REG - Kingfisher PLC - Half Year Results - (Part 2 of 2)
20/09/2022 07:00
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RNS Number : 9273Z Kingfisher PLC 20 September 2022
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Half year ended 31 July 2022 Half year ended 31 July 2021
£ millions Notes Before adjusting items Adjusting items (note 5) Total Before adjusting items Adjusting items (note 5) Total
Sales 4 6,809 - 6,809 7,101 - 7,101
Cost of sales (4,313) - (4,313) (4,404) - (4,404)
Gross profit 2,496 - 2,496 2,697 - 2,697
Selling and distribution expenses (1,549) 1 (1,548) (1,554) - (1,554)
Administrative expenses (434) - (434) (417) 7 (410)
Other income 11 1 12 12 1 13
Share of post-tax results of joint ventures and associates 5 - 5 1 - 1
Operating profit 4 529 2 531 739 8 747
Finance costs (65) - (65) (76) - (76)
Finance income 8 - 8 6 - 6
Net finance costs 6 (57) - (57) (70) - (70)
Profit before taxation 472 2 474 669 8 677
Income tax expense 7 (104) 3 (101) (144) 23 (121)
Profit for the period 368 5 373 525 31 556
Earnings per share 8
Basic 18.6p 26.4p
Diluted 18.3p 26.2p
Adjusted basic 18.3p 24.9p
Adjusted diluted 18.0p 24.7p
The proposed interim ordinary dividend for the period ended 31 July 2022 is
3.80p per share (2021/22: 3.80p per share).
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Year ended 31 January 2022
£ millions Notes Before adjusting Adjusting Total
items items
(note 5)
Sales 4 13,183 - 13,183
Cost of sales (8,248) - (8,248)
Gross profit 4,935 - 4,935
Selling and distribution expenses (3,041) 42 (2,999)
Administrative expenses (836) 13 (823)
Other income 23 3 26
Share of post-tax results of joint ventures and associates 5 - 5
Operating profit 4 1,086 58 1,144
Finance costs (148) - (148)
Finance income 11 - 11
Net finance costs 6 (137) - (137)
Profit before taxation 949 58 1,007
Income tax expense 7 (212) 48 (164)
Profit for the year 737 106 843
Earnings per share 8
Basic 40.3p
Diluted 39.8p
Adjusted basic 35.2p
Adjusted diluted 34.8p
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
£ millions Half year ended Half year ended Year ended
31 July 2022 31 July 2021 31 January 2022
Notes
Profit for the period 373 556 843
Remeasurements of post-employment benefits 11 (14) (12) 21
Inventory cash flow hedges - fair value gains 113 6 59
Tax on items that will not be reclassified (24) 1 (18)
Total items that will not be reclassified 75 (5) 62
subsequently to profit or loss
Currency translation differences
Group (22) (148) (218)
Joint ventures and associates (1) (2) (7)
Other cash flow hedges
Fair value gains - 4 1
Gains transferred to income statement - (4) (1)
Total items that may be reclassified subsequently to profit or loss (23) (150) (225)
Other comprehensive income/(expense) for the period 52 (155) (163)
Total comprehensive income for the period 425 401 680
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year ended 31 July 2022
Share capital Own shares held Capital Other Total equity
£ millions Share Retained earnings redemption reserves
premium reserve (note 14)
At 1 February 2022 325 2,228 (46) 4,025 50 196 6,778
Profit for the period - - - 373 - - 373
Other comprehensive (expense)/income for the period - - - (10) - 62 52
Total comprehensive income for the period - - - 363 - 62 425
Inventory cash flow hedges - gains transferred to inventories - - - - - (61) (61)
Share-based compensation - - - 11 - - 11
New shares issued under share schemes - - - 2 - - 2
Own shares issued under share schemes - - 17 (17) - - -
Purchase of own shares for cancellation (13) - - (225) 13 - (225)
Dividends - - - (172) - - (172)
Tax on equity items - - - (1) - 14 13
At 31 July 2022 312 2,228 (29) 3,986 63 211 6,771
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 expense for the period - - - (9) - (146) (155)
Total comprehensive income/(expense) 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
Year ended 31 January 2022
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 year - - - 843 - - 843
Other comprehensive income/(expense) for the year - - - 16 - (179) (163)
Total comprehensive income/(expense) for the year - - - 859 - (179) 680
Inventory cash flow hedges - losses transferred to inventories
- - - - - 16 16
Share-based compensation - - - 27 - - 27
New shares issued under share schemes - - - 5 - - 5
Own shares issued under share schemes - - 15 (15) - - -
Purchase of own shares for cancellation (7) - - (226) 7 - (226)
Purchase of own shares for ESOP trust - - (38) - - - (38)
Dividends - - - (254) - - (254)
Tax on equity items - - - (1) - (2) (3)
At 31 January 2022 325 2,228 (46) 4,025 50 196 6,778
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEET
£ millions Notes At 31 July 2022 At 31 July 2021 At 31 January 2022
Non-current assets
Goodwill 2,424 2,425 2,424
Other intangible assets 10 353 320 330
Property, plant and equipment 10 3,086 2,982 3,078
Investment property 10 33 20 33
Right-of-use assets 1,842 1,785 1,885
Investments in joint ventures and associates 20 18 17
Post-employment benefits 11 542 506 540
Deferred tax assets 9 19 10
Other tax authority asset 17 64 64 64
Derivative assets 12 2 - 1
Other receivables 17 26 22
8,392 8,165 8,404
Current assets
Inventories 3,138 2,730 2,749
Trade and other receivables 364 317 300
Derivative assets 12 82 11 37
Current tax assets 37 23 33
Cash and cash equivalents 496 1,535 823
Assets held for sale 5 6 6
4,122 4,622 3,948
Total assets 12,514 12,787 12,352
Current liabilities
Trade and other payables (2,891) (2,947) (2,674)
Borrowings 12 (17) (111) (14)
Lease liabilities (334) (333) (347)
Derivative liabilities 12 (13) (27) (12)
Current tax liabilities (19) (126) (46)
Provisions (16) (35) (23)
(3,290) (3,579) (3,116)
Non-current liabilities
Other payables (10) (11) (10)
Borrowings 12 (1) (2) (2)
Lease liabilities (1,984) (1,986) (2,029)
Derivative liabilities 12 - - (1)
Deferred tax liabilities (310) (231) (276)
Provisions (12) (22) (10)
Post-employment benefits 11 (136) (145) (130)
(2,453) (2,397) (2,458)
Total liabilities (5,743) (5,976) (5,574)
Net assets 6,771 6,811 6,778
Equity
Share capital 13 312 332 325
Share premium 2,228 2,228 2,228
Own shares held in ESOP trust (29) (41) (46)
Retained earnings 3,986 4,008 4,025
Capital redemption reserve 63 43 50
Other reserves 14 211 241 196
Total equity 6,771 6,811 6,778
The interim financial report was approved by the Board of Directors on 19
September 2022 and signed on its behalf by:
Thierry Garnier, Chief Executive Officer Bernard Bot, Chief Financial Officer
Kingfisher plc
2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED CASH FLOW STATEMENT
£ millions Notes Half year ended Half year ended Year ended
31 July 2022 31 July 2021 31 January 2022
Operating activities
Cash generated by operations 15 584 1,161 1,411
Income tax paid (75) (78) (169)
French tax authority payment 7 (34) - -
Other tax authority payments 17 - (64) (64)
Net cash flows from operating activities 475 1,019 1,178
Investing activities
Purchase of property, plant and equipment and intangible assets (184) (131) (397)
Disposal of property, plant and equipment, investment property, assets held 1 7 9
for sale and intangible assets
Disposal of businesses, net of cash disposed - - 7
Interest received 1 1 2
Interest element of lease rental receipts 1 1 1
Principal element of lease rental receipts 2 2 3
Advance payments on right-of-use assets (2) (1) (11)
Advance receipts on right-of-use assets 2 - -
Dividends received from joint ventures and associates 1 1 1
Net cash flows used in investing activities (178) (120) (385)
Financing activities
Interest paid (3) (5) (22)
Interest element of lease rental payments (62) (69) (135)
Principal element of lease rental payments (164) (177) (341)
Repayment of bank loans - (3) (2)
Repayment of fixed term debt - - (95)
New shares issued under share schemes 2 2 5
Purchase of own shares for cancellation (218) - (157)
Purchase of own shares for ESOP trust (9) (29) (29)
Ordinary dividends paid to equity shareholders of the Company 9 (172) (174) (254)
Net cash flows used in financing activities (626) (455) (1,030)
Net (decrease)/increase in cash and cash equivalents and bank overdrafts (329) 444 (237)
Cash and cash equivalents and bank overdrafts at beginning of period 809 1,136 1,136
Exchange differences (1) (64) (90)
Cash and cash equivalents and bank overdrafts at end of period 479 1,516 809
Kingfisher plc
2022/23 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 2022 were approved by the Board of Directors on
21 March 2022 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 19 September 2022.
2. Basis of preparation
The interim financial report for the six months ended 31 July 2022 ('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 2022, which
have been prepared in accordance with United Kingdom adopted international
accounting standards and International Financial Reporting Standards (IFRSs).
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, '2021/22' refers to the six months
ended 31 July 2021.
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 2022.
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).
In forming their outlook on the future financial performance, the Directors
considered the post-COVID 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 that 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.£1.9bn
(22% 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 capital returns
to shareholders. Even under this remote scenario, which requires drawing on
the revolving credit facility (RCF) for a few months, the group retains
headroom on its credit facilities. Given current trading and expectations for
the business, the Directors believe that this scenario reflects a remote
outcome for the Group. Should a more extreme scenario occur than currently
forecast by the Directors under this remote scenario, the Group would need to
implement additional operational or financial measures.
New and amended accounting standards
New standards, amendments and interpretations are in issue and effective for
the Group's financial year ended 31 January
2023, but they do not have a material impact on the interim financial report.
Principal rates of exchange against Sterling
Half year ended 31 July 2022 Half year ended 31 July 2021 Year ended 31 January 2022
Average Period end Average Period end Average Year end
rate rate rate rate rate rate
Euro 1.18 1.19 1.16 1.17 1.17 1.20
US Dollar 1.27 1.22 1.39 1.39 1.38 1.34
Polish Zloty 5.53 5.64 5.27 5.35 5.34 5.49
Romanian Leu 5.85 5.87 5.70 5.76 5.76 5.92
Risks and uncertainties
The principal risks and uncertainties to which the Group is exposed are set
out on pages 42-48 of the Kingfisher plc Annual Report and Accounts for the
year ended 31 January 2022. 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. The Group
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 the Group 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/exit 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 (or non-designated) 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.
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 2022, 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 2022 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 2022
£ millions UK & Ireland France Poland Other Other
International Total
Sales 3,221 2,325 913 350 1,263 6,809
Retail profit 339 129 94 (7) 87 555
Central costs (26)
Adjusting items 2
Operating profit 531
Net finance costs (57)
Profit before taxation 474
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
Year ended 31 January 2022
£ millions UK & Ireland France Poland Other Other International
Total
Sales 6,505 4,498 1,525 655 2,180 13,183
Retail profit 794 221 135 (2) 133 1,148
Central costs (60)
Share of interest and tax of joint ventures and associates (2)
Adjusting items 58
Operating profit 1,144
Net finance costs (137)
Profit before taxation 1,007
Balance sheet
At 31 July 2022
£ millions UK & Ireland France Poland Other Other International
Total
Segment assets 3,198 1,753 988 301 1,289 6,240
Central liabilities (45)
Goodwill 2,424
Net debt (1,848)
Net assets 6,771
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 January 2022
£ millions UK & Ireland France Poland Other Other International
Total
Segment assets 3,052 1,682 942 332 1,274 6,008
Central liabilities (82)
Goodwill 2,424
Net debt (1,572)
Net assets 6,778
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 and results
from franchise agreements. 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 current
macro-economic environment, the phasing of sales is less predictable.
5. Adjusting items
£ millions Half year ended Half year ended 31 July 2021 Year ended
31 July 2022 31 January 2022
Included within selling and distribution expenses
Release of France and other restructuring provisions 1 - 9
Net store asset impairment reversals - - 33
1 - 42
Included within administrative expenses
Release of France uncertain operating tax position - 7 9
Commercial operating model restructuring - - 4
- 7 13
Included within other income
Profit on exit of properties 1 1 3
1 1 3
Adjusting items before tax 2 8 58
Prior year and other adjusting tax items 3 23 48
Adjusting items 5 31 106
Current year adjusting items include a £1m credit arising due to savings on
costs relating to legacy store closure programmes in France as compared with
the original restructuring provisions recognised as adjusting items.
A profit of £1m has been recorded on the exit of one property in the UK.
Prior year and other adjusting tax items of £3m relates principally to the
impact of the enacted future increase in the UK tax rate on deferred tax
balances. This credit has been included within the income tax expense for the
period. Refer to note 7.
Refer to note 5 of the 2021/22 interim accounts for further details on
adjusting items for the half year ended 31 July 2021, and to note 5 of the
2021/22 annual accounts for further details on adjusting items for the year
ended 31 January 2022.
6. Net finance costs
£ millions Half year ended 31 July 2022 Half year ended 31 July 2021 Year ended
31 January 2022
Bank overdrafts and bank loans (3) (4) (7)
Fixed term debt - (2) (3)
Lease liabilities (62) (69) (135)
Other interest payable - (1) (3)
Finance costs (65) (76) (148)
Cash and cash equivalents and short-term deposits 1 1 2
Net interest income on defined benefit pension schemes 6 4 8
Finance lease income 1 1 1
Finance income 8 6 11
Net finance costs (57) (70) (137)
7. Income tax expense
£ millions Half year ended Half year ended Year ended
31 July 2022
31 January 2022
31 July 2021
UK corporation tax
Current tax on profits for the period (29) (78) (80)
Adjustments in respect of prior years - 3 2
(29) (75) (78)
Overseas tax
Current tax on profits for the period (49) (53) (87)
Adjustments in respect of prior years - (2) 31
(49) (55) (56)
Deferred tax
Current period (26) (16) (56)
Adjustments in respect of prior years 1 - 1
Adjustments in respect of changes in tax rates 2 25 25
(23) 9 (30)
Income tax expense (101) (121) (164)
The adjusted effective tax rate on profit before adjusting items is 22%
(2021/22: 22%), 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 2022 was 22%. The adjusted effective tax rate
calculation is set out in the Financial Review in part 1 of this announcement.
During the period, a payment of €40m (£34m) was made to the French tax
authorities relating to a historic tax liability. This amount was fully
provided for at the prior year end.
8. Earnings per share
Pence Half year ended Half year ended 31 July 2021 Year ended
31 July 2022 31 January 2022
Basic earnings per share 18.6 26.4 40.3
Effect of dilutive share options (0.3) (0.2) (0.5)
Diluted earnings per share 18.3 26.2 39.8
Basic earnings per share 18.6 26.4 40.3
Adjusting items before tax (0.1) (0.4) (2.8)
Prior year and other adjusting tax items (0.2) (1.1) (2.3)
Adjusted basic earnings per share 18.3 24.9 35.2
Diluted earnings per share 18.3 26.2 39.8
Adjusting items before tax (0.1) (0.4) (2.7)
Prior year and other adjusting tax items (0.2) (1.1) (2.3)
Adjusted diluted earnings per share 18.0 24.7 34.8
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 2022 Half year ended 31 July 2021 Year ended
31 January 2022
Profit for the period 373 556 843
Adjusting items before tax (2) (8) (58)
Prior year and other adjusting tax items (3) (23) (48)
Adjusted profit for the period 368 525 737
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 2021 Year ended
31 July 2022 31 January 2022
Basic 2,012 2,103 2,092
Diluted 2,035 2,125 2,116
9. Dividends
Half year ended Half year ended Year ended
£ millions 31 July 2022 31 July 2021 31 January 2022
Dividends to equity shareholders of the Company
Ordinary final dividend for the year ended 31 January 2022 of 8.60p per share 172 - -
Ordinary interim dividend for the year ended 31 January 2022 of 3.80p per - 80
share
-
Ordinary final dividend for the year ended 31 January 2021 of 5.50p per share 116 116
-
Ordinary interim dividend for the year end 31 January 2021 of 2.75p per share - 58 58
172 174 254
The proposed interim ordinary dividend for the period ended 31 July 2022 is
3.80p per share (2021/22: 3.80p per share).
10. 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 £174m (2021/22: £125m) and for the year
ended 31 January 2022 were £412m. Disposals in net book value of property,
plant and equipment, investment property, property assets held for sale and
other intangible assets are £1m (2021/22: £6m) and for the year ended 31
January 2022 were £9m.
Capital commitments contracted but not provided for at the end of the period
are £55m (2021/22: £64m) and at 31 January 2022 were £31m.
11. Post-employment benefits
Half year ended Half year ended Year ended
£ millions 31 July 2022 31 July 2021 31 January 2022
Net surplus in schemes at beginning of period 410 359 359
Current service cost (6) (6) (14)
Administration costs (2) (2) (3)
Net interest income 6 4 8
Net remeasurement (losses)/gains (14) (12) 21
Contributions paid by employer 13 13 30
Exchange differences (1) 5 9
Net surplus in schemes at end of period 406 361 410
UK 542 506 540
Overseas (136) (145) (130)
Net surplus in schemes at end of period 406 361 410
Present value of defined benefit obligations (2,408) (3,310) (3,084)
Fair value of scheme assets 2,814 3,671 3,494
Net surplus in schemes at end of period 406 361 410
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 2022.
A full actuarial valuation of the scheme is carried out every three years by
an independent actuary for the Trustee and the last full valuation was carried
out as at 31 March 2019 with the next valuation currently ongoing.
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 2022 31 July 2021 31 January 2022
Discount rate 3.4 1.6 2.2
Price inflation 3.3 3.2 3.5
12. Financial instruments
The Group holds the following derivative financial instruments at fair value:
At At At
£ millions 31 July 2022 31 July 2021 31 January 2022
Foreign exchange contracts 84 11 38
Derivative assets 84 11 38
At At At
£ millions 31 July 2022 31 July 2021 31 January 2022
Cross currency interest rate swaps - (2) -
Foreign exchange contracts (13) (25) (13)
Derivative liabilities (13) (27) (13)
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 2022 31 July 2021 31 January 2022
Bank overdrafts 17 19 14
Bank loans 1 3 2
Fixed term debt - 91 -
Borrowings 18 113 16
Fair value
£ millions At At At
31 July 2022 31 July 2021 31 January 2022
Bank overdrafts 17 19 14
Bank loans 1 3 3
Fixed term debt - 93 -
Borrowings 18 115 17
Cash and borrowings balances at 31 July 2022, 31 July 2021 and 31 January 2022
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.
As at 31 July 2022, the Group had an undrawn revolving credit facility (RCF)
of £550m due to expire in May 2025 (2021/22: £550m RCF due to expire in May
2024). As at 31 January 2022, the Group had an undrawn RCF of £550m due to
expire in May 2024.
13. Share Capital
Number of ordinary shares Ordinary share capital
millions £ millions
Allotted, called up and fully paid:
At 1 February 2022 2,066 325
New shares issued under share schemes 1 -
Purchase of own shares for cancellation (82) (13)
At 31 July 2022 1,985 312
At 1 February 2021 2,111 332
At 31 July 2021 2,111 332
At 1 February 2021 2,111 332
New shares issued under share schemes 2 -
Purchase of own shares for cancellation (47) (7)
At 31 January 2022 2,066 325
Ordinary shares have a par value of 155/(7) pence per share and carry full
voting, dividend and capital distribution rights.
During the half-year the Group purchased 82 million of the Company's own
shares for cancellation at a cost of £218m as part of its capital returns
programme.
14. Other reserves
Half year ended 31 July 2022
Translation reserve Cash flow Other
£ millions hedge reserve Total
At 1 February 2022 10 27 159 196
Inventory cash flow hedges - fair value gains - 113 - 113
Tax on items that will not be reclassified subsequently to profit or loss - (28) - (28)
Currency translation differences
Group - - (22)
(22)
Joint ventures and associates (1) - - (1)
Other comprehensive (expense)/income for the period (23) 85 - 62
Inventory cash flow hedges - gains transferred to inventories - (61) - (61)
Tax on equity items (1) 15 - 14
At 31 July 2022 (14) 66 159 211
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 (expense)/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
Year ended 31 January 2022
£ millions Translation reserve Cash flow hedge reserve Other Total
At 1 February 2021 234 (32) 159 361
Inventory cash flow hedges - fair value gains - 59 - 59
Tax on items that will not be reclassified subsequently to profit or loss - (13) - (13)
Currency translation differences (218) - - (218)
Group
Joint ventures and associates (7) - - (7)
Other cash flow hedges - 1 - 1
Fair value gains
Gains transferred to income statement - (1) - (1)
Other comprehensive (expense)/income for the year (225) 46 - (179)
Inventory cash flow hedges - losses transferred to inventories - 16 - 16
Tax on equity items 1 (3) - (2)
At 31 January 2022 10 27 159 196
15. Cash generated by operations
£ millions Half year ended Half year ended Year ended
31 July 2022
31 July 2021
31 January 2022
Operating profit 531 747 1,144
Share of post-tax results of joint ventures and associates (5) (1) (5)
Depreciation and amortisation 282 273 555
Net impairment charges/(reversals) - 2 (31)
(Gain)/loss on disposal of property, plant and equipment, investment property, - (1) 1
assets held for sale and intangible assets
Lease gains (2) - (1)
Share-based compensation charge 11 14 27
Increase in inventories (395) (303) (359)
Increase in trade and other receivables (59) (33) (23)
Increase in trade and other payables 231 487 158
Movement in provisions (5) (19) (42)
Movement in post-employment benefits (5) (5) (13)
Cash generated by operations 584 1,161 1,411
16. Net debt
£ millions At At At
31 July 2022 31 July 2021 31 January 2022
Cash and cash equivalents 496 1,535 823
Bank overdrafts (17) (19) (14)
Cash and cash equivalents and bank overdrafts 479 1,516 809
Bank loans (1) (3) (2)
Fixed term debt - (91) -
Lease liabilities (2,318) (2,319) (2,376)
Net financing derivatives (8) (11) (3)
Net debt (1,848) (908) (1,572)
£ millions Half year ended Half year ended Year ended
31 July 2022 31 July 2021 31 January 2022
Net debt at beginning of period (1,572) (1,394) (1,394)
Net (decrease)/increase in cash and cash equivalents and bank overdrafts 444 (237)
(329)
Repayment of bank loans - 3 2
Repayment of fixed term debt - - 95
Net cash flow (329) 447 (140)
Movements in lease liabilities 57 78 7
Exchange differences and other non-cash movements (4) (39) (45)
Net debt at end of period (1,848) (908) (1,572)
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
illegal state aid. In January 2021, the Group received a charging notice from
HM Revenue & Customs for £57m, which was paid in February 2021, with a
further £7m interest paid in April 2021.
The UK Government and the Group, along with other UK-based multinational
groups, appealed the European Commission decision to the European Courts. On 8
June 2022, the General Court of the European Union dismissed several of those
appeals, including the UK Government's. It is expected that this decision will
be appealed to the European Court of Justice.
The final impact on the Group remains uncertain but, based upon advice taken,
the Group continues to consider that the amount paid of £64m, which is
included in non-current assets, 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, 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 38 of the annual financial statements for
the year ended 31 January 2022. There have been no significant changes in
related parties or related party transactions in the period.
19. Post balance sheet events
During the period since the balance sheet date, the Group purchased 25 million
of the Company's own shares for cancellation at a cost of £60m. This amount
was deducted from equity in the half-year to 31 July 2022 as a result of an
irrevocable buyback agreement which was in place at 31 July 2022.
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 2021/22 Annual
Report and Accounts. Bill Lennie joined the Board as a non-executive Director
on 1 May 2022. 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
19 September
2022
19 September 2022
INDEPENDENT REVIEW REPORT TO KINGFISHER PLC
Conclusion
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 2022 which comprises the condensed income statement, the condensed
statement of comprehensive income, the condensed statement of changes in
equity, the condensed balance sheet, the condensed cash flow statement and
related notes 1 to 19.
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 2022 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.
Basis for Conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 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 (ISRE (UK) 2410). 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.
As disclosed in note 2, the annual financial statements of the group are
prepared in accordance with United Kingdom adopted international accounting
standards and 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".
Conclusion Relating to Going Concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for Conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This Conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410; however future events or conditions may cause the entity to
cease to continue as a going concern.
Responsibilities of 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.
In preparing the half-yearly financial report, the directors are responsible
for assessing the group's ability to continue as a going concern, disclosing
as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the
company or to cease operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial information
In reviewing the half-yearly financial report, we are responsible for
expressing to the company a conclusion on the condensed set of financial
statements in the half-yearly financial report. Our Conclusion, including our
Conclusion Relating to Going Concern, are based on procedures that are less
extensive than audit procedures, as described in the Basis for Conclusion
paragraph of this report.
Use of our report
This report is made solely to the company in accordance with ISRE (UK) 2410.
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
19 September 2022
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