REG - Kingfisher PLC - Interim Results - Part 2 <Origin Href="QuoteRef">KGF.L</Origin> - Part 1

KingfisherAnnouncement

29/10/2014 10:38

RNS Number : 2504R
Kingfisher PLC
10 September 2014
KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT







Half year ended 2 August 2014

Half year ended 3 August 2013
(restated - note 2)


Before
Exceptional


Before
Exceptional



exceptional
items


exceptional
items

 millions
Notes
items
(note 5)
Total

items
(note 5)
Total
Sales
4
5,768
-
5,768

5,716
-
5,716
Cost of sales

(3,660)
-
(3,660)

(3,619)
-
(3,619)
Gross profit

2,108
-
2,108

2,097
-
2,097
Selling and distribution expenses 

(1,464)
(11)
(1,475)

(1,468)
7
(1,461)
Administrative expenses

(297)
-
(297)

(283)
-
(283)
Other income

19
21
40

17
1
18
Share of post-tax results of joint ventures and associates
2
-
2

5
-
5
Operating profit 

368
10
378

368
8
376









Analysed as:








Retail profit
4
390
10
400

390
8
398
Share of Hornbach operating profit

-
-
-

4
-
4
Central costs

(19)
-
(19)

(20)
-
(20)
Share of interest and tax of joint ventures and associates

(3)
-
(3)

(6)
-
(6)









Finance costs

(6)
-
(6)

(6)
-
(6)
Finance income

3
-
3

4
27
31
Net finance (costs)/income
6
(3)
-
(3)

(2)
27
25
Profit before taxation

365
10
375

366
35
401
Income tax (expense)/credit
7
(99)
1
(98)

(79)
118
39
Profit for the period

266
11
277

287
153
440









Attributable to:








Equity shareholders of the Company



278



440
Non-controlling interests



(1)



-




277



440









Earnings per share 
8







Basic



11.8p



18.7p
Diluted



11.7p



18.5p
Adjusted basic



11.3p



11.3p
Adjusted diluted



11.2p



11.2p
The proposed interim ordinary dividend for the period ended 2 August 2014 is 3.15p per share. 


KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT


Year ended 1 February 2014
(restated - note 2)


Before
Exceptional



exceptional
items

 millions
Notes
items
(note 5)
Total
Sales
4
11,125
-
11,125
Cost of sales

(7,005)
-
(7,005)
Gross profit

4,120
-
4,120
Selling and distribution expenses 

(2,883)
2
(2,881)
Administrative expenses

(550)
-
(550)
Other income

37
2
39
Share of post-tax results of joint ventures and associates

22
(14)
8
Operating profit 

746
(10)
736





Analysed as:




Retail profit 
4
779
4
783
Share of Hornbach operating profit

26
(14)
12
Central costs

(42)
-
(42)
Share of interest and tax of joint ventures and associates

(17)
-
(17)





Finance costs

(12)
-
(12)
Finance income

8
27
35
Net finance income
6
(4)
27
23
Profit before taxation

742
17
759
Income tax expense
7
(163)
114
(49)
Profit for the year

579
131
710





Attributable to:




Equity shareholders of the Company



709
Non-controlling interests



1




710





Earnings per share 
8



Basic



30.0p
Diluted



29.7p
Adjusted basic



22.8p
Adjusted diluted



22.6p


KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
 millions
Half year ended
2 August 2014
Half year ended
3 August 2013
Year ended
1 February 2014
Profit for the period
277
440
710
Actuarial gains/(losses) on post employment benefits
42
(17)
(127)
Tax on items that will not be reclassified
(39)
3
65
Total items that will not be reclassified
subsequently to profit or loss
3
(14)
(62)
Currency translation differences 



Group
(77)
(22)
(210)
Joint ventures and associates
-
(1)
(25)
Transferred to income statement
-
-
(31)
Cash flow hedges



Fair value (losses)/gains
(6)
13
(4)
Losses/(gains) transferred to inventories
16
(1)
9
Tax on items that may be reclassified
(3)
(2)
2
Total items that may be reclassified
subsequently to profit or loss
(70)
(13)
(259)
Other comprehensive income for the period
(67)
(27)
(321)
Total comprehensive income for the period
210
413
389




Attributable to:



Equity shareholders of the Company
211
412
388
Non-controlling interests
(1)
1
1

210
413
389


KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to equity shareholders of the Company
 millions
Share capital
Share
premium
Own shares held
Retained earnings
Other reserves (note 13)
Total
Non-controlling interests
Total equity
At 2 February 2014
373
2,209
(35)
3,495
266
6,308
9
6,317
Profit for the period
-
-
-
278
-
278
(1)
277
Other comprehensive income for the period
-
-
-
3
(70)
(67)
-
(67)
Total comprehensive income for the period
-
-
-
281
(70)
211
(1)
210
Share-based compensation
-
-
-
6
-
6
-
6
New shares issued under share schemes
-
1
-
-
-
1
-
1
Own shares issued under share schemes
-
-
11
(10)
-
1
-
1
Purchase of own shares for cancellation
(1)
-
-
(35)
1
(35)
-
(35)
Dividends
-
-
-
(259)
-
(259)
-
(259)
At 2 August 2014
372
2,210
(24)
3,478
197
6,233
8
6,241









At 3 February 2013
373
2,204
(60)
3,106
525
6,148
8
6,156
Profit for the period
-
-
-
440
-
440
-
440
Other comprehensive income for the period
-
-
-
(14)
(14)
(28)
1
(27)
Total comprehensive income for the period
-
-
-
426
(14)
412
1
413
Share-based compensation
-
-
-
7
-
7
-
7
New shares issued under share schemes
-
1
-
-
-
1
-
1
Own shares issued under share schemes
-
-
44
(38)
-
6
-
6
Dividends
-
-
-
(150)
-
(150)
-
(150)
At 3 August 2013
373
2,205
(16)
3,351
511
6,424
9
6,433









At 3 February 2013
373
2,204
(60)
3,106
525
6,148
8
6,156
Profit for the year
-
-
-
709
-
709
1
710
Other comprehensive income for the year
-
-
-
(62)
(259)
(321)
-
(321)
Total comprehensive income for the year
-
-
-
647
(259)
388
1
389
Share-based compensation
-
-
-
7
-
7
-
7
New shares issued under share schemes
-
5
-
-
-
5
-
5
Own shares issued under share schemes
-
-
49
(41)
-
8
-
8
Purchase of own shares for ESOP trust
-
-
(24)
-
-
(24)
-
(24)
Dividends
-
-
-
(224)
-
(224)
-
(224)
At 1 February 2014
373
2,209
(35)
3,495
266
6,308
9
6,317


KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEET
 millions
Notes
At 
2 August 2014
At 
3 August 2013
At 
1 February 2014
Non-current assets




Goodwill

2,416
2,414
2,417
Other intangible assets

240
200
222
Property, plant and equipment

3,526
3,770
3,625
Investment property

40
63
50
Investments in joint ventures and associates 

26
282
32
Post employment benefits
11
28
70
-
Deferred tax assets

11
16
12
Derivative assets
12
33
55
40
Other receivables

14
18
15


6,334
6,888
6,413
Current assets




Inventories

2,199
2,167
2,054
Trade and other receivables

610
599
590
Derivative assets
12
11
12
5
Current tax assets

11
4
15
Short-term deposits
15
167
-
-
Cash and cash equivalents

627
559
535
Assets held for sale

11
-
208


3,636
3,341
3,407
Total assets

9,970
10,229
9,820
Current liabilities




Trade and other payables

(2,691)
(2,695)
(2,486)
Borrowings
12
(103)
(15)
(94)
Derivative liabilities
12
(18)
(6)
(27)
Current tax liabilities

(203)
(208)
(175)
Provisions

(9)
(13)
(8)


(3,024)
(2,937)
(2,790)
Non-current liabilities




Other payables

(85)
(87)
(86)
Borrowings
12
(218)
(329)
(230)
Derivative liabilities
12
-
(13)
-
Deferred tax liabilities

(286)
(304)
(251)
Provisions

(42)
(50)
(46)
Post employment benefits
11
(74)
(76)
(100)


(705)
(859)
(713)
Total liabilities

(3,729)
(3,796)
(3,503)
Net assets

6,241
6,433
6,317





Equity




Share capital

372
373
373
Share premium

2,210
2,205
2,209
Own shares held in ESOP trust

(24)
(16)
(35)
Retained earnings

3,478
3,351
3,495
Other reserves
13
197
511
266
Total attributable to equity shareholders of the Company

6,233
6,424
6,308
Non-controlling interests

8
9
9
Total equity

6,241
6,433
6,317
The interim financial report was approved by the Board of Directors on 9 September 2014 and signed on its behalf by:
Sir Ian Cheshire, Group Chief Executive
Karen Witts, Group Finance Director
KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED CASH FLOW STATEMENT
 millions
Notes
Half year ended
2 August 2014
Half year ended
3 August 2013
Year ended
1 February 2014
Operating activities




Cash generated by operations
14
512
600
976
Income tax paid

(65)
(39)
(142)
Net cash flows from operating activities

447
561
834





Investing activities




Purchase of businesses, net of cash acquired
16
-
(28)
(28)
Purchase of property, plant and equipment, investment property and intangible assets

(119)
(147)
(304)
Disposal of property, plant and equipment, investment property, property assets held for sale and intangible assets

47
10
12
Disposal of Hornbach
16
198
-
-
Increase in short-term deposits
15
(167)
-
-
Interest received

2
3
8
Dividends received from joint ventures and associates

7
11
11
Net cash flows from investing activities

(32)
(151)
(301)





Financing activities




Interest paid

(3)
(6)
(12)
Interest element of finance lease rental payments

(2)
(2)
(4)
Repayment of bank loans

(2)
(89)
(89)
Repayment of Medium Term Notes and 
other fixed term debt

-
(33)
(33)
Receipt on financing derivatives

-
6
6
Capital element of finance lease rental payments

(7)
(6)
(13)
New shares issued under share schemes

1
1
5
Own shares issued under share schemes

1
6
8
Purchase of own shares for cancellation

(35)
-
-
Purchase of own shares for ESOP trust

-
-
(24)
Ordinary dividends paid to equity shareholders of the Company

(159)
(150)
(224)
Special dividend paid to equity shareholders of the Company

(100)
-
-
Net cash flows from financing activities

(306)
(273)
(380)





Net increase in cash and cash equivalents and bank overdrafts 

109
137
153
Cash and cash equivalents and bank overdrafts at beginning of period

534
398
398
Exchange differences 

(31)
23
(17)
Cash and cash equivalents and bank overdrafts at end of period
15
612
558
534


KINGFISHER PLC
2014/15 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. General information
Kingfisher plc ('the Company'), its subsidiaries, joint ventures and associates (together 'the Group') supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom, continental Europe and China. 
Kingfisher plc is a company incorporated in the United Kingdom.
The address of its registered office is 3 Sheldon Square, Paddington, London W2 6PX.
The Company is listed on the London Stock Exchange.
The interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Audited statutory accounts for the year ended 1 February 2014 were approved by the Board of Directors on 24 March 2014 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 9 September 2014.
2. Basis of preparation
The interim financial report for the 26 weeks ended 2 August 2014 ('the half year') has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34, 'Interim Financial Reporting', as adopted by the European Union. It should be read in conjunction with the annual financial statements for the year ended 1 February 2014, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. Where comparatives are given, '2013/14' refers to the prior half year.
The following non-GAAP measures have been restated in the comparatives to exclude the contribution of Hornbach, in order to improve comparability following its disposal in the current period:

Half year ended 3 August 2013
Year ended 1 February 2014
 millions
Before restatement
Restatement
After restatement
Before restatement
Restatement
After restatement
Retail profit - Group
394
(4)
390
805
(26)
779
Retail profit - Other International
62
(4)
58
171
(26)
145
Adjusted pre-tax profit
365
(1)
364
744
(14)
730
Adjusted earnings
266
(1)
265
552
(14)
538
Adjusted basic earnings per share
11.3p
-
11.3p
23.4p
(0.6)p
22.8p
Adjusted diluted earnings per share
11.2p
-
11.2p
23.2p
(0.6)p
22.6p
Segment assets - Group
3,994
(248)
3,746
3,894
(198)
3,696
Segment assets - Other International
1,172
(248)
924
1,174
(198)
976
There was no contribution from Hornbach to the current period adjusted (non-GAAP) results. Statutory (GAAP) measures have not been restated.
There have been no changes in estimates of amounts reported in prior periods that have had a material effect in the current period.
The Directors of Kingfisher plc, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence for the foreseeable future and that, therefore, it is appropriate to adopt the going concern basis in preparing the condensed consolidated financial statements for the half year ended 2 August 2014.
Principal rates of exchange against Sterling

Half year ended
2 August 2014
Half year ended
3 August 2013
Year ended
1 February 2014

Average
rate
Period end
rate
Average
rate
Period end
rate
Average
rate
Year end
rate
Euro
1.23
1.25
1.17
1.15
1.18
1.22
US Dollar
1.68
1.68
1.53
1.53
1.57
1.64
Polish Zloty
5.11
5.24
4.91
4.86
4.95
5.17
Chinese Renminbi
10.40
10.40
9.44
9.37
9.62
9.97

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, effective tax rate, adjusted earnings and adjusted earnings per share provide additional useful information on underlying trends to shareholders. These and other non-GAAP measures such as net debt/cash are used by Kingfisher for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'exceptional items', 'adjusted', 'effective tax rate' and 'net debt/cash' are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.
Retail profit is defined as continuing operating profit before central costs (principally the costs of the Group's head office), exceptional items, amortisation of acquisition intangibles and the Group's share of interest and tax of joint ventures and associates. 2013/14 comparatives have been restated to exclude the share of Hornbach operating profit.
The separate reporting of non-recurring exceptional items, which are presented as exceptional within their relevant income statement category, helps provide an indication of the Group's underlying business performance. The principal items which are included as exceptional items are:
 non-trading items included in operating profit such as profits and losses on the disposal, closure or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group's trading activities;
 profits and losses on the disposal of properties; and
 the costs of significant restructuring and incremental acquisition integration costs.
The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and prior year tax items (including the impact of changes in tax rates on deferred tax). 2013/14 comparatives have been restated to exclude the share of Hornbach results. Financing fair value remeasurements represent changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value hedge relationships. Financing derivatives are those that relate to underlying items of a financing nature.
The effective tax rate represents the effective income tax expense as a percentage of continuing profit before taxation excluding exceptional items. Effective income tax expense is the continuing income tax expense excluding tax on exceptional items and tax adjustments in respect of prior years and the impact of changes in tax rates on deferred tax.
Net debt/cash comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and short-term deposits.
3. Accounting policies 
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 1 February 2014, as described in note 2 of those financial statements.
There are no standards, amendments to standards or interpretations that are both mandatory for the first time for the financial year ending 31 January 2015 and expected to have a material impact on the Group's results.
Taxes on income for interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

4. Segmental analysis
Income statement

Half year ended 2 August 2014
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Sales
2,419
2,205
554
590
5,768
Retail profit 
166
182
54
(12)
390
Exceptional items




10
Central costs




(19)
Share of interest and tax of joint ventures and associates




(3)
Operating profit




378
Net finance costs




(3)
Profit before taxation




375

Half year ended 3 August 2013
(restated - note 2)
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Sales
2,270
2,306
557
583
5,716
Retail profit 
141
191
54
4
390
Share of Hornbach operating profit




4 
Exceptional items




8
Central costs




(20)
Share of interest and tax of joint ventures and associates




(6)
Operating profit




376
Net finance income




25
Profit before taxation




401

Year ended 1 February 2014
(restated - note 2)
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Sales
4,363
4,423
1,109
1,230
11,125
Retail profit 
238
396
123
22
779
Share of Hornbach operating profit




26
Exceptional items




(10)
Central costs




(42)
Share of interest and tax of joint ventures and associates




(17)
Operating profit




736
Net finance income




23
Profit before taxation




759


Balance sheet

At 2 August 2014
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Segment assets 
1,366
1,279
518
391
3,554
Central liabilities




(225)
Goodwill




2,416
Net cash




496
Net assets




6,241

At 3 August 2013
(restated - note 2)
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Segment assets 
1,456
1,366
560
364
3,746
Investment in Hornbach




248
Central liabilities




(234)
Goodwill




2,414
Net cash




259
Net assets




6,433

At 1 February 2014
(restated - note 2)
 millions
UK & Ireland
France
Other International 
Total
Poland
Other
Segment assets 
1,356
1,364
563
413
3,696
Investment in Hornbach




198
Central liabilities




(232)
Goodwill




2,417
Net cash




238
Net assets




6,317
The 'Other International' segment consists of Poland, China, Spain, Portugal, Germany, Russia, Romania and the joint venture Kota in Turkey. Poland has been shown separately due to its significance.
Central costs principally comprise the costs of the Group's head office. Central liabilities comprise unallocated head office and other central items including pensions, interest and tax.
The Group's sales, although 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.

5. Exceptional items
Half year ended
Half year ended
Year ended
 millions
2 August 2014
3 August 2013
1 February 2014
Included within selling and distribution expenses



UK restructuring
(6)
-
-
Acquisition and integration costs
(5)
-
(5)
Ireland restructuring
-
7
7

(11)
7
2
Included within other income



Profit on disposal of properties
21
1
2

21
1
2
Included within share of post-tax results of joint ventures and associates



Net impairment of investment in Hornbach
-
-
(14)

-
-
(14)
Included within finance income



Kesa demerger French tax case - repayment supplement income
-
27
27

-
27
27
Exceptional items before tax
10
35
17
Tax on exceptional items
1
-
(4)
Kesa demerger French tax case
-
118
118
Exceptional items
11
153
131
Current period exceptional items include a 6m restructuring charge in the UK relating to the transformation of B&Q, driven by productivity initiatives aimed at delivering a simpler, more efficient business with a lower cost operating model.
Current period acquisition and integration costs of 5m have been incurred, including fees relating to the acquisition of Mr Bricolage.
Profit on disposal of properties of 21m in the current period principally relates to the disposal of freehold assets in the UK and France.
Prior year acquisition and integration costs of 5m principally comprised costs of acquiring and integrating the Bricostore Romania business.
The prior year exceptional credit of 7m for Ireland restructuring reflected the release of provisions recorded in January 2013 when B&Q Ireland entered into an Examinership process. It successfully exited Examinership in May 2013 with the closure of only one store.
A net impairment loss of 14m was recognised in the prior year on the Group's investment in Hornbach. This comprised a loss of 45m on remeasurement of the investment to fair value, offset by a 31m gain on the transfer from reserves of cumulative foreign exchange gains since transition to IFRS.
In July 2013 the Conseil d'Etat, France's ultimate court, found in favour of Kingfisher regarding the Kesa demerger tax case, which concluded the matter. Whilst a refund was received from the French tax authorities following the first positive decision in 2009, the Group continued to provide against the risk while litigation was on-going. A 27m repayment supplement provision and 118m taxation provision related to the case were subsequently released and treated as exceptional.
6. Net finance (costs)/income

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
Bank overdrafts and bank loans
(3)
(3)
(3)
Medium Term Notes and other fixed term debt
(1)
(2)
(3)
Finance leases
(2)
(2)
(4)
Financing fair value remeasurements
1
1
(2)
Unwinding of discount on provisions
(1)
-
-
Net interest expense on defined benefit pension schemes
(1)
-
-
Capitalised interest
1
-
-
Finance costs
(6)
(6)
(12)




Cash and cash equivalents and short-term deposits
3
3
6
Net interest income on defined benefit pension schemes
-
1
2
Kesa demerger French tax case - repayment supplement income
-
27
27
Finance income 
3
31
35




Net finance (costs)/income
(3)
25
23
7. Income tax

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
UK corporation tax



Current tax on profits for the period
35
30
47
Adjustments in respect of prior years
-
(1)
(7)

35
29
40
Overseas tax



Current tax on profits for the period
64
66
131
Kesa demerger French tax case
-
(118)
(118)
Other adjustments in respect of prior years
1
(12)
(11)

65
(64)
2
Deferred tax



Current period
(2)
3
16
Adjustments in respect of changes in tax rates
-
(7)
(9)

(2)
(4)
7




Income tax expense/(credit)
98
(39)
49
The effective rate of tax on profit before exceptional items and excluding prior year tax adjustments and the impact of changes in tax rates on deferred tax is 27% (2013/14: 27%), representing the best estimate of the effective rate for the full financial year. The effective tax rate on the same basis for the year ended 1 February 2014 was 26%. Exceptional tax items for the current period amount to a credit of 1m (2013/14: 118m credit, all of which related to prior year items). Exceptional tax items for the year ended 1 February 2014 amounted to a credit of 114m, 118m of which related to prior year items. 
8. Earnings per share

Half year ended 
Half year ended 
Year ended 
Pence
2 August 2014
3 August 2013
(restated - note 2)
1 February 2014
(restated - note 2)
Basic earnings per share
11.8
18.7
30.0
Effect of dilutive share options
(0.1)
(0.2)
(0.3)
Diluted earnings per share
11.7
18.5
29.7




Basic earnings per share
11.8
18.7
30.0
Share of Hornbach post-tax results
-
-
(0.6)
Exceptional items before tax
(0.4)
(1.5)
(0.7)
Tax on exceptional and prior year items
-
(5.9)
(6.0)
Financing fair value remeasurements
(0.1)
-
0.1
Adjusted basic earnings per share
11.3
11.3
22.8




Diluted earnings per share
11.7
18.5
29.7
Share of Hornbach post-tax results
-
-
(0.6)
Exceptional items before tax
(0.4)
(1.5)
(0.7)
Tax on exceptional and prior year items
-
(5.8)
(5.9)
Financing fair value remeasurements
(0.1)
-
0.1
Adjusted diluted earnings per share
11.2
11.2
22.6
The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. A reconciliation of statutory earnings to adjusted earnings is set out below:

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
(restated - note 2)
1 February 2014
(restated - note 2)
Earnings
278
440
709
Share of Hornbach post-tax results
-
(1)
(14)
Exceptional items before tax
(10)
(35)
(17)
Tax on exceptional and prior year items
-
(138)
(141)
Financing fair value remeasurements
(1)
(1)
2
Tax on financing fair value remeasurements
-
-
(1)
Adjusted earnings
267
265
538
The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust (ESOP), is 2,364m (2013/14: 2,358m). The diluted weighted average number of shares in issue during the period is 2,375m (2013/14: 2,376m). For the year ended 1 February 2014, the weighted average number of shares in issue was 2,363m and the diluted weighted average number of shares in issue was 2,382m.
9. Dividends

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
Dividends to equity shareholders of the Company



Special interim dividend of 4.2p per share paid 25 July 2014
100
-
-
Ordinary final dividend for the year ended 1 February 2014 of
6.78p per share
159
-
-
Ordinary interim dividend for the year ended 1 February 2014 of
3.12p per share
-
-
74
Ordinary final dividend for the year ended 2 February 2013 of
6.37p per share
-
150
150

259
150
224
The proposed ordinary interim dividend for the period ended 2 August 2014 is 3.15p per share. 
10. Capital expenditure
Additions to the cost of property, plant and equipment, investment property and intangible assets, excluding assets acquired on the purchase of businesses, are 124m (2013/14: 146m) and for the year ended 1 February 2014 were 308m. Disposals in net book value of property, plant and equipment, investment property, property assets held for sale and intangible assets are 24m (2013/14: 9m) and for the year ended 1 February 2014 were 13m.
Capital commitments contracted but not provided for at the end of the period are 54m (2013/14: 48m) and at 1 February 2014 were 31m.
11. Post employment benefits

Half year ended
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
Net deficit in schemes at beginning of period
(100)
-
-
Current service cost
(4)
(4)
(9)
Administration costs
(2)
(2)
(3)
Net interest (expense)/income
(1)
1
2
Net actuarial gains/(losses)
42
(17)
(127)
Contributions paid by employer
18
16
33
Exchange differences
1
-
4
Net deficit in schemes at end of period
(46)
(6)
(100)
The assumptions used in calculating the costs and obligations of the Group's defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis provided in note 27 of the annual financial statements for the year ended 1 February 2014.
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 based on the yield on the iBoxx over 15 year AA-rated Sterling corporate bond index adjusted for the difference in term between iBoxx and scheme liabilities.
The principal financial assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:

At 
At 
At 
Annual % rate
2 August 2014
3 August 2013
1 February 2014
Discount rate
4.2
4.6
4.4
Price inflation
3.2
3.3
3.3
12. Financial instruments
The Group holds the following financial instruments at fair value:

At 
At 
At 


 millions
2 August 2014
3 August 2013
1 February 2014


Cross-currency interest rate swaps
37
60
42


Foreign exchange contracts
7
7
3


Derivative assets
44
67
45



At 
At 
At 


 millions
2 August 2014
3 August 2013
1 February 2014


Cross-currency interest rate swaps
(8)
(13)
(9)


Foreign exchange contracts
(10)
(6)
(18)


Derivative liabilities
(18)
(19)
(27)


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'. 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 directors consider that the carrying amounts of financial instruments 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 a mix of Level 1 and Level 2 inputs as defined by the fair value hierarchy of IFRS 13, 'Fair value measurement'.



Carrying amount



At 
At 
At 


 millions
2 August 2014
3 August 2013
1 February 2014


Bank overdrafts
15
1
1


Bank loans
12
16
14


Medium Term Notes and other fixed term debt
238
264
247


Finance leases
56
63
62


Borrowings
321
344
324











Fair value



At 
At 
At 


 millions
2 August 2014
3 August 2013
1 February 2014


Bank overdrafts
15
1
1


Bank loans
13
17
16


Medium Term Notes and other fixed term debt
245
273
254


Finance leases
70
79
79


Borrowings
343 
370
350




13. Other reserves
 millions
Cash flow hedge reserve
Translation reserve
 Other
Total
At 2 February 2014
(5)
112
159
266
Currency translation differences
Group
-
(77)
-
(77)
Cash flow hedges
Fair value losses
(6)
-
-
(6)
Losses transferred to inventories
16
-
-
16
Tax on items that may be reclassified
(3)
-
-
(3)
Other comprehensive income for the period
7
(77)
-
(70)
Purchase of own shares for cancellation
-
-
1
1
At 2 August 2014
2
35
160
197





At 3 February 2013
(8)
374
159
525
Currency translation differences
Group
-
(23)
-
(23)
Joint ventures and associates
-
(1)
-
(1)
Cash flow hedges
Fair value gains
13
-
-
13
Gains transferred to inventories
(1)
-
-
(1)
Tax on items that may be reclassified
(4)
2
-
(2)
Other comprehensive income for the period
8
(22)
-
(14)
At 3 August 2013
-
352
159
511





At 3 February 2013
(8)
374
159
525
Currency translation differences
Group
-
(210)
-
(210)
 Joint ventures and associates
-
(25)
-
(25)
 Transferred to income statement
-
(31)
-
(31)
Cash flow hedges
Fair value losses
(4)
-
-
(4)
Losses transferred to inventories
9
-
-
9
Tax on items that may be reclassified
(2)
4
-
2
Other comprehensive income for the year
3
(262)
-
(259)
At 1 February 2014
(5)
112
159
266


14. Cash generated by operations

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
Operating profit
378
376
736
Share of post-tax results of joint ventures and associates 
(2)
(5)
(8)
Depreciation and amortisation 
132
130
261
Impairment losses
-
-
2
(Profit)/loss on disposal of property, plant and equipment, investment property and intangible assets
(22)
(1)
1
Share-based compensation charge 
6
7
7
Increase in inventories
(179)
(60)
(31)
Increase in trade and other receivables
(28)
(50)
(60)
Increase in trade and other payables
243
234
118
Movement in provisions
(4)
(21)
(29)
Movement in post employment benefits
(12)
(10)
(21)
Cash generated by operations
512
600
976
15. Net cash

At 
At 
At 
 millions
2 August 2014
3 August 2013
1 February 2014
Cash and cash equivalents
627
559
535
Bank overdrafts
(15)
(1)
(1)
Cash and cash equivalents and bank overdrafts
612
558
534
Short-term deposits
167
-
-
Bank loans
(12)
(16)
(14)
Medium Term Notes and other fixed term debt
(238)
(264)
(247)
Financing derivatives 
23
44
27
Finance leases
(56)
(63)
(62)
Net cash
496
259
238
Short-term deposits comprise bank deposits with original maturities of between three and 12 months.

Half year ended 
Half year ended 
Year ended 
 millions
2 August 2014
3 August 2013
1 February 2014
Net cash at beginning of period
238
38
38
Net increase in cash and cash equivalents and 
bank overdrafts
109
137
153
Increase in short-term deposits
167
-
-
Repayment of bank loans
2
89
89
Repayment of Medium Term Notes and other fixed term debt
-
33
33
Receipt on financing derivatives
-
(6)
(6)
Capital element of finance lease rental payments 
7
6
13
Cash flow movement in net cash
285
259
282
Borrowings acquired
-
(35)
(35)
Exchange differences and other non-cash movements
(27)
(3)
(47)
Net cash at end of period
496
259
238

16. Acquisitions and disposals
On 3 April 2014, Kingfisher announced it had entered into exclusive negotiations with the principal shareholders of Mr Bricolage, the French home improvement retailer, to acquire their shareholding. A non-binding memorandum of understanding was entered into, marking the start of exclusive negotiations during which the operating businesses of Mr Bricolage and of Kingfisher in France (Castorama and Brico Dpt) would meet with their respective works councils and would propose improved commercial terms to the franchisees of Mr Bricolage. The outcome of these negotiations was successful and accordingly, a binding agreement was entered into on 23 July 2014.
The acquisition by Kingfisher of the shares of the principal shareholders of Mr Bricolage will now proceed subject to French anti-trust clearance. Subsequently, a mandatory offer will be made to acquire the shares held by the minority shareholders at the agreed price per share of 15, in accordance with applicable law. The closure of the acquisition of the shareholding of the principal shareholders is expected to be completed around the end of Kingfisher's 2014/15 financial year.
In the prior period, the Group acquired 100% of the share capital of the Bricostore Romania companies for cash consideration of 35m (along with a non-cash element of 16m) and acquired cash of 7m and borrowings of 35m.
The Group received proceeds of 236m (198m) following the disposal of its 21% stake in Hornbach in March 2014.
17. Contingent assets and liabilities
The Group has arranged for certain guarantees to be provided to third parties in the ordinary course of business. Of these guarantees, only 1m (2013/14: 1m) would crystallise due to possible future events not wholly within the Group's control. At 1 February 2014 the amount was 1m.
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.
18. Related party transactions
The Group's significant related parties are its joint ventures, associates and pension schemes as disclosed in note 37 of the annual financial statements for the year ended 1 February 2014. There have been no significant changes in related parties or related party transactions in the period, except that Hornbach is no longer a related party.


STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that this set of interim condensed financial statements has been prepared in accordance with IAS 34, 'Interim Financial Reporting', as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:
 an indication of important events that have occurred during the period and their impact on the interim condensed financial statements, and a description of the principal risks and uncertainties for the remainder of the financial year; and
 material related party transactions in the period and any material changes in the related party transactions described in the last annual report.
The Directors of Kingfisher plc were listed in the Kingfisher plc Annual Report for the year ended 1 February 2014. With the exception of Philippe Tible, who stepped down as a Director of Kingfisher plc on 31 July 2014, there have been no changes in the period.
By order of the Board
Sir Ian Cheshire Karen Witts
Group Chief Executive Group Finance Director
9 September 2014   9 September 2014


INDEPENDENT REVIEW REPORT TO KINGFISHER PLC
We have been engaged by the Company to review the condensed set of financial statements in the interim financial report for the half year ended 2 August 2014 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated cash flow statement and related notes 1 to 18. We have read the other information contained in the interim financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410; "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The interim financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the interim financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this interim financial report has been prepared in accordance with International Accounting Standard 34; "Interim Financial Reporting," as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the interim financial report based on our review.
Scope of review 
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410; "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the interim financial report for the half year ended 2 August 2014 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditor
London, United Kingdom
9 September 2014

This information is provided by RNS
The company news service from the London Stock Exchange
  END
IR UGUPABUPCGBB