TIDMKGF
RNS Number : 6488Z
Kingfisher PLC
22 September 2020
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Half year ended 31 July 2020 Half year ended 31 July 2019
---------------------------------- ------------------------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
GBP millions Notes items items Total items items Total
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
Sales 4 5,921 - 5,921 5,997 - 5,997
Cost of sales (3,735) - (3,735) (3,776) - (3,776)
---------------- -------- ---------------- --------
Gross profit 2,186 - 2,186 2,221 - 2,221
Selling and
distribution
expenses (1,302) (27) (1,329) (1,414) (94) (1,508)
Administrative
expenses (390) 10 (380) (396) - (396)
Other income 11 - 11 10 1 11
Share of
post-tax
results of
joint ventures
and associates (2) - (2) - - -
Operating
profit 4 503 (17) 486 421 (93) 328
Finance costs (94) - (94) (93) - (93)
Finance income 6 - 6 10 - 10
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
Net finance
costs 6 (88) - (88) (83) - (83)
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
Profit before
taxation 415 (17) 398 338 (93) 245
Income tax
expense 8 (85) 4 (81) (93) 19 (74)
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
Profit for the
period 330 (13) 317 245 (74) 171
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
Earnings per
share 9
Basic 15.1p 8.1p
Diluted 15.0p 8.1p
Adjusted basic 15.1p 11.8p
Adjusted
diluted 15.0p 11.8p
Reconciliation of non-GAAP adjusted pre-tax profit:
Adjusted
pre-tax profit 415 337
Exchange
differences on
lease
liabilities - 1
Exceptional
items 5 (17) (93)
Profit before
taxation 398 245
---------------- ------ ---------------- ---------------- -------- ---------------- ---------------- --------
The Directors propose no interim dividend for the period ended
31 July 2020.
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED INCOME STATEMENT
Year ended 31 January 2020
-------------------------------------------
Before exceptional Exceptional
GBP millions Notes items items Total
---------------------------------------------------- -------- ------------------- ------------ --------
Sales 4 11,513 - 11,513
Cost of sales (7,258) - (7,258)
Gross profit 4,255 - 4,255
Selling and distribution expenses (2,772) (398) (3,170)
Administrative expenses (790) (51) (841)
Other income 21 15 36
Share of post-tax results of joint ventures and associates 3 - 3
Operating profit 4 717 (434) 283
Finance costs (191) (7) (198)
Finance income 18 - 18
---------------------------------------------------- -------- ------------------- ------------ --------
Net finance costs 6 (173) (7) (180)
---------------------------------------------------- -------- ------------------- ------------ --------
Profit before taxation 544 (441) 103
Income tax expense 8 (136) 41 (95)
---------------------------------------------------- -------- ------------------- ------------ --------
Profit for the year 408 (400) 8
---------------------------------------------------- -------- ------------------- ------------ --------
Earnings per share 9
Basic 0.4p
Diluted 0.4p
Adjusted basic 19.1p
Adjusted diluted 19.0p
Reconciliation of non-GAAP adjusted pre-tax profit:
-----------------------------------------------------------------------------------------------------------
Adjusted pre-tax profit 544
Exceptional items 5 (441)
Profit before taxation 103
---------------------------------------------------- -------- ------------------- ------------ --------
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year ended Half year ended Year ended
GBP millions Notes 31 July 2020 31 July 2019 31 January 2020
----------------------------------------------------- -------- ---------------- ---------------- -----------------
Profit for the period 317 171 8
----------------------------------------------------- -------- ---------------- ---------------- -----------------
Actuarial gains on post-employment benefits 12 195 73 42
Inventory cash flow hedges - fair value
(losses)/gains (7) 47 20
Tax on items that will not be reclassified (67) (37) (24)
----------------------------------------------------- -------- ---------------- ---------------- -----------------
Total items that will not be reclassified
subsequently to profit or loss 121 83 38
----------------------------------------------------- -------- ---------------- ---------------- -----------------
Currency translation differences
Group 204 153 (134)
Joint ventures and associates - - (1)
Other cash flow hedges
Fair value gains/(losses) 6 4 (3)
(Gains)/losses transferred to income statement (6) (4) 3
Total items that may be reclassified subsequently to
profit or loss 204 153 (135)
-------- ---------------- ----------------
Other comprehensive income/(loss) for the period 325 236 (97)
Total comprehensive income/(loss) for the period 642 407 (89)
----------------------------------------------------- -------- ---------------- ---------------- -----------------
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half year ended 31 July
2020
---------- ---------- -------- ----------- ----------------------------------
Other
Own Capital reserves
Share Share shares Retained redemption (note Total
GBP millions capital premium held earnings reserve 14) equity
--------------------------- ---------- ---------- -------- ----------- ------------ ---------- --------
At 1 February 2020 332 2,228 (23) 2,994 43 228 5,802
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Profit for the period - - - 317 - - 317
Other comprehensive income
for the period - - - 126 - 199 325
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Total comprehensive income
for the period - - - 443 - 199 642
Inventory cash flow hedges
- gains transferred to
inventories - - - - - (19) (19)
Share-based compensation - - - 11 - - 11
Own shares issued under
share
schemes - - 9 (9) - - -
Tax on equity items - - - - - 6 6
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
At 31 July 2020 332 2,228 (14) 3,439 43 414 6,442
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Half year ended 31 July 2019
----------- ---------------------------------------------------------------------
Other
Own Capital reserves
Share Share shares Retained redemption (note Total
GBP millions capital premium held earnings reserve 14) equity
-------------------------- ----------- ---------- -------- ----------- ------------ ---------- --------
At 1 February 2019 332 2,228 (25) 3,192 43 379 6,149
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Profit for the period - - - 171 - - 171
Other comprehensive income
for the period - - - 45 - 191 236
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Total comprehensive income
for the period - - - 216 - 191 407
Inventory cash flow hedges
- gains transferred to
inventories - - - - - (24) (24)
Share-based compensation - - - 8 - - 8
Own shares issued under
share
schemes - - 9 (9) - - -
Purchase of own shares for
cancellation - - (10) - - - (10)
Dividends (note 10) - - - (157) - - (157)
Tax on equity items - - - - - 5 5
--------- ---------- -------- ----------- ------------ ---------- --------
At 31 July 2019 332 2,228 (26) 3,250 43 551 6,378
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Year ended 31 January 2020
--------- ---------------------------------------------------------------------
Other
Own Capital reserves
Share Share shares Retained redemption (note Total
GBP millions capital premium held earnings reserve 14) equity
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
At 1 February 2019 332 2,228 (25) 3,192 43 379 6,149
Profit for the year - - - 8 - - 8
Other comprehensive
income/(loss)
for the year - - - 22 - (119) (97)
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Total comprehensive
income/(loss)
for the year - - - 30 - (119) (89)
Inventory cash flow hedges
- gains transferred to
inventories - - - - - (40) (40)
Share-based compensation - - - 11 - - 11
Own shares issued under
share
schemes - - 12 (12) - - -
Purchase of own shares for
ESOP trust - - (10) - - - (10)
Dividends (note 10) - - - (227) - - (227)
Tax on equity items - - - - - 8 8
At 31 January 2020 332 2,228 (23) 2,994 43 228 5,802
---------------------------- --------- ---------- -------- ----------- ------------ ---------- --------
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED BALANCE SHEET
GBP millions Notes At 31 July 2020 At 31 July 2019 At 31 January 2020
------------------------------------------------- ------ ---------------- ---------------- -------------------
Non-current assets
Goodwill 2,419 2,439 2,416
Other intangible assets 11 332 374 339
Property, plant and equipment 11 3,033 3,356 2,988
Right-of-use assets 1,872 2,030 1,916
Investment property 11 20 8 8
Investments in joint ventures and associates 14 13 16
Post-employment benefits 12 612 413 404
Deferred tax assets 12 13 12
Derivative assets 13 - 2 -
Other receivables 23 40 27
------------------------------------------------- ------ ---------------- ---------------- -------------------
8,337 8,688 8,126
Current assets
Inventories 2,383 2,765 2,485
Trade and other receivables 345 415 293
Derivative assets 13 34 62 14
Current tax assets 18 3 9
Cash and cash equivalents 1,749 385 189
Assets held for sale 184 58 196
4,713 3,688 3,186
------------------------------------------------- ------ ---------------- ---------------- -------------------
Total assets 13,050 12,376 11,312
------------------------------------------------- ------ ---------------- ---------------- -------------------
Current liabilities
Trade and other payables (2,774) (2,554) (2,210)
Borrowings 13 (539) (47) (43)
Lease liabilities (351) (318) (306)
Derivative liabilities 13 (49) (19) (43)
Current tax liabilities (94) (148) (78)
Provisions (52) (84) (65)
Liabilities directly associated with assets held
for sale (67) - (88)
(3,926) (3,170) (2,833)
Non-current liabilities
Other payables (5) (4) (5)
Borrowings 13 (96) (97) (93)
Lease liabilities (2,146) (2,320) (2,221)
Derivative liabilities 13 (1) - (3)
Deferred tax liabilities (251) (242) (189)
Provisions (41) (39) (39)
Post-employment benefits 12 (142) (126) (127)
(2,682) (2,828) (2,677)
------------------------------------------------- ------ ---------------- ---------------- -------------------
Total liabilities (6,608) (5,998) (5,510)
------------------------------------------------- ------ ---------------- ---------------- -------------------
Net assets 6,442 6,378 5,802
------------------------------------------------- ------ ---------------- ---------------- -------------------
Equity
Share capital 332 332 332
Share premium 2,228 2,228 2,228
Own shares held in ESOP trust (14) (26) (23)
Retained earnings 3,439 3,250 2,994
Capital redemption reserve 43 43 43
Other reserves 14 414 551 228
------------------------------------------------- ------ ---------------- ---------------- -------------------
Total equity 6,442 6,378 5,802
------------------------------------------------- ------ ---------------- ---------------- -------------------
The interim financial report was approved by the Board of
Directors on 21 September 2020 and signed on its behalf by:
Thierry Garnier, Chief Executive Bernard Bot , Chief Financial
Officer Officer
Kingfisher plc
2020/21 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED CASH FLOW STATEMENT
Half year ended Half year ended Year ended
GBP millions Notes 31 July 2020 31 July 2019 31 January 2020
------------------------------------------------------- ------ ---------------- ---------------- -----------------
Operating activities
Cash generated by operations 15 1,412 613 1,052
Income tax paid (80) (34) (155)
-----------------
Net cash flows from operating activities 1,332 579 897
Investing activities
Purchase of property, plant and equipment and
intangible assets (87) (163) (342)
Disposal of property, plant and equipment, investment
property, assets held for sale and intangible
assets 2 125 188
Interest received 3 6 12
Interest element of lease rental receipts 1 1 1
Principal element of lease rental receipts 2 2 5
Advance payments on right-of-use assets (1) - (3)
Advance receipts on right-of-use assets 2 - -
Dividends received from joint ventures and associates - 2 1
Net cash flows used in investing activities (78) (27) (138)
Financing activities
Interest paid (14) (13) (35)
Interest element of lease rental payments (79) (82) (165)
Principal element of lease rental payments (136) (158) (319)
Repayment of bank loans (1) (1) (1)
Issue of fixed term debt 16 1,950 - -
Repayment of fixed term debt 16 (1,461) - -
Purchase of own shares for ESOP trust - (10) (10)
Ordinary dividends paid to equity shareholders of the
Company 10 - (157) (227)
Net cash flows from financing activities 259 (421) (757)
Net increase in cash and cash equivalents 1,513 131 2
Cash and cash equivalents at beginning of period 195 229 229
Exchange differences 56 25 (36)
------------------------------------------------------- ------ ---------------- ---------------- -----------------
Cash and cash equivalents at end of period 1,764 385 195
------------------------------------------------------- ------ ---------------- ---------------- -----------------
Cash and cash equivalents at the end of the period include
GBP15m of cash included within assets held for sale on the balance
sheet (2019/20: GBPnil). Cash and cash equivalents at 31 January
2020 include GBP6m of cash included within assets held for sale on
the balance sheet.
Kingfisher plc
2020/21 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 2020
were approved by the Board of Directors on 16 June 2020 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 21 September 2020.
2. Basis of preparation
The interim financial report for the six months ended 31 July
2020 ('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 European Union. It should be read in conjunction
with the annual financial statements for the year ended 31 January
2020, 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, '2019/20' refers to the six months ended 31
July 2019.
Going concern
Based on the Group's liquidity position and cash flow
projections, including a forward looking Covid-19 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 half year ended 31 July 2020.
This assessment is considered to be a critical accounting
judgement and further details, including the analysis performed and
conclusions reached, are set out below.
Overview
In determining whether the Group's accounts can be prepared on a
going concern basis, the Directors considered the Group's business
activities together with factors likely to affect its performance
and financial position.
These factors included governments' categorisation, under
Covid-19 regulations, of the Group's activities as 'essential' in
its largest markets, actual trading performance over the past six
months, expectations on the future economic environment, the impact
of mitigation actions, available liquidity as well as the other
principal risks associated with the business's ongoing
operations.
The key judgements in relation to this assessment are the
likelihood and impact of a potential resurgence of the Covid-19
pandemic as a result of physical distancing measures being relaxed,
the reinstatement of selective containment measures by governments
and the more durable impact of Covid-19 on the wider economy and
household spending in the markets in which the Group operates. In
informing these judgements, the Directors considered the Group's
trading performance during the different phases of the pandemic,
the mitigating actions available, the current outlook for the
business in addition to an unlikely future Covid-19 worst case
scenario, and finally two 'reverse stress test' scenarios.
Business and financial impact
Following the outbreak of the Covid-19 pandemic in Europe in
March 2020, stores were closed for customer browsing and in-store
purchasing in the UK, France, Spain and Russia and subject to
stricter social distancing rules in Poland and Romania, resulting
in a decline of Group like-for-like sales of 24.8% in Q1 (February
to April). After a period of trialling alternative operating models
and introducing safe operating procedures, nearly all stores were
reopened by the middle of May. Trading since reopening has been
consistently strong across all categories, with Group Q2 (May to
July) like-for-like sales growth of 19.5%.
The re-imposition of restrictive measures following local
Covid-19 outbreaks, such as in the Leicester area in the UK, has
not had any meaningful negative impact on trading, with stores in
the affected regions remaining open and continuing to trade
strongly. The designation as an 'essential retailer' in the Group's
largest markets, the successful operation of stores while adhering
to social distancing and safety procedures even after the
re-introduction of stricter control measures, indicate that the
Group would be able to mitigate the negative impact on sales of
stricter confinement rules that could be re-introduced in the event
of a more widespread resurgence of the virus. The Group's net cash
outflow, representing the net change in cash at bank excluding
physical cash in tills and cash in transit and excluding drawdown
on Revolving Credit Facilities (RCFs), from 1 February up to the
first week of May was c.GBP250m. This reflected negative sales over
the preceding seven weeks, along with significant payments to
suppliers during this period for orders made prior to the Covid-19
crisis. This net cash outflow was more than offset by renewed
strong sales and associated working capital recovery since the
third week of May. The net cash flow from 1 February to 31 July was
GBP1,025m (see note 16).
While trading continues to be exceptionally strong on a year on
year basis since early May, in forming their outlook on future
financial performance, the Directors considered the normalisation
of store traffic and average spend levels, the risk of higher
business volatility and the negative impact of the general economic
environment on household and trade spend. The Directors also
considered that the business would continue to benefit from
continued cost reduction measures, lower levels of investment and
an ongoing focus on working capital.
Forward looking Covid-19 scenarios
In addition to their outlook for the financial performance of
the Group, the Directors also reviewed an updated downside 'worst
case' scenario for Covid-19, assuming a more widespread resurgence
of the pandemic as of mid-September. This Covid-19 worst case
scenario assumes the re-imposition of stricter local confinement
rules affecting individual geographic regions representing
one-third of the Group's stores in each country for a period of 4
weeks, with all stores in a country impacted over a twelve week
period. During the stricter lockdown period, stores are assumed to
see a reduction in sales of between 25% and 35%. Following the
lifting of local lockdown restrictions, trading is modelled to
recover to slightly negative sales growth levels over a period of 8
weeks. The Covid-19 worst case scenario would result in
approximately GBP700m lower sales compared to the original budget
for 2020/21 over the 12 months going concern period. Given current
trading and expectations for the business, the Directors believe
that this scenario reflects an unlikely worst case outcome for the
Group.
Further downside sensitivities were applied to the Covid-19
scenario. These sensitivities considered both the length of time
during which strict social distancing measures would be in place
and increased the extent of the impact on sales. In particular, the
Directors reviewed two reverse stress test scenarios that model the
decline in sales that the Group would be able to absorb before
requiring additional sources of financing, over and above what is
currently guaranteed. The two scenarios modelled different
assumptions on the length and extent of the impact on sales. The
decline in sales would be around GBP3 billion over a 12 month
period in both reverse stress test scenarios compared to the
original budget for 2020/21. The financing sources used in these
scenarios would be the c.GBP540m term facility with three French
banks and, for a limited time, part of the Group's RCFs that
contain a financial covenant. If such a scenario would occur, the
Group would take additional mitigating actions, including further
initiatives on cost and cash, drawing on the Bank of England's
Covid Corporate Financing Facility (CCFF) for which it is eligible
for an amount up to GBP600m, and negotiating a waiver or amendment
of the financial covenant of its RCFs and term loan.
These reverse stress test scenarios, including the events that
could lead to them, were considered to be remote.
Mitigating actions
The mitigating actions available to the Group, either already
utilised or which could be (re)implemented are as follows:
-- Cost savings, including through store operating efficiencies
(adjustment of store variable costs, maintenance and store opening
hours), reduction in discretionary costs (marketing and
advertising, consumables and other GNFR spend, travel) and freezing
of pay and recruitment;
-- Reducing inventory purchases by adjusting purchasing plans
beyond the automatic reductions from lower sales;
-- Limiting capital expenditure to the minimum required under
contractual or legal obligations or for health and safety
purposes;
-- Optimising working capital by negotiating longer payment
terms for rental and supplier payments, while continuing to pay all
suppliers in full and according to contractual payment terms;
-- Benefiting from government support programmes as far as these
are maintained or re-introduced; and
-- Cease dividend payments.
Financing actions
The Group commenced the year as at 1 February 2020, with cash
and cash equivalents (including amounts held for sale) of
GBP195m.
To further protect the Group against extended lockdown measures
and deeper periods of disruption than anticipated, the Group
secured access to additional funding arrangements.
On 18 May 2020, the Group drew on a EUR600m (c.GBP540m) term
facility with three French banks in support of its operations in
France. This loan is guaranteed at 80% by the French State ('Prêt
garanti par l'État') and has a maturity of one year, extendable for
up to five years.
The Group also confirmed its eligibility under the Bank of
England's CCFF and on 12 June 2020 issued 11-month Commercial Paper
for GBP600m under this programme, the maximum amount under its
allocated issuer limit. These funds were fully repaid on 23 July
2020. Due to the terms of eligibility of the CCFF programme, the
Group is unable to rely on eligibility alone in its going concern
assessment. Access to this facility was not therefore included in
the reverse stress test assessments described above.
The Group has also agreed an additional RCF of GBP250m with a
syndicate of its relationship banks. This facility is currently
undrawn and expires in May 2021.
These additional funding arrangements complement the already
available two RCFs totalling GBP775m, which expire in March 2022
(GBP225m) and August 2022 (GBP550m). Most banks participating in
the RCF expiring in August 2022 have agreed to an extension to
August 2023, with GBP493m available until then. The two RCFs are
currently undrawn.
While the Directors do not believe that this additional
liquidity is needed even under the worst case Covid-19 scenario,
the additional liquidity could be required should the negative
impact of the pandemic on trading conditions be significantly more
prolonged or severe than those modelled in the reverse stress
tests.
The Group has a number of financing facilities, including the
three RCFs, that require the Group to maintain an interest cover
ratio that is tested semi-annually. The terms of these financing
facilities require that the ratio of Group operating profit
(excluding exceptional items) to net interest payable (excluding
interest on IFRS 16 lease liabilities) must be no less than 3:1 for
the preceding 12 months as at the half and full year ends. At the
date of this report, the Group is in compliance with its financial
covenant and expects to remain compliant even under the forecast
Covid-19 worst case scenario over the going concern period.
As a result of the strong sales since the beginning of May and
the drawings under the French Government facility, the Group had
cash and cash equivalents (including amounts held for sale) of
GBP1,764m at 31 July 2020. At 18 September 2020 the Group had
access to over GBP3.7bn in total liquidity, including cash and cash
equivalents of c.GBP2.1bn and eligibility to access over GBP1.6bn
of funding under the CCFF and RCFs.
Going concern basis
Considering the above, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, the Directors consider it appropriate for the
Group to continue to adopt the going concern basis of accounting in
preparing the condensed consolidated financial statements for the
half year ended 31 July 2020. Should the impact of the pandemic be
more prolonged or severe than currently forecast by the Directors
under the reverse stress test scenarios, 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
2021, but they do not have a material impact on the interim
financial report.
Principal rates of exchange against Sterling
Half year ended 31 Half year ended 31 Year ended 31 January
July 2020 July 2019 2020
--------------------- --------------------- ------------------------
Average Period end Average Period end Average Year end
rate rate rate rate rate rate
---------------- -------- ----------- -------- ----------- ----------- -----------
Euro 1.13 1.11 1.14 1.10 1.14 1.19
US Dollar 1.25 1.31 1.29 1.22 1.28 1.32
Polish Zloty 5.03 4.90 4.90 4.70 4.91 5.11
Romanian Leu 5.46 5.37 5.42 5.19 5.44 5.69
Russian Rouble 89.25 97.48 83.14 77.46 82.13 84.48
---------------- -------- ----------- -------- ----------- ----------- -----------
Risks and uncertainties
The principal risks and uncertainties to which the Group is
exposed are set out on pages 36-45 of the Kingfisher plc Annual
Report and Accounts for the year ended 31 January 2020. These have
been reviewed as part of the Group's half year procedures and are
listed in the Financial Review.
Use of non-GAAP measures
In the reporting of financial information, the Group uses
certain measures that are not required under IFRS, the generally
accepted accounting principles ('GAAP') under which the Group
reports. Kingfisher believes that retail profit, adjusted pre-tax
profit, adjusted effective tax rate, and adjusted earnings per
share provide additional useful information on performance and
trends to shareholders. These and other non-GAAP measures (also
known as 'Alternative Performance Measures'), such as net debt, are
used by Kingfisher for internal performance analysis and incentive
compensation arrangements for employees. The terms 'retail profit',
'exceptional items', 'adjusted', 'adjusted effective tax rate' 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 exceptional items. Central costs
principally comprise the costs of the Group's head office before
exceptional items.
The separate reporting of exceptional items, which are presented
as exceptional 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. 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, exit or impairment of
subsidiaries, joint ventures, associates and investments which do
not form part of the Group's ongoing trading activities;
-- profits and losses on the disposal of properties and
significant write-downs of goodwill and other assets;
-- the costs of significant restructuring and incremental acquisition integration costs; and
-- significant one-off tax settlements and provision
charges/releases and the tax effects of other exceptional
items.
The term 'adjusted' refers to the relevant measure being
reported for continuing operations excluding exceptional items,
exchange differences on lease liabilities, financing fair value
remeasurements, related tax items and prior year tax items
(including the impact of changes in tax rates on deferred tax).
Exchange differences on lease liabilities represent the income
statement impact of translating lease liabilities denominated in
non-functional currencies (e.g. a dollar-denominated lease in
Russia) which are not able to be designated as net investment
hedges. 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 adjusted 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. The exclusion of items
relating to prior years, and those not in the ordinary course of
business, helps provide a better indication of the Group's ongoing
rate of tax.
Net debt comprises lease liabilities, borrowings and financing
derivatives (excluding accrued interest) less cash and cash
equivalents and short-term deposits, including such balances
classified as held for sale.
The Group no longer reports profits on an 'underlying' basis,
with the single 'adjusted' measure now judged by management to be a
better and simpler reflection of business performance. The term
'underlying' previously referred to the relevant adjusted measure
being reported before non-exceptional transformation costs
('transformation P&L costs'). Non-exceptional transformation
costs previously represented the additional costs that arose only
as a result of the transformation plan launched in 2016/17, which
either because of their nature or the length of the period over
which they were incurred were not considered as exceptional items.
As a result, half year 2019/20 'Retail profit' and 'Central costs'
comparatives have been restated to include their respective share
of costs previously reported as non-exceptional transformation
costs (see note 4). Note that the 'adjusted' performance measures
are unaffected by this change.
A further restatement of half year 2019/20 comparatives has been
performed for the reallocation of certain central support costs
between operating segments, which has also impacted their reported
retail profits (see note 4).
3. Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 January 2020, 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 2020 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.
Government grant income is recognised in the Income Statement
over the periods necessary to match the benefit of the credit with
the costs for which it is intended to compensate. The grant is only
recognised when there is reasonable assurance that the Group will
comply with the conditions attaching to it and that the grant will
be received. Grant income is recorded as a deduction to the related
expense, where the expense has been incurred in the same period as
the grant income received.
4. Segmental analysis
Income statement
Half year ended 31 July 2020
------------------------------------------------------
Other International
------------------------------------------------------------ ------------- ------- ---------------------- ------
GBP millions UK & Ireland France Poland Other Total
------------------------------------------------------------ ------------- ------- ----------- --------- ------
Sales 2,753 2,028 783 357 5,921
------------------------------------------------------------ ------------- ------- ----------- --------- ------
Retail profit 411 63 74 (15) 533
Central costs (28)
Share of interest and tax of joint ventures and associates (2)
Exceptional items (17)
Operating profit 486
Net finance costs (88)
------------------------------------------------------------ ------------- ------- ----------- --------- ------
Profit before taxation 398
------------------------------------------------------------ ------------- ------- ----------- --------- ------
Half year ended 31 July 2019 restated (see below)
-------------------------------------------------------------
Other International
------------------------------------------------------- ----------------- --------- ---------------------- -------
GBP millions UK & Ireland France Poland Other Total
------------------------------------------------------- ----------------- --------- ----------- --------- -------
Sales 2,655 2,158 753 431 5,997
Retail profit 279 112 81 (18) 454
Central costs (29)
Share of interest and tax of joint ventures and
associates
before exchange differences on lease liabilities (5)
Exchange differences on lease liabilities of joint
ventures
and associates 1
Exceptional items (93)
Operating profit 328
Net finance costs (83)
------------------------------------------------------- ----------------- --------- ----------- --------- -------
Profit before taxation 245
------------------------------------------------------- ----------------- --------- ----------- --------- -------
Year ended 31 January 2020
-------------------------------------------------------
Other International
------------------------------------------------------------ ------------- ------- ---------------------- -------
GBP millions UK & Ireland France Poland Other Total
------------------------------------------------------------ ------------- ------- ----------- --------- -------
Sales 5,112 4,082 1,461 858 11,513
------------------------------------------------------------ ------------- ------- ----------- --------- -------
Retail profit 499 164 151 (28) 786
Central costs (62)
Share of interest and tax of joint ventures and associates (7)
Exceptional items (434)
Operating profit 283
Net finance costs (180)
------------------------------------------------------------ ------------- ------- ----------- --------- -------
Profit before taxation 103
------------------------------------------------------------ ------------- ------- ----------- --------- -------
Reallocation of central support costs and transformation P&L
costs
In recent years the Group has developed its offer, sourcing and
supply chain organisations. The services and benefits provided to
each of Kingfisher's retail banners have evolved over time.
Consequently, management updated its assessment of how the Group's
centrally-incurred costs are most appropriately allocated across
the businesses in 2019/20.
Although neutral at a Group Retail profit level, this has
resulted in a change to Retail profit by geography for 2019/20,
with the principal effect of more costs being allocated to Poland
and less to the UK & Ireland.
As set out in note 2, the 2019/20 half year comparatives have
also been restated for the reallocation of Transformation P&L
costs to Retail profit and Central costs. This has reduced the
reported segment Retail profits and increased reported Central
costs.
The impacts of the reallocation of central support costs and
Transformation P&L costs on the 2019/20 half year segmental
analysis income statement comparatives are set out below:
Half year ended 31 July 2019
-----------------------------------------------------------------------------------------
Impact of central support
cost Impact of transformation
GBP millions As previously reported reallocation P&L cost reallocation Restated
--------------------------- ---------------------- --------------------------- -------------------------- --------
Sales 5,997 - - 5,997
--------------------------- ---------------------- --------------------------- -------------------------- --------
UK & Ireland 277 7 (5) 279
France 114 1 (3) 112
Poland 88 (6) (1) 81
Other (13) (2) (3) (18)
--------------------------- ---------------------- --------------------------- -------------------------- --------
Retail profit 466 - (12) 454
Central costs (25) - (4) (29)
Share of interest and tax
of joint ventures and
associates before
exchange differences on
lease liabilities (5) - - (5)
Exchange differences on
lease liabilities of
joint ventures and
associates 1 - - 1
Exceptional items (93) - - (93)
Transformation P&L costs
before exceptional items (16) - 16 -
--------------------------- ---------------------- --------------------------- -------------------------- --------
Operating profit 328 - - 328
Net finance costs (83) - - (83)
--------------------------- ---------------------- --------------------------- -------------------------- --------
Profit before taxation 245 - - 245
--------------------------- ---------------------- --------------------------- -------------------------- --------
Balance sheet
At 31 July 2020
--------------------------------------------------------
Other International
--------------------- ------------- ------- ---------------------- --------
GBP millions UK & Ireland France Poland Other Total
--------------------- ------------- ------- ----------- --------- --------
Segment assets 2,722 1,553 875 399 5,549
Central liabilities (149)
Goodwill 2,419
Net debt (1,377)
--------------------- ------------- ------- ----------- --------- --------
Net assets 6,442
--------------------- ------------- ------- ----------- --------- --------
At 31 July 2019
--------------------------------------------------------
Other International
--------------------- ------------- ------- ---------------------- --------
GBP millions UK & Ireland France Poland Other Total
--------------------- ------------- ------- ----------- --------- --------
Segment assets 3,083 1,858 867 677 6,485
Central liabilities (162)
Goodwill 2,439
Net debt (2,384)
--------------------- ------------- ------- ----------- --------- --------
Net assets 6,378
--------------------- ------------- ------- ----------- --------- --------
At 31 January 2020
--------------------------------------------------------
Other International
--------------------- ------------- ------- ---------------------- --------
GBP millions UK & Ireland France Poland Other Total
--------------------- ------------- ------- ----------- --------- --------
Segment assets 2,989 1,715 855 488 6,047
Central liabilities (135)
Goodwill 2,416
Net debt (2,526)
--------------------- ------------- ------- ----------- --------- --------
Net assets 5,802
--------------------- ------------- ------- ----------- --------- --------
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 majority of the
sales in each geographical area are derived from in-store sales of
products.
The 'Other International' segment consists of Poland, Iberia,
Russia, Romania, the joint venture Koçta in Turkey and, in the
prior year, Germany. 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
uncertainty around the impact of Covid-19 on current trading
performance, the phasing of sales is less predictable.
5. Exceptional items
Half year ended Year ended
GBP millions 31 July 2020 Half year ended 31 July 2019 31 January 2020
-------------------------------------------------- ---------------- ----------------------------- -----------------
Included within selling and distribution expenses
Impairments of Russia assets and other exit costs (27) (26) (130)
UK & Ireland and continental Europe restructuring - (68) (67)
Impairments of Romania assets - - (39)
Store asset write-downs - - (118)
IT asset write-downs and related costs - - (44)
(27) (94) (398)
-------------------------------------------------- ---------------- ----------------------------- -----------------
Included within administrative expenses
Release of B&Q China disposal warranty liability 10 - -
Transformation exceptional costs - - (8)
Penalties on French Tax Authority settlement - - (17)
France business tax - - (26)
10 - (51)
Included within other income/expenses
Profit on disposal of properties - 1 15
- 1 15
-------------------------------------------------- ---------------- ----------------------------- -----------------
Included within net finance costs
Interest on French Tax Authority settlement - - (7)
-------------------------------------------------- ---------------- ----------------------------- -----------------
- - (7)
-------------------------------------------------- ---------------- ----------------------------- -----------------
Exceptional items before tax (17) (93) (441)
French Tax Authority settlement - - (51)
Other exceptional tax items 4 19 92
Exceptional items (13) (74) (400)
-------------------------------------------------- ---------------- ----------------------------- -----------------
Exceptional costs of GBP27m have been recognised in the current
year relating to the exit of Russia, predominately relating to
additional impairments that reflect the performance during the
period and the anticipated net proceeds under the planned sale. The
Group announced the decision to exit Russia in November 2018 and
the business was classified as held for sale in January 2020.
A GBP14m liability that was held in relation to warranties as
part of the B&Q China disposal in 2014 has been released in the
period following the expiry of the warranty claims period. Of this
amount, GBP10m has been recognised within administrative expenses
and GBP4m has been recognised within other exceptional tax
items.
Refer to note 5 of the 2019/20 interim and annual accounts for
further details on exceptional items for the half year ended 31
July 2019 and the year ended 31 January 2020 respectively.
6. Net finance costs
Year ended
GBP millions Half year ended 31 July 2020 Half year ended 31 July 2019 31 January 2020
---------------------------------- ------------------------------ ----------------------------- -----------------
Bank overdrafts and bank loans (8) (10) (22)
Fixed term debt (7) (2) (4)
Lease liabilities (79) (82) (165)
Capitalised interest 1 1 3
Other interest payable (1) - (3)
Exceptional interest on French Tax
Authority settlement - - (7)
Finance costs (94) (93) (198)
----------------------------------- ----------------------------- ----------------------------- -----------------
Cash and cash equivalents and
short-term deposits 2 6 10
Net interest income on defined
benefit pension schemes 3 3 7
Finance lease income 1 1 1
Finance income 6 10 18
----------------------------------- ----------------------------- ----------------------------- -----------------
Net finance costs (88) (83) (180)
----------------------------------- ----------------------------- ----------------------------- -----------------
7. Government grants
The Group has utilised the Coronavirus Job Retention Scheme
(CJRS) in the UK, 'activité partielle' relief measures in France,
and similar schemes in Spain and Romania. This led to c.50% of the
Group's colleagues being furloughed in April, reducing
significantly to c.10% by the end of May as the Group reopened
stores in the UK and France. With the exception of those who are
vulnerable and/or at a higher risk of infection, all remaining
colleagues in France and Romania returned from furlough on 1 June,
with remaining colleagues in the UK and Spain returning on 1 July.
From this date the Group decided to no longer claim under the
furlough programmes in the UK and France. Furthermore, the Group
will not claim the UK Job Retention Bonus announced by the UK
government in late July 2020. The Group is intending to repay the
UK furlough claim (c.GBP23m) in the second half of the year, unless
any material changes in the trading environment occur.
The UK government announced in March that retail premises in
England will be granted a relief from paying business rates in the
2020/21 tax year, effective from April. Similar measures have been
announced by the local governments and assemblies of Scotland,
Wales and Northern Ireland.
Participation in these schemes has lowered the operating costs
of the Group by GBP100m (2019/20: GBPnil) in the six months to 31
July 2020.
8. Income tax expense
Half year ended Half year ended Year ended
GBP millions 31 July 2020 31 July 2019 31 January 2020
------------------------------------------------ ---------------- ---------------- -----------------
UK corporation tax
Current tax on profits for the period (81) (30) (57)
Adjustments in respect of prior years 4 - (5)
------------------------------------------------ ---------------- ---------------- -----------------
(77) (30) (62)
------------------------------------------------ ---------------- ---------------- -----------------
Overseas tax
Current tax on profits for the period (13) (29) (46)
Adjustments in respect of prior years 4 (2) (6)
(9) (31) (52)
------------------------------------------------ ---------------- ---------------- -----------------
Deferred tax
Current period (4) (11) 20
Adjustments in respect of prior years - (2) -
Adjustments in respect of changes in tax rates 9 - (1)
5 (13) 19
------------------------------------------------ ---------------- ---------------- -----------------
Income tax expense (81) (74) (95)
------------------------------------------------ ---------------- ---------------- -----------------
The adjusted 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 24% (2019/20: 26%),
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 2020 was 26%. Exceptional tax items
for the current period amount to a credit of GBP4m, all of which
relates to prior year items (2019/20: GBP19m credit, none of which
related to prior year items). Exceptional tax items for the year
ended 31 January 2020 amounted to a credit of GBP41m, with a GBP20m
charge relating to prior year items.
9. Earnings per share
Half year ended Year ended
Pence 31 July 2020 Half year ended 31 July 2019 31 January 2020
----------------------------------------- ---------------- ------------------------------ -----------------
Basic earnings per share 15.1 8.1 0.4
Effect of dilutive share options (0.1) - -
Diluted earnings per share 15.0 8.1 0.4
----------------------------------------- ---------------- ------------------------------ -----------------
Basic earnings per share 15.1 8.1 0.4
Exceptional items before tax 0.8 4.4 21.0
Tax on exceptional and prior year items (0.8) (0.7) (2.3)
Adjusted basic earnings per share 15.1 11.8 19.1
----------------------------------------- ---------------- ------------------------------ -----------------
Diluted earnings per share 15.0 8.1 0.4
Exceptional items before tax 0.8 4.4 20.9
Tax on exceptional and prior year items (0.8) (0.7) (2.3)
Adjusted diluted earnings per share 15.0 11.8 19.0
----------------------------------------- ---------------- ------------------------------ -----------------
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:
Year ended
GBP millions Half year ended 31 July 2020 Half year ended 31 July 2019 31 January 2020
--------------------------------- ----------------------------- --------------------------------- -----------------
Earnings 317 171 8
Exceptional items before tax 17 93 441
Tax on exceptional and prior
year items (17) (15) (49)
Exchange differences on lease -
liabilities (1) -
Adjusted earnings 317 248 400
The weighted average number of shares in issue during the
period, excluding those held in the Employee Share Ownership Plan
Trust ('ESOP trust'), is 2,104m (2019/20: 2,101m). The diluted
weighted average number of shares in issue during the period is
2,113m (2019/20: 2,112m). For the year ended 31 January 2020, the
weighted average number of shares in issue was 2,101m and the
diluted weighted average number of shares in issue was 2,114m.
10. Dividends
Half year ended Half year ended Year ended
GBP millions 31 July 2020 31 July 2019 31 January 2020
--------------------------------------------------------------- ----------------- ---------------- ----------------
Dividends to equity shareholders of the Company
Ordinary interim dividend for the year ended 31 January 2020
of 3.33p per share - - 70
Ordinary final dividend for the year ended 31 January 2019 of
7.49p per share - 157 157
- 157 227
--------------------------------------------------------------------------------- ---------------- ----------------
In light of the continuing uncertainty caused by Covid-19, the
Board is not declaring an interim dividend for H1 2020/21. The
Board recognises the importance of dividends to shareholders and
will continue to evaluate the quantum and timing of any future
dividend payments.
11. Property, plant and equipment, investment property and other intangible assets
Additions to the cost of property, plant and equipment,
investment property and other intangible assets are GBP84m
(2019/20: GBP144m) and for the year ended 31 January 2020 were
GBP324m. Disposals in net book value of property, plant and
equipment, investment property, property assets held for sale and
other intangible assets are GBP4m (2019/20: GBP77m) and for the
year ended 31 January 2020 were GBP14m.
Capital commitments contracted but not provided for at the end
of the period are GBP58m (2019/20: GBP161m) and at 31 January 2020
were GBP62m.
12. Post-employment benefits
Half year ended Half year ended Year ended
GBP millions 31 July 2020 31 July 2019 31 January 2020
Net surplus in schemes at beginning of period 277 205 205
Current service cost (6) (5) (10)
Administration costs (2) (2) (3)
Net interest income 3 3 7
Net actuarial gains 195 73 42
Contributions paid by employer 13 19 32
Exchange differences (10) (6) 4
----------------------------------------------- ---------------- ---------------- ----------------
Net surplus in schemes at end of period 470 287 277
----------------------------------------------- ---------------- ---------------- ----------------
UK 612 413 404
Overseas (142) (126) (127)
----------------------------------------- ------ ------ ------
Net surplus in schemes at end of period 470 287 277
----------------------------------------- ------ ------ ------
Present value of defined benefit obligations (3,302) (3,249) (3,261)
Fair value of scheme assets 3,772 3,536 3,538
---------------------------------------------- -------- -------- --------
Net surplus in schemes at end of period 470 287 277
---------------------------------------------- -------- -------- --------
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 31 January 2020.
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 2020 31 July 2019 31 January 2020
----------------- ------------- ------------- ----------------
Discount rate 1.5 2.1 1.6
Price inflation 2.9 3.4 2.9
----------------- ------------- ------------- ----------------
13. Financial instruments
The Group holds the following derivative financial instruments
at fair value:
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
------------------------------------ ------------- ------------- ----------------
Cross currency interest rate swaps - 1 -
Foreign exchange contracts 34 63 14
------------------------------------ ------------- ------------- ----------------
Derivative assets 34 64 14
------------------------------------ ------------- ------------- ----------------
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
------------------------------------ ------------- ------------- ----------------
Cross currency interest rate swaps - - (5)
Foreign exchange contracts (50) (19) (41)
------------------------------------ ------------- ------------- ----------------
Derivative liabilities (50) (19) (46)
------------------------------------ ------------- ------------- ----------------
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
-------------- -------------- -----------------
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
----------------- -------------- -------------- -----------------
Bank loans 2 4 3
Fixed term debt 633 140 133
Borrowings 635 144 136
----------------- -------------- -------------- -----------------
Fair value
-------------- -------------- -----------------
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
----------------- -------------- -------------- -----------------
Bank loans 3 4 4
Fixed term debt 645 143 135
Borrowings 648 147 139
----------------- -------------- -------------- -----------------
Fixed term debt comprises a EUR600m term facility with three
French banks which is guaranteed at 80% by the French State ('Prêt
garanti par l'État') and matures in May 2021, a EUR50m term loan
maturing in September 2021 and a GBP50m term loan maturing in
December 2021.
As at 31 July 2020, the Group had undrawn revolving credit
facilities of GBP250m due to expire in May 2021, GBP225m due to
expire in March 2022 and GBP550m due to expire in August 2022. In
August 2020, the Group completed an extension of GBP493m of the
GBP550m revolving credit facility, taking the term to August
2023.
14. Other reserves
Half year ended 31 July 2020
----------------------------------------------------------------
Cash flow
GBP millions Translation reserve hedge reserve Other Total
------------------------------------------------ -------------------- ------------------------ ------ --------
At 1 February 2020 75 (6) 159 228
------------------------------------------------ -------------------- ------------------------ ------ --------
Inventory cash flow hedges - fair value losses - (7) - (7)
Tax on items that will not be reclassified
subsequently to profit or loss - 2 - 2
Currency translation differences
Group 204 - - 204
Other cash flow hedges
Fair value gains - 6 - 6
Gains transferred to income statement - (6) - (6)
Other comprehensive income/(loss) for the
period 204 (5) - 199
Inventory cash flow hedges - gains transferred
to inventories - (19) - (19)
Tax on equity items - 6 - 6
------------------------------------------------ -------------------- ------------------------ ------ --------
At 31 July 2020 279 (24) 159 414
------------------------------------------------ -------------------- ------------------------ ------ --------
Half year ended 31 July 2019
----------------------------------------------------------------
Cash flow
GBP millions Translation reserve hedge reserve Other Total
------------------------------------------------ -------------------- ------------------------ ------ --------
At 1 February 2019 210 10 159 379
------------------------------------------------ -------------------- ------------------------ ------ --------
Inventory cash flow hedges - fair value gains - 47 - 47
Tax on items that will not be reclassified
subsequently to profit or loss - (9) - (9)
Currency translation differences
Group 153 - - 153
Other cash flow hedges
Fair value gains - 4 - 4
Gains transferred to income statement - (4) - (4)
Other comprehensive income for the period 153 38 - 191
Inventory cash flow hedges - gains transferred
to inventories - (24) - (24)
Tax on equity items - 5 - 5
At 31 July 2019 363 29 159 551
------------------------------------------------ -------------------- ------------------------ ------ --------
Year ended 31 January 2020
----------------------------------------------------------------
GBP millions Translation reserve Cash flow hedge reserve Other Total
------------------------------------------------ -------------------- ------------------------ ------ --------
At 1 February 2019 210 10 159 379
------------------------------------------------ -------------------- ------------------------ ------ --------
Inventory cash flow hedges - fair value gains - 20 - 20
Tax on items that will not be reclassified
subsequently to profit or loss - (4) - (4)
Currency translation differences
Group (134) - - (134)
Joint ventures and associates (1) - - (1)
Other cash flow hedges
Fair value losses - (3) - (3)
Losses transferred to income statement - 3 - 3
Other comprehensive (loss)/income for the year (135) 16 - (119)
Inventory cash flow hedges - gains transferred
to inventories - (40) - (40)
Tax on equity items - 8 - 8
At 31 January 2020 75 (6) 159 228
------------------------------------------------ -------------------- ------------------------ ------ --------
15. Cash generated by operations
Half year ended Half year ended Year ended
GBP millions 31 July 2020 31 July 2019 31 January 2020
--------------------------------------------------------------- ---------------- ---------------- -----------------
Operating profit 486 328 283
Share of post-tax results of joint ventures and associates 2 - (3)
Depreciation and amortisation 264 270 545
Net impairment losses 24 24 315
Gain on disposal of property, plant and equipment, investment
property, assets held for sale
and intangible assets - (2) (15)
Lease losses/(gains) - 2 (5)
Share-based compensation charge 11 8 11
Decrease/(increase) in inventories 208 (111) (65)
(Increase)/decrease in trade and other receivables (39) (43) 53
Increase/(decrease) in trade and other payables 477 94 (91)
Movement in provisions (16) 55 43
Movement in post-employment benefits (5) (12) (19)
--------------------------------------------------------------- ---------------- ---------------- -----------------
Cash generated by operations 1,412 613 1,052
--------------------------------------------------------------- ---------------- ---------------- -----------------
16. Net debt
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
----------------------------------------------------------------- -------------- -------------- -----------------
Cash and cash equivalents 1,749 385 189
Cash and cash equivalents held for sale 15 - 6
----------------------------------------------------------------- -------------- -------------- -----------------
Cash and cash equivalents including amounts held for sale 1,764 385 195
Bank loans (2) (4) (3)
Fixed term debt (633) (140) (133)
Net financing derivatives 20 13 (22)
----------------------------------------------------------------- -------------- -------------- -----------------
Net financial cash 1,149 254 37
Lease liabilities (2,497) (2,638) (2,527)
Lease liabilities directly associated with assets held for sale (29) - (36)
Net debt (1,377) (2,384) (2,526)
----------------------------------------------------------------- -------------- -------------- -----------------
At At At
GBP millions 31 July 2020 31 July 2019 31 January 2020
--------------------------------------------------------------- -------------- -------------- -----------------
Net debt at beginning of period (2,526) (2,542) (2,542)
--------------------------------------------------------------- -------------- -------------- -----------------
Net increase in cash and cash equivalents 1,513 131 2
Repayment of bank loans 1 1 1
Issue of fixed term debt (1,950) - -
Repayment of fixed term debt 1,461 - -
--------------------------------------------------------------- -------------- -------------- -----------------
Net cash flow 1,025 132 3
Movement in lease liabilities including amounts held for sale 69 18 40
Exchange differences and other non-cash movements 55 8 (27)
--------------------------------------------------------------- -------------- -------------- -----------------
Net debt at end of period (1,377) (2,384) (2,526)
--------------------------------------------------------------- -------------- -------------- -----------------
In May 2020, Kingfisher arranged a EUR600m term facility with
three French banks in support of its operations in France. The loan
is guaranteed at 80% by the French State ('Prêt garanti par
l'État') and has a maturity of one year, extendable for up to five
years. As required under the terms of the loan, the full amount was
drawn down in May 2020.
In July 2020 Kingfisher repaid a EUR50m Medium Term Note at its
maturity.
During the period Kingfisher drew down on and repaid in full the
following funds:
-- GBP600m of commercial paper under the Bank of England's Covid Corporate Financing Facility;
-- GBP775m of the Group's revolving credit facilities; and
-- EUR50m of temporary borrowing.
17. Contingent liabilities
The Group is subject to claims and litigation arising in the
ordinary course of business and provision is made where liabilities
are considered likely to arise on the basis of current information
and legal advice.
The Group files tax returns in many jurisdictions around the
world and at any one time is subject to periodic tax audits in the
ordinary course of its business. Applicable tax laws and
regulations are subject to differing interpretations and the
resolution of a final tax position can take several years to
complete. Where it is considered that future tax liabilities are
more likely than not to arise, an appropriate provision is
recognised in the financial statements.
In October 2017, the European Commission opened a state aid
investigation into the Group Financing Exemption section of the UK
controlled foreign company rules. While the Group has complied with
the requirements of UK tax law in force at the time, in April 2019
the European Commission concluded that aspects of the UK controlled
foreign company regime partially constitute state aid. The UK
Government and the Group, along with other UK-based international
companies, have appealed the European Commission decision to the
European Courts.
At present it is not possible to determine the final amount that
will be payable as discussions are ongoing with HM Revenue &
Customs as to how the decision should be applied to the Group's
facts. The Group has calculated its maximum potential liability
(including compound interest) to be GBP64m (2019/20: GBP62m) in the
event that all appeals against the position are unsuccessful. The
maximum potential liability at 31 January 2020 (including compound
interest) was calculated at GBP63m. The final impact on the Group
remains uncertain but based upon advice taken, the Group considers
that no provision is required at this time.
18. Related party transactions
The Group's significant related parties are its joint venture,
associate and pension schemes as disclosed in note 36 of the annual
financial statements for the year ended 31 January 2020. There have
been no significant changes in related parties or related party
transactions in the period.
19. Post balance sheet events
On 27 August 2020, the Group completed the disposal of a UK
freehold property on a sale and leaseback basis, generating cash
proceeds of GBP38m and a profit on disposal of GBP13m.
In September 2020, the Group commenced formal consultation with
employee representatives regarding its proposal to implement a new
commercial operating model. The associated restructuring costs,
currently estimated at c.GBP10-20m, are expected to be recorded as
an exceptional item in the current financial year's consolidated
income statement.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that to the best of their knowledge 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 Group's
2019/20 Annual Report and Accounts. A list of current Directors is
maintained on the Kingfisher plc website which can be found at
www.kingfisher.com .
By order of the Board
Thierry Garnier Bernard Bot
Chief Executive Officer Chief Financial Officer
21 September 2020 21 September 2020
INDEPENT REVIEW REPORT TO KINGFISHER PLC
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 July 2020 which comprises the condensed
consolidated income statement, the condensed consolidated statement
of comprehensive income, the condensed consolidated statement of
changes in equity, the condensed consolidated balance sheet, the
condensed consolidated cash flow statement and related notes 1 to
19. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with IFRSs as adopted by the
European Union. The condensed set of financial statements included
in this half-yearly 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 half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity" issued by the Financial Reporting Council for use in
the United Kingdom. A review of interim financial information
consists of making inquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
July 2020 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the company in accordance with
International Standard on Review Engagements (UK and Ireland) 2410
"Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. Our work has been undertaken so that we might
state to the company those matters we are required to state to it
in an independent review report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our review
work, for this report, or for the conclusions we have formed.
Deloitte LLP
Statutory Auditor
London, United Kingdom
21 September 2020
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END
IR FZGZLLMZGGZM
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