REG - Kingfisher PLC - Half-Year Results - (Part 2 of 2)
21/09/2021 07:00
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RNS Number : 3748M Kingfisher PLC 21 September 2021
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Half year ended 31 July 2021 Half year ended 31 July 2020
£ millions Notes Before adjusting items Adjusting items (note 5) Total Before adjusting items Adjusting items (note 5) Total
Sales 4 7,101 - 7,101 5,921 - 5,921
Cost of sales (4,404) - (4,404) (3,735) - (3,735)
Gross profit 2,697 - 2,697 2,186 - 2,186
Selling and distribution expenses (1,554) - (1,554) (1,302) (27) (1,329)
Administrative expenses (417) 7 (410) (390) 10 (380)
Other income 12 1 13 11 - 11
Share of post-tax results of joint ventures and associates 1 - 1 (2) - (2)
Operating profit 4 739 8 747 503 (17) 486
Finance costs (76) - (76) (94) - (94)
Finance income 6 - 6 6 - 6
Net finance costs 6 (70) - (70) (88) - (88)
Profit before taxation 669 8 677 415 (17) 398
Income tax expense 8 (144) 23 (121) (98) 17 (81)
Profit for the period 525 31 556 317 - 317
Earnings per share 9
Basic 26.4p 15.1p
Diluted 26.2p 15.0p
Adjusted basic 24.9p 15.1p
Adjusted diluted 24.7p 15.0p
The proposed interim ordinary dividend for the period ended 31 July 2021 is
3.80p per share (2020/21: 2.75p per share).
The Group no longer uses the term 'exceptional adjusting items' within its
Alternative Performance Measure definitions, with the term 'adjusting items'
now judged to be more appropriate. As a result, the previous columnar
presentation in the consolidated income statement has been revised to include
all 'adjusting items', including prior year tax items. Refer to note 2.
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Year ended 31 January 2021
£ millions Notes Before adjusting Adjusting Total
items items
(note 5)
Sales 4 12,343 - 12,343
Cost of sales (7,770) - (7,770)
Gross profit 4,573 - 4,573
Selling and distribution expenses (2,843) 12 (2,831)
Administrative expenses (809) (6) (815)
Other income 19 13 32
Other expenses - (49) (49)
Share of post-tax results of joint ventures and associates 6 - 6
Operating profit 4 946 (30) 916
Finance costs (180) - (180)
Finance income 20 - 20
Net finance costs 6 (160) - (160)
Profit before taxation 786 (30) 756
Income tax expense 8 (182) 18 (164)
Profit for the year 604 (12) 592
Earnings per share 9
Basic 28.1p
Diluted 27.9p
Adjusted basic 28.7p
Adjusted diluted 28.5p
The Group no longer uses the term 'exceptional adjusting items' within its
Alternative Performance Measure definitions, with the term 'adjusting items'
now judged to be more appropriate. As a result, the previous columnar
presentation in the consolidated income statement has been revised to include
all 'adjusting items', including prior year tax items. Refer to note 2.
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
£ millions Half year ended Half year ended Year ended
31 July 2021 31 July 2020 31 January 2021
Notes
Profit for the period 556 317 592
Remeasurements of post-employment benefits 12 (12) 195 68
Inventory cash flow hedges - fair value gains/(losses) 6 (7) (48)
Tax on items that will not be reclassified 1 (67) (13)
Total items that will not be reclassified (5) 121 7
subsequently to profit or loss
Currency translation differences
Group (148) 204 112
Joint ventures and associates (2) - (2)
Transferred to income statement - - 49
Other cash flow hedges
Fair value gains 4 6 5
Gains transferred to income statement (4) (6) (5)
Total items that may be reclassified subsequently to profit or loss (150) 204 159
Other comprehensive (loss)/income for the period (155) 325 166
Total comprehensive income for the period 401 642 758
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year ended 31 July 2021
Share capital Own shares held Capital Other Total equity
£ millions Share Retained earnings redemption reserves
premium reserve (note 14)
At 1 February 2021 332 2,228 (23) 3,630 43 361 6,571
Profit for the period - - - 556 - - 556
Other comprehensive loss for the period - - - (9) - (146) (155)
Total comprehensive income for the period - - - 547 - (146) 401
Inventory cash flow hedges - losses transferred to inventories - - - - - 34 34
Share-based compensation - - - 14 - - 14
New shares issued under share schemes - - - 2 - - 2
Own shares issued under share schemes - - 11 (11) - - -
Purchase of own shares for ESOP trust - - (29) - - - (29)
Dividends - - - (174) - - (174)
Tax on equity items - - - - - (8) (8)
At 31 July 2021 332 2,228 (41) 4,008 43 241 6,811
Half year ended 31 July 2020
Share capital Own shares held Capital Other Total equity
£ millions Share Retained earnings redemption reserves
premium reserve (note 14)
At 1 February 2020 332 2,228 (23) 2,994 43 228 5,802
Profit for the period - - - 317 - - 317
Other comprehensive income for the period - - - 126 - 199 325
Total comprehensive income for the period - - - 443 - 199 642
Inventory cash flow hedges - gains transferred to inventories - - - - - (19) (19)
Share-based compensation - - - 11 - - 11
Own shares issued under share schemes - - 9 (9) - - -
Tax on equity items - - - - - 6 6
At 31 July 2020 332 2,228 (14) 3,439 43 414 6,442
Year ended 31 January 2021
Share capital Own shares held Capital Other Total equity
£ millions Share Retained earnings redemption reserves
premium reserve (note 14)
At 1 February 2020 332 2,228 (23) 2,994 43 228 5,802
Profit for the year - - - 592 - - 592
Other comprehensive income for the year - - - 44 - 122 166
Total comprehensive income for the year - - - 636 - 122 758
Inventory cash flow hedges - losses transferred to inventories
- - - - - 13 13
Share-based compensation - - - 14 - - 14
New shares issued under share schemes - - - 1 - - 1
Own shares issued under share schemes - - 14 (14) - - -
Purchase of own shares for ESOP trust - - (14) - - - (14)
Tax on equity items - - - (1) - (2) (3)
At 31 January 2021 332 2,228 (23) 3,630 43 361 6,571
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEET
£ millions Notes At 31 July 2021 At 31 July 2020 restated (note 2) At 31 January 2021
Non-current assets
Goodwill 2,425 2,419 2,427
Other intangible assets 11 320 332 320
Property, plant and equipment 11 2,982 3,033 3,075
Investment property 11 20 20 20
Right-of-use assets 1,785 1,872 1,845
Investments in joint ventures and associates 18 14 20
Post-employment benefits 12 506 612 504
Deferred tax assets 19 12 15
Other tax authority asset 17 64 - 57
Other receivables 26 23 29
8,165 8,337 8,312
Current assets
Inventories 2,730 2,383 2,488
Trade and other receivables 317 345 290
Derivative assets 13 11 34 5
Current tax assets 23 18 20
Cash and cash equivalents 1,535 2,450 1,142
Assets held for sale 6 184 12
4,622 5,414 3,957
Total assets 12,787 13,751 12,269
Current liabilities
Trade and other payables (2,947) (2,774) (2,520)
Borrowings 13 (111) (1,240) (101)
Lease liabilities (333) (351) (330)
Derivative liabilities 13 (27) (49) (59)
Current tax liabilities (126) (94) (70)
Other tax authority liability 17 - - (57)
Provisions (35) (52) (46)
Liabilities directly associated with assets held for sale - (67) -
(3,579) (4,627) (3,183)
Non-current liabilities
Other payables (11) (5) (11)
Borrowings 13 (2) (96) (2)
Lease liabilities (1,986) (2,146) (2,091)
Derivative liabilities 13 - (1) (1)
Deferred tax liabilities (231) (251) (232)
Provisions (22) (41) (33)
Post-employment benefits 12 (145) (142) (145)
(2,397) (2,682) (2,515)
Total liabilities (5,976) (7,309) (5,698)
Net assets 6,811 6,442 6,571
Equity
Share capital 332 332 332
Share premium 2,228 2,228 2,228
Own shares held in ESOP trust (41) (14) (23)
Retained earnings 4,008 3,439 3,630
Capital redemption reserve 43 43 43
Other reserves 14 241 414 361
Total equity 6,811 6,442 6,571
The interim financial report was approved by the Board of Directors on
20 September 2021 and signed on its behalf by:
Thierry Garnier, Chief Executive Officer Bernard Bot, Chief Financial Officer
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED CASH FLOW STATEMENT
£ millions Notes Half year ended Half year ended Year ended
31 July 2021 31 July 2020 31 January 2021
Operating activities
Cash generated by operations 15 1,161 1,412 1,816
Income tax paid (78) (80) (166)
Other tax authority payments 17 (64) - -
Net cash flows from operating activities 1,019 1,332 1,650
Investing activities
Purchase of property, plant and equipment and intangible assets (131) (87) (281)
Disposal of property, plant and equipment, investment property, assets held 7 2 48
for sale and intangible assets
Purchase of businesses, net of cash acquired - - (8)
Disposal of businesses, net of cash disposed - - 27
Interest received 1 3 4
Interest element of lease rental receipts 1 1 2
Principal element of lease rental receipts 2 2 3
Advance payments on right-of-use assets (1) (1) (2)
Advance receipts on right-of-use assets - 2 -
Dividends received from joint ventures and associates 1 - -
Net cash flows used in investing activities (120) (78) (207)
Financing activities
Interest paid (5) (14) (26)
Interest element of lease rental payments (69) (79) (153)
Principal element of lease rental payments (177) (136) (309)
Repayment of bank loans (3) (1) (1)
Issue of fixed term debt - 1,950 1,950
Repayment of fixed term debt - (1,461) (2,011)
Receipt on financing derivatives - - 1
New shares issued under share schemes 2 - 1
Purchase of own shares for ESOP trust (29) - (14)
Ordinary dividends paid to equity shareholders of the Company 10 (174) - -
Net cash flows from financing activities (455) 259 (562)
Net increase in cash and cash equivalents and bank overdrafts 444 1,513 881
Cash and cash equivalents and bank overdrafts at beginning of period 1,136 195 195
Exchange differences (64) 56 60
Cash and cash equivalents and bank overdrafts at end of period 1,516 1,764 1,136
Cash and cash equivalents and bank overdrafts at the end of the period include
£nil of cash included within assets held for sale on the balance sheet
(2020/21: £15m). Cash and cash equivalents and bank overdrafts at 31 January
2021 include £nil of cash included within assets held for sale on the balance
sheet.
Kingfisher plc
2021/22 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Kingfisher plc ('the Company'), its subsidiaries, joint ventures and
associates (together 'the Group') supply home improvement products and
services through a network of retail stores and other channels, located mainly
in the United Kingdom and continental Europe.
The Company is incorporated in England and Wales, United Kingdom, and is
listed on the London Stock Exchange. The address of its registered office is 3
Sheldon Square, Paddington, London W2 6PX.
The interim financial report does not comprise statutory accounts within the
meaning of section 434 of the Companies Act 2006. Audited statutory accounts
for the year ended 31 January 2021 were approved by the Board of Directors on
21 March 2021 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 20 September 2021.
2. Basis of preparation
The interim financial report for the six months ended 31 July 2021 ('the half
year') has been prepared in accordance with the Disclosure and Transparency
Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial
Reporting', as adopted by the United Kingdom. It should be read in conjunction
with the annual financial statements for the year ended 31 January 2021, which
have been prepared in accordance with international accounting standards in
conformity with the requirements of the Companies Act 2006 and International
Financial Reporting Standards (IFRS Standards) adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union. The financial
statements have also been prepared in accordance with International Financial
Reporting Standards as issued by the IASB. 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, '2020/21' refers to the six months ended 31 July 2020.
Going concern
Based on the Group's liquidity position and cash flow projections, including a
forward looking remote downside scenario, the Directors have a reasonable
expectation that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future and they continue to adopt
the going concern basis of accounting in preparing the condensed consolidated
financial statements for the period ended 31 July 2021.
Considering whether the Group's condensed consolidated financial statements
can be prepared on a going concern basis, the Directors have reviewed the
Group's business activities together with factors likely to affect its
performance, financial position and access to liquidity (including
consideration of financial covenants and credit ratings).
While trading continues to be strong, in forming their outlook on the future
financial performance, the Directors considered the normalisation of store
traffic and average spend, the risk of higher business volatility and the
potential negative impact of the general economic environment on household and
trade spend.
The Directors' review also included a remote scenario to assess the impact of
more restrictive containment measures than those experienced during the
pandemic to date in the event of a more severe wave of resurgence of the
Covid-19 pandemic. The remote
scenario considers the impact of a significant drop in sales over a period of
six months followed by a period of recovery lasting two months before trading
resumes to the base case expected forecast. The total loss of sales in this
scenario is c.£1.6bn (21%
over the impacted period). The scenario assumes the impact of lost sales is
partially offset by a limited set of mitigating actions on variable and
discretionary costs, capital expenditure and the suspension of dividend
payments. Even under this remote scenario
the group retains significant headroom on its credit facilities with only a
limited drawing on the revolving credit facility (RCF) required for a few
months. Given current trading and expectations for the business, the Directors
believe that this scenario reflects a remote outcome for the Group. Should the
impact of the pandemic be more prolonged or severe than currently forecast by
the Directors under this remote scenario, the Group would need to implement
additional operational or financial measures.
Restatement of prior periods
In the prior year, it was determined that the Group's cash and overdraft
balances within notional cash pooling arrangements
did not meet the requirements for offsetting in accordance with IAS 32:
'Financial Instruments: Presentation' and should not therefore be presented on
a net basis on the balance sheet. For presentational purposes, amounts at 31
July 2020 have been restated in accordance with IAS 8: 'Accounting Policies,
Changes in Accounting Policies and Errors' with an additional £701m within
borrowings and cash balances increased by an equal amount. There is no impact
on net assets or net profit.
New and amended accounting standards
In April 2021, the IFRS Interpretations Committee (IFRIC) issued a final
agenda decision in relation to configuration and customisation costs in cloud
computing arrangements. The IFRIC decision clarified that such costs would not
meet the definition of intangible assets under IAS 38, 'Intangible Assets', if
they do not give the Group the power to control the cloud-based software to
obtain the future economic benefits from the asset and to restrict the access
of others to those benefits. Given the proximity of this decision to the
interim reporting date, the Group has not had sufficient time to amend its
existing accounting policy, however this is not expected to have a material
impact on the Group's financial statements.
Other new standards, amendments and interpretations are in issue and effective
for the Group's financial year ended 31 January
2022, but they do not have a material impact on the interim financial report.
Principal rates of exchange against Sterling
Half year ended 31 July 2021 Half year ended 31 July 2020 Year ended 31 January 2021
Average Period end Average Period end Average Year end
rate rate rate rate rate rate
Euro 1.16 1.17 1.13 1.11 1.12 1.13
US Dollar 1.39 1.39 1.25 1.31 1.29 1.37
Polish Zloty 5.27 5.35 5.03 4.90 5.00 5.11
Romanian Leu 5.70 5.76 5.46 5.37 5.43 5.50
Russian Rouble n/a n/a 89.25 97.48 92.43* 103.99
* The Group completed the sale of Castorama Russia on 30 September 2020. The
31 January 2021 Russian Rouble average rate relates to the period to 30
September 2020 (i.e. to the date of disposal).
Risks and uncertainties
The principal risks and uncertainties to which the Group is exposed are set
out on pages 40-46 of the Kingfisher plc Annual Report and Accounts for the
year ended 31 January 2021. These have been reviewed as part of the Group's
half year procedures and are listed in the Financial Review.
Use of non-GAAP measures
In the reporting of financial information, the Group uses certain measures
that are not required under IFRS, the generally accepted
accounting principles ('GAAP') under which the Group reports. Kingfisher
believes that retail profit, adjusted pre-tax profit, adjusted
effective tax rate, and adjusted earnings per share provide additional useful
information on performance and trends to shareholders. These and other
non-GAAP measures (also known as 'Alternative Performance Measures'), such as
net debt, are used by Kingfisher for internal performance analysis and
incentive compensation arrangements for employees. The terms 'retail profit',
'adjusting items', 'adjusted', 'adjusted effective tax rate', 'net cashflow'
and 'net debt' 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,
the Group's share of interest and tax of joint ventures and associates and
adjusting items. Central costs principally comprise the costs of the Group's
head office before adjusting items.
Adjusting items, which are presented separately within their relevant income
statement category, include items which by virtue of their size and/or nature,
do not reflect the Group's ongoing trading performance. Adjusting items may
include, but are not limited to:
· non-trading items included in operating profit such as profits
and losses on the disposal, closure, exit or impairment of subsidiaries, joint
ventures, associates and investments which do not form part of the Group's
ongoing trading activities;
· the costs of significant restructuring and incremental
acquisition integration costs;
· profits and losses on the disposal of properties, impairments of
goodwill and significant impairments (or impairment reversals) of other
non-current assets;
· prior year tax items (including the impact of changes in tax
rates on deferred tax), significant one-off tax settlements and provision
charges/releases and the tax effects of other adjusting items;
· financing fair value remeasurements i.e. 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 hedged items of a financing nature.
The term 'adjusted' refers to the relevant measure being reported for
continuing operations excluding adjusting items.
The adjusted effective tax rate is calculated as continuing income tax expense
excluding prior year tax items (including the impact of changes in tax rates
on deferred tax), significant one-off tax settlements and provision
charges/releases and the tax effects of other adjusting items, divided by
continuing profit before taxation excluding adjusting items. Prior year tax
items represent income statement tax relating to underlying items originally
arising in prior years, including the impact of changes in tax rates on
deferred tax. The exclusion of items relating to prior years, and those not in
the ordinary course of business, helps provide a better indication of the
Group's ongoing rate of tax.
Net debt comprises lease liabilities, borrowings and financing derivatives
(excluding accrued interest) less cash and cash equivalents and short-term
deposits, including such balances classified as held for sale.
The Group no longer uses the term 'exceptional adjusting items' within its
Alternative Performance Measure definitions, with the term 'adjusting items'
now judged to be more appropriate given the potential for items previously
classified as 'exceptional adjusting items' to be recurring in nature (e.g.
profits and losses on the disposal of properties). This removes the previous
distinction between 'exceptional adjusting items' and other adjusting items
(i.e. prior year tax items and financing fair value remeasurements) from the
Group's Alternative Performance Measures and simplifies the Group's reporting
of such items. As a result, the consolidated income statement comparatives for
the half year ended 31 July 2020 and year ended 31 January 2021, which
previously included separate presentation of 'exceptional adjusting items',
have been re-presented to include all 'adjusting items' (as defined above)
separately in the columnar presentation. The effect of this change on the
prior periods presented is the inclusion within the 'Adjusting items' column
of those prior year tax items that were not previously classified as
'Exceptional items' (HY 2020/21: £13m credit) or 'Exceptional adjusting
items' (FY 2020/21: £21m credit). Financing fair value remeasurements were
£nil in the prior periods presented. This represents a change in terminology
and presentation only, with no impact on adjusted or statutory performance
measures. Refer to note 5.
Refer to the Financial Review for definitions of all of the Group's
Alternative Performance Measures, including further information on why they
are used and details of where reconciliations to statutory measures can be
found where applicable.
3. Accounting policies
The accounting policies adopted are consistent with those of the annual
financial statements for the year ended 31 January 2021, as described in note
2 of those financial statements, except where set out below. The critical
accounting estimates and judgements are set out in note 3 of the annual
financial statements for the year ended 31 January 2021 and remain unchanged.
Taxes on income for interim periods are accrued using the best estimate of the
effective tax rate that would be applicable to expected total annual earnings.
4. Segmental analysis
Income statement
Half year ended 31 July 2021
£ millions UK & Ireland France Poland Other Other
International Total
Sales 3,570 2,437 743 351 1,094 7,101
Retail profit 579 129 58 1 59 767
Central costs (27)
Share of interest and tax of joint ventures and associates (1)
Adjusting items 8
Operating profit 747
Net finance costs (70)
Profit before taxation 677
Half year ended 31 July 2020
£ millions UK & Ireland France Poland Other Other International
Total
Sales 2,753 2,028 783 357 1,140 5,921
Retail profit 411 63 74 (15) 59 533
Central costs (28)
Share of interest and tax of joint ventures and associates (2)
Adjusting items (17)
Operating profit 486
Net finance costs (88)
Profit before taxation 398
Year ended 31 January 2021
£ millions UK & Ireland France Poland Other Other International
Total
Sales 5,743 4,309 1,550 741 2,291 12,343
Retail profit 681 181 146 (5) 141 1,003
Central costs (54)
Share of interest and tax of joint ventures and associates (3)
Adjusting items (30)
Operating profit 916
Net finance costs (160)
Profit before taxation 756
Balance sheet
At 31 July 2021
£ millions UK & Ireland France Poland Other Other International
Total
Segment assets 2,595 1,535 918 271 1,189 5,319
Central liabilities (25)
Goodwill 2,425
Net debt (908)
Net assets 6,811
At 31 July 2020
£ millions UK & Ireland France Poland Other Other International
Total
Segment assets 2,722 1,553 875 399 1,274 5,549
Central liabilities (149)
Goodwill 2,419
Net debt (1,377)
Net assets 6,442
At 31 January 2021
£ millions UK & Ireland France Poland Other Other International
Total
Segment assets 2,774 1,686 899 303 1,202 5,662
Central liabilities (124)
Goodwill 2,427
Net debt (1,394)
Net assets 6,571
The operating segments disclosed above are based on the information reported
internally to the Board of Directors and Group Executive, representing the
geographical areas in which the Group operates. The Group only has one
reportable business segment, being the supply of home improvement products and
services. The majority of the sales in each geographical area are derived from
in-store and online sales of products.
The 'Other International' segment consists of Poland, Iberia, Romania, the
joint venture Koçtaş in Turkey, NeedHelp, Screwfix International, results
from franchise agreements and, in the prior year, Russia. 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 central assets, pensions, insurance, interest and tax.
The Group's sales, although generally not highly seasonal on a half yearly
basis, do increase over the Easter period and during the summer months leading
to slightly higher sales usually being recognised in the first half of the
year. However due to the continued uncertainty around the impact of Covid-19
on current trading performance, the phasing of sales is less predictable.
5. Adjusting items
£ millions Half year ended Half year ended 31 July 2020 Year ended
31 July 2021 31 January 2021
Included within selling and distribution expenses
Impairments of Russia assets and other exit costs - (27) (27)
Net store asset impairment reversals - - 42
IT asset write-downs and related costs - - (3)
- (27) 12
Included within administrative expenses
Release of France business tax liability 7 - -
Commercial operating model restructuring - - (16)
Release of B&Q China disposal warranty liability - 10 10
7 10 (6)
Included within other income/expenses
Profit on disposal of properties 1 - 13
Loss on disposal of Castorama Russia - - (49)
1 - (36)
Adjusting items before tax 8 (17) (30)
Prior year and other adjusting tax items 23 17 18
Adjusting items 31 - (12)
A £7m liability that was held in relation to an uncertain tax position in
France has been released in the period. This formed part of a liability of
£26m that had been recorded as an adjusting item in 2019/20.
A profit of £1m has been recorded on the disposal of one property in France.
Prior year and other adjusting tax items relate principally to the impact of
the enacted future increase in the UK tax rate on deferred tax balances. Refer
to note 8.
Refer to note 5 of the 2020/21 interim accounts for further details on
adjusting items for the half year ended 31 July 2020, and to note 5 of the
2020/21 annual accounts for further details on adjusting items for the year
ended 31 January 2021.
6. Net finance costs
£ millions Half year ended 31 July 2021 Half year ended 31 July 2020 Year ended
31 January 2021
Bank overdrafts and bank loans (4) (8) (13)
Fixed term debt (2) (7) (14)
Lease liabilities (69) (79) (153)
Capitalised interest - 1 2
Other interest payable (1) (1) (2)
Finance costs (76) (94) (180)
Cash and cash equivalents and short-term deposits 1 2 3
Net interest income on defined benefit pension schemes 4 3 6
Finance lease income 1 1 2
Release of liability for interest on uncertain tax positions - - 9
Finance income 6 6 20
Net finance costs (70) (88) (160)
7. Government grants
In the prior year, the Group announced furlough programmes to some of our
colleagues in the UK, Republic of Ireland, France, Poland, Spain and Romania,
such as the Coronavirus Job Retention Scheme (CJRS) in the UK and 'activité
partielle' relief measures in France. Approximately 50% of the Group's
colleagues were furloughed in April 2020, reducing to c.10% by the end of May
2020 as stores within the UK and France were reopened. With the exception of
those who were vulnerable and/or at a higher risk of infection, all furloughed
colleagues returned by 1 July 2020.
In addition, the UK government announced in March 2020 that retail premises in
England would be granted relief from paying business rates in the 2020/21 tax
year, effective from April 2020. Similar measures (a combination of payment
deferrals and relief) were announced by the local governments and assemblies
of Scotland, Wales and Northern Ireland, as well as the Republic of Ireland.
In Q4 2020/21, the Group repaid £25m received in the first half of that year
under the UK and Republic of Ireland furlough
programmes and decided to repay and forego all UK and Republic of Ireland
business rates relief for the entire 2020/21 tax year. Kingfisher's total
business rates bill eligible for relief in 2020/21 was £105m, of which £42m
was claimed in H1 2020/21.
Participation in these schemes lowered the operating costs of the Group by
£100m in the six months to 31 July 2020 and, after repayments, by £45m for
the year ended 31 January 2021.
Government grants in the six months to 31 July 2021 lowered the operating
costs of the Group by £4m.
Refer to note 33 of the 2020/21 annual accounts for further details of
government financing support received and fully repaid in the prior year.
8. Income tax expense
£ millions Half year ended Half year ended Year ended
31 July 2021
31 January 2021
31 July 2020
UK corporation tax
Current tax on profits for the period (78) (81) (102)
Adjustments in respect of prior years 3 4 10
(75) (77) (92)
Overseas tax
Current tax on profits for the period (53) (13) (61)
Adjustments in respect of prior years (2) 4 5
(55) (9) (56)
Deferred tax
Current period (16) (4) (26)
Adjustments in respect of prior years - - 2
Adjustments in respect of changes in tax rates 25 9 8
9 5 (16)
Income tax expense (121) (81) (164)
The adjusted effective tax rate on profit before adjusting items is 22%
(2020/21: 24%), representing the best estimate of the effective rate for the
full financial year. The adjusted effective tax rate on the same basis for the
year ended 31 January 2021 was 23%.
The UK Budget on 3 March 2021 announced the intention to increase the tax rate
from the current rate of 19% to 25%, with effect from April 2023. The change
was substantively enacted in May 2021, with the effect of reducing the net
deferred tax liability as reported at the year end by £25m. This reflects an
increase in net deferred tax assets that would be expected to reverse in the
future at the new rate, with net deferred tax liabilities not impacted by this
future change in rate.
9. Earnings per share
Pence Half year ended Half year ended 31 July 2020 Year ended
31 July 2021 31 January 2021
Basic earnings per share 26.4 15.1 28.1
Effect of dilutive share options (0.2) (0.1) (0.2)
Diluted earnings per share 26.2 15.0 27.9
Basic earnings per share 26.4 15.1 28.1
Adjusting items before tax (0.4) 0.8 1.4
Prior year and other adjusting tax items (1.1) (0.8) (0.8)
Adjusted basic earnings per share 24.9 15.1 28.7
Diluted earnings per share 26.2 15.0 27.9
Adjusting items before tax (0.4) 0.8 1.4
Prior year and other adjusting tax items (1.1) (0.8) (0.8)
Adjusted diluted earnings per share 24.7 15.0 28.5
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:
£ millions Half year ended 31 July 2021 Half year ended 31 July 2020 Year ended
31 January 2021
Earnings 556 317 592
Adjusting items before tax (8) 17 30
Prior year and other adjusting tax items (23) (17) (18)
Adjusted earnings 525 317 604
The weighted average number of shares in issue during the period, excluding
those held in the Employee Share Ownership Plan Trust ('ESOP trust'), is set
out below:
Weighted average number of shares (millions) Half year ended Half year ended 31 July 2020 Year ended
31 July 2021 31 January 2021
Basic 2,103 2,104 2,105
Diluted 2,125 2,113 2,119
10. Dividends
Half year ended Half year ended Year ended
£ millions 31 July 2021 31 July 2020 31 January 2021
Dividends to equity shareholders of the Company
Ordinary interim dividend for the year ended 31 January 2021 of 2.75p per 58 - -
share
Ordinary final dividend for the year ended 31 January 2021 of 5.50p per share 116 - -
174 - -
The proposed interim ordinary dividend for the period ended 31 July 2021 is
3.80p per share (2020/21: 2.75p per share).
11. Property, plant and equipment, investment property and other
intangible assets
Additions to the cost of property, plant and equipment, investment property
and other intangible assets are £125m (2020/21: £84m) and for the year ended
31 January 2021 were £283m. Disposals in net book value of property, plant
and equipment, investment property, property assets held for sale and other
intangible assets are £6m (2020/21: £4m) and for the year ended 31 January
2021 were £38m.
Capital commitments contracted but not provided for at the end of the period
are £64m (2020/21: £58m) and at 31 January 2021 were £38m.
12. Post-employment benefits
Half year ended Half year ended Year ended
£ millions 31 July 2021 31 July 2020 31 January 2021
Net surplus in schemes at beginning of period 359 277 277
Current service cost (6) (6) (9)
Past service cost - - (1)
Administration costs (2) (2) (3)
Net interest income 4 3 6
Net remeasurement (losses)/gains (12) 195 68
Contributions paid by employer 13 13 29
Exchange differences 5 (10) (8)
Net surplus in schemes at end of period 361 470 359
UK 506 612 504
Overseas (145) (142) (145)
Net surplus in schemes at end of period 361 470 359
Present value of defined benefit obligations (3,310) (3,302) (3,257)
Fair value of scheme assets 3,671 3,772 3,616
Net surplus in schemes at end of period 361 470 359
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 28 of the annual financial statements
for the year ended 31 January 2021.
During the period the UK scheme purchased an annuity for £902m from a major
insurance company. This targeted certain pensioner liabilities, removing the
longevity risk associated with these members. Measured against the long-term
funding objective that has been agreed between Kingfisher and the Trustee, the
transaction generated a funding improvement as well as a significant reduction
in funding risk. As the cost of the annuity of £902m was greater than the IAS
19 accounting value of the corresponding liabilities, a loss of £87m has been
recorded in other comprehensive income.
A key assumption in valuing the pension obligation is the discount rate.
Accounting standards require this to be set based on market yields on high
quality corporate bonds at the balance sheet date. The UK scheme discount rate
is derived using a single equivalent discount rate approach, based on the
yields available on a portfolio of high-quality Sterling corporate bonds with
the same duration as that of the scheme liabilities.
The principal financial assumptions for the UK scheme, being the Group's
principal defined benefit scheme, are set out below:
At At At
Annual % rate 31 July 2021 31 July 2020 31 January 2021
Discount rate 1.6 1.5 1.5
Price inflation 3.2 2.9 2.9
13. Financial instruments
The Group holds the following derivative financial instruments at fair value:
At At At
£ millions 31 July 2021 31 July 2020 31 January 2021
Foreign exchange contracts 11 34 5
Derivative assets 11 34 5
At At At
£ millions 31 July 2021 31 July 2020 31 January 2021
Cross currency interest rate swaps (2) - (1)
Foreign exchange contracts (25) (50) (59)
Derivative liabilities (27) (50) (60)
The fair values are calculated by discounting future cash flows arising from
the instruments and adjusted for credit risk. These fair value measurements
are all made using observable market rates of interest, foreign exchange and
credit risk. All the derivatives held by the Group at fair value are
considered to have fair values determined by level 2 inputs as defined by the
fair value hierarchy of IFRS 13, 'Fair value measurement', representing
significant observable inputs other than quoted prices in active markets for
identical assets or liabilities. There are no non-recurring fair value
measurements nor have there been any transfers of assets or liabilities
between levels of the fair value hierarchy.
Except as detailed in the following table of borrowings, the carrying amounts
of financial instruments (excluding lease liabilities) recorded at amortised
cost in the financial statements are approximately equal to their fair values.
Where available, market values have been used to determine the fair values of
borrowings. Where market values are not available or are not reliable, fair
values have been calculated by discounting cash flows at prevailing interest
and foreign exchange rates. This has resulted in level 2 inputs for borrowings
as defined by the IFRS 13 fair value hierarchy.
Carrying amount
£ millions At At At
31 July 2021 31 July 2020 31 January 2021
restated (note 2)
Bank overdrafts 19 701 6
Bank loans 3 2 4
Fixed term debt 91 633 93
Borrowings 113 1,336 103
Fair value
£ millions At At At
31 July 2021 31 July 2020 31 January 2021
restated (note 2)
Bank overdrafts 19 701 6
Bank loans 3 3 4
Fixed term debt 93 645 95
Borrowings 115 1,349 105
Cash and borrowings balances at 31 July 2021 and 31 January 2021 (and the
restated balances at 31 July 2020) reflect the grossing up of cash and
overdraft balances subject to the Group's cash pooling arrangements to ensure
the Group's presentation of these balances is in line with the requirements
for offsetting in accordance with IAS 32. See note 2.
Fixed term debt comprises a €50m term loan maturing in September 2021 and a
£50m term loan maturing in December 2021.
As at 31 July 2021, the Group had an undrawn revolving credit facility (RCF)
of £550m due to expire in May 2024. This replaced the £225m and £493m
facilities, due to expire in March 2022 and August 2023 respectively, which
were cancelled in June 2021.
14. Other reserves
Half year ended 31 July 2021
Translation reserve Cash flow Other
£ millions hedge reserve Total
At 1 February 2021 234 (32) 159 361
Inventory cash flow hedges - fair value gains - 6 - 6
Tax on items that will not be reclassified subsequently to profit or loss - (2) - (2)
Currency translation differences (148) - - (148)
Group
Joint ventures and associates (2) - - (2)
Other cash flow hedges - 4 - 4
Fair value gains
Gains transferred to income statement - (4) - (4)
Other comprehensive (loss)/income for the period (150) 4 - (146)
Inventory cash flow hedges - losses transferred to inventories - 34 - 34
Tax on equity items - (8) - (8)
At 31 July 2021 84 (2) 159 241
Half year ended 31 July 2020
Translation reserve Cash flow Other
£ millions hedge reserve Total
At 1 February 2020 75 (6) 159 228
Inventory cash flow hedges - fair value losses - (7) - (7)
Tax on items that will not be reclassified subsequently to profit or loss - 2 - 2
Currency translation differences 204 - - 204
Group
Other cash flow hedges - 6 - 6
Fair value gains
Gains transferred to income statement - (6) - (6)
Other comprehensive income/(loss) for the period 204 (5) - 199
Inventory cash flow hedges - gains transferred to inventories - (19) - (19)
Tax on equity items - 6 - 6
At 31 July 2020 279 (24) 159 414
Year ended 31 January 2021
£ millions Translation reserve Cash flow hedge reserve Other Total
At 1 February 2020 75 (6) 159 228
Inventory cash flow hedges - fair value losses - (48) - (48)
Tax on items that will not be reclassified subsequently to profit or loss - 11 - 11
Currency translation differences 112 - - 112
Group
Joint ventures and associates (2) - - (2)
Transferred to income statement 49 - - 49
Other cash flow hedges - 5 - 5
Fair value gains
Gains transferred to income statement - (5) - (5)
Other comprehensive income/(loss) for the year 159 (37) - 122
Inventory cash flow hedges - losses transferred to inventories - 13 - 13
Tax on equity items - (2) - (2)
At 31 January 2021 234 (32) 159 361
15. Cash generated by operations
£ millions Half year ended Half year ended Year ended
31 July 2021
31 July 2020
31 January 2021
Operating profit 747 486 916
Share of post-tax results of joint ventures and associates (1) 2 (6)
Depreciation and amortisation 273 264 536
Net impairment charges/(reversals) 2 24 (7)
Gain on disposal of property, plant and equipment, investment property, assets (1) - (10)
held for sale and intangible assets
Loss on disposals of subsidiaries - - 49
Share-based compensation charge 14 11 14
(Increase)/decrease in inventories (303) 208 86
(Increase)/decrease in trade and other receivables (33) (39) 17
Increase in trade and other payables 487 477 267
Movement in provisions (19) (16) (30)
Movement in post-employment benefits (5) (5) (16)
Cash generated by operations 1,161 1,412 1,816
16. Net debt
£ millions At At At
31 July 2021 31 July 2020 31 January 2021
restated (note 2)
Cash and cash equivalents 1,535 2,450 1,142
Cash and cash equivalents held for sale - 15 -
Bank overdrafts (19) (701) (6)
Cash and cash equivalents and bank overdrafts including amounts held for sale 1,516 1,764 1,136
Bank loans (3) (2) (4)
Fixed term debt (91) (633) (93)
Lease liabilities (2,319) (2,497) (2,421)
Lease liabilities directly associated with assets held for sale - (29) -
Net financing derivatives (11) 20 (12)
Net debt (908) (1,377) (1,394)
£ millions At At At
31 July 2021 31 July 2020 31 January 2021
Net debt at beginning of period (1,394) (2,526) (2,526)
Net increase in cash and cash equivalents and bank overdrafts 444 1,513 881
Repayment of bank loans 3 1 1
Issue of fixed term debt - (1,950) (1,950)
Repayment of fixed term debt - 1,461 2,011
Receipt on financing derivatives - - (1)
Net cash flow 447 1,025 942
Lease liabilities disposed - - 27
Other movements in lease liabilities 78 69 136
Exchange differences and other non-cash movements (39) 55 27
Net debt at end of period (908) (1,377) (1,394)
17. Contingent liabilities
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.
The Group files tax returns in many jurisdictions around the world and at any
one time is subject to periodic tax audits in the ordinary course of its
business. Applicable tax laws and regulations are subject to differing
interpretations and the resolution of a final tax position can take several
years to complete. Where it is considered that future tax liabilities are more
likely than not to arise, an appropriate provision is recognised in the
financial statements.
In October 2017, the European Commission opened a state aid investigation into
the Group Financing Exemption section of the UK controlled foreign company
rules. While the Group has complied with the requirements of UK tax law in
force at the time, in April 2019 the European Commission concluded that
aspects of the UK controlled foreign company regime partially constitute state
aid. The UK Government and the Group, along with other UK-based international
companies, have appealed the European Commission decision to the European
Courts.
Notwithstanding these appeals, under EU law, the UK government is required to
commence collection proceedings. In January 2021, the Group received a
charging notice from HM Revenue & Customs (HMRC) for £57m, which was paid
in February 2021, with a further £7m interest paid in April 2021.
The final impact on the Group remains uncertain but based upon advice taken,
the Group considers that no liability is required at this time and,
consequently, £64m is included in non-current assets to reflect the Group's
view that the amount paid will ultimately be recovered.
Whilst the procedures that must be followed to resolve these types of tax
issues make it likely that it will be some years before the eventual outcome
is known, other than the state aid case described above, the Group does not
currently expect the outcome of these contingent liabilities to have a
material effect on the Group's financial position.
18. Related party transactions
The Group's significant related parties are its joint venture, associate and
pension schemes as disclosed in note 39 of the annual financial statements for
the year ended 31 January 2021. There have been no significant changes in
related parties or related party transactions in the period.
19. Post balance sheet events
There have been no material post balance sheet events between the balance
sheet date and 20 September 2021, the date of this
report.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that the condensed interim financial statements have
been prepared in accordance with United Kingdom adopted International
Accounting Standard 34, "Interim Financial Reporting", and that the Interim
Results 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 Group's 2020/21 Annual
Report and Accounts. A list of current Directors is maintained on the
Kingfisher plc website which can be found at www.kingfisher.com
(http://www.kingfisher.com) .
By order of the Board
Thierry
Garnier
Bernard Bot
Chief Executive
Officer
Chief Financial Officer
20 September
2021
20 September 2021
INDEPENDENT REVIEW REPORT TO KINGFISHER PLC
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
July 2021 which comprises the condensed income statement, the condensed
statement of comprehensive income, the condensed statement of changes in
equity, the condensed balance sheet and the cash flow statement and related
notes 1 to 19. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements
or material inconsistencies with the information in the condensed set of
financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the group will be
prepared in accordance with United Kingdom adopted International Financial
Reporting Standards as issued by the IASB. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with United Kingdom adopted International Accounting Standard 34,
"Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly 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 Financial
Reporting Council 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 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 half-yearly
financial report for the six months ended 31 July 2021 is not prepared, in all
material respects, in accordance with United Kingdom adopted International
Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
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 Financial Reporting Council. 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.
Deloitte LLP
Statutory Auditor
London, United Kingdom
20 September 2021
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