(6)	(66)
Financing fair value remeasurements	1	1	(2)
Adjusted earnings	267	316	584

The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust (ESOP), is 2,332m (2011/12: 2,339m). The diluted weighted average number of shares in issue during the period is 2,379m (2011/12: 2,385m). For the year ended 28 January 2012, the weighted average number of shares in issue was 2,331m and the diluted weighted average number of shares in issue was 2,375m.

9.         Dividends

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Dividends to equity shareholders of the Company
Final dividend for the year ended 28 January 2012 of 6.37p per share	148	-	-
Interim dividend for the year ended 28 January 2012 of 2.47p per share	-	-	57
Final dividend for the year ended 29 January 2011 of 5.145p per share	-	121	121
	148	121	178

The proposed interim dividend for the period ended 28 July 2012 is 3.09p per share.

10.        Capital expenditure

Additions to the cost of property, plant and equipment, investment property and intangible assets are £176m (2011/12: £238m) and for the year ended 28 January 2012 were £443m. Disposals in net book value of property, plant and equipment, investment property and intangible assets are £5m (2011/12: £1m) and for the year ended 28 January 2012 were £20m.

Capital commitments contracted but not provided for at the end of the period are £34m (2011/12: £84m) and at 28 January 2012 were £139m.

11.        Post employment benefits

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Net deficit in schemes at beginning of period	(15)	(58)	(58)
Current service cost	(14)	(14)	(29)
Interest on defined benefit obligations	(44)	(46)	(93)
Expected return on pension scheme assets	42	47	95
Curtailment gain	27	-	-
Actuarial (losses)/gains	(66)	(19)	20
Contributions paid by employer	23	23	49
Exchange differences	3	(1)	1
Net deficit in schemes at end of period	(44)	(68)	(15)

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 28 January 2012.

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	28 July 2012	30 July 2011	28 January 2012
Discount rate	4.0	5.3	4.5
Price inflation	2.6	3.5	3.0

The UK final salary scheme was closed to future benefit accrual with effect from 30 June 2012, resulting in a curtailment gain of £27m. From this date all UK employees have had the opportunity to join an enhanced defined contribution scheme. The reduction in future contributions to the final salary scheme is expected to be offset significantly by the increased employee participation in, and employer contributions to, the enhanced defined contribution scheme.

12.        Other reserves

£ millions	Cash flow hedge reserve	Translation reserve	Other	Total
At 29 January 2012	7	247	159	413
Currency translation differences Group	-	(143)	-	(143)
Joint ventures and associates	-	(12)	-	(12)
Cash flow hedges Fair value gains	10	-	-	10
Gains transferred to inventories	(8)	-	-	(8)
Tax on other comprehensive income	(1)	3	-	2
Other comprehensive income for the period	1	(152)	-	(151)
At 28 July 2012	8	95	159	262
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 30 January 2011	(5)	385	159	539
Currency translation differences Group	-	(129)	-	(129)
Joint ventures and associates	-	(10)	-	(10)
Cash flow hedges Fair value gains	10	-	-	10
Losses transferred to inventories	8	-	-	8
Tax on other comprehensive income	(6)	1	-	(5)
Other comprehensive income for the year	12	(138)	-	(126)
At 28 January 2012	7	247	159	413

13.        Cash generated by operations

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Operating profit	368	443	807
Share of post-tax results of joint ventures and associates	(7)	(13)	(32)
Depreciation and amortisation	122	115	237
Impairment losses	-	-	7
(Profit)/loss on disposal of property, plant and equipment, investment property and intangible assets	(1)	1	7
Share-based compensation charge	11	17	32
Increase in inventories	(152)	(155)	(94)
Increase in trade and other receivables	(57)	(63)	(28)
Increase/(decrease) in trade and other payables	264	50	(65)
Movement in provisions	23	(11)	(24)
Movement in post employment benefits	(36)	(9)	(20)
Cash generated by operations	535	375	827

14.        Net cash/(debt)

	At	At	At
£ millions	28 July 2012	30 July 2011	28 January 2012
Cash and cash equivalents	613	594	587
Bank overdrafts	(32)	(160)	(102)
Cash and cash equivalents and bank overdrafts	581	434	485
Bank loans	(91)	(96)	(98)
Medium Term Notes and other fixed term debt	(464)	(493)	(478)
Financing derivatives	65	36	67
Finance leases	(62)	(67)	(64)
Net cash/(debt)	29	(186)	(88)

	Half year ended	Half year ended	Year ended
£ millions	28 July 2012	30 July 2011	28 January 2012
Net (debt)/cash at beginning of period	(88)	14	14
Net increase/(decrease) in cash and cash equivalents and bank overdrafts	147	(224)	(118)
Repayment of bank loans	5	8	10
Repayment of Medium Term Notes and other fixed term debt	-	10	30
Payment on financing derivatives	-	3	5
Capital element of finance lease rental payments	6	6	16
Cash flow movement in net cash/(debt)	158	(197)	(57)
Exchange differences and other non-cash movements	(41)	(3)	(45)
Net cash/(debt) at end of period	29	(186)	(88)

15.        Contingent assets and liabilities

Kingfisher plc has an obligation to provide a bank guarantee for £50m (2011/12: £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 28 January 2012 the amount was £50m.

The Group has arranged for certain guarantees to be provided to third parties in the ordinary course of business. Of these guarantees, only £6m (2011/12: £9m) would crystallise due to possible future events not wholly within the Group's control. At 28 January 2012 the amount was £10m.

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 36 of the annual financial statements for the year ended 28 January 2012. 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 28 January 2012. There have been no changes in the period.

By order of the Board

Ian Cheshire                                                                        Kevin O'Byrne

Group Chief Executive                                                        Group Finance Director

11 September 2012                                                            11 September 2012

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 28 July 2012 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 28 July 2012 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

11 September 2012

 

END

 

 

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