27th Mar 2008 07:02
Kingfisher PLC27 March 2008 Consolidated income statementFor the financial year ended 2 February 2008 2007/08 2006/07 Before Exceptional Total Before Exceptional Total exceptional items exceptional items£ millions Notes items (note 3) items (note 3)Continuing operations:Revenue 2 9,364 - 9,364 8,676 - 8,676Cost of sales (6,093) - (6,093) (5,624) - (5,624)Gross profit 3,271 - 3,271 3,052 - 3,052Selling and distribution (2,390) (35) (2,425) (2,207) - (2,207)expensesAdministrative expenses (469) - (469) (434) - (434)Other income 22 44 66 24 49 73Other expenses - (5) (5) - - -Share of post-tax results of 2 19 19 17 - 17joint ventures and associates -Operating profit 453 4 457 452 49 501 Analysed as:Retail profit 2 498 (1) 497 504 49 553Central costs (40) 5 (35) (39) - (39)Share of interest and tax of (5) (5) (13) - (13)joint ventures and associates - Finance income 33 33 25 - 25 -Finance costs (95) (95) (76) - (76) -Net finance costs 4 (62) (62) (51) - (51) - Profit before taxation 391 4 395 401 49 450 Income tax expense 5 (125) 2 (123) (120) 8 (112)Profit for the year 266 6 272 281 57 338 Attributable to:Equity shareholders of the 274 337CompanyMinority interests (2) 1 272 338 Earnings per share 7Basic 11.7p 14.4pDiluted 11.7p 14.4pAdjusted basic 11.3p 11.9pAdjusted diluted 11.3p 11.8p The proposed final dividend for the financial year ended 2 February 2008,subject to approval by shareholders at the Annual General Meeting, is 3.4p pershare. Consolidated statement of recognised income and expenseFor the financial year ended 2 February 2008 £ millions Notes 2007/08 2006/07 Actuarial gains on post employment benefits 47 95Currency translation differences Group 206 (60) Joint ventures and associates 26 (12) Losses transferred to income statement 3 -Cash flow hedgesFair value losses (6) (9)Losses transferred to inventories 8 3Tax on items recognised directly in equity (19) (30)Net income/(expense) recognised directly in equity 265 (13)Profit for the year 272 338Total recognised income for the year 537 325 Attributable to:Equity shareholders of the Company 9 537 324Minority interests - 1 537 325 Consolidated balance sheetAs at 2 February 2008 £ millions Notes 2007/08 2006/07Non-current assetsGoodwill 2,532 2,552Other intangible assets 85 89Property, plant and equipment 3,698 3,211Investment property 29 29Investments in joint ventures and associates 204 185Post employment benefits 8 110 -Deferred tax assets 25 30Derivative financial instruments 66 29Other receivables 13 18 6,762 6,143Current assetsInventories 1,873 1,531Trade and other receivables 533 495Current tax assets 1 15Other investments 11 28Derivative financial instruments 5 10Cash and cash equivalents 218 395 2,641 2,474Total assets 9,403 8,617 Current liabilitiesTrade and other payables (2,238) (1,953)Current tax liabilities (89) (87)Derivative financial instruments (10) (5)Borrowings (191) (242)Provisions (47) (56) (2,575) (2,343) Non-current liabilitiesOther payables (32) (4)Deferred tax liabilities (318) (263)Derivative financial instruments (52) (46)Borrowings (1,620) (1,432)Provisions (49) (53)Post employment benefits 8 (33) (55) (2,104) (1,853)Total liabilities (4,679) (4,196) Net assets 4,724 4,421 EquityShare capital 371 371Share premium 2,188 2,185Own shares held (66) (81)Reserves 9 2,220 1,939Minority interests 11 7Total equity 4,724 4,421 The financial statements were approved by the Board of Directors on 26 March2008 and signed on its behalf by: Ian Cheshire Duncan Tatton-BrownGroup Chief Executive Group Finance Director Consolidated cash flow statementFor the financial year ended 2 February 2008 £ millions Notes 2007/08 2006/07Net cash flows from operating activities 10 465 559 Cash flows from investing activitiesPurchase of minority interests (1) (2)Purchase of intangible assets (29) (28)Purchase of property, plant and equipment and investment property (499) (439)Disposal of property, plant and equipment and investment property 117 251Disposal of investment in joint venture 50 -Net disposal/(purchase) of other investments 21 (29)Dividends received from joint ventures and associates 6 5Net cash flows from investing activities (335) (242) Cash flows from financing activitiesInterest received 23 19Interest paid (89) (71)Interest element of finance lease rental payments (6) (6)Net receipt on forward foreign exchange contracts 6 -Net receipt/(repayment) of bank loans 136 (133)Issue of Medium Term Notes and other fixed term debt - 252Capital element of finance lease rental payments (11) (12)Issue of share capital to equity shareholders of the Company 3 11Issue of share capital to minority interests 3 1Disposal of own shares held 2 7Dividends paid to equity shareholders of the Company (249) (248)Dividends paid to minority interests (4) (2)Net cash flows from financing activities (186) (182) Net (decrease)/increase in cash and cash equivalents and bank overdrafts (56) 135 Cash and cash equivalents and bank overdrafts at beginning of year 245 114Exchange differences 6 (4) Cash and cash equivalents and bank overdrafts at end of year 11 195 245 Notes to the financial informationFor the financial year ended 2 February 2008 1. Basis of preparation The financial information which comprises the consolidated income statement,consolidated statement of recognised income and expense, consolidated balancesheet, consolidated cash flow statement and related notes do not constitute theGroup's Annual Report and Accounts. The auditors have reported on the Group'sstatutory accounts for each of the years 2007/08 and 2006/07 under section 235of the Companies Act 1985, which do not contain statements under sections 237(2) or (3) of the Companies Act 1985 and are unqualified. The statutory accountsfor 2006/07 have been delivered to the Registrar of Companies and the statutoryaccounts for 2007/08 will be filed with the Registrar in due course. Copies ofthe Annual Report and Accounts will be posted to shareholders during the weekbeginning 28 April 2008. The Group's financial reporting year ends on the nearest Saturday to 31 Januaryeach year. The current financial year is the 52 weeks ended 2 February 2008.The comparative financial year is the 53 weeks ended 3 February 2007. This onlyimpacts the UK operations with all of the other operations reporting on acalendar basis as a result of local statutory requirements. The consolidated financial statements have been prepared in accordance withInternational Financial Reporting Standards (IFRSs) as adopted by the EuropeanUnion, IFRIC interpretations and those parts of the Companies Act 1985applicable to companies reporting under IFRS. The consolidated financialstatements have been prepared under the historical cost convention, as modifiedby the use of valuations for certain financial instruments, share-based paymentsand post employment benefits. The principal accounting policies applied in the preparation of the consolidatedfinancial statements are consistent with those set out in the statutory accountsfor 2006/07. Use of adjusted measures Kingfisher believes that retail profit, adjusted pre-tax profit, adjustedpost-tax profit and adjusted earnings per share provide additional usefulinformation on underlying trends to shareholders. These measures are used byKingfisher for internal performance analysis and incentive compensationarrangements for employees. The terms 'retail profit', 'exceptional items' and 'adjusted' are not defined terms under IFRS and may therefore not be comparablewith similarly titled profit measures reported by other companies. It is notintended to be a substitute for, or superior to, GAAP measurements of profit.The term 'adjusted' refers to the relevant measure being reported excludingexceptional items, financing fair value remeasurements and amortisation ofacquisition intangibles. Retail profit is defined as operating profit beforecentral costs (principally the costs of the Group's head office), exceptionalitems, amortisation of acquisition intangibles and the Group's share of interestand tax of joint ventures and associates. The separate reporting of non-recurring exceptional items, which are presentedas exceptional within their relevant income statement category, helps provide anindication of the Group's underlying business performance. The principal itemswhich will be included as exceptional items are: • non-trading items included in operating profit such as profits andlosses on the disposal or closure of subsidiaries, joint ventures, associatesand investments which do not form part of the Group's trading activities; • gains and losses on the disposal of properties; and • the costs of significant restructuring and incremental acquisitionintegration costs. 2. Segmental analysis Income statement Year ended 2 February 2008£ millions United France Poland Rest of Asia Total Kingdom Europe External revenue 4,395 3,224 703 570 472 9,364Retail profit 153 237 87 35 (14) 498Exceptional items before central costs 38 1 - - (40) (1)Less: Share of operating profit of joint ventures and - - - (20) (4) (24)associatesSegment result before joint ventures and associates 191 238 87 15 (58) 473Share of post-tax results of joint ventures and - - - 16 3 19associatesSegment result 191 238 87 31 (55) 492Central costs (35)Operating profit 457Net finance costs (62)Profit before taxation 395Income tax expense (123)Profit for the year 272 Year ended 3 February 2007£ millions United France Poland Rest of Asia Total Kingdom Europe External revenue 4,262 2,955 508 494 457 8,676Retail profit 183 206 58 52 5 504Exceptional items before central costs 50 (1) - - - 49Less: Share of operating profit of joint ventures and - (1) - (23) (6) (30)associatesSegment result before joint ventures and associates 233 204 58 29 (1) 523Share of post-tax results of joint ventures and - - - 13 4 17associatesSegment result 233 204 58 42 3 540Central costs (39)Operating profit 501Net finance costs (51)Profit before taxation 450Income tax expense (112)Profit for the year 338 The Group's primary reporting segments are geographic, with the Group operatingin four main geographical areas, being the UK, France, Rest of Europe and Asia.The Group only has one business segment, being retail, therefore no secondarysegmental disclosure is given. The 'Rest of Europe' segment consists of B&Q Ireland, Castorama Poland,Castorama Italy, Castorama Russia, Brico Depot Spain, Koctas and Hornbach.Poland has been shown separately as it meets the reportable segment criteria asprescribed by IAS 14 Segment Reporting. The 'Asia' segment consists of B&QChina, B&Q Taiwan, B&Q Home in South Korea and the Asia head office. Central costs have not been allocated. These principally comprise the HeadOffice operations of Kingfisher plc. 3. Exceptional items £ millions 2007/08 2006/07Included within selling and distribution expensesLoss on closure of B&Q Home in South Korea and Asia head office (13) -China restructuring (22) - (35) -Included within other incomeProfit on disposal of properties 39 49Recovery of loan receivable previously written off 5 - 44 49Included within other expensesGross profit on disposal of B&Q Taiwan joint venture before goodwill 27 -Goodwill attributed to B&Q Taiwan joint venture (32) -Net loss on disposal of B&Q Taiwan joint venture (5) - Exceptional items 4 49 Closure costs of £13m have been expensed in relation to the closure of B&Q Homein South Korea and the Asia head office. A further £22m exceptional charge hasbeen recognised as part of a restructuring project in B&Q China, comprisingstore impairment costs and onerous lease contracts. The Group has recorded £39m exceptional profit on disposal of properties, whichincludes a £40m profit on the sale and leaseback of the Worksop DistributionCentre by B&Q UK. In the prior year, total profits recognised on the disposalof properties totalled £49m. The Group recognised £43m profit on disposal ofproperties on the sale and leaseback of seven large UK stores to The BritishLand Company. The Group has recognised £5m income in relation to the repayment of a loan madeto ProMarkt which had previously been written off as an exceptional item. On 4 January 2008, the Group disposed of its 50% interest in B&Q Taiwan (B&QInternational Co. Ltd) to its joint venture partner, Test Rite International Co.Ltd, for cash consideration of £50m. This resulted in a £27m profit beforegoodwill being recognised and a £5m loss after goodwill. The goodwill wasallocated to B&Q Taiwan on the Group's acquisition of the minority interests ofCastorama in 2002/03. 4. Net finance costs £ millions 2007/08 2006/07Cash and cash equivalents and current other investments 21 19Expected net return on defined benefit pension schemes 12 6Finance income 33 25 Bank overdrafts and bank loans (12) (7)Medium Term Notes and other fixed term debt (79) (65)Financing fair value remeasurements 5 4Finance leases (6) (6)Unwinding of discount on provisions (3) (2)Finance costs (95) (76) Net finance costs (62) (51) 5. Income tax expense £ millions 2007/08 2006/07UK corporation taxCurrent tax on profits for the year 21 36Adjustments in respect of prior years (29) - (8) 36Double taxation relief (1) (6) (9) 30Overseas taxCurrent tax on profits for the year 99 80Adjustments in respect of prior years - (2) 99 78Deferred taxCurrent year 20 13Adjustments in respect of prior years 22 (9)Adjustments in respect of changes in tax rates (9) - 33 4 Income tax expense 123 112 The effective rate of tax on profit before exceptional items and excluding taxadjustments in respect of prior years and changes in tax rates is 32.0% (2006/07: 32.0%). A tax credit of £2m has been recognised in the income statementrelating to exceptional items, of which £14m is charged against the current yeartax charge in relation to the £4m net exceptional income, with the remaining£16m credit in respect of prior periods, relating to tax previously provided onexceptional items. The tax credit on exceptional items for the year ended 3February 2007 was £8m, of which £3m related to adjustments in respect of prioryears. 6. Dividends £ millions 2007/08 2006/07Dividends to equity shareholders of the CompanyFinal dividend for the year ended 3 February 2007 of 6.8p per share (28 January 2006: 159 1586.8p per share)Interim dividend for the year ended 2 February 2008 of 3.85p per share (3 February 2007: 90 903.85p per share) 249 248Proposed final dividend for the year ended 2 February 2008 of 3.4p per share 80 The proposed final dividend for the year ended 2 February 2008 is subject toapproval by shareholders at the Annual General Meeting and has not been includedas a liability in these financial statements. 7. Earnings per share 2007/08 2006/07 Earnings Weighted Per share Earnings Weighted Per average amount average number number share of shares of shares amount £ millions millions pence £ millions millions penceBasic earnings per share 274 2,342 11.7 337 2,333 14.4Effect of dilutive share options 9 - 11 -Diluted earnings per share 274 2,351 11.7 337 2,344 14.4 Basic earnings per share 274 2,342 11.7 337 2,333 14.4Effect of non-recurring costs Exceptional items (4) (0.2) (49) (2.1) Tax on exceptional items (2) (0.1) (8) (0.3) Financing fair value remeasurements (5) (0.2) (4) (0.2) Tax on financing fair value 2 0.1 1 0.1 remeasurementsAdjusted basic earnings per share 265 2,342 11.3 277 2,333 11.9 Diluted earnings per share 274 2,351 11.7 337 2,344 14.4Effect of non-recurring costs Exceptional items (4) (0.2) (49) (2.2) Tax on exceptional items (2) (0.1) (8) (0.3) Financing fair value remeasurements (5) (0.2) (4) (0.2) Tax on financing fair value 2 0.1 1 0.1 remeasurementsAdjusted diluted earnings per share 265 2,351 11.3 277 2,344 11.8 Basic earnings per share is calculated by dividing the earnings attributable toordinary equity shareholders of the Company by the weighted average number ofordinary shares in issue during the year, excluding those held in the EmployeeShare Ownership Plan Trust (ESOP) which for the purpose of this calculation aretreated as cancelled. For diluted earnings per share, the weighted average number of ordinary sharesin issue is adjusted to assume conversion of all dilutive potential ordinaryshares. These represent share options granted to employees where the exerciseprice is less than the average market price of the Company's shares during theyear. Adjusted earnings per share figures are also presented. These exclude theeffects of exceptional items, financing fair value remeasurements andamortisation of acquisition intangibles, to allow comparison of underlyingtrading performance on a consistent basis. 8. Post employment benefits Movements in the present value of defined benefit (obligations)/assets on thebalance sheet are as follows: 2007/08 2006/07£ millions UK Other Total UK Other TotalDeficit in scheme at beginning of year (28) (27) (55) (210) (29) (239)Total service cost charged in the income statement (26) (3) (29) (35) (5) (40)Interest cost (74) (2) (76) (66) (1) (67)Expected return on pension scheme assets 88 - 88 73 - 73Actuarial gains/(losses) 49 (2) 47 92 3 95Contributions paid 101 2 103 118 4 122Settlements and curtailments - 1 1 - - -Exchange differences - (2) (2) - 1 1Surplus/(deficit) in scheme at end of year 110 (33) 77 (28) (27) (55) The assumptions used in calculating the costs and obligations of the Group'sdefined benefit pension plans, as shown in the tables below, are set by theDirectors after consultation with independent professionally qualifiedactuaries. 2007/08 2006/07Annual % rate UK Other UK OtherDiscount rate 6.2 5.3 to 5.5 5.3 4.6 to 5.5Salary escalation 4.1 2.0 to 6.6 4.5 3.5 to 6.7Rate of pension increases 3.3 - 2.9 -Price inflation 3.3 2.0 to 2.5 2.9 2.0 to 2.5 2007/08 2006/07% rate of return UK Other UK OtherEquities 8.1 - 7.8 -Bonds 5.3 - 4.9 4.5Property 6.7 - 6.3 -Other 4.3 4.0 3.9 4.0Overall expected rate of return 6.8 4.0 6.5 4.0 The UK discount rate is based on the yield on the iBoxx over 15-year AA-ratedSterling corporate bond index. The overall expected rate of return on planassets reflects market expectations at the valuation date of long-term assetreturns and the mix of assets in the plans. 2007/08 2006/07Age to which current pensioners are expected to live (60 now)- Male 87.2 85.1- Female 85.9 86.3Age to which future pensioners are expected to live (60 in 15 years time)- Male 88.8 86.2- Female 87.1 87.5 The mortality assumptions used in the actuarial valuations of the Group's UKdefined benefit pension liabilities have been selected with regard to thecharacteristics and experience of the membership of the plan from 2004 to 2007. The following table analyses, for the UK Plan, the estimated impact on planobligations resulting from changes to key actuarial assumptions, whilst holdingall other assumptions constant. Assumption Change in assumption Impact on UK plan liabilitiesDiscount rate Increase/decrease by 0.1% Decrease/increase by £24mSalary escalation Increase/decrease by 0.1% Increase/decrease by £3mRate of pension increases Increase/decrease by 0.1% Increase/decrease by £14mPrice inflation Increase/decrease by 0.1% Increase/decrease by £24mMortality Increase in life expectancy by one year Increase by £40m 9. Reserves £ millions Cash flow Translation Other Retained Total hedge reserve reserve reserves earningsAt 4 February 2007 (3) 20 159 1,763 1,939Actuarial gains on post employment benefits - - - 47 47Currency translation differences - Group - 204 - - 204Currency translation differences - joint ventures andassociates - 26 - - 26Currency translation differences - losses transferred to income statement - 3 - - 3Cash flow hedges - fair value losses (6) - - - (6)Cash flow hedges - losses transferred to inventories 8 - - - 8Tax on items recognised directly in equity (1) (5) - (13) (19)Net income recognised directly in equity 1 228 - 34 263Profit for the year - - - 274 274Total recognised income for the year 1 228 - 308 537Share-based compensation charge - - - 6 6Own shares disposed - - - (13) (13)Dividends - - - (249) (249)At 2 February 2008 (2) 248 159 1,815 2,220 At 29 January 2006 1 92 159 1,609 1,861Actuarial gains on post employment benefits - - - 95 95Currency translation differences - Group - (60) - - (60)Currency translation differences - joint ventures and associates - (12) - - (12)Cash flow hedges - fair value losses (9) - - - (9)Cash flow hedges - losses transferred to inventories 3 - - - 3Tax on items recognised directly in equity 2 - - (32) (30)Net (expense)/income recognised directly in equity (4) (72) - 63 (13)Profit for the year - - - 337 337Total recognised (expense)/income for the year (4) (72) - 400 324Share-based compensation charge - - - 9 9Own shares disposed - - - (7) (7)Dividends - - - (248) (248)At 3 February 2007 (3) 20 159 1,763 1,939 10. Cash flows from operating activities £ millions 2007/08 2006/07Operating profit 457 501Share of post-tax results of joint ventures and associates (19) (17)Amortisation and depreciation 234 207Impairment losses 19 1Loss on disposal of intangible assets - 6Profit on disposal of property, plant and equipment and investment property (29) (44)Loss on disposal of investment in joint venture 5 -Share-based compensation charge 6 9Increase in inventories (215) (215)Decrease in trade and other receivables 6 44Increase in trade and other payables 173 295(Increase)/decrease in working capital (36) 124Decrease in provisions (16) (48)Decrease in post employment benefits (75) (82)Cash generated by operations 546 657Income tax paid (81) (98)Net cash flows from operating activities 465 559 11. Net debt £ millions 2007/08 2006/07Cash and cash equivalents 218 395Bank overdrafts (23) (150)Cash and cash equivalents and bank overdrafts 195 245Current other investments 11 28Bank loans (283) (146)Medium Term Notes and other fixed term debt (1,436) (1,307)Interest rate and cross currency swaps (excluding accrued interest) 23 (44)Finance leases (69) (70)Net debt (1,559) (1,294) £ millions 2007/08 2006/07Net debt at beginning of year (1,294) (1,355)Net (decrease)/increase in cash and cash equivalents and bank overdrafts (56) 135Net (disposal)/purchase of other investments (21) 29Net (receipt)/repayment of bank loans (136) 133Issue of Medium Term Notes and other fixed term debt - (252)Capital element of finance lease rental payments 11 12Exchange differences and other non-cash movements (63) 4Net debt at end of year (1,559) (1,294) This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Kingfisher