REG - Kingfisher PLC - Annual Financial Report & Notice of AGM <Origin Href="QuoteRef">KGF.L</Origin> - Part 2
21/04/2017 11:01
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All investments are evaluated and monitored via our post-investment review methodology in place across the business.- The financial performance of investments is monitored ensuring early corrective action can be taken if needed.
7. TECHNOLOGY DELIVERY 8. EFFICIENCY SAVINGS
Our unified IT platform fails to deliver the requirements in line with the plan needed to enable/support the delivery of the company strategy. We fail to identify and maximise potential cost reductions and efficiency savings.
Strategic Pillar Strategic Pillar
- Digital - Operational Efficiency
How our risks have changed How our risks have changed
Increasing. The implementation within B&Q is nearing completion and the roll-out is commencing in the remainder of our Operating Companies. Whilst we have confidence in thesolution and our roll-out process, the risk is increased for us as more of the estate is exposed to the implementation. No change. The project targets were based on an initial number of estimated savings. A plan is now in place to deliver these savings.
How we manage and monitor the risk How we manage and monitor the risk
- Change control procedure in place with the leadership team having final approval on all functional changes.- The roll-out plan avoids a 'big bang' implementation approach, instead gradual increments are implemented over a short period, ensuring dual running kept to a minimum and allowing any issues to be identified and resolved before moving on.- Process in place to establish learning points and to ensure these are built into future roll outs.- Agile ways of working are already in place and are currently being enhanced.- A new process has been introduced to deliver the transformational change, including tracking alignment, dependencies and expectations.- Existing partners have skills that can support our needs in this area.- Retaining knowledge by ensuring the colleagues who established the template are involved in the programme through the central team or via the local roll-out.- Applications are being provided in accordance with our proposed three-tier architecture, which provides flexibility to areas where innovative ideas are most likely, tools are typically agnostic and therefore can be interchanged in the event this is required.- Digital IT team is integrated within the overall IT function with common release management and operations in place. - Each Operating Company reviews its cost base and identifies potential savings as part of the planning process.- Identified savings are monitored as part of the budgeting and forecasting processes.- As part of our investment in IT we have
identified a number of benefits and benchmarked these externally.- One of our strategic pillars is Optimising our Operational Efficiency which is driven by our Goods Not For Resale opportunity. Specific controls in this area are as follows:o A project
team is in place to review categories of spend across the company and not only identify cost savings but also opportunities to work in a more effective way.o Project teams are supported by a Steering Group whose responsibilities include monitoring plans,
milestones and the financial impact for each category.o Initial review committed to delivery of targets over the first three years. Year 1 has delivered earlier than plan, we have plans in place to deliver Year 2 and Year 3 is now being planned.o Regular
reporting and review against budget targets and forecast.o Procurement Excellence Programme launched to optimise key processes within the procurement function.
9. INVESTING IN OUR PEOPLE 10. HEALTH & SAFETY
We do not make the necessary investment in our people to ensure that we have the appropriate capacity, skills and experience. We fail to maintain a safe environment for our customers and store colleagues, which results in a major incident or fatality that is directly attributable to a failure in our Health & Safety management systems.
Strategic Pillar Strategic Pillar
- Unified & Unique Offer- Digital- Operational Efficiency- Retail Operations - Retail Operations
How our risks have changed How our risks have changed
No change. We continue to monitor and manage this risk closely. While the risk exposure is significant, we have a clear understanding of the scale of the change and plans in place to deliver the model. No change. Our Safety network is embedded in the business and continues to work with the Operating Companies to ensure our minimum standards are maintained during the transformation.
How we manage and monitor the risk How we manage and monitor the risk
- The Chief People Officer is leading the work to improve our capabilities, ensuring we have effective KPIs and relevant reward structures.- Work is underway to redesign, where required, HR processes, policies and guidelines to ensure they are fit for purpose and in line with our ambition. Initial focus will be on recruitment, reward, talent and engagement.- Remuneration Committee oversees the reward policy.- Reviewing our engagement methodology to ensure we have an appropriate and timely engagement methodology which enables us to check across all staff our ability to drive the changes we need whilst being able to respond to any insights which may impact upon our duty of care as an employer.- Creating a strong pipeline of developing talent through structured programmes including graduate and high potential schemes e.g. LEAD programme (Leadership Exploration and Development) for the development of senior leaders.- Nomination Committee oversees the Board composition and succession planning.- Continue to invest in development activities for our store- based colleagues and in how we support and recognise the role of our customer advisors across the organisation. - The Board reviews and challenges Health & Safety performance, standards and targets across our Operating Companies.- Group Health and Safety Committee sets the policy and standards for the company.- Group Minimum Safety Standards with detailed
guidance for identified risks are in place across the Operating Companies.- Dedicated Safety team and responsible Director in each of our Operating Companies to ensure the Health & Safety policy is implemented and communicated.- The Group Safety
Officer monitors compliance and provides help and support to the Operating Companies.- Compliance is monitored across our Operating Companies through a programme of self-certification and Health & Safety audits, with issues reported through local Audit
Committees and escalated to the leadership team, Group Audit Committee or Board where necessary.
10. REPUTATION 11. MACRO-ECONOMIC FACTORS
Kingfisher's reputation and brand are affected by a major environmental or ethical failure, major corporate issue or crisis, a significant corporate fraud or material non- compliance with legislative or regulatory requirements resulting in punitive or custodial procedures. Uncertainty surrounding the resilience of the global economy and increased geo-political volatility, may impact both consumer confidence and the long-term sustainability and capabilities of our supplier base.
Strategic Pillar Strategic Pillar
- Retail Operations - Retail Operations
How our risks have changed How our risks have changed
No change. There is a potential for the risk to increase in this area as we go forward with our transformation, however, we are putting procedures in place to mitigate this risk and therefore believe there is no change in the risk. Increasing. This is an area of increasing risk. There are still a number of uncertainties relating to the UK's exit from the EU and heightened geopolitical tensions in some of our markets.
How we manage and monitor the risk How we manage and monitor the risk
- Both employees and suppliers working for or with Kingfisher must conduct themselves according to our minimum standards of ethics and behaviours as defined by our Code of Conduct.- Responsibility for compliance with our Code of Conduct rests with each Operating Company Chief Executive.- Appropriate resources are available to our Operating Companies to ensure that both colleagues and suppliers are aware of, and comply with, the Code.- Legal teams in Group and each of our Operating Companies work and communicate together to form a legal compliance network.- Communications teams at Kingfisher and each of our Operating Companies work together to form a communications network.- Policies and procedures in place to support the environmental, ethical, fraud, crisis management, legislative and regulatory areas. Specifically;o Competition law compliance messaging and training.o Working group in place to manage and oversee the new European and Russian Data Protection legal requirements.o Anti-bribery training in place and all key individuals must complete this training.o Whistleblowing hotline throughout the Group and all calls are followed up, including monitoring at the local Audit Committee level.o Disclosure policy and training in place. - The provision of supply chain finance programmes to support suppliers.- Portfolio of international banking partners that provide flexibility, access to funding and reliable local retail cash and card payment processing services.- Diversification
of cash holdings across a number of financial institutions with the strongest short-term credit rating.- An appropriate and prudent mix of hedging policies, cash deposits and debt financing to minimise the impact of foreign exchange currency volatility
on the company.- Government Affairs team actively monitors the political and economic situations in the countries in which we operate or may impact our operations.- Strategies in place to identify, monitor and aim to influence changes to legislation
which may impact the business.- The Government Affairs team oversees direct policy and political engagement with dedicated resource in the UK, France, Belgium, Poland and Russia, supported by local representatives in our Operating Companies and our
membership of key business trade associations in every market.- Actively monitoring the Brexit process via the Government Affairs team, Treasury, Finance and Tax teams alongside UK and French Operating Companies.- Work has begun to consider the
implications of Brexit, including presenting high level implications of this to the Board. As the situation becomes clearer and the mechanics of an exit are known, more detailed plans will be prepared.
2. Details of Related Party Transactions
During the year, the Company and its subsidiaries carried out a number of
transactions with related parties in the normal course of business and on an
arm's length basis. The names of the related parties, the nature of these
transactions and their total value are shown below:
2016/17 2015/16
£millions Income Receivable Income Receivable
Transactions with Koçtas Yapi Marketleri Ticaret A.S. in which the Group holds a 50% interest Commission and other income 1.0 0.4 1.2 0.1
Transactions with Crealfi S.A. in which the Group holds a 49% interest Provision of employee services Commission and other income 0.16.4 -0.3 0.15.7 -0.3
Transactions with Kingfisher Pension Scheme Provision of administrative services 1.3 0.1 1.2 0.1
Services are usually negotiated with related parties on a cost-plus basis.
Goods are sold or bought on the basis of the price lists in force with
non-related parties.
The remuneration of key management personnel is disclosed in note 8.
Other transactions with the Kingfisher Pension Scheme are disclosed in note
27.
3. Directors' Statement of Responsibility
The directors confirm that to the best of their knowledge:
- the financial statements, prepared in accordance with the relevant
financial reporting framework, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the company and the
undertakings included in the consolidation taken as a whole;
- the strategic report includes a fair review of the development and
performance of the business and the position of the company and the
undertakings included in the consolidation taken as a whole, together with a
description of the principal risks and uncertainties they face; and
- the Annual Report and financial statements, taken as a whole are fair,
balanced and understandable and provide the information necessary for
shareholders to assess the company's performance, business model and
strategy.
Paul Moore, Group Company Secretary
Tel: +44 (0)207 644 1041
Kingfisher plc
3 Sheldon Square, London W2 6PX
- Ends -
This information is provided by RNS
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