Company Announcements

Half Year Results (Part 2 of 2)

Source: RNS
RNS Number : 3988E
Kingfisher PLC
17 September 2024
 

Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

 


 



 

Half year ended 31 July 2024

Half year ended 31 July 2023  

£ millions

Notes

Before adjusting items

Adjusting items (note 5) 

Total

Before adjusting items  

Adjusting items (note 5)

Total

Sales

4

6,756

-

6,756

6,880

-

6,880

Cost of sales


(4,276)

-

(4,276)

(4,385)

-

(4,385)

Gross profit


2,480

-

2,480

2,495

-

2,495

Selling and distribution expenses


(1,583)

(9)

(1,592)

(1,605)

(21)

(1,626)

Administrative expenses


(510)

2

(508)

(511)

-

(511)

Other income


10

-

10

12

2

14

Other expense


-

(3)

(3)

-

-

-

Share of post-tax results of joint ventures and associates

 

 

(13)

-

(13)

(5)

-

(5)

Operating profit

4

384

(10)

374

386

(19)

367

Finance costs


(67)

-

(67)

(64)

-

(64)

Finance income


17

-

17

14

-

14

Net finance costs

6

(50)

-

(50)

(50)

-

(50)

Profit before taxation


334

(10)

324

336

(19)

317

Income tax expense

7

(91)

4

(87)

(87)

7

(80)

Profit for the period


243

(6)

237

249

(12)

237

 


 

 

 




 


 

 

 






 

 

 




Earnings per share

8

 

 

 




Basic


 

 

12.8p



12.4p

Diluted


 

 

12.6p



12.2p

Adjusted basic


 

 

13.2p



13.0p

Adjusted diluted


 

 

13.0p



12.8p


The proposed interim ordinary dividend for the period ended 31 July 2024 is 3.80p per share (2023/24: 3.80p per share).



Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED INCOME STATEMENT

 

 

 


Year ended 31 January 2024

£ millions

Notes

Before adjusting

items

Adjusting

items

(note 5)

Total

Sales

4

12,980

-

12,980

Cost of sales


(8,204)

-

(8,204)

Gross profit


4,776

-

4,776

Selling and distribution expenses


(3,143)

(87)

(3,230)

Administrative expenses


(982)

(8)

(990)

Other income


23

2

25

Share of post-tax results of joint ventures and associates

(1)

-

(1)

Operating profit

4

673

(93)

580

Finance costs


(133)

-

(133)

Finance income


28

-

28

Net finance costs

6

(105)

-

(105)

Profit before taxation


568

(93)

475

Income tax expense

7

(153)

23

(130)

Profit for the year


415

(70)

345






Earnings per share

8




Basic




18.2p

Diluted




18.0p

Adjusted basic




21.9p

Adjusted diluted




21.6p






 

 

Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

£ millions

 

 

Notes

Half year ended

31 July 2024

Half year ended

31 July 2023

Year ended

31 January 2024

Profit for the period

 

237

237

345

Remeasurements of post-employment benefits

11

1

(9)

(42)

Inventory cash flow hedges - fair value losses


(6)

(40)

(32)

Tax on items that will not be reclassified

7

34

14

28

Total items that will not be reclassified

subsequently to profit or loss


29

(35)

(46)

Currency translation differences


 



Subsidiaries


(28)

(10)

(3)

Joint ventures and associates


2

(4)

(1)

Transferred to income statement


-

(2)

(2)

Inventory cash flow hedges - losses transferred to income statement

 

-

9

12

Tax on items that may be reclassified

 

-

-

(2)

Total items that may be reclassified subsequently to profit or loss

 

(26)

(7)

4

Other comprehensive income/(expense) for the period

 

3

(42)

(42)

Total comprehensive income for the period

 

240

195

303



Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 






Half year ended 31 July 2024

 

£ millions

Share capital

(note 13)

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

 

At 1 February 2024

294

2,228

(31)

3,741

82

290

6,604

 

Profit for the period

-

-

-

237

-

-

237

 

Other comprehensive income/(expense) for the period

-

-

-

34

-

(31)

3

 

Total comprehensive income/(expense) for the period

-

-

-

271

-

(31)

 240

 

Inventory cash flow hedges - losses transferred to inventories

-

-

-

-

-

15

15

 

Share-based compensation

-

-

-

12

-

-

12

 

New shares issued under share schemes

-

-

-

1

-

-

1

 

Own shares issued under share schemes

-

-

11

(11)

-

-

-

 

Purchase of own shares for cancellation

(5)

-

-

(100)

5

-

(100)

 

Purchase of own shares for ESOP trust

-

-

(26)

-

-

-

(26)

 

Dividends

-

-

-

(159)

-

-

(159)

 

Tax on equity items

-

-

-

-

-

(3)

(3)

 

At 31 July 2024

289

2,228

(46)

3,755

87

271

6,584

 

 

 

 

 

 

 

 

 

 



 Half year ended 31 July 2023

 

 

£ millions

Share capital (note 13)

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

 

At 1 February 2023

305

2,228

(22)

3,796

71

285

6,663

 

Profit for the period

-

-

-

237

-

-

237

 

Other comprehensive expense for the period

-

-

-

(4)

-

(38)

(42)

 

Total comprehensive income/(expense) for the period

-

-

-

233

-

(38)

195

 

Inventory cash flow hedges - losses transferred to inventories

-

-

-

-

-

12

12

 

Share-based compensation

-

-

-

12

-

-

12

 

New shares issued under share schemes

-

-

-

2

-

-

2

 

Own shares issued under share schemes

-

-

9

(9)

-

-

-

 

Purchase of own shares for cancellation

(6)

-

-

(103)

6

-

(103)

 

Purchase of own shares for ESOP trust

-

-

(24)

-

-

-

(24)

 

Dividends

-

-

-

(165)

-

-

(165)

 

Tax on equity items

-

-

-

-

-

(4)

(4)

 

At 31 July 2023

299

2,228

(37)

3,766

77

255

6,588

 

 








 



 

 


Year ended 31 January 2024

 

£ millions

Share capital (note 13)

 

Share

premium

Own shares held

 

Retained earnings

Capital

redemption

reserve

Other

reserves

(note 14)

Total equity

At 1 February 2023

305

2,228

(22)

3,796

71

285

6,663

Profit for the year

-

-

-

345

-

-

345

Other comprehensive expense for the year

-

-

-

(20)

-

(22)

(42)

Total comprehensive income/(expense) for the year

-

-

-

325

-

(22)

303

Inventory cash flow hedges - losses transferred to inventories

 

-

 

-

 

-

 

-

 

-

 

33

 

33

Share-based compensation

-

-

-

22

-

-

22

New shares issued under share schemes

-

-

-

4

-

-

4

Own shares issued under share schemes

-

-

15

(15)

-

-

-

Purchase of own shares for cancellation

(11)

-

-

(153)

11

-

(153)

Purchase of own shares for ESOP trust

-

-

(24)

-

-

-

(24)

Dividends

-

-

-

(237)

-

-

(237)

Tax on equity items

-

-

-

(1)

-

(6)

(7)

At 31 January 2024

294

2,228

(31)

3,741

82

290

6,604



Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED BALANCE SHEET

£ millions

Notes

At 31 July 2024

At 31 July 2023

At 31 January 2024

Non-current assets





Goodwill


2,397

2,407

2,398

Other intangible assets

10

338

372

368

Property, plant and equipment

10

3,171

3,168

3,206

Investment property

10

30

28

27

Right-of-use assets


1,871

1,934

1,881

Investments in joint ventures and associates


8

12

19

Post-employment benefits

11

216

243

212

Deferred tax assets


8

19

10

Other tax authority asset

17

70

67

68

Other receivables


15

16

15



8,124

8,266

8,204

Current assets


 



Inventories


2,979

3,132

2,914

Trade and other receivables


385

393

344

Derivative assets

12

3

4

2

Current tax assets


54

44

73

Cash and cash equivalents


485

344

360

Assets held for sale


-

3

3



3,906

3,920

3,696

Total assets


12,030

12,186

11,900

 


 



Current liabilities


 



Trade and other payables


(2,653)

(2,665)

(2,445)

Borrowings

12

(63)

(28)

(7)

Lease liabilities


(356)

(350)

(366)

Derivative liabilities

12

(15)

(54)

(23)

Current tax liabilities


(16)

(2)

(12)

Provisions


(8)

(9)

(9)



(3,111)

(3,108)

(2,862)

Non-current liabilities


 



Other payables


(4)

(4)

(3)

Borrowings

12

(50)

(101)

(102)

Lease liabilities


(1,968)

(2,048)

(2,001)

Derivative liabilities

12

(1)

(3)

(1)

Deferred tax liabilities


(190)

(207)

(207)

Provisions


(6)

(11)

(7)

Post-employment benefits

11

(116)

(116)

(113)



(2,335)

(2,490)

(2,434)

Total liabilities


(5,446)

(5,598)

(5,296)

Net assets


6,584

6,588

6,604

 


 



 

Equity


 



 

Share capital

13

289

299

294

Share premium


2,228

2,228

2,228

Own shares held in ESOP trust


(46)

(37)

(31)

Retained earnings


3,755

3,766

3,741

Capital redemption reserve


87

77

82

Other reserves

14

271

255

290

Total equity


6,584

6,588

6,604

 

The interim financial report was approved by the Board of Directors on 16 September 2024 and signed on its behalf by:

 

Thierry Garnier, Chief Executive Officer

Bernard Bot, Chief Financial Officer

 


Kingfisher plc

2024/25 INTERIM CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

CONSOLIDATED CASH FLOW STATEMENT

£ millions

Notes

Half year ended

31 July 2024

Half year ended

31 July 2023

Year ended

31 January 2024

Operating activities


 



Cash generated by operations

15

858

796

1,438

Income tax paid


(48)

(68)

(117)

Net cash flows from operating activities


810

728

1,321



 



Investing activities


 



Purchase of property, plant and equipment and intangible assets


(153)

(164)

(363)

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


-

-

2

Purchase of businesses


-

(3)

(3)

Disposal of subsidiaries and associates, net of cash disposed


(3)

9

9

Interest received


12

7

16

Interest element of lease rental receipts


-

-

1

Principal element of lease rental receipts


2

1

3

Advance payments on right-of-use assets


(2)

(1)

(4)

Net cash flows used in investing activities


(144)

(151)

(339)



 



Financing activities


 



Interest paid


(4)

(2)

(7)

Interest element of lease rental payments


(62)

(62)

(126)

Principal element of lease rental payments


(198)

(176)

(348)

Arrangement fees paid


(2)

-

-

New shares issued under share schemes


1

2

4

Purchase of own shares for cancellation


(92)

(99)

(160)

Purchase of own shares for ESOP trust


(26)

(24)

(24)

Ordinary dividends paid to equity shareholders of the Company

9

(159)

(165)

(237)

Net cash flows used in financing activities


(542)

(526)

(898)



 



Net increase in cash and cash equivalents and bank overdrafts


124

51

84

Cash and cash equivalents and bank overdrafts at beginning of period


353

270

270

Exchange differences


(5)

(4)

(1)

Cash and cash equivalents and bank overdrafts at end of period


472

317

353

 



Kingfisher plc

2024/25 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 One Paddington Square, London, W2 1GG.

 

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 2024 were approved by the Board of Directors on 24 March 2024 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 16 September 2024.

 

2.         Basis of preparation

 

The interim financial report for the six months ended 31 July 2024 ('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 2024, which have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) 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, '2023/24' refers to the six months ended 31 July 2023.

 

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, a period not less than 12 months from the date of this report, and they continue to adopt the going concern basis of accounting in preparing the condensed consolidated financial statements for the period ended 31 July 2024.

 

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). As of 31 July 2024, the Group had access to over £1.1bn in total liquidity, including cash and cash equivalents of £472m (net of bank overdrafts) and access to a £650m revolving credit facility (RCF), due to expire in May 2027.

 

In forming their outlook on the future financial performance, the Directors considered 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 consideration of a remote scenario that models the impact of a significant demand or supply shock preventing the Group from realising a large part of its sales over the period of a month followed by subdued demand for the following 11 months. The total loss of sales in this scenario is c.£1.4bn (10% 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 RCF for a few months, the Group retains sufficient liquidity and remains in compliance with financial covenants on credit facilities. 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

2025, but they do not have a material impact on the interim financial report.

 

Principal rates of exchange against Sterling

 


Half year ended 31 July 2024

Half year ended 31 July 2023

Year ended 31 January 2024


Average

Rate

Period end

rate

Average

rate

Period end

rate

Average

rate

Year end

rate

Euro

1.17

1.19

1.15

1.17

1.15

1.17

US Dollar

1.27

1.28

1.24

1.29

1.25

1.27

Polish Zloty

5.05

5.09

5.25

5.14

5.20

5.08

Romanian Leu

5.84

5.91

5.66

5.77

5.71

5.83

Turkish Lira*

42.54

42.54

34.61

34.61

38.64

38.64

* Turkish Lira average exchange rates represent the closing rates for the periods presented due to the application of hyperinflation accounting in Turkey.

 

Risks and uncertainties

 

The principal risks and uncertainties to which the Group is exposed are set out on pages 59-64 of the Kingfisher plc Annual Report and Accounts for the year ended 31 January 2024. These have been reviewed as part of the Group's half year procedures and are listed in the Financial Review in part 1 of this announcement.

 

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 an 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 2024, 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 2024 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 2024








£ millions

UK & Ireland

France

Poland

Other

Other

International

 

Total

Sales

3,376

2,099

941

340

1,281

6,756

Retail profit/(loss)

325

69

50

(24)

26

420

Central costs

 

 

 

 

 

(29)

Share of interest and tax of joint ventures and associates

 

 

 

 

 

(7)

Adjusting items

 

 

 

 

 

(10)

Operating profit

 

 

 

 

 

374

Net finance costs

 

 

 

 

 

(50)

Profit before taxation

 

 

 

 

 

324

 

 


Half year ended 31 July 2023








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Sales

3,346

2,311

880

343

1,223

6,880

Retail profit/(loss)

306

104

35

(12)

23

433

Central costs






(36)

Share of interest and tax of joint ventures and associates






(11)

Adjusting items






(19)

Operating profit






367

Net finance costs






(50)

Profit before taxation






317

 

 


Year ended 31 January 2024








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Sales

6,387

4,246

1,694

653

2,347

12,980

Retail profit/(loss)

555

139

82

(27)

55

749

Central costs






(60)

Share of interest and tax of joint ventures and associates






(16)

Adjusting items






(93)

Operating profit






580

Net finance costs






(105)

Profit before taxation






475

 

 

Balance sheet


At 31 July 2024








£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

2,915

1,688

1,123

321

1,444

6,047

Central assets

 

 

 

 

 

92

Goodwill

 

 

 

 

 

2,397

Net debt

 

 

 

 

 

(1,952)

Net assets

 

 

 

 

 

6,584

 


 

At 31 July 2023







£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

2,974

1,784

1,186

352

1,538

6,296

Central assets






66

Goodwill






2,407

Net debt






(2,181)

Net assets






6,588

 


At 31 January 2024







£ millions

UK & Ireland

France

Poland

Other

Other International

 

Total

Segment assets

2,931

1,753

1,195

360

1,555

6,239

Central assets






83

Goodwill






2,398

Net debt






(2,116)

Net assets






6,604

 

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. On 18 July 2024, we completed a divestment of our c.80% equity interest in NeedHelp.

 

Central assets comprise unallocated head office and other central items, principally relating to central tax assets, partially offset by central creditors and accruals including insurance and payroll.

 

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 2024

Half year ended

31 July 2023

Year ended

31 January 2024

Included within selling and distribution expenses

 



Net store asset impairment losses

(6)

(14)

(76)

Operating model restructuring

(3)

(7)

(11)


(9)

(21)

(87)

Included within administrative expenses

 



NeedHelp goodwill impairment

-

-

(8)

UK guaranteed minimum pension credit

2

-

-

 

2

-

(8)

Included within other income/expenses

 



Loss on disposal of NeedHelp

(3)

-

-

Profit on disposal of Crealfi associate investment

-

2

2


(3)

2

2

Adjusting items before tax

(10)

(19)

(93)

Prior year and other adjusting tax items

4

7

23

Adjusting items

(6)

(12)

(70)

 

In consideration of H1 2024/25 performance to date in France, we have revised future projections for a number of stores. This has resulted in the recognition of £6m of net store impairment charges in the period. 

 

During the prior year, the Group commenced formal consultation with employee representatives regarding the Group's Technology operating model restructuring programme. Operating model restructuring costs of £3m have been recorded in the period relating to this programme. The programme is expected to be completed in the second half of the year at a total cost of c.£15m, in line with previous expectations.

 

During the period, we have updated the methodology under which the liability relating to guaranteed minimum pension equalisation is calculated, to reflect the methodology chosen by the Trustees, which has resulted in a £2m credit. 

 

During the period, the Group completed the disposal of its 80% interest in NeedHelp for nil proceeds, resulting in a loss on disposal of £3m.

 

Prior year and other adjusting tax items relate principally to deferred tax credits recorded in respect of the impairment and restructuring expenses noted above, movements in prior year provisions to reflect a reassessment of expected outcomes, and refunds from tax authorities.

 

Refer to note 5 of the 2023/24 interim accounts for further details on adjusting items for the half year ended 31 July 2023, and to note 6 of the 2023/24 annual accounts for further details on adjusting items for the year ended 31 January 2024.

 

6.         Net finance costs

 

£ millions

Half year ended 31 July 2024

Half year ended 31 July 2023

Year ended

 31 January 2024

Fixed term debt

(4)

(2)

(7)

Lease liabilities

(62)

(62)

(126)

Other interest expense

(1)

-

-

Finance costs

(67)

(64)

(133)


 



Cash and cash equivalents and short-term deposits

12

7

16

Net interest income on defined benefit pension schemes

3

4

7

Finance lease income

-

-

1

Other interest income

2

3

4

Finance income

17

14

28


 



Net finance costs

(50)

(50)

(105)

 

Interest on fixed term debt includes amortisation of arrangement fees on borrowing facilities of £1m (2023/24: £nil). Amortisation of arrangement fees on borrowing facilities for the year ended 31 January 2024 was £nil.

 

7.         Income tax expense

 

£ millions

Half year ended
31 July 2024

Half year ended

31 July 2023

Year ended
31 January 2024

UK corporation tax

 

 


Current tax on profits for the period

(52)

(46)

(73)

Adjustments in respect of prior years

-

1

2


(52)

(45)

(71)

Overseas tax

 



Current tax on profits for the period

(20)

(24)

(37)

Adjustments in respect of prior years

3

2

8

 

(17)

(22)

(29)

Current tax

(69)

(67)

(100)

 

Deferred tax




Current period

(17)

(13)

(25)

Adjustments in respect of prior years

(1)

-

(4)

Adjustments in respect of changes in tax rates

-

-

(1)


(18)

(13)

(30)


 



Income tax expense

(87)

(80)

(130)

 

 



 

The adjusted effective tax rate on profit before adjusting items is 27% (2023/24: 26%), representing the best estimate of the effective rate for the full financial year. The adjusted effective tax rate on the same basis for the year ended 31 January 2024 was 27%. The adjusted effective tax rate calculation is set out in the Financial Review in part 1 of this announcement.

 

An accounting surplus is recognised for the UK defined benefit pension scheme - refer to note 11. The surplus has been recognised on the basis that the future economic benefits are unconditionally available to the Group, which is assumed to be via a refund assuming the full settlement of plan liabilities in the event of a plan wind-up. On 22 November 2023, the UK government announced that the authorised surplus payments charge would be reduced from 35% to 25% from 6 April 2024. Following the enactment of this legislation on 11 March 2024, the deferred tax liability has been reduced by £32m with a corresponding credit to other comprehensive income.


8.         Earnings per share

 

Pence

Half year ended

31 July 2024

 Half year ended 31 July 2023

Year ended

31 January 2024

Basic earnings per share

12.8

12.4

18.2

Effect of dilutive share options

(0.2)

(0.2)

(0.2)

Diluted earnings per share

12.6

12.2

18.0

 

 



Basic earnings per share

12.8

12.4

18.2

Adjusting items before tax

0.5

1.0

4.9

Prior year and other adjusting tax items

(0.1)

(0.4)

(1.2)

Adjusted basic earnings per share

13.2

13.0

21.9

 

 



Diluted earnings per share

12.6

12.2

18.0

Adjusting items before tax

0.5

1.0

4.8

Prior year and other adjusting tax items

(0.1)

(0.4)

(1.2)

Adjusted diluted earnings per share

13.0

12.8

21.6

 

 



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 2024

Half year ended 31 July 2023

Year ended

31 January 2024

Earnings

237

237

345

Adjusting items before tax

10

19

93

Prior year and other adjusting tax items

(4)

(7)

(23)

Adjusted earnings

243

249

415

 

 



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 2024

Half year ended 31 July 2023

Year ended

31 January 2024

Basic

1,850

1,918

1,898

Diluted

1,878

1,943

1,921

 

 




9.         Dividends


Half year ended

Half year ended

Year ended  

£ millions

31 July 2024

31 July 2023

31 January 2024

Dividends to equity shareholders of the Company

 



Ordinary final dividend for the year ended 31 January 2024 of 8.60p per share

159

-

-

Ordinary interim dividend for the year ended 31 January 2024 of 3.80p per share

-

-

72

Ordinary final dividend for the year ended 31 January 2023 of 8.60p per share

-

165

165

 

159

165

237

 

The proposed interim ordinary dividend for the period ended 31 July 2024 is 3.80p per share (2023/24: 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 £126m (2023/24: £152m) and for the year ended 31 January 2024 were £371m. Disposals in net book value of property, plant and equipment, investment property, property assets held for sale and other intangible assets are £nil (2023/24: nil) and for the year ended 31 January 2024 were £2m.

 

Capital commitments contracted but not provided for at the end of the period are £49m (2023/24: £50m) and at 31 January 2024 were £31m.

 

11.        Post-employment benefits

 

 

Half year ended

Half year ended

Year ended  

£ millions

31 July 2024

31 July 2023

31 January 2024

Net surplus in schemes at beginning of period

99

137

137

Current service cost

(6)

(7)

(11)

Past service credit

2

-

3

Administration costs

(2)

(2)

(4)

Net interest income

3

4

7

Net remeasurement gains/(losses)

1

(9)

(42)

Contributions paid by employer

2

-

5

Exchange differences

1

4

4

Net surplus in schemes at end of period

100

127

99

 

UK

216

243

212

Overseas

(116)

(116)

(113)

Net surplus in schemes at end of period

100

127

99

 

Present value of defined benefit obligations

(1,944)

(1,916)

(1,959)

Fair value of scheme assets

2,044

2,043

2,058

Net surplus in schemes at end of period

100

127

99

 

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 2024.

 

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 2022. Following this valuation and in accordance with the scheme's Statement of Funding Principles, The Trustee and Kingfisher agreed to cease annual employer contributions during the period from August 2022 to July 2025. This agreement was reached with reference to a funding objective that targets a longer-term, low risk funding position in excess of the minimum statutory funding requirements. This longer-term objective is based on the principles of the scheme reaching a point where it can provide benefits to members with a high level of security, thereby limiting its reliance on the employer for future support. The Company monitors the scheme funding level on a regular basis and will reassess with the scheme Trustee the appropriate level of contributions at future valuations.

 

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 2024

31 July 2023

31 January 2024

Discount rate

5.00

5.15

4.85

Rate of pension increases

3.05

3.05

2.95

 

On 25 July 2024, in the case Virgin Media v NTL Pension Trustees II Limited (and others), the Court of Appeal upheld the High Court's 2023 decision which confirmed that certain rules of a contracted-out DB scheme cannot be altered without the statutory actuarial confirmation having been obtained and that non-compliant alterations are void. The pension trustees have commenced their assessment as to whether the ruling has any implications on the UK defined benefit scheme.

12.        Financial instruments

 

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


At

At

At  



£ millions

31 July 2024

31 July 2023

31 January 2024



Foreign exchange contracts

3

4

2



Derivative assets

3

4

2



 


At

At

At  



£ millions

31 July 2024

31 July 2023

31 January 2024



Foreign exchange contracts

(16)

(57)

(24)



Derivative liabilities

(16)

(57)

(24)



 

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 2024

At  

31 July 2023

At

 31 January 2024



Bank overdrafts

13

27

7



Bank loans

                                   -

3

3



Fixed term debt

100

99

99



Borrowings

113

129

109






 

 

Fair value



£ millions

At

31 July 2024

At

 31 July 2023

At

31 January 2024



Bank overdrafts

13

27

7



Bank loans

-

4

3



Fixed term debt

107

107

101



Borrowings

120

138

111




Cash and borrowings balances at 31 July 2024, 31 July 2023 and 31 January 2024 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 - Financial Instruments: Presentation.

 

Fixed term debt comprises a £50m term loan maturing in June 2025 and a £50m term loan maturing in January 2026.

 

As at 31 July 2024, the Group had an undrawn revolving credit facility (RCF) of £650m, due to expire in May 2027. This replaced the £550m facility (of which £46m was due to expire in May 2025 & £504m in May 2026) following a refinancing in May 2024.

13.        Share capital

 

Number of

ordinary shares

Ordinary

share capital  


millions

£ millions

Allotted, called up and fully paid:



At 1 February 2024

1,875

294

New shares issued under share schemes

1

-

Purchase of own shares for cancellation

(36)

(5)

At 31 July 2024

1,840                                                   

289

 



At 1 February 2023

1,940

305

New shares issued under share schemes

2

-

Purchase of own shares for cancellation

(41)

(6)

At 31 July 2023

1,901

299




At 1 February 2023

1,940

305

New shares issued under share schemes

2

-

Purchase of own shares for cancellation

(67)

(11)

At 31 January 2024

1,875

294

 

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

During the period the Group purchased 36 million (2023/24: 41 million) of the Company's own shares for cancellation at a cost of £92m (2023/24: £99m) as part of its capital returns programme. For the year ended 31 January 2024, the Group purchased 67 million of the Company's own shares for cancellation at a cost of £160m.

 

14.        Other reserves


Half year ended 31 July 2024

 

£ millions

Translation reserve

Cash flow

hedge reserve

Other

 

Total

At 1 February 2024

144

(13)

159

290

Inventory cash flow hedges - fair value losses

-

(6)

-

(6)

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

-

1

-

1

Currency translation differences

Subsidiaries

 

-

-

(28)

(28)

Joint ventures and associates

2

-

-

2

Other comprehensive expense for the period

(26)

(5)

-

(31)

Inventory cash flow hedges - losses transferred to inventories

-

15

-

15

Tax on equity items

-

(3)

-

(3)

At 31 July 2024

118

(6)

159

271









Half year ended 31 July 2023

 

£ millions

Translation reserve

Cash flow

hedge reserve

Other

 

Total

At 1 February 2023

150

(24)

159

285

Inventory cash flow hedges - fair value losses

-

(40)

-

(40)

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

-

9

-

9

Currency translation differences

   Subsidiaries

(10)

-

-

(10)

   Joint ventures and associates

(4)

-

-

(4)

Transferred to income statement

(2)

-

-

(2)

Inventory cash flow hedges - losses transferred to income statement

-

9

-

9

Other comprehensive expense for the period

(16)

(22)

-

(38)

Inventory cash flow hedges - losses transferred to inventories

-

12

-

12

Tax on equity items

-

(4)

-

(4)

At 31 July 2023

134

(38)

159

255

 


 


 

Year ended 31 January 2024

£ millions

Translation reserve

Cash flow hedge reserve

Other

Total

At 1 February 2023

150

(24)

159

285

Inventory cash flow hedges - fair value losses

-

(32)

-

(32)

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

-

6

-

6

Currency translation differences

Subsidiaries

(3)

-

-

(3)

    Joint ventures and associates

(1)

-

-

(1)

    Transferred to income statement

(2)

-

-

(2)

Inventory cash flow hedges - losses transferred to income statement

-

12

-

12

Tax on items that may be reclassified subsequently to profit or loss

-

(2)

-

(2)

Other comprehensive expense for the year

(6)

(16)

-

(22)

Inventory cash flow hedges - losses transferred to inventories

-

33

-

33

Tax on equity items

-

(6)

-

(6)

At 31 January 2024

144

(13)

159

290

 

 

15.        Cash generated by operations

 

Share-based compensation charge

12

12

22

 

16.        Net debt

£ millions

At

31 July 2024

At

31 July 2023

At

31 January 2024

Cash and cash equivalents

485

344

360

Bank overdrafts

(13)

(27)

(7)

Cash and cash equivalents and bank overdrafts

472

317

353

Bank loans

- 

(3)

(3)

Fixed term debt

(100)

(99)

(99)

Lease liabilities

(2,324)

(2,398)

(2,367)

Net financing derivatives

-

2

-

Net debt

(1,952)

(2,181)

(2,116)

 

 




£ millions

Half year ended

31 July 2024

Half year ended

 31 July 2023

Year ended

31 January 2024

Net debt at beginning of period

(2,116)

(2,274)

(2,274)

Net increase in cash and cash equivalents and bank overdrafts

124

51

 

84

Arrangement fees paid

2

-

-

Net cash flow

126

51

84

Movements in lease liabilities

37

40

71

Exchange differences and other non-cash movements

1

2

3

Net debt at end of period

(1,952)

(2,181)

(2,116)

 

 

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 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 company 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 Company, along with other UK-based multinational groups, appealed the European Commission decision to the European Courts. In June 2022, the General Court of the European Union dismissed several of those appeals, including the UK Government's. The decision of the General Court has been appealed to the Court of Justice and the hearing took place on 10 January 2024. On 11 April 2024, the Advocate General's opinion was published, proposing that the Court of Justice should set aside the judgement of the General Court and annul the European Commission's decision. The final decision is expected on 19 September 2024.

 

The final impact on the company remains uncertain but, based on advice taken, the Group continues to consider that the amount paid of £64m plus repayment interest accrued of £6m, which is included in non-current assets, will ultimately be recovered.

 

18.        Related party transactions

 

The Group's significant related parties are its joint venture and pension schemes as disclosed in note 36 of the annual financial statements for the year ended 31 January 2024. In the prior year, the Group completed the disposal of its 49% interest in its French associate investment Crealfi S.A. There have been no other 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 2.4 million of the Company's own shares for cancellation at a cost of £8m. This amount was deducted from equity in the half year to 31 July 2024 as a result of an irrevocable buyback agreement which was in place at 31 July 2024.

 



 

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 2023/24 Annual Report and Accounts. A list of current Directors is maintained on the Kingfisher plc website which can be found at www.kingfisher.com.

 

By order of the Board

 

 

 

Thierry Garnier                                                                     Bernard Bot

Chief Executive Officer                                                      Chief Financial Officer

16 September 2024                                                            16 September 2024



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 2024 which comprises the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated balance sheet, the consolidated 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 2024 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

16 September 2024

 

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