Consolidated income statement
|
|
Year ended 31 January
2024
|
|
|
|
|
|
|
|
|
|
2023/24
|
2022/23
|
|
|
Before
adjusting items
|
Adjusting items
(note
4)
|
|
Before
adjusting items
|
Adjusting items
(note
4)
|
|
£ millions
|
Notes
|
Total
|
Total
|
Sales
|
3
|
12,980
|
-
|
12,980
|
13,059
|
-
|
13,059
|
Cost of sales
|
|
(8,204)
|
-
|
(8,204)
|
(8,264)
|
-
|
(8,264)
|
Gross profit
|
|
4,776
|
-
|
4,776
|
4,795
|
-
|
4,795
|
Selling and distribution
expenses
|
|
(3,143)
|
(87)
|
(3,230)
|
(3,087)
|
(136)
|
(3,223)
|
Administrative expenses
|
|
(982)
|
(8)
|
(990)
|
(868)
|
(12)
|
(880)
|
Other income
|
|
23
|
2
|
25
|
25
|
1
|
26
|
Share of post-tax results
of joint ventures and
associates
|
|
(1)
|
-
|
(1)
|
5
|
-
|
5
|
Operating profit
|
3
|
673
|
(93)
|
580
|
870
|
(147)
|
723
|
Finance costs
|
|
(133)
|
-
|
(133)
|
(129)
|
-
|
(129)
|
Finance income
|
|
28
|
-
|
28
|
17
|
-
|
17
|
Net finance costs
|
5
|
(105)
|
-
|
(105)
|
(112)
|
-
|
(112)
|
Profit before taxation
|
|
568
|
(93)
|
475
|
758
|
(147)
|
611
|
Income tax expense
|
6
|
(153)
|
23
|
(130)
|
(169)
|
29
|
(140)
|
Profit for the year
|
|
415
|
(70)
|
345
|
589
|
(118)
|
471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share
|
7
|
|
|
|
|
|
|
Basic
|
|
|
|
18.2p
|
|
|
23.8p
|
Diluted
|
|
|
|
18.0p
|
|
|
23.5p
|
Adjusted basic
|
|
|
|
21.9p
|
|
|
29.7p
|
Adjusted diluted
|
|
|
|
21.6p
|
|
|
29.4p
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The proposed dividend for the year
ended 31 January 2024, subject to approval by shareholders at the
Annual General Meeting, is 12.40p per share, comprising an interim
dividend of 3.80p in respect of the six months ended 31 July 2023
and a final dividend of 8.60p.
Consolidated statement of comprehensive
income
Year ended 31 January
2024
|
|
|
|
£ millions
|
Notes
|
2023/24
|
2022/23
|
Profit for the year
|
|
345
|
471
|
Remeasurements of post-employment
benefits
|
9
|
(42)
|
(278)
|
Inventory cash flow hedges - fair
value (losses)/gains
|
|
(32)
|
58
|
Tax on items that will not be
reclassified
|
|
28
|
85
|
Total items that will not be reclassified subsequently to
profit or loss
|
|
(46)
|
(135)
|
Currency translation
differences
|
|
|
|
Group
|
|
(3)
|
129
|
Joint ventures and
associates
|
|
(1)
|
11
|
Transferred to income
statement
|
|
(2)
|
-
|
Inventory cash flow hedges -
losses/(gains) transferred to income statement
|
|
12
|
(5)
|
Tax on items that may be
reclassified
|
|
(2)
|
-
|
Total items that may be reclassified subsequently to profit
or loss
|
|
4
|
135
|
Other comprehensive expense for the year
|
|
(42)
|
-
|
Total comprehensive income for the year
|
|
303
|
471
|
|
|
|
|
|
Consolidated statement of changes in equity
Year ended 31 January
2024
|
|
|
|
|
|
|
|
|
|
2023/24
|
£ millions
|
Notes
|
Share
capital
|
Share
premium
|
Own
shares held
|
Retained
earnings
|
Capital
redemption reserve
|
Other
reserves
|
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
|
8
|
-
|
-
|
-
|
(237)
|
-
|
-
|
(237)
|
Tax on equity items
|
|
-
|
-
|
-
|
(1)
|
-
|
(6)
|
(7)
|
At
31 January 2024
|
|
294
|
2,228
|
(31)
|
3,741
|
82
|
290
|
6,604
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022/23
|
£ millions
|
Notes
|
Share
capital
|
Share
premium
|
Own
shares held
|
Retained
earnings
|
Capital
redemption reserve
|
Other
reserves
|
Total
equity
|
At
1 February 2022
|
|
325
|
2,228
|
(46)
|
4,025
|
50
|
196
|
6,778
|
Profit for the year
|
|
-
|
-
|
-
|
471
|
-
|
-
|
471
|
Other comprehensive (expense)/income
for the year
|
|
-
|
-
|
-
|
(181)
|
-
|
181
|
-
|
Total comprehensive income for the year
|
|
-
|
-
|
-
|
290
|
-
|
181
|
471
|
Inventory cash flow hedges - gains
transferred to inventories
|
|
-
|
-
|
-
|
-
|
-
|
(117)
|
(117)
|
Share-based compensation
|
|
-
|
-
|
-
|
19
|
-
|
-
|
19
|
New shares issued under share
schemes
|
|
1
|
-
|
-
|
7
|
-
|
-
|
8
|
Own shares issued under share
schemes
|
|
-
|
-
|
24
|
(24)
|
-
|
-
|
-
|
Purchase of own shares for
cancellation
|
|
(21)
|
-
|
-
|
(275)
|
21
|
-
|
(275)
|
Dividends
|
8
|
-
|
-
|
-
|
(246)
|
-
|
-
|
(246)
|
Tax on equity items
|
|
-
|
-
|
-
|
-
|
-
|
25
|
25
|
At
31 January 2023
|
|
305
|
2,228
|
(22)
|
3,796
|
71
|
285
|
6,663
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated balance sheet
|
|
|
|
At 31 January 2024
|
|
|
|
|
|
|
|
£ millions
|
Notes
|
2023/24
|
2022/23
|
Non-current assets
|
|
|
|
Goodwill
|
|
2,398
|
2,408
|
Other intangible assets
|
|
368
|
371
|
Property, plant and
equipment
|
|
3,206
|
3,205
|
Investment property
|
|
27
|
30
|
Right-of-use assets
|
|
1,881
|
1,947
|
Investments in joint ventures and
associates
|
|
19
|
30
|
Post-employment benefits
|
9
|
212
|
251
|
Deferred tax assets
|
|
10
|
16
|
Other tax authority asset
|
|
68
|
64
|
Other receivables
|
|
15
|
19
|
|
|
8,204
|
8,341
|
Current assets
|
|
|
|
Inventories
|
|
2,914
|
3,070
|
Trade and other
receivables
|
|
344
|
347
|
Derivative assets
|
|
2
|
16
|
Current tax assets
|
|
73
|
40
|
Cash and cash equivalents
|
|
360
|
286
|
Assets held for sale
|
|
3
|
3
|
|
|
3,696
|
3,762
|
Total assets
|
|
11,900
|
12,103
|
|
|
|
|
Current liabilities
|
|
|
|
Trade and other payables
|
|
(2,445)
|
(2,483)
|
Borrowings
|
|
(7)
|
(16)
|
Lease liabilities
|
|
(366)
|
(343)
|
Derivative liabilities
|
|
(23)
|
(47)
|
Current tax liabilities
|
|
(12)
|
-
|
Provisions
|
|
(9)
|
(10)
|
|
|
(2,862)
|
(2,899)
|
Non-current liabilities
|
|
|
|
Other payables
|
|
(3)
|
(4)
|
Borrowings
|
|
(102)
|
(102)
|
Lease liabilities
|
|
(2,001)
|
(2,101)
|
Derivative liabilities
|
|
(1)
|
(5)
|
Deferred tax liabilities
|
|
(207)
|
(205)
|
Provisions
|
|
(7)
|
(10)
|
Post-employment benefits
|
9
|
(113)
|
(114)
|
|
|
(2,434)
|
(2,541)
|
Total liabilities
|
|
(5,296)
|
(5,440)
|
Net
assets
|
|
6,604
|
6,663
|
|
|
|
|
Equity
|
|
|
|
Share capital
|
|
294
|
305
|
Share premium
|
|
2,228
|
2,228
|
Own shares held in ESOP
trust
|
|
(31)
|
(22)
|
Retained earnings
|
|
3,741
|
3,796
|
Capital redemption
reserve
|
|
82
|
71
|
Other reserves
|
|
290
|
285
|
Total equity
|
|
6,604
|
6,663
|
The financial statements were
approved by the Board of Directors on 24 March 2024 and signed on
its behalf by:
Thierry Garnier
Bernard Bot
Chief Executive
Officer
Chief Financial Officer
Consolidated cash flow statement
|
|
Year ended 31 January
2024
|
|
|
|
£ millions
|
Notes
|
2023/24
|
2022/23
|
Operating activities
|
|
|
|
Cash generated by
operations
|
10
|
1,438
|
984
|
Income tax paid
|
|
(117)
|
(130)
|
French tax authority
payment
|
|
-
|
(34)
|
Net
cash flows from operating activities
|
|
1,321
|
820
|
|
|
|
|
Investing activities
|
|
|
|
Purchase of property, plant and
equipment and intangible assets
|
|
(363)
|
(449)
|
Disposal of property, plant and
equipment, intangible assets and assets held for sale
|
|
2
|
2
|
Purchase of businesses
|
|
(3)
|
-
|
Disposal of subsidiaries and
associates
|
|
9
|
8
|
Interest received
|
|
16
|
5
|
Interest element of lease rental
receipts
|
|
1
|
1
|
Principal element of lease rental
receipts
|
|
3
|
3
|
Advance payments on right-of-use
assets
|
|
(4)
|
(7)
|
Advance receipts on right-of-use
assets
|
|
-
|
2
|
Dividends received from joint
ventures and associates
|
|
-
|
3
|
Net
cash flows used in investing activities
|
|
(339)
|
(432)
|
|
|
|
|
Financing activities
|
|
|
|
Interest paid
|
|
(7)
|
(5)
|
Interest element of lease rental
payments
|
|
(126)
|
(124)
|
Principal element of lease rental
payments
|
|
(348)
|
(329)
|
Issue of fixed term debt
|
|
-
|
99
|
New shares issued under share
schemes
|
|
4
|
8
|
Purchase of own shares for
cancellation
|
|
(160)
|
(337)
|
Purchase of own shares for ESOP
trust
|
|
(24)
|
(9)
|
Ordinary dividends paid to equity
shareholders of the Company
|
8
|
(237)
|
(246)
|
Net
cash flows used in financing activities
|
|
(898)
|
(943)
|
|
|
|
|
Net
increase/(decrease) in cash and cash equivalents and bank
overdrafts
|
|
84
|
(555)
|
Cash and cash equivalents and bank
overdrafts at beginning of year
|
|
270
|
809
|
Exchange differences
|
|
(1)
|
16
|
Cash and cash equivalents and bank overdrafts at end of
year
|
11
|
353
|
270
|
Notes
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.
2 Basis
of preparation
The consolidated financial
statements of the Company, its subsidiaries, joint ventures and
associates are made up to 31 January. The current financial year is
the year ended 31 January 2024 ('the year' or '2023/24'). The
comparative financial year is the year ended 31 January 2023 ('the
prior year' or '2022/23').
The condensed financial information,
which comprises the consolidated income statement, consolidated
statement of comprehensive income, consolidated statement of
changes in equity, consolidated balance sheet, consolidated cash
flow statement and related notes do not constitute statutory
financial statements for the year ended 31 January 2024, but are
derived from those statements. Statutory financial statements for
2022/23 have been filed with the Registrar of Companies and those
for 2023/24 will be filed in due course. The Group's auditors have
reported on both years' accounts; their reports were unqualified
and did not contain statements under Section 498 (2) or (3) of the
Companies Act 2006.
The condensed financial information
has been abridged from the 2023/24 statutory financial statements,
which have been prepared in accordance with United Kingdom adopted
international accounting standards and International Financial
Reporting Standards (IFRSs). The financial statements have also
been prepared in accordance with International Financial Reporting
Standards as issued by the IASB. The consolidated income statement
and related notes represent results for continuing operations,
there being no discontinued operations in the years presented. The
condensed financial information has been prepared under the
historical cost convention, as modified by the use of valuations
for certain financial instruments, share-based payments and
post-employment benefits.
Going
concern
Based on the Group's liquidity
position and cash flow projections, including a forward-looking
remote downside scenario, the Directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future and
they continue to adopt the going concern basis of accounting in
preparing the condensed consolidated financial statements for the
year ended 31 January 2024.
The financial position of the Group,
its cash flows, liquidity position and borrowing facilities are
described in the Financial Review in part 1 of this announcement.
The Directors have considered these areas alongside the principal
risks and how they may impact the going concern assessment. Further
details, including the analysis performed and conclusions reached,
are set out below.
As of 31 January 2024, Kingfisher
had access to over £900m of liquidity, comprising cash and cash
equivalents (net of bank overdrafts) of £353m and access to an
undrawn Revolving Credit Facility (RCF) of £550m (of which £46m
expires at the end of May 2025, with the balance expiring at the
end of May 2026). The ratio of net debt to EBITDA was 1.6 as of 31
January 2024.
In considering whether the Group's
financial statements can be prepared on a going concern basis, the
Directors have reviewed the Group's business activities together
with factors likely to affect its performance, financial position
and access to liquidity (including consideration of financial
covenants and credit ratings).
The terms of the RCF require that
the ratio of Group operating profit (excluding adjusting items) to
net interest payable (excluding interest on lease liabilities) must
be no less than 3:1 for the preceding 12 months as at the half and
full year-ends. As of 31 January 2024, Kingfisher was compliant
with this requirement.
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 remainder of the year. The total
loss of sales in this scenario is c.£1.5bn (12% 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 headroom on its credit facilities.
Given current trading and
expectations for the business, the Directors believe that this
scenario reflects a remote outcome for the Group. Should a more
extreme scenario occur than currently modelled by the Directors
under this remote scenario, the Group would need to implement
additional operational or financial measures.
Accounting
policies
The accounting policies adopted are
consistent with those of the annual financial statements for the
year ended 31 January 2023, as described in note 2 of those
financial statements.
Critical accounting
judgements and key sources of estimation
uncertainty
The critical accounting judgements
and key sources of estimation uncertainty are consistent with those
of the annual financial statements for the year ended 31 January
2023, as described in note 3 of those financial
statements.
New and amended accounting
standards
New standards, amendments and
interpretations are in issue and effective for the Group's
financial year ended 31 January 2024, but they do not have a
material impact on the consolidated financial
statements.
Principal rates of exchange
against Sterling
|
|
2023/24
|
|
2022/23
|
|
Average
rate
|
Year end
rate
|
Average
rate
|
Year end
rate
|
Euro
|
1.15
|
1.17
|
1.17
|
1.13
|
US Dollar
|
1.25
|
1.27
|
1.23
|
1.23
|
Polish Zloty
|
5.20
|
5.08
|
5.48
|
5.34
|
Romanian Leu
|
5.71
|
5.83
|
5.76
|
5.58
|
Turkish Lira*
|
38.64
|
38.64
|
23.18
|
23.18
|
* the Turkish Lira average exchange rates represent the
closing rates for the year, due to the application of
hyperinflation accounting in Turkey.
Use of non-GAAP
measures
In the reporting of financial
information, the Group uses certain measures that are not required
under IFRS, the generally accepted accounting principles ('GAAP')
under which the Group reports. Kingfisher believes that retail
profit, adjusted pre-tax profit, adjusted effective tax rate, and
adjusted earnings per share provide additional useful information
on performance and trends to shareholders. These and other non-GAAP
measures (also known as 'Alternative Performance Measures'), such
as net debt, are used by Kingfisher for internal performance
analysis and incentive compensation arrangements for employees. The
terms 'retail profit', 'adjusting items', 'adjusted', 'adjusted
effective tax rate', 'net cashflow' and 'net debt' are not defined
terms under IFRS and may therefore not be comparable with similarly
titled measures reported by other companies. They are not intended
to be a substitute for, or superior to, GAAP measures.
Retail profit is defined as
continuing operating profit before central costs, the Group's share
of interest and tax of joint ventures and associates and adjusting
items. Central costs principally comprise the costs of the Group's
head office before adjusting items.
Adjusting items, which are presented
separately within their relevant income statement category, include
items which by virtue of their size and/or nature, do not reflect
the Group's ongoing trading performance. Adjusting items may
include, but are not limited to:
· non-trading items included in operating profit such as profits
and losses on the disposal, closure, exit or impairment of
subsidiaries, joint ventures, associates and investments which do
not form part of the Group's ongoing trading activities;
· the
costs of significant restructuring and incremental acquisition
integration costs;
· profits and losses on the disposal/exit of properties,
impairments of goodwill and significant impairments (or impairment
reversals) of other non-current assets;
· prior
year tax items (including the impact of changes in tax rates on
deferred tax), significant one-off tax settlements and provision
charges/releases and the tax effects of other adjusting
items;
· financing fair value remeasurements i.e. changes in the fair
value of financing derivatives, excluding interest accruals, offset
by fair value adjustments to the carrying amount of borrowings and
other hedged items under fair value (or non-designated) hedge
relationships. Financing derivatives are those that relate to
hedged items of a financing nature.
The term 'adjusted' refers to the
relevant measure being reported for continuing operations excluding
adjusting items.
The adjusted effective tax rate is
calculated as continuing income tax expense excluding prior year
tax items (including the impact of changes in tax rates on deferred
tax), significant one-off tax settlements and provision
charges/releases and the tax effects of other adjusting items,
divided by continuing profit before taxation excluding adjusting
items. Prior year tax items represent income statement tax relating
to underlying items originally arising in prior years, including
the impact of changes in tax rates on deferred tax. The exclusion
of items relating to prior years, and those not in the ordinary
course of business, helps provide a better indication of the
Group's ongoing rate of tax.
Net debt comprises lease
liabilities, borrowings and financing derivatives (excluding
accrued interest) less cash and cash equivalents and short-term
deposits, including such balances classified as held for
sale.
Refer to the Financial Review for
definitions of all of the Group's Alternative Performance Measures,
including further information on why they are used and details of
where reconciliations to statutory measures can be found where
applicable.
3
Segmental analysis
Income statement
|
|
2023/24
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2022/23
|
|
|
|
|
|
|
|
|
UK &
Ireland
|
France
|
Poland
|
Other
|
Other
International
|
Total
|
Sales
|
6,200
|
4,452
|
1,734
|
673
|
2,407
|
13,059
|
Retail profit/(loss)
|
603
|
195
|
148
|
(23)
|
125
|
923
|
Central costs
|
|
|
|
|
|
(49)
|
Share of interest and tax of joint
ventures and associates
|
|
|
|
|
|
(4)
|
Adjusting items
|
|
|
|
|
|
(147)
|
Operating profit
|
|
|
|
|
|
723
|
Net finance costs
|
|
|
|
|
|
(112)
|
Profit before taxation
|
|
|
|
|
|
611
|
|
|
|
|
|
|
|
|
|
|
|
|
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, Screwfix International, NeedHelp and results from franchise
and wholesale agreements. Poland has been shown separately due to
its significance.
Central costs principally comprise
the costs of the Group's head office before adjusting
items.
4 Adjusting
items
£ millions
|
2023/24
|
2022/23
|
Included within selling and distribution
expenses
|
|
|
Net store asset impairment
losses
|
(76)
|
(139)
|
Operating model
restructuring
|
(11)
|
-
|
Release of France and other
restructuring provisions
|
-
|
3
|
|
(87)
|
(136)
|
Included within administrative expenses
|
|
|
NeedHelp goodwill
impairment
|
(8)
|
-
|
Romania goodwill
impairment
|
-
|
(16)
|
Release of Castorama Russia disposal
warranty liability
|
-
|
4
|
|
(8)
|
(12)
|
Included within other income
|
|
|
Profit on disposal of Crealfi
associate investment
|
2
|
-
|
Profit on exit of
properties
|
-
|
1
|
|
2
|
1
|
Adjusting items before tax
|
(93)
|
(147)
|
Prior year and other adjusting tax
items
|
23
|
29
|
Adjusting items
|
(70)
|
(118)
|
|
|
|
In consideration of 2023/24
performance, we have revised future projections for a number of
stores across the Group's portfolio. This has resulted in the
recognition of £76m of net store impairment charges in the year.
Impairment charges of £104m have been recorded principally in
France, Romania and the UK, partially offset by impairment
reversals of £28m principally in the UK.
An impairment charge of £8m has been
recorded relating to the goodwill originally recorded on the
acquisition of NeedHelp in 2020/21, principally driven by revised
financial projections.
During the year, the Group commenced
formal consultation with employee representatives regarding a
proposed Group Technology operating model restructuring programme.
Operating model restructuring costs of £11m have been recorded in
the year, primarily related to this programme. The total cost is
expected to be c.£15m by FY 2024/25.
On 30 June 2023, the Group completed
the disposal of its 49% interest in its French associate investment
Crealfi S.A., for cash proceeds of £9m, resulting in a gain on
disposal of £2m.
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, agreed positions with tax authorities and items
that have time-expired.
5 Net finance
costs
£ millions
|
2023/24
|
2022/23
|
Bank overdrafts, bank loans and
derivatives
|
-
|
(3)
|
Fixed term debt
|
(7)
|
(2)
|
Lease liabilities
|
(126)
|
(124)
|
Finance costs
|
(133)
|
(129)
|
|
|
|
Cash and cash equivalents and
short-term deposits
|
16
|
5
|
Net interest income on defined
benefit pension schemes
|
7
|
11
|
Finance lease income
|
1
|
1
|
Other interest income
|
4
|
-
|
Finance income
|
28
|
17
|
|
|
|
Net
finance costs
|
(105)
|
(112)
|
6 Income tax
expense
£ millions
|
2023/24
|
2022/23
|
UK
corporation tax
|
|
|
Current tax on profits for the
year
|
(73)
|
(44)
|
Adjustments in respect of prior
years
|
2
|
3
|
|
(71)
|
(41)
|
Overseas tax
|
|
|
Current tax on profits for the
year
|
(37)
|
(77)
|
Adjustments in respect of prior
years
|
8
|
4
|
|
(29)
|
(73)
|
Current tax
|
(100)
|
(114)
|
|
|
|
Deferred tax
|
|
|
Current year
|
(25)
|
(25)
|
Adjustments in respect of prior
years
|
(4)
|
(3)
|
Adjustments in respect of changes in
tax rates
|
(1)
|
2
|
Deferred tax
|
(30)
|
(26)
|
|
|
|
Income tax expense
|
(130)
|
(140)
|
The adjusted effective tax rate on
profit before adjusting items is 27% (2022/23: 22%). The adjusted
effective tax rate calculation is set out in the Financial Review
in part 1 of this announcement.
7 Earnings per
share
Pence
|
|
2023/24
|
2022/23
|
Basic earnings per share
|
|
18.2
|
23.8
|
Effect of dilutive share options
per share
|
|
(0.2)
|
(0.3)
|
Diluted earnings per share
|
|
18.0
|
23.5
|
|
|
|
|
Basic earnings per share
|
|
18.2
|
23.8
|
Adjusting items before tax per
share
|
|
4.9
|
7.4
|
Prior year and other adjusting tax
items per share
|
|
(1.2)
|
(1.5)
|
Adjusted basic earnings per share
|
|
21.9
|
29.7
|
|
|
|
|
Diluted earnings per share
|
|
18.0
|
23.5
|
Adjusting items before tax per
share
|
|
4.8
|
7.3
|
Prior year and other adjusting tax
items per share
|
|
(1.2)
|
(1.4)
|
Adjusted diluted earnings per share
|
|
21.6
|
29.4
|
|
|
|
|
|
|
|
|
|
Basic earnings per share is
calculated by dividing the profit for the year attributable to
equity shareholders of the Company by the weighted average number
of shares in issue during the year, excluding those held in the
Employee Share Ownership Plan trust ('ESOP trust') which for the
purpose of this calculation are treated as cancelled.
For diluted earnings per share, the
weighted average number of shares is adjusted to assume conversion
of all dilutive potential ordinary shares. These represent share
options granted to employees where both the exercise price is less
than the average market price of the Company's shares during the
year and any related performance conditions have been
met.
The calculation of basic and diluted
earnings per share is based on the profit for the year attributable
to equity shareholders of the Company. A reconciliation of
statutory earnings to adjusted earnings is set out
below:
|
|
|
|
£ millions
|
|
2023/24
|
2022/23
|
Earnings
|
|
345
|
471
|
Adjusting items before
tax
|
|
93
|
147
|
Prior year and other adjusting tax
items
|
|
(23)
|
(29)
|
Adjusted earnings
|
|
415
|
589
|
|
|
|
|
|
|
|
|
|
|
|
|
The weighted average number of
shares in issue during the year, excluding those held in the
Employee Share Ownership Plan Trust ('ESOP trust'), is set out
below:
|
|
|
|
Weighted average number of shares
(millions)
|
|
2023/24
|
2022/23
|
Basic
|
|
1,898
|
1,980
|
Diluted
|
|
1,921
|
2,002
|
|
|
|
|
|
|
8
Dividends
£ millions
|
2023/24
|
2022/23
|
Dividends paid to equity
shareholders of the Company
|
|
|
Ordinary interim dividend for the
year ended 31 January 2024 of 3.80p per share
(year ended 31 January 2023: 3.80p
per share)
|
72
|
74
|
Ordinary final dividend for the
year ended 31 January 2023 of 8.60p per share
(year ended 31 January 2022: 8.60p
per share)
|
165
|
172
|
|
237
|
246
|
The proposed dividend for the year
ended 31 January 2024, subject to approval by shareholders at the
Annual General Meeting, is 12.40p per share, comprising an interim
dividend of 3.80p in respect of the six months ended 31 July 2023
and a final dividend of 8.60p.
9
Post-employment benefits
|
2023/24
|
2022/23
|
£ millions
|
UK
|
Overseas
|
Total
|
UK
|
Overseas
|
Total
|
Net
surplus/(deficit) in schemes
at beginning of year
|
251
|
(114)
|
137
|
540
|
(130)
|
410
|
Current service cost
|
(3)
|
(8)
|
(11)
|
(3)
|
(10)
|
(13)
|
Past service credit
|
-
|
3
|
3
|
-
|
-
|
-
|
Administration costs
|
(4)
|
-
|
(4)
|
(4)
|
-
|
(4)
|
Net interest
income/(expense)
|
11
|
(4)
|
7
|
12
|
(1)
|
11
|
Net remeasurement
(losses)/gains
|
(43)
|
1
|
(42)
|
(308)
|
30
|
(278)
|
Contributions paid by
employer
|
-
|
5
|
5
|
14
|
4
|
18
|
Exchange differences
|
-
|
4
|
4
|
-
|
(7)
|
(7)
|
Net
surplus/(deficit) in schemes at end of year
|
212
|
(113)
|
99
|
251
|
(114)
|
137
|
|
|
|
|
|
|
|
Present value of defined benefit
obligations
|
(1,826)
|
(133)
|
(1,959)
|
(1,979)
|
(134)
|
(2,113)
|
Fair value of scheme
assets
|
2,038
|
20
|
2,058
|
2,230
|
20
|
2,250
|
Net
surplus/(deficit) in schemes
|
212
|
(113)
|
99
|
251
|
(114)
|
137
|
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.
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 have agreed to cease annual employer contributions
during the period from August 2022 to July 2025. This agreement has
been 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 principle 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 obligations 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 are as follows:
Annual % rate
|
2023/24
|
2022/23
|
Discount rate
|
4.85
|
4.50
|
Rate of pension
increases
|
2.95
|
3.15
|
For the UK scheme, the mortality
assumptions used have been selected with regard to the
characteristics and experience of the membership of the scheme as
assessed from time to time relating to triennial funding
valuations. The assumptions for life expectancy of UK scheme
members are as follows:
Years
|
|
2023/24
|
2022/23
|
Age to which current pensioners
are expected to live (60 now)
|
|
|
|
- Male
|
|
85.6
|
86.2
|
- Female
|
|
88.3
|
88.7
|
Age to which future pensioners are
expected to live (60 in 15 years' time)
|
|
|
|
- Male
|
|
86.9
|
87.5
|
- Female
|
|
90.4
|
90.8
|
|
|
|
|
|
The following sensitivity analysis
for the UK scheme shows the estimated impact on the obligation
resulting from changes to key actuarial assumptions, whilst holding
all other assumptions constant.
Assumption
|
Change
in assumption
|
Impact
on defined benefit obligation
|
Discount rate
|
Increase/decrease by 0.5%
|
Decrease/increase by £137m
|
Rate of pension
increases
|
Increase/decrease by 0.5%
|
Increase/decrease by £113m
|
Mortality
|
Increase/decrease in life expectancy by one year
|
Increase/decrease by £66m
|
10
Cash generated by operations
£ millions
|
2023/24
|
2022/23
|
Operating profit
|
580
|
723
|
Share of post-tax results of joint
ventures and associates
|
1
|
(5)
|
Depreciation and
amortisation
|
641
|
582
|
Net impairment losses
|
87
|
155
|
Gain on disposal of investments in
associates
|
(2)
|
-
|
Lease gains
|
(7)
|
(2)
|
Share-based compensation
charge
|
22
|
19
|
Decrease/(increase) in
inventories
|
132
|
(234)
|
Increase in trade and other
receivables
|
(6)
|
(44)
|
Decrease in trade and other
payables
|
(14)
|
(196)
|
Movement in provisions
|
(3)
|
(13)
|
Movement in post-employment
benefits
|
7
|
(1)
|
Cash generated by operations
|
1,438
|
984
|
11 Net
debt
£ millions
|
2023/24
|
2022/23
|
Cash and cash equivalents
|
360
|
286
|
Bank overdrafts
|
(7)
|
(16)
|
Cash and cash equivalents and bank
overdrafts
|
353
|
270
|
Bank loans
|
(3)
|
(3)
|
Fixed term debt
|
(99)
|
(99)
|
Lease liabilities
|
(2,367)
|
(2,444)
|
Net financing derivatives
|
-
|
2
|
Net
debt
|
(2,116)
|
(2,274)
|
|
|
|
£ millions
|
2023/24
|
2022/23
|
Net
debt at beginning of year
|
(2,274)
|
(1,572)
|
Net increase/(decrease) in cash and
cash equivalents and bank overdrafts
|
84
|
(555)
|
Issue of fixed term debt
|
-
|
(99)
|
Net
cash flow
|
84
|
(654)
|
Movements in lease
liabilities
|
71
|
(41)
|
Exchange differences and other
non-cash movements
|
3
|
(7)
|
Net
debt at end of year
|
(2,116)
|
(2,274)
|
|
|
|
|
12 Contingent
liabilities
The Group is subject to claims and
litigation arising in the ordinary course of business and provision
is made where liabilities are considered likely to arise on the
basis of current information and legal advice.
The Group files tax returns in many
jurisdictions around the world and at any one time is subject to
periodic tax audits in the ordinary course of its business.
Applicable tax laws and regulations are subject to differing
interpretations and the resolution of a final tax position can take
several years to complete. Where it is considered that future tax
liabilities are more likely than not to arise, an appropriate
provision is recognised in the financial statements.
In October 2017, the European
Commission opened a state aid investigation into the Group
Financing Exemption section of the UK controlled foreign company
rules. While the Group has complied with the requirements of UK tax
law in force at the time, in April 2019 the European Commission
concluded that aspects of the UK controlled foreign company regime
partially constitute illegal state aid. In January 2021, the Group
received a charging notice from HM Revenue & Customs for £57m,
which was paid in February 2021, with a further £7m interest paid
in April 2021.
The UK Government and the Group,
along with other UK-based multinational groups, appealed the
European Commission decision to the European Courts. In June 2022,
the General Court of the European Union dismissed several of those
appeals, including the UK Government's. This decision has been
appealed to the European Court of Justice and the hearing took
place on 10 January 2024. The Advocate General's opinion is
expected on 11 April 2024 and the final decision will follow after
that, the date of which is not known.
The final impact on the Group
remains uncertain but, based upon advice taken, the Group continues
to consider that the amount paid of £64m plus accrued interest of
£4m, which is included in non-current assets, will ultimately be
recovered.
Whilst the procedures that must be
followed to resolve these types of tax issues make it likely that
it will be some years before the eventual outcome is known, the
Group does not currently consider the likelihood of adverse
outcomes in relation to these matters (other than those matters for
which liabilities have already been recorded) to be
probable.
13 Post balance
sheet events
An accounting surplus is recognised
for the UK defined benefit pension scheme - refer to note 9. 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. The
legislation had not been substantively enacted as at 31 January
2024 and the corresponding deferred tax liability therefore
continues to be recognised at 35% at the balance sheet date,
although this was enacted on 11 March 2024. Should this legislation
have been enacted at the year-end this would have resulted in a
reduction in the deferred tax liability of £32m with a
corresponding credit to other comprehensive income.