TIDMKGF
RNS Number : 1429A
Kingfisher PLC
22 March 2017
KINGFISHER PLC
Consolidated income statement
Year ended 31 January 2017
2016/17 2015/16
----------- ----------- ------- ---------------------------------
Before Exceptional Before Exceptional
exceptional items exceptional items
GBP millions Notes Items (note 4) Total items (note 4) Total
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
Sales 3 11,225 - 11,225 10,441 - 10,441
Cost of sales (7,050) - (7,050) (6,545) - (6,545)
----------- ----------- -------
Gross profit 4,175 - 4,175 3,896 - 3,896
Selling and distribution expenses (2,758) 21 (2,737) (2,666) (308) (2,974)
Administrative expenses (687) (5) (692) (567) (15) (582)
Other income 19 7 26 26 157 183
Share of post-tax results
of joint ventures and associates 1 - 1 3 - 3
Operating profit 750 23 773 692 (166) 526
Finance costs (21) (6) (27) (22) - (22)
Finance income 13 - 13 8 - 8
----------- ----------- -------
Net finance costs 5 (8) (6) (14) (14) - (14)
Profit before taxation 742 17 759 678 (166) 512
Income tax expense 6 (143) (6) (149) (167) 67 (100)
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
Profit for the year 599 11 610 511 (99) 412
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
Earnings per share 7
Basic 27.1p 17.8p
Diluted 27.0p 17.8p
Adjusted basic 24.4p 22.0p
Adjusted diluted 24.3p 22.0p
Underlying basic 25.9p 22.0p
Underlying diluted 25.8p 22.0p
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
Reconciliation of non-GAAP underlying and adjusted pre-tax profit:
---------------------------------------------------------------------------------------------------------------
Underlying pre-tax profit 787 686
Transformation costs before exceptional items (44) -
------------------------------------------------------ ----------- ------- ----------- ----------- -------
Adjusted pre-tax profit 743 686
B&Q China operating loss - (4)
Financing fair value remeasurements (1) (4)
Exceptional items 17 (166)
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
Profit before taxation 759 512
---------------------------------- ----- ----------- ----------- ------- ----------- ----------- -------
The proposed final dividend for the year ended 31 January 2017,
subject to approval by shareholders at the Annual General Meeting,
is 7.15p per share.
Consolidated statement of comprehensive income
Year ended 31 January 2017
GBP millions Notes 2016/17 2015/16
-------------------------------------------------------------------------- ------ -------- --------
Profit for the year 610 412
-------------------------------------------------------------------------- ------ --------
Actuarial (losses)/gains on post-employment benefits 9 (50) 19
Tax on items that will not be reclassified 11 (8)
-------------------------------------------------------------------------- ------ --------
Total items that will not be reclassified subsequently to profit or loss (39) 11
-------------------------------------------------------------------------- ------ --------
Currency translation differences
Group 390 1
Joint ventures and associates (1) (3)
Transferred to income statement - (7)
Cash flow hedges
Fair value gains 52 24
Gains transferred to inventories (60) (50)
Available-for-sale financial assets
Fair value gains 5 2
Transferred to income statement 12 (7) -
Tax on items that may be reclassified 2 8
-------------------------------------------------------------------------- ------ -------- --------
Total items that may be reclassified subsequently to profit or loss 381 (25)
-------------------------------------------------------------------------- ------ -------- --------
Other comprehensive income for the year 342 (14)
-------------------------------------------------------------------------- ------ -------- --------
Total comprehensive income for the year 952 398
-------------------------------------------------------------------------- ------ -------- --------
Consolidated statement of changes in equity
Year ended 31 January 2017
Attributable to equity shareholders of the Company
Own Non-
Share Share shares Retained Other controlling Total
GBP millions Notes capital premium held earnings reserves Total interests equity
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
At 1 February
2016 361 2,218 (24) 3,637 (6) 6,186 - 6,186
--------------- --------
Profit for the
year - - - 610 - 610 - 610
Other
comprehensive
income for
the year - - - (39) 381 342 - 342
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
Total
comprehensive
income for
the year - - - 571 381 952 - 952
Share-based
compensation - - - 15 - 15 - 15
New shares
issued under
share schemes - 3 - - - 3 - 3
Own shares
issued under
share schemes - - 7 (6) - 1 - 1
Purchase of
own shares
for
cancellation (9) - - (150) 9 (150) - (150)
Purchase of
own shares
for ESOP
trust - - (6) - - (6) - (6)
Dividends 8 - - - (230) - (230) - (230)
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
At 31 January
2017 352 2,221 (23) 3,837 384 6,771 - 6,771
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
At 1 February
2015 369 2,214 (26) 3,652 11 6,220 10 6,230
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
Profit for the
year - - - 412 - 412 - 412
Other
comprehensive
income for
the year - - - 11 (25) (14) - (14)
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
Total
comprehensive
income for
the year - - - 423 (25) 398 - 398
Disposal of
B&Q China 12 - - - - - - (10) (10)
Share-based
compensation - - - 11 - 11 - 11
New shares
issued under
share schemes - 4 - - - 4 - 4
Own shares
issued under
share schemes - - 18 (17) - 1 - 1
Purchase of
own shares
for
cancellation (8) - - (200) 8 (200) - (200)
Purchase of
own shares
for ESOP
trust - - (16) - - (16) - (16)
Dividends 8 - - - (232) - (232) - (232)
At 31 January
2016 361 2,218 (24) 3,637 (6) 6,186 - 6,186
--------------- -------- ---------- ---------- --------- ---------- ---------- ------ ------------ ----------
Consolidated balance sheet
At 31 January 2017
GBP millions Notes 2016/17 2015/16
---------------------------------------------- ------ -------- --------
Non-current assets
Goodwill 2,399 2,397
Other intangible assets 308 276
Property, plant and equipment 3,589 3,212
Investment property 24 25
Investments in joint ventures and associates 23 23
B&Q China investment 12 - 62
Post-employment benefits 9 239 246
Deferred tax assets 28 11
Derivative assets 54 43
Other receivables 8 7
---------------------------------------------- ------ --------
6,672 6,302
Current assets
Inventories 2,173 1,957
Trade and other receivables 551 568
Derivative assets 36 56
Current tax assets 6 5
Short-term deposits - 70
Cash and cash equivalents 795 730
Assets held for sale - 6
---------------------------------------------- ------ --------
3,561 3,392
---------------------------------------------- ------ -------- --------
Total assets 10,233 9,694
Current liabilities
Trade and other payables (2,495) (2,369)
Borrowings (14) (138)
Derivative liabilities (26) (6)
Current tax liabilities (141) (66)
Provisions (63) (69)
(2,739) (2,648)
Non-current liabilities
Other payables (50) (53)
Borrowings (184) (179)
Deferred tax liabilities (282) (333)
Provisions (99) (208)
Post-employment benefits 9 (108) (87)
---------------------------------------------- ------ -------- --------
(723) (860)
---------------------------------------------- ------ -------- --------
Total liabilities (3,462) (3,508)
Net assets 6,771 6,186
---------------------------------------------- ------ -------- --------
Equity
Share capital 352 361
Share premium 2,221 2,218
Own shares held in ESOP trust (23) (24)
Retained earnings 3,837 3,637
Other reserves 384 (6)
---------------------------------------------- ------ -------- --------
Total equity 6,771 6,186
---------------------------------------------- ------ -------- --------
The financial statements were approved by the Board of Directors
on 21 March 2017 and signed on its behalf by:
VĂ©ronique Laury Karen Witts
Chief Executive Officer Chief Financial Officer
Consolidated cash flow statement
Year ended 31 January 2017
GBP millions Notes 2016/17 2015/16
------------------------------------------------------------------------------------ ------ --------- ---------
Operating activities
Cash generated by operations 10 925 931
Income tax paid (144) (118)
---------
Net cash flows from operating activities 781 813
Investing activities
Purchase of property, plant and equipment and intangible assets (406) (333)
Disposal of property, plant and equipment, investment property and property held
for sale 20 25
Disposal of property company 12 - 18
Disposal of B&Q China: 12
Proceeds (net of costs and cash disposed) 63 102
Deposit repaid - (12)
Decrease/(increase) in short-term deposits 70 (22)
Interest received 5 3
Dividends received from joint ventures and associates - 5
------------------------------------------------------------------------------------ ------ --------- ---------
Net cash flows from investing activities (248) (214)
Financing activities
Interest paid (10) (12)
Interest element of finance lease rental payments (2) (3)
Repayment of bank loans (2) (1)
Repayment of fixed term debt (47) -
Receipt on financing derivatives 10 -
Capital element of finance lease rental payments (12) (13)
New shares issued under share schemes 3 4
Own shares issued under share schemes 1 1
Purchase of own shares for ESOP trust (6) (16)
Purchase of own shares for cancellation (200) (200)
Ordinary dividends paid to equity shareholders of the Company (230) (232)
Net cash flows from financing activities (495) (472)
Net increase in cash and cash equivalents and bank overdrafts, including amounts
classified
as held for sale 38 127
Cash and cash equivalents and bank overdrafts, including amounts classified as held
for sale,
at beginning of year 654 527
Exchange differences 103 -
Cash and cash equivalents and bank overdrafts at end of year 11 795 654
------------------------------------------------------------------------------------ ------ --------- ---------
Notes
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 the United Kingdom and is listed
on the London Stock Exchange. The address of its registered office
is 3 Sheldon Square, Paddington, London W2 6PX.
2 Basis of preparation
The consolidated financial statements of the Company, its
subsidiaries, joint ventures and associates are made up to 31
January. The current financial year is the calendar year ended 31
January 2017 ('the year' or '2016/17'). The comparative financial
year is the calendar year ended 31 January 2016 ('the prior year'
or '2015/16').
The directors of Kingfisher plc, having made appropriate
enquiries, consider that adequate resources exist for the Group to
continue in operational existence and that, therefore, it is
appropriate to adopt the going concern basis in preparing the
consolidated financial statements for the year ended 31 January
2017.
The condensed financial information, which comprises the
consolidated income statement, consolidated statement of
comprehensive income, consolidated statement of changes in equity,
consolidated balance sheet, consolidated cash flow statement and
related notes do not constitute statutory financial statements for
the year ended 31 January 2017, but are derived from those
statements. Statutory financial statements for 2015/16 have been
filed with the Registrar of Companies and those for 2016/17 will be
filed in due course. The Group's auditors have reported on both
years' accounts; their reports were unqualified and did not contain
statements under Section 498 (2) or (3) of the Companies Act
2006.
The condensed financial information has been abridged from the
2016/17 statutory financial statements, which have been prepared in
accordance with International Financial Reporting Standards as
adopted by the European Union ('IFRS') and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS and
therefore the consolidated financial statements comply with Article
4 of the EU IAS legislation. The consolidated income statement and
related notes represent results for continuing operations, there
being no discontinued operations in the years presented. The
condensed financial information has been prepared under the
historical cost convention, as modified by the use of valuations
for certain financial instruments, share-based payments and
post-employment benefits.
Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 January 2016, as
described in note 2 of those financial statements.
Principal rates of exchange against Sterling
2016/17 2015/16
-------- --------- -------- ---------
Average Year end Average Year end
rate rate rate rate
---------------- -------- --------- -------- ---------
Euro 1.21 1.16 1.38 1.31
US Dollar 1.34 1.26 1.52 1.42
Polish Zloty 5.28 5.03 5.78 5.78
Russian Rouble 87.98 75.72 94.54 107.52
---------------- -------- --------- -------- ---------
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 adjusted sales, retail profit,
underlying pre-tax profit, adjusted pre-tax profit, effective tax
rate, underlying earnings per share and adjusted earnings per share
provide additional useful information on performance and trends to
shareholders. These and other non-GAAP measures, such as net cash,
are used by Kingfisher for internal performance analysis and
incentive compensation arrangements for employees. The terms
'retail profit', 'exceptional items', 'transformation costs',
'underlying', 'adjusted', 'effective tax rate' and 'net 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, the Group's share of interest and tax of joint
ventures and associates, transformation costs, exceptional items
and amortisation of acquisition intangibles. It includes the
sustainable benefits of the Group's transformation programme.
2015/16 comparatives exclude B&Q China's operating results.
Central costs principally comprise the costs of the Group's head
office before transformation costs.
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 ongoing
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
impairment losses on non-operational assets; and
-- the costs of significant restructuring, including certain
restructuring costs of the Group's five-year transformation
programme launched in 2016/17, 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). 2015/16
comparatives exclude B&Q China's operating 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 hedged items of a financing
nature.
The term 'underlying' refers to the relevant adjusted measure
being reported before non-exceptional transformation costs.
Non-exceptional transformation costs represent the short-term
additional costs that arise only as a result of the transformation
programme launched in 2016/17, which either because of their nature
or the length of the period over which they are incurred are not
considered as exceptional items. These costs principally relate to
the unified and unique offer range implementation and the digital
strategic initiative. The separate reporting of such costs (in
addition to exceptional items) helps provide an indication of the
Group's underlying business performance, which includes the
sustainable benefits of the transformation programme.
The effective tax rate is calculated as continuing income tax
expense excluding tax on exceptional items and adjustments in
respect of prior years and the impact of changes in tax rates on
deferred tax, divided by continuing profit before taxation
excluding exceptional items.
Net cash comprises cash and cash equivalents and short-term
deposits less borrowings and financing derivatives (excluding
accrued interest). It excludes balances classified as assets and
liabilities held for sale.
3 Segmental analysis
Income statement
2016/17
---------------------------------------------------------
Other International
----------------------------------------------------------- ------------- ------- ---------------------- -------
GBP millions UK & Ireland France Poland Other Total
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Adjusted sales 4,979 4,254 1,191 801 11,225
B&Q China sales -
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Sales 11,225
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Retail profit 358 353 144 (8) 847
Central costs (48)
Share of interest and tax of joint ventures and associates (5)
Transformation costs before exceptional items (44)
Exceptional items 23
Operating profit 773
Net finance costs (14)
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Profit before taxation 759
----------------------------------------------------------- ------------- ------- ----------- --------- -------
2015/16
---------------------------------------------------------
Other International
----------------------------------------------------------- ------------- ------- ---------------------- -------
GBP millions UK & Ireland France Poland Other Total
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Adjusted sales 4,853 3,786 987 705 10,331
----------------------------------------------------------- ------------- ------- ----------- --------- -------
B&Q China sales 110
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Sales 10,441
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Retail profit 326 311 113 (4) 746
Central costs (45)
Share of interest and tax of joint ventures and associates (5)
B&Q China operating loss (4)
Exceptional items (166)
Operating profit 526
Net finance costs (14)
----------------------------------------------------------- ------------- ------- ----------- --------- -------
Profit before taxation 512
----------------------------------------------------------- ------------- ------- ----------- --------- -------
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 business segment being the supply
of home improvement products and services.
The 'Other International' segment consists of Poland, Spain,
Portugal, Germany, Russia, Romania and the joint venture Koçta in
Turkey. Poland has been shown separately due to its
significance.
Central costs principally comprise the costs of the Group's head
office before transformation costs.
4 Exceptional items
GBP millions 2016/17 2015/16
---------------------------------------------------- -------- --------
Included within selling and distribution expenses
UK & Ireland and continental Europe restructuring 21 (305)
Brico DĂ©pĂ´t Romania impairment - (3)
21 (308)
---------------------------------------------------- -------- --------
Included within administrative expenses
Transformation exceptional costs (5) -
Brico DĂ©pĂ´t Romania impairment - (15)
(5) (15)
---------------------------------------------------- -------- --------
Included within other income
Profit on disposal of B&Q China 3 143
Profit on disposal of property and other companies - 13
Profit on disposal of properties 4 1
---------------------------------------------------- -------- --------
7 157
---------------------------------------------------- -------- --------
Included within net finance costs
UK & Ireland and continental Europe restructuring (6) -
---------------------------------------------------- -------- --------
(6) -
---------------------------------------------------- -------- --------
Exceptional items before tax 17 (166)
Exceptional tax items (6) 67
Exceptional items 11 (99)
---------------------------------------------------- -------- --------
Current year exceptional items include a GBP21m net credit
(2015/16: GBP305m charge) relating to the B&Q store closure
programme in the UK and the closure of loss-making stores in France
and other countries in continental Europe. In addition, a GBP6m
exceptional interest charge relating to the reduction in discount
rate used to measure the overall UK restructuring provision was
recognised.
The net credit principally arises due to savings on B&Q
store exit costs as compared with the original restructuring
provisions recognised, and the reversal of a restructuring
provision following the announcement that one of the B&Q stores
originally earmarked for closure would remain open, offset mainly
by store asset impairments relating to the closure of additional
loss-making stores in continental Europe.
Transformation exceptional costs of GBP5m have been recorded in
the year relating to the initial costs of setting up the Group's
new offer and supply chain organisation.
A profit of GBP3m was recognised on disposal of the Group's
remaining 30% stake in B&Q China - refer to note 12 for further
information. In the prior year a profit of GBP143m was recorded on
disposal of the Group's controlling 70% stake.
In the prior year, an exceptional loss of GBP18m was recorded
relating to the impairment of goodwill and certain stores in the
Brico DĂ©pĂ´t Romania business.
5 Net finance costs
GBP millions 2016/17 2015/16
-------------------------------------------------------- -------- --------
Bank overdrafts and bank loans (10) (8)
Fixed term debt (2) (3)
Finance leases (2) (3)
Financing fair value remeasurements (1) (4)
Unwinding of discount on provisions (7) (1)
Other interest payable (5) (3)
Finance costs (27) (22)
-------------------------------------------------------- -------- --------
Cash and cash equivalents and short-term deposits 6 3
Net interest income on defined benefit pension schemes 7 5
Finance income 13 8
-------------------------------------------------------- -------- --------
Net finance costs (14) (14)
-------------------------------------------------------- -------- --------
The GBP7m charge relating to the unwinding of discount on
provisions includes a GBP6m exceptional charge relating to the
reduction in discount rate used to measure the overall UK
restructuring provision.
6 Income tax expense
GBP millions 2016/17 2015/16
---------------------------------------------------------------- -------- --------
UK corporation tax
Current tax on profits for the year (66) (7)
Adjustments in respect of prior years 10 4
(56) (3)
---------------------------------------------------------------- -------- --------
Overseas tax
Current tax on profits for the year (155) (117)
Adjustments in respect of prior years (11) 7
---------------------------------------------------------------- -------- --------
(166) (110)
---------------------------------------------------------------- -------- --------
Deferred tax
Current year 22 14
Adjustments in respect of prior years and changes in tax rates 51 (1)
73 13
---------------------------------------------------------------- -------- --------
Income tax expense (149) (100)
---------------------------------------------------------------- -------- --------
The effective tax rate on profit before exceptional items and
excluding prior year tax adjustments and the impact of changes in
tax rates on deferred tax is 26% (2015/16: 26%). Exceptional tax
items for the year amount to a charge of GBP6m, of which a GBP1m
credit relates to prior year items. In 2015/16 exceptional tax
items amounted to a credit of GBP67m, of which a GBP1m credit was
relating to prior year items.
7 Earnings per share
2016/17 2015/16
------------- -------------------------------- ------------- --------------------------------
Weighted Weighted
average average
number Earnings per number Earnings per
Earnings of shares share Earnings of shares share
GBP millions millions Pence GBP millions millions pence
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Basic earnings per
share 610 2,256 27.1 412 2,311 17.8
Effect of dilutive
share options 7 (0.1) 8 -
-------------------- ------------- ----------- -------------------
Diluted earnings
per share 610 2,263 27.0 412 2,319 17.8
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Basic earnings per
share 610 2,256 27.1 412 2,311 17.8
B&Q China operating
loss - - 4 0.2
Exceptional items
before tax (17) (0.8) 166 7.2
Tax on exceptional
and prior year
items (43) (2.0) (76) (3.3)
Financing fair
value
remeasurements 1 0.1 4 0.2
Tax on financing
fair value
remeasurements - - (1) (0.1)
-------------------- ------------- ----------- -------------------
Adjusted basic
earnings per share 551 2,256 24.4 509 2,311 22.0
Transformation
costs before
exceptional items 44 2.0 - -
Tax on
transformation
costs before
exceptional items (11) (0.5) - -
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Underlying basic
earnings per share 584 2,256 25.9 509 2,311 22.0
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Diluted earnings
per share 610 2,263 27.0 412 2,319 17.8
B&Q China operating
loss - - 4 0.2
Exceptional items
before tax (17) (0.8) 166 7.2
Tax on exceptional
and prior year
items (43) (2.0) (76) (3.3)
Financing fair
value
remeasurements 1 0.1 4 0.2
Tax on financing
fair value
remeasurements - - (1) (0.1)
-------------------- ------------- ----------- -------------------
Adjusted diluted
earnings per share 551 2,263 24.3 509 2,319 22.0
Transformation
costs before
exceptional items 44 2.0 - -
Tax on
transformation
costs before
exceptional items (11) (0.5) - -
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Underlying diluted
earnings per share 584 2,263 25.8 509 2,319 22.0
-------------------- ------------- ----------- ------------------- ------------- ----------- -------------------
Basic earnings per share is calculated by dividing the profit
for the year attributable to equity shareholders of the Company by
the weighted average number of shares in issue during the year,
excluding those held in the Employee Share Ownership Plan Trust
('ESOP') which for the purpose of this calculation are treated as
cancelled.
For diluted earnings per share, the weighted average number of
shares is adjusted to assume conversion of all dilutive potential
ordinary shares. These represent share options granted to employees
where both the exercise price is less than the average market price
of the Company's shares during the year and any related performance
conditions have been met.
8 Dividends
GBP millions 2016/17 2015/16
--------------------------------------------------------------------------------- -------- --------
Dividends to equity shareholders of the Company
Ordinary interim dividend for the year ended 31 January 2017 of 3.25p per share
(year ended 31 January 2016: 3.18p per share) 73 72
Ordinary final dividend for the year ended 31 January 2016 of 6.92p per share
(year ended 31 January 2015: 6.85p per share) 157 160
230 232
--------------------------------------------------------------------------------- -------- --------
The proposed final dividend for the year ended 31 January 2017
of 7.15p per share is subject to approval by shareholders at the
Annual General Meeting and has not been included as a liability in
the financial statements.
9 Post-employment benefits
2016/17 2015/16
----------------------------- -----------------------------
GBP millions UK Overseas Total UK Overseas Total
-------- --------- -------- -------- --------- --------
Net surplus/(deficit) in schemes
at beginning of year 246 (87) 159 194 (82) 112
Current service cost (2) (7) (9) (2) (6) (8)
Administration costs (4) - (4) (4) - (4)
Net interest income/(expense) 9 (2) 7 6 (1) 5
Net actuarial (losses)/gains (46) (4) (50) 16 3 19
Contributions paid by employer 36 2 38 36 1 37
Exchange differences - (10) (10) - (2) (2)
------------------------------------------------- -------- --------- -------- -------- --------- --------
Net surplus/(deficit) in schemes at end of year 239 (108) 131 246 (87) 159
------------------------------------------------- -------- --------- -------- -------- --------- --------
Present value of defined benefit obligations (2,999) (126) (3,125) (2,374) (102) (2,476)
Fair value of scheme assets 3,238 18 3,256 2,620 15 2,635
------------------------------------------------- -------- --------- -------- -------- --------- --------
Net surplus/(deficit) in schemes 239 (108) 131 246 (87) 159
------------------------------------------------- -------- --------- -------- -------- --------- --------
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.
A key assumption in valuing the pension obligations 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 are as
follows:
Annual % rate 2016/17 2015/16
----------------- -------- --------
Discount rate 2.7 3.6
Price inflation 3.6 3.1
----------------- -------- --------
For the UK scheme, the mortality assumptions used have been
selected with regard to the characteristics and experience of the
membership of the scheme from time to time in connection with
triennial funding valuations. The assumptions for life expectancy
of UK scheme members are as follows:
Years 2016/17 2015/16
--------------------------------- --- -------- --------
Age to which current pensioners
are expected to live (60 now)
- Male 87.1 86.8
- Female 88.8 87.4
Age to which future pensioners
are expected to live (60 in 15
years' time)
- Male 88.3 87.5
- Female 90.7 88.6
---------------------------------- -------- --------
The following sensitivity analysis for the UK scheme shows the
estimated impact on the obligation resulting from changes to key
actuarial assumptions, whilst holding all other assumptions
constant.
Impact on defined
Assumption Change in assumption benefit obligation
---------------- ---------------------------- --------------------
Increase/decrease Decrease/increase
Discount rate by 0.1% by GBP57m
Increase/decrease Increase/decrease
Price inflation by 0.1% by GBP46m
Increase in life expectancy
Mortality by one year Increase by GBP96m
---------------- ---------------------------- --------------------
10 Cash generated by operations
GBP millions 2016/17 2015/16
---------------------------------------------------------------------------- -------- --------
Operating profit 773 526
Share of post-tax results of joint ventures and associates (1) (3)
Depreciation and amortisation 253 240
Impairment losses 14 55
Loss on disposal of property, plant and equipment, investment property and
property held for sale 4 3
Profit on disposal of B&Q China (3) (143)
Profit on disposal of property and other companies - (13)
Share-based compensation charge 15 11
(Increase)/decrease in inventories (46) 56
Decrease/(increase) in trade and other receivables 62 (36)
Increase in trade and other payables 4 27
Movement in provisions (125) 233
Movement in post-employment benefits (25) (25)
---------------------------------------------------------------------------- -------- --------
Cash generated by operations 925 931
---------------------------------------------------------------------------- -------- --------
11 Net cash
GBP millions 2016/17 2015/16
-------------------------------------------------------------------------- -------- --------
Cash and cash equivalents 795 730
Bank overdrafts - (76)
-------------------------------------------------------------------------- -------- --------
Cash and cash equivalents and bank overdrafts 795 654
Short-term deposits - 70
Bank loans (9) (10)
Fixed term debt (147) (185)
Financing derivatives 44 63
Finance leases (42) (46)
Net cash 641 546
-------------------------------------------------------------------------- -------- --------
GBP millions 2016/17 2015/16
-------------------------------------------------------------------------- -------- --------
Net cash at beginning of year 546 329
-------------------------------------------------------------------------- -------- --------
Net increase in cash and cash equivalents and bank overdrafts, including
amounts classified as held for sale 38 127
(Decrease)/increase in short term deposits (70) 22
Repayment of bank loans 2 1
Repayment of fixed term debt 47 -
Receipt on financing derivatives (10) -
Capital element of finance lease rental payments 12 13
-------------------------------------------------------------------------- -------- --------
Cash flow movement in net cash 19 163
Adjustment for cash classified as held for sale (B&Q China) - 57
Exchange differences and other non-cash movements 76 (3)
Net cash at end of year 641 546
-------------------------------------------------------------------------- -------- --------
12 Disposals
On 5 July 2016, the Group disposed of its remaining 30% interest
in the B&Q China business to Wumei Holdings Inc. for a gross
consideration of GBP67m, being the Sterling equivalent of RMB 582m.
The profit on disposal of GBP3m is analysed as follows:
GBP millions
-------------------------------------------------------------- -----
Proceeds 67
Disposal costs (4)
--------------------------------------------------------------- -----
Net disposal proceeds 63
Fair value of investment disposed (67)
Fair value gains transferred from available-for-sale reserve 7
--------------------------------------------------------------- -----
Exceptional profit on disposal 3
--------------------------------------------------------------- -----
In the prior year, the Group received gross proceeds of GBP140m
(before disposal costs of GBP6m) and recognised a profit on
disposal of GBP143m in respect of Wumei Holdings Inc. acquiring a
controlling 70% stake in the B&Q China business. In the prior
year, the Group also completed the sale of a property company for
proceeds of GBP18m and a profit of GBP16m, along with the sale of a
UK company for proceeds of GBPnil and a loss of GBP3m.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SELFUFFWSEDD
(END) Dow Jones Newswires
March 22, 2017 03:01 ET (07:01 GMT)
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