IFRS Impact
Kingfisher PLC
17 March 2005
EMBARGOED UNTIL 1000 HOURS
Thursday 17 March 2005
Kingfisher plc
IMPACT FROM THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS
Kingfisher plc ('Kingfisher') is preparing for the adoption of International
Financial Reporting Standards ('IFRS') as its primary accounting basis for the
year ending 28 January 2006. As part of this transition, Kingfisher is
presenting today financial information prepared in accordance with IFRS for the
year ended 29 January 2005.
Results for the year ended 29 January 2005 under UK GAAP were released today and
are available on the Group's website www.kingfisher.com.
The primary changes to Kingfisher's reported financial information at 29 January
2005 from the adoption of IFRS are as a result of the:
• recognition of all employee benefit related obligations, principally
pensions;
• recognition of a relatively small number of building leases as finance
leases;
• recognition of lease incentives received over the entire term of the
lease rather than to the first market rent review;
• recognition of deferred tax liabilities on historical property
revaluations and other temporary differences; and
• recognition of exchange gains and losses in the income statement on
inter-company loan balances which do not meet the functional currency
requirements under IAS21.
For the year ended 29 January 2005 the impact on profits from the adoption of
IFRS would be to reduce retail profit by less than 1% and profit after tax by
3%, with an underlying reduction in profit after tax of 5% excluding a
functional currency benefit under IAS 21. Net assets would be reduced by 7% at 1
February 2004 and by 11% at 29 January 2005 after the reversal of the property
revaluation uplift recorded under UK GAAP.
Duncan Tatton-Brown, Group Finance Director, commented:
'This announcement provides a detailed analysis of the impacts of IFRS on our
financial statements. To help our stakeholders prepare for the change we have
re-stated our results for the year ended 29 January 2005, announced earlier
today, under these new rules ahead of their adoption for the year ending 28
January 2006.'
For further information:
Kingfisher plc
Heather Ward, Head of Investor Relations
020 7644 1032
KINGFISHER plc
IMPACT FROM ADOPTION OF IFRS
CONTENTS
1. Introduction
2. Basis of Preparation
3. Key Impact Analysis
4. Restated IFRS Consolidated Statements
- Consolidated Income Statement for the year ended 29 January 2005
- Consolidated Statement of Recognised Income and Expense for the year ended
29 January 2005
- Consolidated Balance Sheet at 1 February 2004
- Consolidated Balance Sheet at 29 January 2005
5. Notes to IFRS Financial Information
6. Other Information
Appendix - Detailed reconciliation of UK GAAP to IFRS
1. INTRODUCTION
Kingfisher plc and its subsidiaries (the Group) currently prepares its
consolidated financial statements under UK Generally Accepted Accounting
Practice (UK GAAP). Following the adoption of Regulation No. 1606/2002 by the
European Parliament on 19 July 2002, the Group has been preparing for the
adoption of International Financial Reporting Standards (IFRS)1 as its primary
accounting basis.
IFRS will apply for the first time in the Group's financial statements for the
year ending 28 January 2006. Accordingly, the Group's first quarter sales and
retail profit announcement and the financial results for the six month period
ending 30 July 2005 will be prepared and reported under IFRS.
This press release explains how the Group's reported UK GAAP financial
performance for the year ended 29 January 2005 and its financial position at
that date would have been reported under IFRS. It includes, on an IFRS basis:
• the Group's consolidated balance sheet at 1 February 2004, the Group's
date of transition (the 'opening' balance sheet under IFRS);
• the Group's consolidated income statement for the year ended 29
January 2005;
• the Group's consolidated statement of recognised income and expense
for the year ended 29 January 2005; and
• the Group's consolidated balance sheet at 29 January 2005.
This document explains all material accounting policy changes from the
accounting policies adopted in the UK GAAP financial statements for the year
ended 29 January 2005. A full set of IFRS accounting policies will be published
in the Group's first IFRS financial statements for the year ending 28 January
2006.
The financial information presented in this document is unaudited.
Reconciliations to assist the reader in understanding the nature and quantum of
differences between UK GAAP and IFRS for the financial information above are
included in the Appendix.
1. References to IFRS throughout this document refer to the application of
International Financial Reporting Standards ('IFRS'), including International
Accounting Standards ('IAS') and interpretations issued by the International
Accounting Standards Board ('IASB') and its committees, and as interpreted by
any regulatory bodies applicable to the Group.
2. BASIS OF PREPARATION
The financial information presented in this document has been prepared on the
basis of all International Financial Reporting Standards ('IFRS'), including
International Accounting Standards ('IAS') and interpretations issued by the
International Accounting Standards Board ('IASB') and its committees, and as
interpreted by any regulatory bodies applicable to the Group published by 31
December 2004. These are subject to ongoing amendment by the IASB and
subsequent endorsement by the European Commission and are therefore subject to
possible change. Further standards and interpretations may also be issued that
will be applicable for financial years beginning on or after 1 January 2005 or
that are applicable to later accounting periods but may be adopted early. The
Group's first IFRS financial statements may, therefore, be prepared in
accordance with some different accounting policies from the financial
information presented here.
In preparing this financial information, the Group has assumed that the European
Commission will endorse the amendment to IAS 19, 'Employee Benefits - Actuarial
Gains and Losses, Group Plans and Disclosures'.
On 19 November 2004, the European Commission endorsed an amended version of IAS
39, 'Financial Instruments: Recognition and Measurement' rather than the full
version as previously published by the IASB. In accordance with guidance issued
by the UK Accounting Standards Board, the full version of IAS 39, as issued by
the IASB, will be adopted with effect from 30 January 2005 (Kingfisher's 2005/06
financial year).
2.1. IFRS 1 First Time Adoption Choices
IFRS 1, 'First-time Adoption of International Financial Reporting Standards'
sets out the procedures that the Group must follow when it adopts IFRS for the
first time as the basis for preparing its consolidated financial statements. The
Group is required to establish its IFRS accounting policies as at 28 January
2006 and, in general, apply these retrospectively to determine the IFRS opening
balance sheet at its date of transition, 1 February 2004.
This standard provides a number of optional exceptions to this general
principle. Set out below is a description of the significant first time
adoption choices made by the Group.
a) Business combinations before the opening IFRS balance sheet date (IFRS 3,
'Business Combinations')
The Group has elected not to apply IFRS 3 retrospectively to business
combinations that took place before the date of transition. As a result, in the
opening balance sheet, goodwill arising from past business combinations (£2.5
billion) remains as stated under UK GAAP at 1 February 2004.
Substantially all of the Group's goodwill arose on the acquisition of the
minority interest in Castorama Dubois Investissements S.C.A. and the Group has
elected to leave this as a sterling denominated asset. In future, IFRS will
require goodwill arising on the acquisition of a foreign operation to be
accounted for as a foreign currency asset and to be re-translated each period as
part of the translation of the opening net investment.
b) Employee Benefits - actuarial gains and losses (IAS 19, 'Employee
Benefits')
The Group has elected to recognise all cumulative actuarial gains and losses in
relation to employee benefit schemes at the date of transition. The Group has
recognised actuarial gains and losses in full in the period in which they occur
in a statement of recognised income and expense in accordance with the amendment
to IAS 19, issued on 16 December 2004.
c) Valuation of properties (IAS 16, 'Property, plant and equipment')
The Group has previously applied a policy of annual revaluations of property.
The Group has now elected to treat the revalued amount of operating properties
at 1 February 2004 as deemed cost as at that date and will not revalue for
accounts purposes in future. The Group will however provide the current market
values as additional disclosure in the financial statements.
Investment property was previously revalued annually under UK GAAP. Following
the disposal of the Chartwell Land investment property portfolio in 2004, the
amount of investment property now held by the Group is insignificant. The Group
has elected to restate the remaining investment property at historical cost
under IFRS. There is no material impact of this change on the income statement.
d) Share-based Payments (IFRS 2, 'Share-based Payment')
The Group has elected to apply IFRS 2 only to relevant share based payment
transactions granted after 7 November 2002.
e) Foreign Currency Translation Reserve (IAS 21, 'The Effects of Changes in
Foreign Exchange Rates')
The Group has elected to reset the foreign currency translation reserve to zero
at 1 February 2004. Going forward, IFRS requires amounts taken to reserves on
the retranslation of foreign subsidiaries to be recorded in a separate foreign
currency translation reserve and be included in the future calculation of profit
or loss on sale of the subsidiary.
f) Financial Instruments (IAS 39, 'Financial Instruments : Recognition and
Measurement' and IAS 32, 'Financial Instruments: Disclosure and Presentation')
The Group has taken the option to defer the implementation of IAS 32 and IAS 39
to the financial year ending 28 January 2006. Therefore, financial instruments
will continue to be accounted for and presented in accordance with UK GAAP for
the year ended 29 January 2005. On 30 January 2005, there will be an adjustment
to reflect the movements from the UK GAAP carrying values to the IAS 39 values.
It is the Group's intention to apply hedge accounting where the requirements of
IAS 39 are met.
2.2. Presentation of financial information
The primary statements within the financial information contained in this
document have been presented in accordance with IAS 1, 'Presentation of
Financial Statements'. However, this format and presentation may require
modification as practice develops and in the event that further guidance is
issued.
3. KEY IMPACT ANALYSIS
The analysis below sets out the most significant adjustments arising from the
transition to IFRS.
3.1. Presentation of Financial Statements
The format of the primary statements contained in this document have been
presented in accordance with IAS 1, 'Presentation of Financial Statements',
which are different to their UK GAAP equivalents.
The Group will continue to account for its joint venture interests in B&Q Home
(Taiwan) and Koctas (Turkey) using the equity method of accounting rather than
the proportional consolidation method that is permitted under IAS 31. The Group
will also continue to account for its associate investments using the equity
accounting method.
The presentation of the Group's share of the results of joint ventures and
associated undertakings in the Group's consolidated income statement will change
under IFRS. Under UK GAAP, the Group's share of joint venture and associated
undertaking operating profit, interest and tax have been disclosed separately in
the consolidated income statement. In accordance with IAS 1, the results of
joint venture and associated undertakings are presented net of interest and tax
as a single line item. There is no effect on the result for the financial period
from this adjustment.
There is no FRS 3 non-operating exceptionals equivalent under IFRS. Items not
relating to underlying business performance, such as profits and losses on the
disposal of property, will now be reported in operating profit. Kingfisher will
continue to disclose operating exceptionals and provide adjusted earnings per
share to assist stakeholders.
3.2. Intangible Assets
a) Goodwill amortisation
IFRS 3 'Business Combinations' requires that negative goodwill is recognised
immediately in the income statement as opposed to being amortised. The negative
goodwill that arose on the acquisition of the shares in Hornbach has been
credited back to opening reserves under IFRS and increases the Group's interest
in joint ventures and associates by £19.3m. The removal of the amortisation
credit in the current year reduces profit before tax by £1m.
The non-amortisation of positive goodwill required under IFRS has no impact as
all positive goodwill held was deemed to have an indefinite life under UK GAAP.
b) Computer Software
Under UK GAAP, all capitalised computer software is included within tangible
fixed assets on the balance sheet. Under IFRS, only computer software that is
integral to a related item of hardware should be included as property, plant and
equipment. All other computer software should be recorded as an intangible
asset.
Accordingly, a net reclassification has been made of £65.4m in the opening
balance sheet and of £66.9m in the balance sheet as at 29 January 2005 between
property, plant and equipment and intangible assets. There is no impact on the
profit and loss account from this reclassification.
3.3. Post Employment Benefits
The Group currently applies the provisions of SSAP 24 under UK GAAP and provides
detailed disclosure under FRS 17 in accounting for pensions and other
post-employment benefits.
The Group has elected to early adopt the amendment to IAS 19, 'Employee
Benefits ' issued by the IASB on 16 December 2004 which allows all actuarial
gains and losses to be charged or credited to equity.
The Group's opening IFRS balance sheet reflects the assets and liabilities of
the Group's defined benefit schemes totalling a net liability of £245.7m. This
amount represents less than 4% of the Group's market capitalisation at 31
January 2004. The transitional adjustment of £220.6m to opening reserves
comprises the reversal of entries in relation to UK GAAP accounting under SSAP
24 less the recognition of the net liabilities of the Group's defined benefit
schemes. The incremental charge arising from the adoption of IAS 19 on the
Group's income statement is as follows:
Year ended
29 January 2005
£m
Charged to operating profit 0.9
Charged to net financing charge 5.1
Total charge 6.0
The actuarial loss before tax of £79.3m arising in the year ended 29 January
2005 has been recorded in the statement of recognised income and expense. The
pension deficit under IFRS at 29 January 2005 is £325.7m.
3.4. Deferred and Current Taxes
The scope of IAS 12, 'Income Taxes' is wider than the corresponding UK GAAP
standards, and requires deferred tax to be provided on all temporary differences
rather than just taxable timing differences under UK GAAP.
As a result, the Group's IFRS opening balance sheet at 1 February 2004 includes
an additional deferred tax liability of £189.4m. The majority of this adjustment
relates to the deferred tax provided on the revaluation reserve less the
deferred tax asset recognised on the pension deficit at 1 February 2004.
As stated in 3.1 above, the Group's share of its joint venture and associated
undertakings' tax charges is shown as part of 'Share of post tax result in joint
venture and associated undertakings'. 'Tax on profit on ordinary activities' on
the face of the consolidated income statement comprises the tax charge of the
Company and its subsidiaries under IFRS.
The effective overall tax rate on profit is 31.0%. The effective tax rate before
exceptional items and acquisition goodwill amortisation excluding prior year
adjustments and the impact of the presentation of joint ventures and associated
undertakings is 33.5% compared with 31.6% under UK GAAP. The increase is as a
result of deferred tax being provided on all temporary differences as described
above.
3.5. Share-based Payments
IFRS 2, 'Share-based Payment' requires that an expense for equity instruments
granted is recognised in the financial statements based on their fair value at
the date of grant. This expense, which is primarily in relation to employee
option and performance share schemes, is recognised over the vesting period of
the scheme.
As previously mentioned, IFRS 2 allows the measurement of this expense to be
calculated only on options granted after 7 November 2002. The Group has
principally adopted the Black Scholes model for the purposes of computing fair
value under IFRS.
The additional pre-tax charge arising from the adoption of IFRS 2 on the Group's
income statement is £1.8m for the year ended 29 January 2005. The impact from
the adoption of this standard has only a small impact as the Group ceased
offering share options in 2003 and replaced them with deferred shares for which
a charge equating to the market value of the deferred shares has been recognised
under UK GAAP.
3.6. Leases
a) Capitalisation of building leases
IAS 17, 'Leases' requires that the land element of leases on land and buildings
is considered separately for the purposes of determining whether the lease is a
finance or operating lease.
A majority of the Group's buildings are on leases of 25 years or less which are
classified as operating leases under IFRS. This treatment is consistent with UK
GAAP. There are a small number of leases greater than 25 years where the
building element of the leases have been reclassified as finance leases based on
the criteria set out in IAS 17.
As a result, the Group's IFRS opening balance sheet at 1 February 2004 includes
additional tangible fixed assets of £30.6m and additional finance lease
obligations of £47.6m included within current and non-current borrowings. The
main impact on the income statement is that the operating lease payment charged
to operating profit under UK GAAP is replaced with a depreciation charge of the
asset (in operating profit) and a financing charge (interest expense). Whilst
the total charge for a lease over the life of the lease will be the same under
UK GAAP and IFRS, the profile of the charge is different, with the charge being
more front loaded under IFRS. The net pre-tax impact on the income statement is
a further charge of £1.3m for the year ended 29 January 2005.
b) Lease incentives
Under UK GAAP, lease incentives were recognised over the period to the first
market rent review. Under IFRS (SIC 15), lease incentives are required to be
recognised over the entire lease term.
As a result, the Group's IFRS opening balance sheet at 1 February 2004 includes
additional deferred income of £21.7m and a reduction in operating profit for the
year ended 29 January 2005 of £4.5m.
3.7. FX Gains and Losses
Exchange differences on inter-company loan balances which do not meet the more
stringent functional currency requirements of IAS 21 are shown in the income
statement rather than as reserve movements, giving rise to a pre-tax unrealised
gain of £12m in net finance costs for the year ended 29 January 2005. As these
amounts are generated by exchange movements they will vary from period to
period. However, there is an equal and opposite amount in reserve movements on
consolidation and net equity is therefore unaffected.
3.8. Post Balance Sheet Events
IAS 10, 'Events after the Balance Sheet Date' requires that dividends declared
after the balance sheet date should not be recognised as a liability at that
balance sheet date as the liability does not represent a present obligation as
defined by IAS 37, 'Provisions, Contingent Liabilities and Contingent Assets'.
The final dividend declared in March 2004 in relation to the financial year
ended 31 January 2004 of £143.4m has been reversed in the opening balance sheet
and charged to equity in the balance sheet as at 29 January 2005. The final
dividend accrued for the year ended 29 January 2005 of £159.7m has been reversed
in the IFRS balance sheet as at 29 January 2005.
3.9. Financial Instruments
IAS 32, 'Financial Instruments: Disclosure and Presentation' and IAS 39 '
Financial Instruments: Recognition and Measurement' address the accounting for,
and reporting of, financial instruments. IAS 39 sets out detailed accounting
requirements in relation to financial assets and liabilities.
All derivative financial instruments are accounted for at fair market value
whilst other financial instruments are accounted for either at amortised cost or
at fair value depending on their classification. Subject to stringent criteria,
derivative financial instruments, financial assets and financial liabilities may
be designated as forming hedge relationships as a result of which fair value
changes are offset in the income statement or charged/credited to equity
depending on the nature of the hedge relationship.
Hedge accounting will be adopted for a majority of the Group's forward currency
contracts which are taken out to hedge the cost of foreign currency inventory,
thereby reducing potential volatility in the income statement. Hedge accounting
will also be adopted for the Group's interest rate swaps and underlying capital
market debt, thereby reducing potential volatility in the income statement.
3.10. Other Adjustments
Other adjustments comprise:
- the restatement of investment properties to historical cost;
- reclassification of current asset investments to cash and cash
equivalents as required by IAS 7;
- the inclusion of certain elements of income from suppliers and other
similar items in the cost of inventories as required by IAS 2; and
- other minor GAAP differences.
4. RESTATED IFRS CONSOLIDATED STATEMENTS
CONSOLIDATED INCOME STATEMENT
For the year ended 29 January 2005
UK GAAP IFRS IFRS
(unaudited) adjustments (unaudited)
IFRS format (unaudited)
£m £m £m
Revenue 7,649.6 - 7,649.6
Cost of sales (4,783.3) (2.4) (4,785.7)
Gross profit 2,866.3 (2.4) 2,863.9
Selling costs (1,834.4) 1.4 (1,833.0)
Administrative expenses (363.4) (7.3) (370.7)
Other operating income 16.8 0.2 17.0
Other operating expenses (note 5.1) (16.6) 2.9 (13.7)
Share of post tax result in joint venture and
associated undertakings 27.5 (12.9) 14.6
Operating profit 696.2 (18.1) 678.1
Analysed as:
Retail profit 747.9 (5.9) 742.0
Other operating costs (36.1) (1.2) (37.3)
Acquisition goodwill amortisation 1.0 (1.0) -
Exceptional items (note 5.1) (16.6) 2.9 (13.7)
Share of joint venture and associate interest and tax - (12.9) (12.9)
696.2 (18.1) 678.1
Net financing charge (25.3) (3.4) (28.7)
Gain on retranslation of intercompany loan balance - 12.0 12.0
Net interest payable (25.3) 8.6 (16.7)
Profit before tax 670.9 (9.5) 661.4
Tax on profit on ordinary activities (201.4) (3.8) (205.2)
Profit for the financial period from continuing
operations 469.5 (13.3) 456.2
Attributable to:
- Equity shareholders 469.0 (13.3) 455.7
- Minority interests 0.5 - 0.5
469.5 (13.3) 456.2
Earnings per share (pence):
- Basic 20.3 (0.6) 19.7
- Diluted 20.2 (0.6) 19.6
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 29 January 2005
UK GAAP IFRS IFRS
(unaudited) adjustments (unaudited)
IFRS format (unaudited)
£m £m £m
Gains on revaluation of properties 175.8 (175.8) -
Exchange differences on translation of foreign
operations 65.2 (18.2) 47.0
Actuarial losses on defined benefit pension schemes - (79.3) (79.3)
Tax on items taken directly to equity (2.5) 31.7 29.2
Net income recognised directly in equity 238.5 (241.6) (3.1)
Profit for the financial period 469.5 (13.3) 456.2
Total recognised income and expense for the period 708.0 (254.9) 453.1
Attributable to:
- Equity shareholders 707.9 (254.9) 453.0
- Minority interests 0.1 - 0.1
708.0 (254.9) 453.1
CONSOLIDATED BALANCE SHEET
As at 1 February 2004 (Opening balance sheet)
UK GAAP IFRS adjustments IFRS
(unaudited) (unaudited) (unaudited)
IFRS format
£m £m £m
Non-current assets
Intangible assets 2,455.3 66.7 2,522.0
Property, plant and equipment 2,769.2 (37.1) 2,732.1
Investment property 12.0 (6.3) 5.7
Investments in joint venture and associates 145.7 19.3 165.0
Other investments 0.2 - 0.2
Trade and other receivables 25.8 - 25.8
5,408.2 42.6 5,450.8
Current assets
Inventory 1,071.7 (10.8) 1,060.9
Trade and other receivables 491.6 1.2 492.8
Income tax 1.4 - 1.4
Investments 23.8 (13.8) 10.0
Cash and cash equivalents 144.2 13.8 158.0
1,732.7 (9.6) 1,723.1
Total assets 7,140.9 33.0 7,173.9
Current liabilities
Short-term borrowings (267.6) (0.8) (268.4)
Income tax liabilities (79.2) - (79.2)
Trade and other payables (1,578.4) 124.1 (1,454.3)
Provisions (7.0) - (7.0)
(1,932.2) 123.3 (1,808.9)
Net current liabilities (199.5) 113.7 (85.8)
Non-current liabilities
Long-term borrowings (744.2) (46.8) (791.0)
Other payables (0.7) - (0.7)
Deferred tax liabilities (14.6) (189.4) (204.0)
Post employment benefits (25.1) (220.6) (245.7)
Provisions (17.5) - (17.5)
(802.1) (456.8) (1,258.9)
Net assets 4,406.6 (300.5) 4,106.1
Equity
Share capital 2,390.4 - 2,390.4
Other reserves 2,013.3 (300.5) 1,712.8
Total equity shareholders' funds 4,403.7 (300.5) 4,103.2
Minority interests 2.9 - 2.9
Total equity 4,406.6 (300.5) 4,106.1
CONSOLIDATED BALANCE SHEET
As at 29 January 2005
UK GAAP IFRS adjustments IFRS
(unaudited) (unaudited) (unaudited)
IFRS format
£m £m £m
Non-current assets
Intangible assets 2,463.1 69.9 2,533.0
Property, plant and equipment 3,247.9 (216.6) 3,031.3
Investment property 22.8 (4.1) 18.7
Investments in joint venture and associates 158.3 18.3 176.6
Trade and other receivables 26.6 - 26.6
5,918.7 (132.5) 5,786.2
Current assets
Inventory 1,333.0 (13.0) 1,320.0
Trade and other receivables 451.6 2.3 453.9
Income tax 8.8 - 8.8
Investments 9.4 (9.4) -
Cash and cash equivalents 152.7 9.4 162.1
1,955.5 (10.7) 1,944.8
Total assets 7,874.2 (143.2) 7,731.0
Current liabilities
Short-term borrowings (184.0) (0.9) (184.9)
Income tax liabilities (113.7) - (113.7)
Trade and other payables (1,816.3) 136.6 (1,679.7)
Provisions (16.4) - (16.4)
(2,130.4) 135.7 (1,994.7)
Net current liabilities (174.9) 125.0 (49.9)
Non-current liabilities
Long-term borrowings (772.4) (45.9) (818.3)
Other payables (0.9) - (0.9)
Deferred tax liabilities (20.8) (171.9) (192.7)
Post employment benefits (17.8) (307.9) (325.7)
Provisions (7.7) - (7.7)
(819.6) (525.7) (1,345.3)
Net assets 4,924.2 (533.2) 4,391.0
Equity
Share capital 2,434.9 - 2,434.9
Other reserves 2,486.6 (533.2) 1,953.4
Total equity shareholders' funds 4,921.5 (533.2) 4,388.3
Minority interests 2.7 - 2.7
Total equity 4,924.2 (533.2) 4,391.0
5. NOTES TO IFRS FINANCIAL INFORMATION
5.1.Exceptional items
Exceptional items (other operating expenses) comprise a £4.0m profit on the
disposal of properties and fixed asset investments and a £17.7m charge relating
to the provision against the working capital loan made in connection with the
disposal of ProMarkt.
5.2.Adjusted earnings per share
Year ended
29 January 2005
(unaudited)
£m
Earnings attributable to equity shareholders for basic and diluted earnings per
share 455.7
Items not related to underlying business performance:
- Profit on disposal of fixed assets and investments (4.0)
- Loss on sale of businesses 17.7
- Gain on retranslation of intercompany loan balance (12.0)
- Tax on the adjustments (1.7)
Earnings attributable to equity shareholders for adjusted earnings per share 455.7
Weighted average number of shares for basic EPS (millions) 2,307.5
Weighted average number of shares for diluted EPS (millions) 2,324.4
Basic earnings per share (pence) 19.7
Diluted basic earnings per share (pence) 19.6
Adjusted basic earnings per share (pence) 19.7
Adjusted diluted basic earnings per share (pence) 19.6
5.3.Net debt
Year ended
29 January 2005
(unaudited)
£m
Net debt under UK GAAP 794.3
Additional finance lease liability 46.8
Net debt under IFRS 841.1
6. OTHER INFORMATION
This document, together with the Appendix will be available on the Group's
website www.kingfisher.com
Kingfisher plc
APPENDIX - Detailed reconciliation of UK GAAP to International Financial
Reporting Standards (IFRS)
CONTENTS
1. Consolidated Income Statement for the year ended 29 January 2005
2. Consolidated Balance Sheet as at 1 February 2004
3. Consolidated Balance Sheet as at 29 January 2005
These financial reconciliations are for convenience only and do not contain
sufficient information to allow a full understanding of the impact of the
transition to IFRS on the financial statements of Kingfisher plc or the
historical results and state of affairs of Kingfisher plc.
1. CONSOLIDATED INCOME STATEMENT (UNAUDITED)
For the year ended Reported IAS 1 IFRS 3 IAS 19 IAS 12 IFRS 2 IAS 17 SIC 15 IAS 21 Other Restated
29 January 2005 under Joint Business Employee Deferred Share Leases Lease Functional under
UK GAAP venture combin- benefits tax based incent- currency IFRS
and ation payments ives
assoc-
iates
£m £m £m £m £m £m £m £m £m £m £m
Revenue 7,649.6 - - - - - - - - - 7,649.6
Cost of sales (4,783.3) - - - - - - (0.3) - (2.1)(4,785.7)
Gross profit 2,866.3 - - - - - - (0.3) - (2.1) 2,863.9
Selling costs (1,834.4) - - 0.6 - - 5.3 (4.4) - (0.1)(1,833.0)
Administrative (363.4) - (1.0) (1.5) - (1.8) (2.2) - - (0.8) (370.7)
expenses
Other operating 16.8 - - - - - - 0.2 - - 17.0
income
Other operating (16.6) - - - - - - - - 2.9 (13.7)
expenses
Share of post tax
result in joint
venture and 27.5 (12.9) - - - - - - - - 14.6
associated
undertakings
Operating profit 696.2 (12.9) (1.0) (0.9) - (1.8) 3.1 (4.5) - (0.1) 678.1
Net financing charge (25.3) 6.1 - (5.1) - - (4.4) - - - (28.7)
Gain on retranslation
of intercompany loan
balance - - - - - - - - 12.0 - 12.0
Profit before tax 670.9 (6.8) (1.0) (6.0) - (1.8) (1.3) (4.5) 12.0 (0.1) 661.4
Tax on profit on (201.4) 6.8 - 1.9 (12.1) 0.5 0.4 1.4 (3.6) 0.9 (205.2)
ordinary activities
Profit for the
financial period from 469.5 - (1.0) (4.1) (12.1) (1.3) (0.9) (3.1) 8.4 0.8 456.2
continuing operations
2. CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 1 February 2004 Reported IFRS 3 IAS 38 IAS 19 IAS 12 IFRS 2 IAS 17 SIC 15 IAS 18 Other Restated
(Opening balance under Business Intang- Employee Deferred Share Leases Lease Dividend under
sheet) UKGAAP combin- ibles benefits tax based incent- IFRS
(IFRS ations reclas- payments ives
format) sifica-
tion
£m £m £m £m £m £m £m £m £m £m £m
Non-current assets
Intangible assets 2,455.3 - 68.2 - - - - - - (1.5) 2,522.0
Property, plant and 2,769.2 - (68.2) - - - 30.6 6.7 - (6.2) 2,732.1
equipment
Investment property 12.0 - - - - - - - - (6.3) 5.7
Investment in joint 145.7 19.3 - - - - - - - - 165.0
ventures and associates
Other investments 0.2 - - - - - - - - - 0.2
Trade and other 25.8 - - - - - - - - - 25.8
receivables
5,408.2 19.3 - - - - 30.6 6.7 - (14.0) 5,450.8
Current assets
Inventory 1,071.7 - - - - - - - - (10.8) 1,060.9
Trade and other 491.6 - - - - - - 2.1 - (0.9) 492.8
receivables
Income tax 1.4 - - - - - - - - - 1.4
Investments 23.8 - - - - - - - - (13.8) 10.0
Cash and cash 144.2 - - - - - - - - 13.8 158.0
equivalents
1,732.7 - - - - - - 2.1 - (11.7) 1,723.1
Total assets 7,140.9 19.3 - - - - 30.6 8.8 - (25.7) 7,173.9
Current liabilities
Short-term borrowings (267.6) - - - - - (0.8) - - - (268.4)
Income tax liabilities (79.2) - - - - - - - - - (79.2)
Trade and other (1,578.4) - - (0.8) - 3.2 - (21.7) 143.4 - (1,454.3)
payables
Provisions (7.0) - - - - - - - - - (7.0)
(1,932.2) - - (0.8) - 3.2 (0.8) (21.7) 143.4 - (1,808.9)
Net current liabilities (199.5) - - (0.8) - 3.2 (0.8) (19.6) 143.4 (11.7) (85.8)
Non-current liabilities
Long-term borrowings (744.2) - - - - - (46.8) - - - (791.0)
Other payables (0.7) - - - - - - - - - (0.7)
Deferred tax (14.6) - - 66.6 (268.8) 0.1 5.1 3.8 - 3.8 (204.0)
liabilities
Post employment (25.1) - - (220.6) - - - - - - (245.7)
benefits
Provisions (17.5) - - - - - - - - - (17.5)
(802.1) - - (154.0) (268.8) 0.1 (41.7) 3.8 - 3.8 (1,258.9)
Net assets 4,406.6 19.3 - (154.8) (268.8) 3.3 (11.9) (9.1) 143.4 (21.9) 4,106.1
Equity
Share capital 2,390.4 - - - - - - - - - 2,390.4
Other reserves 2,013.3 19.3 - (154.8) (268.8) 3.3 (11.9) (9.1) 143.4 (21.9) 1,712.8
Total equity 4,403.7 19.3 - (154.8) (268.8) 3.3 (11.9) (9.1) 143.4 (21.9) 4,103.2
shareholders' funds
Minority interests 2.9 - - - - - - - - - 2.9
Total equity 4,406.6 19.3 - (154.8) (268.8) 3.3 (11.9) (9.1) 143.4 (21.9) 4,106.1
3. CONSOLIDATED BALANCE SHEET (UNAUDITED)
As at 29 Reported IFRS 3 IAS 38 IAS 19 IAS 12 IFRS 2 IAS 17 SIC 15 IAS 16 IAS 18 Other Restated
January under Business Intang- Employee Deferred Share Leases Lease Valuation Dividend under
2005 UKGAAP combin- ibles benefits tax based incent- of IFRS
(IFRS ation reclas- payments ives proper-
format) sifica- ties
tion
£m £m £m £m £m £m £m £m £m £m £m £m
Non-current
assets
Intangible 2,463.1 - 69.8 - - - - - - - 0.1 2,533.0
assets
Property, 3,247.9 - (69.8) - - - 28.4 10.7 (185.1) - (0.8) 3,031.3
plant
and equipment
Investment 22.8 - - - - - - - - - (4.1) 18.7
property
Investment in 158.3 18.3 - - - - - - - - - 176.6
joint ventures
and
associates
Trade and 26.6 - - - - - - - - - - 26.6
other
receivables
5,918.7 18.3 - - - - 28.4 10.7 (185.1) - (4.8) 5,786.2
Current assets
Inventory 1,333.0 - - - - - - - - - (13.0) 1,320.0
Trade and 451.6 - - - - - - 2.3 - - - 453.9
other
receivables
Income tax 8.8 - - - - - - - - - - 8.8
Investments 9.4 - - - - - - - - - (9.4) -
Cash and cash 152.7 - - - - - - - - - 9.4 162.1
equivalents
1,955.5 - - - - - - 2.3 - - (13.0) 1,944.8
Total assets 7,874.2 18.3 - - - - 28.4 13.0 (185.1) - (17.8) 7,731.0
Current
liabilities
Short-term (184.0) - - - - - (0.9) - - - - (184.9)
borrowings
Income tax (113.7) - - - - - - - - - - (113.7)
liabilities
Trade and (1,816.3) - - 1.5 - 7.9 - (30.4) - 159.7 (2.1) (1,679.7)
other
payables
Provisions (16.4) - - - - - - - - - - (16.4)
(2,130.4) - - 1.5 - 7.9 (0.9) (30.4) - 159.7 (2.1) (1,994.7)
Net current (174.9) - - 1.5 - 7.9 (0.9) (28.1) - 159.7 (15.1) (49.9)
liabilities
Non-current
liabilities
Long-term (772.4) - - - - - (45.9) - - - - (818.3)
borrowings
Other payables (0.9) - - - - - - - - - - (0.9)
Deferred tax (20.8) - - 92.0 (279.9) 0.6 5.5 5.2 - - 4.7 (192.7)
liabilities
Post (17.8) - - (307.9) - - - - - - - (325.7)
employment
benefits
Provisions (7.7) - - - - - - - - - - (7.7)
(819.6) - - (215.9) (279.9) 0.6 (40.4) 5.2 - - 4.7 (1,345.3)
Net assets 4,924.2 18.3 - (214.4) (279.9) 8.5 (12.9) (12.2) (185.1) 159.7 (15.2) 4,391.0
Equity
Share 2,434.9 - - - - - - - - - - 2,434.9
capital
Other 2,486.6 18.3 - (214.4) (279.9) 8.5 (12.9) (12.2) (185.1) 159.7 (15.2) 1,953.4
reserves
Total 4,921.5 18.3 - (214.4) (279.9) 8.5 (12.9) (12.2) (185.1) 159.7 (15.2) 4,388.3
equity
shareholders'
funds
Minority 2.7 - - - - - - - - - - 2.7
interests
Total equity 4,924.2 18.3 - (214.4) (279.9) 8.5 (12.9) (12.2) (185.1) 159.7 (15.2) 4,391.0
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