Half Year Results - (Part 2 of 2)

RNS Number : 9273Z
Kingfisher PLC
20 September 2022
 

Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

 


 



 

Half year ended 31 July 2022

Half year ended 31 July 2021  

£ millions

Notes

Before adjusting items

Adjusting items (note 5) 

Total

Before adjusting items  

Adjusting items (note 5)

Total

Sales

4

6,809

-

6,809

7,101

-

7,101

Cost of sales


(4,313)

-

(4,313)

(4,404)

-

(4,404)

Gross profit


2,496

-

2,496

2,697

-

2,697

Selling and distribution expenses


(1,549)

1

(1,548)

(1,554)

-

(1,554)

Administrative expenses


(434)

-

(434)

(417)

7

(410)

Other income


11

1

12

12

1

13

Share of post-tax results of joint ventures and associates

 

 

5

-

5

1

-

1

Operating profit

4

529

2

531

739

8

747

Finance costs


(65)

-

(65)

(76)

-

(76)

Finance income


8

-

8

6

-

6

Net finance costs

6

(57)

-

(57)

(70)

-

(70)

Profit before taxation


472

2

474

669

8

677

Income tax expense

7

(104)

3

(101)

(144)

23

(121)

Profit for the period


368

5

373

525

31

556

 


 

 

 




 


 

 

 






 

 

 




Earnings per share

8

 

 

 




Basic


 

 

18.6p



26.4p

Diluted


 

 

18.3p



26.2p

Adjusted basic


 

 

18.3p



24.9p

Adjusted diluted


 

 

18.0p



24.7p


The proposed interim ordinary dividend for the period ended 31 July 2022 is 3.80p per share (2021/22: 3.80p per share).



Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

 

 


Year ended 31 January 2022

£ millions

Notes

Before adjusting

items

Adjusting

items

(note 5)

Total

Sales

4

13,183

-

13,183

Cost of sales


(8,248)

-

(8,248)

Gross profit


4,935

-

4,935

Selling and distribution expenses


(3,041)

42

(2,999)

Administrative expenses


(836)

13

(823)

Other income


23

3

26

Share of post-tax results of joint ventures and associates

5

-

5

Operating profit

4

1,086

58

1,144

Finance costs


(148)

-

(148)

Finance income


11

-

11

Net finance costs

6

(137)

-

(137)

Profit before taxation


949

58

1,007

Income tax expense

7

(212)

48

(164)

Profit for the year


737

106

843






Earnings per share

8




Basic




40.3p

Diluted




39.8p

Adjusted basic




35.2p

Adjusted diluted




34.8p






 

 



Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

£ millions

 

 

Notes

Half year ended

31 July 2022

Half year ended

31 July 2021

Year ended

31 January 2022

Profit for the period

 

373

556

843

Remeasurements of post-employment benefits

11

(14)

(12)

21

Inventory cash flow hedges - fair value gains


113

6

59

Tax on items that will not be reclassified


(24)

1

(18)

Total items that will not be reclassified

subsequently to profit or loss


75

(5)

62

Currency translation differences


 



Group


(22)

(148)

(218)

Joint ventures and associates


(1)

(2)

(7)

Other cash flow hedges

 

 



Fair value gains

 

-

4

  1

Gains transferred to income statement

 

-

(4)

(1)

Total items that may be reclassified subsequently to profit or loss

 

(23)

(150)

(225)

Other comprehensive income/(expense) for the period

 

52

(155)

(163)

Total comprehensive income for the period

 

425

401

680



Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 






Half year ended 31 July 2022

 

£ millions

Share capital

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

At 1 February 2022

325

2,228

(46)

4,025

50

196

6,778

Profit for the period

-

-

-

373

-

-

373

Other comprehensive (expense)/income for the period

-

-

-

(10)

-

62

52

Total comprehensive income for the period

-

-

-

363

-

62

425

Inventory cash flow hedges - gains transferred to inventories

-

-

-

-

-

(61)

(61)

Share-based compensation

-

-

-

11

-

-

11

New shares issued under share schemes

-

-

-

2

-

-

2

Own shares issued under share schemes

-

-

17

(17)

-

-

-

Purchase of own shares for cancellation

(13)

-

-

(225)

13

-

(225)

Dividends

-

-

-

(172)

-

-

(172)

Tax on equity items

-

-

-

(1)

-

14

13

At 31 July 2022

312

2,228

(29)

3,986

63

211

6,771

 

 

 

 

 

 

 

 



Half year ended 31 July 2021

 

£ millions

Share capital

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

At 1 February 2021

332

2,228

(23)

3,630

43

361

6,571

Profit for the period

-

-

-

556

-

-

556

Other comprehensive expense for the period

-

-

-

(9)

-

(146)

(155)

Total comprehensive income/(expense) for the period

-

-

-

547

-

(146)

401

Inventory cash flow hedges - losses transferred to inventories

-

-

-

-

-

34

34

Share-based compensation

-

-

-

14

-

-

14

New shares issued under share schemes

-

-

-

2

-

-

2

Own shares issued under share schemes

-

-

11

(11)

-

-

-

Purchase of own shares for ESOP trust

-

-

(29)

-

-

-

(29)

Dividends

-

-

-

(174)

-

-

(174)

Tax on equity items

-

-

-

-

-

(8)

(8)

At 31 July 2021

332

2,228

(41)

4,008

43

241

6,811

 








 


Year ended 31 January 2022

 

£ millions

Share capital

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

At 1 February 2021

332

2,228

(23)

3,630

43

361

6,571

Profit for the year

-

-

-

843

-

-

843

Other comprehensive income/(expense) for the year

-

-

-

16

-

(179)

(163)

Total comprehensive income/(expense) for the year

-

-

-

859

-

(179)

680

Inventory cash flow hedges - losses transferred to inventories

 

-

 

-

 

-

 

-

 

-

 

16

 

16

Share-based compensation

-

-

-

27

-

-

27

New shares issued under share schemes

-

-

-

5

-

-

5

Own shares issued under share schemes

-

-

15

(15)

-

-

-

Purchase of own shares for cancellation

(7)

-

-

(226)

7

-

(226)

Purchase of own shares for ESOP trust

-

-

(38)

-

-

-

(38)

Dividends

-

-

-

(254)

-

-

(254)

Tax on equity items

-

-

-

(1)

-

(2)

(3)

At 31 January 2022

325

2,228

(46)

4,025

50

196

6,778



Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions

Notes

At 31 July 2022

At 31 July 2021

At 31 January 2022

Non-current assets





Goodwill


2,424

2,425

2,424

Other intangible assets

10

353

320

330

Property, plant and equipment

10

3,086

2,982

3,078

Investment property

10

33

20

33

Right-of-use assets


1,842

1,785

1,885

Investments in joint ventures and associates


20

18

17

Post-employment benefits

11

542

506

540

Deferred tax assets


9

19

10

Other tax authority asset

17

64

64

64

Derivative assets

12

2

-

1

Other receivables


17

26

22



8,392

8,165

8,404

Current assets


 



Inventories


3,138

2,730

2,749

Trade and other receivables


364

317

300

Derivative assets

12

82

11

37

Current tax assets


37

23

33

Cash and cash equivalents


496

1,535

823

Assets held for sale


5

6

6



4,122

4,622

3,948

Total assets


12,514

12,787

12,352

 


 



Current liabilities


 



Trade and other payables


(2,891)

(2,947)

(2,674)

Borrowings

12

(17)

(111)

(14)

Lease liabilities


(334)

(333)

(347)

Derivative liabilities

12

(13)

(27)

(12)

Current tax liabilities


(19)

(126)

(46)

Provisions


(16)

(35)

(23)



(3,290)

(3,579)

(3,116)

Non-current liabilities


 



Other payables


(10)

(11)

(10)

Borrowings

12

(1)

(2)

(2)

Lease liabilities


(1,984)

(1,986)

(2,029)

Derivative liabilities

12

-

-

(1)

Deferred tax liabilities


(310)

(231)

(276)

Provisions


(12)

(22)

(10)

Post-employment benefits

11

(136)

(145)

(130)



(2,453)

(2,397)

(2,458)

Total liabilities


(5,743)

(5,976)

(5,574)

Net assets


6,771

6,811

6,778

 


 



 

Equity


 



 

Share capital

13

312

332

325

Share premium


2,228

2,228

2,228

Own shares held in ESOP trust


(29)

(41)

(46)

Retained earnings


3,986

4,008

4,025

Capital redemption reserve


63

43

50

Other reserves

14

211

241

196

Total equity


6,771

6,811

6,778

 

The interim financial report was approved by the Board of Directors on 19 September 2022 and signed on its behalf by:

 

Thierry Garnier, Chief Executive Officer

Bernard Bot , Chief Financial Officer

Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

£ millions

Notes

Half year ended

31 July 2022

Half year ended

31 July 2021

Year ended

31 January 2022

Operating activities


 



Cash generated by operations

15

584

1,161

1,411

Income tax paid


(75)

(78)

(169)

French tax authority payment

7

(34)

-

-

Other tax authority payments

17

-

(64)

(64)

Net cash flows from operating activities


475

1,019

1,178



 



Investing activities


 



Purchase of property, plant and equipment and intangible assets


(184)

(131)

(397)

Disposal of property, plant and equipment, investment property, assets held for sale and intangible assets


1

7

9

Disposal of businesses, net of cash disposed


-

-

7

Interest received


1

1

2

Interest element of lease rental receipts


1

1

1

Principal element of lease rental receipts


2

2

3

Advance payments on right-of-use assets


(2)

(1)

(11)

Advance receipts on right-of-use assets


2

-

-

Dividends received from joint ventures and associates


1

1

1

Net cash flows used in investing activities


(178)

(120)

(385)



 



Financing activities


 



Interest paid


(3)

(5)

(22)

Interest element of lease rental payments


(62)

(69)

(135)

Principal element of lease rental payments


(164)

(177)

(341)

Repayment of bank loans


-

(3)

(2)

Repayment of fixed term debt


-

-

(95)

New shares issued under share schemes


2

2

5

Purchase of own shares for cancellation


(218)

-

(157)

Purchase of own shares for ESOP trust


(9)

(29)

(29)

Ordinary dividends paid to equity shareholders of the Company

9

(172)

(174)

(254)

Net cash flows used in financing activities


(626)

(455)

(1,030)



 



Net (decrease)/increase in cash and cash equivalents and bank overdrafts


(329)

444

(237)

Cash and cash equivalents and bank overdrafts at beginning of period


809

1,136

1,136

Exchange differences


(1)

(64)

(90)

Cash and cash equivalents and bank overdrafts at end of period


479

1,516

809

 



Kingfisher plc

2022/23 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

1.  General information

 

Kingfisher plc ('the Company'), its subsidiaries, joint ventures and associates (together 'the Group') supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom and continental Europe.

 

The Company is incorporated in England and Wales, United Kingdom, and is listed on the London Stock Exchange. The address of its registered office is 3 Sheldon Square, Paddington, London W2 6PX.

 

The interim financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Audited statutory accounts for the year ended 31 January 2022 were approved by the Board of Directors on 21 March 2022 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under sections 498(2) or (3) of the Companies Act 2006. The interim financial report has been reviewed, not audited, and was approved by the Board of Directors on 19 September 2022.

 

2.  Basis of preparation

 

The interim financial report for the six months ended 31 July 2022 ('the half year') has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim Financial Reporting', as adopted by the United Kingdom. It should be read in conjunction with the annual financial statements for the year ended 31 January 2022, which have been prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards (IFRSs). The financial statements have also been prepared in accordance with International Financial Reporting Standards as issued by the IASB. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. Where comparatives are given, '2021/22' refers to the six months ended 31 July 2021.

 

Going concern

 

Based on the Group's liquidity position and cash flow projections, including a forward looking remote downside scenario, the Directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements for the period ended 31 July 2022.

 

Considering whether the Group's condensed consolidated financial statements can be prepared on a going concern basis, the Directors have reviewed the Group's business activities together with factors likely to affect its performance, financial position and access to liquidity (including consideration of financial covenants and credit ratings).

 

In forming their outlook on the future financial performance, the Directors considered the post-COVID normalisation of store traffic and average spend, the risk of higher business volatility and the potential negative impact of the general economic environment on household and trade spend.

 

The Directors' review also included a remote scenario that considers the impact of a significant drop in sales over a period of six months followed by a period of recovery lasting two months before trading resumes to the base case expected forecast. The total loss of sales in this scenario is c.£1.9bn (22% over the impacted period). The scenario assumes the impact of lost sales is partially offset by a limited set of mitigating actions on variable and discretionary costs, capital expenditure and the suspension of capital returns to shareholders. Even under this remote scenario, which requires drawing on the revolving credit facility (RCF) for a few months, the group retains headroom on its credit facilities. Given current trading and expectations for the business, the Directors believe that this scenario reflects a remote outcome for the Group. Should a more extreme scenario occur than currently forecast by the Directors under this remote scenario, the Group would need to implement additional operational or financial measures.

 

New and amended accounting standards

 

New standards, amendments and interpretations are in issue and effective for the Group's financial year ended 31 January

2023, but they do not have a material impact on the interim financial report.

 

Principal rates of exchange against Sterling

 


Half year ended 31 July 2022

Half year ended 31 July 2021

Year ended 31 January 2022


Average

rate

Period end

rate

Average

rate

Period end

rate

Average

rate

Year end

rate

Euro

1.18

1.19

1.16

1.17

1.17

1.20

US Dollar

1.27

1.22

1.39

1.39

1.38

1.34

Polish Zloty

5.53

5.64

5.27

5.35

5.34

5.49

Romanian Leu

5.85

5.87

5.70

5.76

5.76

5.92

Risks and uncertainties

 

The principal risks and uncertainties to which the Group is exposed are set out on pages 42-48 of the Kingfisher plc Annual Report and Accounts for the year ended 31 January 2022. These have been reviewed as part of the Group's half year procedures and are listed in the Financial Review.

 

Use of non-GAAP measures

 

In the reporting of financial information, the Group uses certain measures that are not required under IFRS, the generally accepted

accounting principles ('GAAP') under which the Group reports. The Group believes that retail profit, adjusted pre-tax profit, adjusted effective tax rate, and adjusted earnings per share provide additional useful information on performance and trends to shareholders. These and other non-GAAP measures (also known as 'Alternative Performance Measures'), such as net debt, are used by the Group for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'adjusting items', 'adjusted', 'adjusted effective tax rate', 'net cashflow' and 'net debt' are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

 

Retail profit is defined as continuing operating profit before central costs, the Group's share of interest and tax of joint ventures and associates and adjusting items. Central costs principally comprise the costs of the Group's head office before adjusting items.

 

Adjusting items, which are presented separately within their relevant income statement category, include items which by virtue of their size and/or nature, do not reflect the Group's ongoing trading performance. Adjusting items may include, but are not limited to:

 

· non-trading items included in operating profit such as profits and losses on the disposal, closure, exit or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group's ongoing trading activities;

· the costs of significant restructuring and incremental acquisition integration costs;

· profits and losses on the disposal/exit of properties, impairments of goodwill and significant impairments (or impairment reversals) of other non-current assets;

· prior year tax items (including the impact of changes in tax rates on deferred tax), significant one-off tax settlements and provision charges/releases and the tax effects of other adjusting items;

· financing fair value remeasurements i.e. changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value (or non-designated) hedge relationships. Financing derivatives are those that relate to hedged items of a financing nature.

 

The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding adjusting items.

 

The adjusted effective tax rate is calculated as continuing income tax expense excluding prior year tax items (including the impact of changes in tax rates on deferred tax), significant one-off tax settlements and provision charges/releases and the tax effects of other adjusting items, divided by continuing profit before taxation excluding adjusting items. Prior year tax items represent income statement tax relating to underlying items originally arising in prior years, including the impact of changes in tax rates on deferred tax. The exclusion of items relating to prior years, and those not in the ordinary course of business, helps provide a better indication of the Group's ongoing rate of tax.

 

Net debt comprises lease liabilities, borrowings and financing derivatives (excluding accrued interest) less cash and cash equivalents and short-term deposits, including such balances classified as held for sale.

 

Refer to the Financial Review for definitions of all of the Group's Alternative Performance Measures, including further information on why they are used and details of where reconciliations to statutory measures can be found where applicable.

 

3.  Accounting policies

 

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2022, as described in note 2 of those financial statements, except where set out below. The critical accounting estimates and judgements are set out in note 3 of the annual financial statements for the year ended 31 January 2022 and remain unchanged.

 

Taxes on income for interim periods are accrued using the best estimate of the effective tax rate that would be applicable to expected total annual earnings.



 

4.  Segmental analysis

 

Income statement


Half year ended 31 July 2022








£ millions

UK & Ireland

France

Poland

Other

Other

International

 

Total

Sales

3,221

2,325

913

350

1,263

6,809

Retail profit

339

129

94

(7)

87

555

Central costs

 

 

 

 

 

(26)

Adjusting items

 

 

 

 

 

2

Operating profit

 

 

 

 

 

531

Net finance costs

 

 

 

 

 

(57)

Profit before taxation

 

 

 

 

 

474

 

 


Half year ended 31 July 2021








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Sales

3,570

2,437

743

351

1,094

7,101

Retail profit

579

129

58

1

59

767

Central costs






(27)

Share of interest and tax of joint ventures and associates






(1)

Adjusting items






8

Operating profit






747

Net finance costs






(70)

Profit before taxation






677

 

 


Year ended 31 January 2022








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Sales

6,505

4,498

1,525

655

2,180

13,183

Retail profit

794

221

135

(2)

133

1,148

Central costs






(60)

Share of interest and tax of joint ventures and associates






(2)

Adjusting items






58

Operating profit






1,144

Net finance costs






(137)

Profit before taxation






1,007

 

Balance sheet


At 31 July 2022








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

3,198

1,753

988

301

1,289

6,240

Central liabilities

 

 

 

 

 

(45)

Goodwill

 

 

 

 

 

2,424

Net debt

 

 

 

 

 

(1,848)

Net assets

 

 

 

 

 

6,771

 


 

At 31 July 2021







£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

2,595

1,535

918

271

1,189

5,319

Central liabilities






(25)

Goodwill






2,425

Net debt






(908)

Net assets






6,811

 

 


At 31 January 2022







£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

3,052

1,682

942

332

1,274

6,008

Central liabilities






(82)

Goodwill






2,424

Net debt






 (1,572)

Net assets






6,778

 

The operating segments disclosed above are based on the information reported internally to the Board of Directors and Group Executive, representing the geographical areas in which the Group operates. The Group only has one reportable business segment, being the supply of home improvement products and services. The majority of the sales in each geographical area are derived from in-store and online sales of products.

 

The 'Other International' segment consists of Poland, Iberia, Romania, the joint venture Koçtaş in Turkey, NeedHelp, Screwfix International and results from franchise agreements. Poland has been shown separately due to its significance.

 

Central costs principally comprise the costs of the Group's head office. Central liabilities comprise unallocated head office and other central items including central assets, pensions, insurance, interest and tax.

 

The Group's sales, although generally not highly seasonal on a half yearly basis, do increase over the Easter period and during the summer months leading to slightly higher sales usually being recognised in the first half of the year. However, due to the continued uncertainty around the current macro-economic environment, the phasing of sales is less predictable.

 

5.  Adjusting items





£ millions

Half year ended

31 July 2022

Half year ended 31 July 2021

Year ended

31 January 2022

Included within selling and distribution expenses

 



Release of France and other restructuring provisions

1

-

9

Net store asset impairment reversals

-

-

33


1

-

42

Included within administrative expenses

 



Release of France uncertain operating tax position

-

7

9

Commercial operating model restructuring

-

-

4

 

-

7

13

Included within other income

 



Profit on exit of properties

1

1

3


1

1

3

Adjusting items before tax

2

8

58

Prior year and other adjusting tax items

3

23

48

Adjusting items

5

31

106

 

Current year adjusting items include a £1m credit arising due to savings on costs relating to legacy store closure programmes in France as compared with the original restructuring provisions recognised as adjusting items.

 

A profit of £1m has been recorded on the exit of one property in the UK.

 

Prior year and other adjusting tax items of £3m relates principally to the impact of the enacted future increase in the UK tax rate on deferred tax balances. This credit has been included within the income tax expense for the period. Refer to note 7.

 

Refer to note 5 of the 2021/22 interim accounts for further details on adjusting items for the half year ended 31 July 2021, and to note 5 of the 2021/22 annual accounts for further details on adjusting items for the year ended 31 January 2022.



 

6.  Net finance costs

 

£ millions

Half year ended 31 July 2022

Half year ended 31 July 2021

Year ended

 31 January 2022

Bank overdrafts and bank loans

(3)

(4)

(7)

Fixed term debt

-

(2)

(3)

Lease liabilities

(62)

(69)

(135)

Other interest payable

-

(1)

(3)

Finance costs

(65)

(76)

(148)


 



Cash and cash equivalents and short-term deposits

1

1

2

Net interest income on defined benefit pension schemes

6

4

8

Finance lease income

1

1

1

Finance income

8

6

11


 



Net finance costs

(57)

(70)

(137)

 

 

7.  Income tax expense

 

£ millions

Half year ended
31 July 2022

Half year ended

31 July 2021

Year ended
31 January 2022

UK corporation tax

 

 


Current tax on profits for the period

(29)

(78)

(80)

Adjustments in respect of prior years

-

3

2


(29)

(75)

(78)

Overseas tax

 



Current tax on profits for the period

(49)

(53)

(87)

Adjustments in respect of prior years

-

(2)

31

 

(49)

(55)

(56)

Deferred tax

 



Current period

(26)

(16)

(56)

Adjustments in respect of prior years

1

-

1

Adjustments in respect of changes in tax rates

2

25

25


(23)

9

(30)


 



Income tax expense

(101)

(121)

(164)

 

The adjusted effective tax rate on profit before adjusting items is 22% (2021/22: 22%), representing the best estimate of the effective rate for the full financial year. The adjusted effective tax rate on the same basis for the year ended 31 January 2022 was 22%. The adjusted effective tax rate calculation is set out in the Financial Review in part 1 of this announcement.

 

During the period, a payment of €40m (£34m) was made to the French tax authorities relating to a historic tax liability. This amount was fully provided for at the prior year end.



 

8.  Earnings per share

 

Pence

Half year ended

31 July 2022

 Half year ended 31 July 2021

Year ended

31 January 2022

Basic earnings per share

18.6

26.4

40.3

Effect of dilutive share options

(0.3)

(0.2)

(0.5)

Diluted earnings per share

18.3

26.2

39.8

 

 



Basic earnings per share

18.6

26.4

40.3

Adjusting items before tax

(0.1)

(0.4)

(2.8)

Prior year and other adjusting tax items

(0.2)

(1.1)

(2.3)

Adjusted basic earnings per share

18.3

24.9

35.2

 

 



Diluted earnings per share

18.3

26.2

39.8

Adjusting items before tax

(0.1)

(0.4)

(2.7)

Prior year and other adjusting tax items

(0.2)

(1.1)

(2.3)

Adjusted diluted earnings per share

18.0

24.7

34.8

 

 



The calculation of basic and diluted earnings per share is based on the profit for the period attributable to equity shareholders of the Company. A reconciliation of statutory earnings to adjusted earnings is set out below:





£ millions

Half year ended 31 July 2022

Half year ended 31 July 2021

Year ended

31 January 2022

Profit for the period

373

556

843

Adjusting items before tax

(2)

(8)

(58)

Prior year and other adjusting tax items

(3)

(23)

(48)

Adjusted profit for the period

368

525

737

 

 



The weighted average number of shares in issue during the period, excluding those held in the Employee Share Ownership Plan Trust ('ESOP trust'), is set out below:





Weighted average number of shares (millions)

Half year ended

31 July 2022

Half year ended 31 July 2021

Year ended

31 January 2022

Basic

2,012

2,103

2,092

Diluted

2,035

2,125

2,116

 

 



9.  Dividends


Half year ended

Half year ended

Year ended 

£ millions

31 July 2022

31 July 2021

31 January 2022

Dividends to equity shareholders of the Company

 



Ordinary final dividend for the year ended 31 January 2022 of 8.60p per share

172

-

-

Ordinary interim dividend for the year ended 31 January 2022 of 3.80p per share

 

-

-

80

Ordinary final dividend for the year ended 31 January 2021 of 5.50p per share

 

-

116

116

Ordinary interim dividend for the year end 31 January 2021 of 2.75p per share

-

58

58

 

172

174

254

 

The proposed interim ordinary dividend for the period ended 31 July 2022 is 3.80p per share (2021/22: 3.80p per share).

 

10.  Property, plant and equipment, investment property and other intangible assets

 

Additions to the cost of property, plant and equipment, investment property and other intangible assets are £174m (2021/22: £125m) and for the year ended 31 January 2022 were £412m. Disposals in net book value of property, plant and equipment, investment property, property assets held for sale and other intangible assets are £1m (2021/22: £6m) and for the year ended 31 January 2022 were £9m.

 

Capital commitments contracted but not provided for at the end of the period are £55m (2021/22: £64m) and at 31 January 2022 were £31m.

 

 

 

11.  Post-employment benefits

 

 

Half year ended

Half year ended

Year ended 

£ millions

31 July 2022

31 July 2021

31 January 2022

Net surplus in schemes at beginning of period

410

359

359

Current service cost

(6)

(6)

(14)

Administration costs

(2)

(2)

(3)

Net interest income

6

4

8

Net remeasurement (losses)/gains

(14)

(12)

21

Contributions paid by employer

13

13

30

Exchange differences

(1)

5

9

Net surplus in schemes at end of period

406

361

410

 

UK

542

506

540

Overseas

(136)

(145)

(130)

Net surplus in schemes at end of period

406

361

410

 

Present value of defined benefit obligations

(2,408)

(3,310)

(3,084)

Fair value of scheme assets

2,814

3,671

3,494

Net surplus in schemes at end of period

406

361

410

 

The assumptions used in calculating the costs and obligations of the Group's defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis provided in note 28 of the annual financial statements for the year ended 31 January 2022.

 

A full actuarial valuation of the scheme is carried out every three years by an independent actuary for the Trustee and the last full valuation was carried out as at 31 March 2019 with the next valuation currently ongoing.

 

A key assumption in valuing the pension obligation is the discount rate. Accounting standards require this to be set based on market yields on high quality corporate bonds at the balance sheet date. The UK scheme discount rate is derived using a single equivalent discount rate approach, based on the yields available on a portfolio of high-quality Sterling corporate bonds with the same duration as that of the scheme liabilities.

 

The principal financial assumptions for the UK scheme, being the Group's principal defined benefit scheme, are set out below:

 

At 

At 

At 

Annual % rate

31 July 2022

31 July 2021

31 January 2022

Discount rate

3.4

1.6

2.2

Price inflation

3.3

3.2

3.5

 



 

12.  Financial instruments

 

The Group holds the following derivative financial instruments at fair value:


At

At

At 



£ millions

31 July 2022

31 July 2021

31 January 2022



Foreign exchange contracts

84

11

38



Derivative assets

84

11

38



 


At

At

At 



£ millions

31 July 2022

31 July 2021

31 January 2022



Cross currency interest rate swaps

-

(2)

-



Foreign exchange contracts

(13)

(25)

(13)



Derivative liabilities

(13)

(27)

(13)



 

The fair values are calculated by discounting future cash flows arising from the instruments and adjusted for credit risk. These fair value measurements are all made using observable market rates of interest, foreign exchange and credit risk. All the derivatives held by the Group at fair value are considered to have fair values determined by level 2 inputs as defined by the fair value hierarchy of IFRS 13, 'Fair value measurement', representing significant observable inputs other than quoted prices in active markets for identical assets or liabilities. There are no non-recurring fair value measurements nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy.

 

Except as detailed in the following table of borrowings, the carrying amounts of financial instruments (excluding lease liabilities) recorded at amortised cost in the financial statements are approximately equal to their fair values. Where available, market values have been used to determine the fair values of borrowings. Where market values are not available or are not reliable, fair values have been calculated by discounting cash flows at prevailing interest and foreign exchange rates. This has resulted in level 2 inputs for borrowings as defined by the IFRS 13 fair value hierarchy.




Carrying amount



£ millions

At

31 July 2022

At 

31 July 2021

At

 31 January 2022



Bank overdrafts

17

19

14



Bank loans

1

3

2



Fixed term debt

-

91

-



Borrowings

18

113

16






 

 

Fair value



£ millions

At

31 July 2022

At

 31 July 2021

At

31 January 2022



Bank overdrafts

17

19

14



Bank loans

1

3

3



Fixed term debt

-

93

-



Borrowings

18

115

17




Cash and borrowings balances at 31 July 2022, 31 July 2021 and 31 January 2022 reflect the grossing up of cash and overdraft balances subject to the Group's cash pooling arrangements to ensure the Group's presentation of these balances is in line with the requirements for offsetting in accordance with IAS 32.

 

As at 31 July 2022, the Group had an undrawn revolving credit facility (RCF) of £550m due to expire in May 2025 (2021/22: £550m RCF due to expire in May 2024). As at 31 January 2022, the Group had an undrawn RCF of £550m due to expire in May 2024.



 

13.  Share Capital

 

Number of ordinary shares

Ordinary share capital 


millions

£ millions

Allotted, called up and fully paid:



At 1 February 2022

2,066

325

New shares issued under share schemes

1

-

Purchase of own shares for cancellation

(82)

(13)

At 31 July 2022

1,985

312

 



At 1 February 2021

2,111

332

At 31 July 2021

2,111

332




At 1 February 2021

2,111

332

New shares issued under share schemes

2

-

Purchase of own shares for cancellation

(47)

(7)

At 31 January 2022

2,066

325

 

Ordinary shares have a par value of 155/7 pence per share and carry full voting, dividend and capital distribution rights.

During the half-year the Group purchased 82 million of the Company's own shares for cancellation at a cost of £218m as part of its capital returns programme.

 

14.  Other reserves


Half year ended 31 July 2022

 

£ millions

Translation reserve

Cash flow

hedge reserve

Other

 

Total

At 1 February 2022

10

27

159

196

Inventory cash flow hedges - fair value gains

-

113

-

113

Tax on items that will not be reclassified subsequently to profit or loss

-

(28)

-

(28)

Currency translation differences

Group

 

 

-

 

-

 

(22)

(22)

Joint ventures and associates

(1)

-

-

(1)

Other comprehensive (expense)/income for the period

(23)

85

-

62

Inventory cash flow hedges - gains transferred to inventories

-

(61)

-

(61)

Tax on equity items

(1)

15

-

14

At 31 July 2022

(14)

66

159

211









Half year ended 31 July 2021

 

£ millions

Translation reserve

Cash flow

hedge reserve

Other

 

Total

At 1 February 2021

234

(32)

159

361

Inventory cash flow hedges - fair value gains

-

6

-

6

Tax on items that will not be reclassified subsequently to profit or loss

-

(2)

-

(2)

Currency translation differences

  Group

(148)

-

-

(148)

  Joint ventures and associates

(2)

-

-

(2)

Other cash flow hedges

Fair value gains

-

4

-

4

  Gains transferred to income statement

-

(4)

-

(4)

Other comprehensive (expense)/income for the period

(150)

4

-

(146)

Inventory cash flow hedges - losses transferred to inventories

-

34

-

34

Tax on equity items

-

(8)

-

(8)

At 31 July 2021

84

(2)

159

241

 

 

 

 

 


 

 

 

 

 

 


 

Year ended 31 January 2022

£ millions

Translation reserve

Cash flow hedge reserve

Other

Total

At 1 February 2021

234

(32)

159

361

Inventory cash flow hedges - fair value gains

-

59

-

59

Tax on items that will not be reclassified subsequently to profit or loss

-

(13)

-

(13)

Currency translation differences

Group

(218)

-

-

(218)

  Joint ventures and associates

(7)

-

-

(7)

Other cash flow hedges

Fair value gains

-

1

-

1

Gains transferred to income statement

-

(1)

-

(1)

Other comprehensive (expense)/income for the year

(225)

46

-

(179)

Inventory cash flow hedges - losses transferred to inventories

-

16

-

16

Tax on equity items

1

(3)

-

(2)

At 31 January 2022

10

27

159

196

 

15.  Cash generated by operations

 

£ millions

Half year ended
31 July 2022

Half year ended
31 July 2021

Operating profit

531

747

1,144

Share of post-tax results of joint ventures and associates

(5)

(1)

(5)

Depreciation and amortisation

282

273

555

Net impairment charges/(reversals)

-

2

(31)

(Gain)/loss on disposal of property, plant and equipment, investment property, assets held for sale and intangible assets

-

(1)

1

Lease gains

(2)

-

(1)

Share-based compensation charge

11

14

27

Increase in inventories

(395)

(303)

(359)

Increase in trade and other receivables

(59)

(33)

(23)

Increase in trade and other payables

231

487

158

Movement in provisions

(5)

(19)

(42)

Movement in post-employment benefits

(5)

(5)

(13)

Cash generated by operations

584

1,161

1,411

 

16.  Net debt

£ millions

At

31 July 2022

At

31 July 2021

At

31 January 2022

Cash and cash equivalents

496

1,535

823

Bank overdrafts

(17)

(19)

(14)

Cash and cash equivalents and bank overdrafts

479

1,516

809

Bank loans

(1)

(3)

(2)

Fixed term debt

-

(91)

-

Lease liabilities

(2,318)

(2,319)

(2,376)

Net financing derivatives

(8)

(11)

(3)

Net debt

(1,848)

(908)

(1,572)

 

 




£ millions

Half year ended

31 July 2022

Half year ended

 31 July 2021

Year ended

31 January 2022

Net debt at beginning of period

(1,572)

(1,394)

(1,394)

Net (decrease)/increase in cash and cash equivalents and bank overdrafts

 

(329)

444

(237)

Repayment of bank loans

-

3

2

Repayment of fixed term debt

-

-

95

Net cash flow

(329)

447

(140)

Movements in lease liabilities

57

78

7

Exchange differences and other non-cash movements

(4)

(39)

(45)

Net debt at end of period

(1,848)

(908)

(1,572)

 

 

 

17.  Contingent liabilities

 

The Group is subject to claims and litigation arising in the ordinary course of business and provision is made where liabilities are considered likely to arise on the basis of current information and legal advice.

 

The Group files tax returns in many jurisdictions around the world and at any one time is subject to periodic tax audits in the ordinary course of its business. Applicable tax laws and regulations are subject to differing interpretations and the resolution of a final tax position can take several years to complete. Where it is considered that future tax liabilities are more likely than not to arise, an appropriate provision is recognised in the financial statements.

 

In October 2017, the European Commission opened a state aid investigation into the Group Financing Exemption section of the UK controlled foreign company rules. While the Group has complied with the requirements of UK tax law in force at the time, in April 2019 the European Commission concluded that aspects of the UK controlled foreign company regime partially constitute illegal state aid. In January 2021, the Group received a charging notice from HM Revenue & Customs for £57m, which was paid in February 2021, with a further £7m interest paid in April 2021.

 

The UK Government and the Group, along with other UK-based multinational groups, appealed the European Commission decision to the European Courts. On 8 June 2022, the General Court of the European Union dismissed several of those appeals, including the UK Government's. It is expected that this decision will be appealed to the European Court of Justice.

 

The final impact on the Group remains uncertain but, based upon advice taken, the Group continues to consider that the amount paid of £64m, which is included in non-current assets, will ultimately be recovered.

 

Whilst the procedures that must be followed to resolve these types of tax issues make it likely that it will be some years before the eventual outcome is known, the Group does not currently expect the outcome of these contingent liabilities to have a material effect on the Group's financial position.

 

18.  Related party transactions

 

The Group's significant related parties are its joint venture, associate and pension schemes as disclosed in note 38 of the annual financial statements for the year ended 31 January 2022. There have been no significant changes in related parties or related party transactions in the period.

 

19.  Post balance sheet events

 

During the period since the balance sheet date, the Group purchased 25 million of the Company's own shares for cancellation at a cost of £60m. This amount was deducted from equity in the half-year to 31 July 2022 as a result of an irrevocable buyback agreement which was in place at 31 July 2022.

 

 



 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The Directors confirm that the condensed interim financial statements have been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting", and that the Interim Results includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

· an indication of important events that have occurred during the period and their impact on the interim condensed financial statements, and a description of the principal risks and uncertainties for the remainder of the financial year; and

· material related party transactions in the period and any material changes in the related party transactions described in the last annual report.

 

The Directors of Kingfisher plc were listed in the Group's 2021/22 Annual Report and Accounts. Bill Lennie joined the Board as a non-executive Director on 1 May 2022. A list of current Directors is maintained on the Kingfisher plc website which can be found at www.kingfisher.com .

 

By order of the Board

 

 

 

Thierry Garnier  Bernard Bot

Chief Executive Officer  Chief Financial Officer

19 September 2022  19 September 2022



INDEPENDENT REVIEW REPORT TO KINGFISHER PLC

 

Conclusion

 

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2022 which comprises the condensed income statement, the condensed statement of comprehensive income, the condensed statement of changes in equity, the condensed balance sheet, the condensed cash flow statement and related notes 1 to 19.

 

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2022 is not prepared, in all material respects, in accordance with United Kingdom adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Basis for Conclusion

 

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council for use in the United Kingdom (ISRE (UK) 2410). A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with United Kingdom adopted international accounting standards and International Financial Reporting Standards as issued by the IASB. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with United Kingdom adopted International Accounting Standard 34, "Interim Financial Reporting".

 

Conclusion Relating to Going Concern

 

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for Conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed.

 

This Conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410; however future events or conditions may cause the entity to cease to continue as a going concern.

 

Responsibilities of the directors

 

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

In preparing the half-yearly financial report, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

 

Auditor's Responsibilities for the review of the financial information

 

In reviewing the half-yearly financial report, we are responsible for expressing to the company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our Conclusion, including our Conclusion Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

 

Use of our report

 

This report is made solely to the company in accordance with ISRE (UK) 2410. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

 

 

 

Deloitte LLP

Statutory Auditor

London, United Kingdom

19 September 2022

 

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