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KGF Kingfisher Plc

247.80
1.80 (0.73%)
Last Updated: 12:06:26
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Kingfisher Plc LSE:KGF London Ordinary Share GB0033195214 ORD 15 5/7P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  1.80 0.73% 247.80 247.70 247.90 248.50 244.90 248.50 641,987 12:06:26
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Misc General Mdse Stores 13.06B 471M 0.2483 9.96 4.69B

Kingfisher PLC Final Results - (Part 2 of 2) (1429A)

22/03/2017 7:01am

UK Regulatory


TIDMKGF

RNS Number : 1429A

Kingfisher PLC

22 March 2017

KINGFISHER PLC

 
Consolidated income statement 
Year ended 31 January 2017 
 
                                                                     2016/17                            2015/16 
                                           -----------  -----------  -------  --------------------------------- 
                                                Before  Exceptional                Before  Exceptional 
                                           exceptional        items           exceptional        items 
GBP millions                        Notes        Items     (note 4)    Total        items     (note 4)    Total 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
Sales                                 3         11,225            -   11,225       10,441            -   10,441 
Cost of sales                                  (7,050)            -  (7,050)      (6,545)            -  (6,545) 
                                           -----------  -----------  ------- 
Gross profit                                     4,175            -    4,175        3,896            -    3,896 
Selling and distribution expenses              (2,758)           21  (2,737)      (2,666)        (308)  (2,974) 
Administrative expenses                          (687)          (5)    (692)        (567)         (15)    (582) 
Other income                                        19            7       26           26          157      183 
Share of post-tax results 
 of joint ventures and associates                    1            -        1            3            -        3 
Operating profit                                   750           23      773          692        (166)      526 
Finance costs                                     (21)          (6)     (27)         (22)            -     (22) 
Finance income                                      13            -       13            8            -        8 
                                           -----------  -----------  ------- 
Net finance costs                     5            (8)          (6)     (14)         (14)            -     (14) 
Profit before taxation                             742           17      759          678        (166)      512 
Income tax expense                    6          (143)          (6)    (149)        (167)           67    (100) 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
Profit for the year                                599           11      610          511         (99)      412 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
 
 
Earnings per share                    7 
Basic                                                                  27.1p                              17.8p 
Diluted                                                                27.0p                              17.8p 
Adjusted basic                                                         24.4p                              22.0p 
Adjusted diluted                                                       24.3p                              22.0p 
Underlying basic                                                       25.9p                              22.0p 
Underlying diluted                                                     25.8p                              22.0p 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
 
Reconciliation of non-GAAP underlying and adjusted pre-tax profit: 
--------------------------------------------------------------------------------------------------------------- 
Underlying pre-tax profit                                                787                                686 
Transformation costs before exceptional items                           (44)                                  - 
------------------------------------------------------  -----------  -------  -----------  -----------  ------- 
Adjusted pre-tax profit                                                  743                                686 
B&Q China operating loss                                                   -                                (4) 
Financing fair value remeasurements                                      (1)                                (4) 
Exceptional items                                                         17                              (166) 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
Profit before taxation                                                   759                                512 
----------------------------------  -----  -----------  -----------  -------  -----------  -----------  ------- 
 

The proposed final dividend for the year ended 31 January 2017, subject to approval by shareholders at the Annual General Meeting, is 7.15p per share.

 
 Consolidated statement of comprehensive income 
  Year ended 31 January 2017 
 
   GBP millions                                                              Notes   2016/17   2015/16 
--------------------------------------------------------------------------  ------  --------  -------- 
 Profit for the year                                                                     610       412 
--------------------------------------------------------------------------  ------            -------- 
 Actuarial (losses)/gains on post-employment benefits                          9        (50)        19 
 Tax on items that will not be reclassified                                               11       (8) 
--------------------------------------------------------------------------  ------            -------- 
 Total items that will not be reclassified subsequently to profit or loss               (39)        11 
--------------------------------------------------------------------------  ------            -------- 
 Currency translation differences 
   Group                                                                                 390         1 
   Joint ventures and associates                                                         (1)       (3) 
   Transferred to income statement                                                         -       (7) 
 Cash flow hedges 
   Fair value gains                                                                       52        24 
   Gains transferred to inventories                                                     (60)      (50) 
 Available-for-sale financial assets 
   Fair value gains                                                                        5         2 
   Transferred to income statement                                            12         (7)         - 
 Tax on items that may be reclassified                                                     2         8 
--------------------------------------------------------------------------  ------  --------  -------- 
 Total items that may be reclassified subsequently to profit or loss                     381      (25) 
--------------------------------------------------------------------------  ------  --------  -------- 
 Other comprehensive income for the year                                                 342      (14) 
--------------------------------------------------------------------------  ------  --------  -------- 
 Total comprehensive income for the year                                                 952       398 
--------------------------------------------------------------------------  ------  --------  -------- 
 
 
 Consolidated statement of changes in equity 
  Year ended 31 January 2017 
                                          Attributable to equity shareholders of the Company 
                                                         Own                                          Non- 
                                Share       Share     shares    Retained       Other           controlling       Total 
   GBP millions     Notes     capital     premium       held    earnings    reserves   Total     interests      equity 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 At 1 February 
  2016                            361       2,218       (24)       3,637         (6)   6,186             -       6,186 
---------------  -------- 
 Profit for the 
  year                              -           -          -         610           -     610             -         610 
 Other 
  comprehensive 
  income for 
  the year                          -           -          -        (39)         381     342             -         342 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 Total 
  comprehensive 
  income for 
  the year                          -           -          -         571         381     952             -         952 
 Share-based 
  compensation                      -           -          -          15           -      15             -          15 
 New shares 
  issued under 
  share schemes                     -           3          -           -           -       3             -           3 
 Own shares 
  issued under 
  share schemes                     -           -          7         (6)           -       1             -           1 
 Purchase of 
  own shares 
  for 
  cancellation                    (9)           -          -       (150)           9   (150)             -       (150) 
 Purchase of 
  own shares 
  for ESOP 
  trust                             -           -        (6)           -           -     (6)             -         (6) 
 Dividends           8              -           -          -       (230)           -   (230)             -       (230) 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 At 31 January 
  2017                            352       2,221       (23)       3,837         384   6,771             -       6,771 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 
 At 1 February 
  2015                            369       2,214       (26)       3,652          11   6,220            10       6,230 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 Profit for the 
  year                              -           -          -         412           -     412             -         412 
 Other 
  comprehensive 
  income for 
  the year                          -           -          -          11        (25)    (14)             -        (14) 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 Total 
  comprehensive 
  income for 
  the year                          -           -          -         423        (25)     398             -         398 
 Disposal of 
  B&Q China         12              -           -          -           -           -       -          (10)        (10) 
 Share-based 
  compensation                      -           -          -          11           -      11             -          11 
 New shares 
  issued under 
  share schemes                     -           4          -           -           -       4             -           4 
 Own shares 
  issued under 
  share schemes                     -           -         18        (17)           -       1             -           1 
 Purchase of 
  own shares 
  for 
  cancellation                    (8)           -          -       (200)           8   (200)             -       (200) 
 Purchase of 
  own shares 
  for ESOP 
  trust                             -           -       (16)           -           -    (16)             -        (16) 
 Dividends           8              -           -          -       (232)           -   (232)             -       (232) 
 At 31 January 
  2016                            361       2,218       (24)       3,637         (6)   6,186             -       6,186 
---------------  --------  ----------  ----------  ---------  ----------  ----------  ------  ------------  ---------- 
 
 
 Consolidated balance sheet 
 At 31 January 2017 
 
 GBP millions                                    Notes   2016/17   2015/16 
----------------------------------------------  ------  --------  -------- 
 Non-current assets 
 Goodwill                                                  2,399     2,397 
 Other intangible assets                                     308       276 
 Property, plant and equipment                             3,589     3,212 
 Investment property                                          24        25 
 Investments in joint ventures and associates                 23        23 
 B&Q China investment                             12           -        62 
 Post-employment benefits                          9         239       246 
 Deferred tax assets                                          28        11 
 Derivative assets                                            54        43 
 Other receivables                                             8         7 
----------------------------------------------  ------            -------- 
                                                           6,672     6,302 
 Current assets 
 Inventories                                               2,173     1,957 
 Trade and other receivables                                 551       568 
 Derivative assets                                            36        56 
 Current tax assets                                            6         5 
 Short-term deposits                                           -        70 
 Cash and cash equivalents                                   795       730 
 Assets held for sale                                          -         6 
----------------------------------------------  ------            -------- 
                                                           3,561     3,392 
----------------------------------------------  ------  --------  -------- 
 Total assets                                             10,233     9,694 
 
 Current liabilities 
 Trade and other payables                                (2,495)   (2,369) 
 Borrowings                                                 (14)     (138) 
 Derivative liabilities                                     (26)       (6) 
 Current tax liabilities                                   (141)      (66) 
 Provisions                                                 (63)      (69) 
                                                         (2,739)   (2,648) 
 Non-current liabilities 
 Other payables                                             (50)      (53) 
 Borrowings                                                (184)     (179) 
 Deferred tax liabilities                                  (282)     (333) 
 Provisions                                                 (99)     (208) 
 Post-employment benefits                          9       (108)      (87) 
----------------------------------------------  ------  --------  -------- 
                                                           (723)     (860) 
----------------------------------------------  ------  --------  -------- 
 Total liabilities                                       (3,462)   (3,508) 
 
 Net assets                                                6,771     6,186 
----------------------------------------------  ------  --------  -------- 
 
 Equity 
 Share capital                                               352       361 
 Share premium                                             2,221     2,218 
 Own shares held in ESOP trust                              (23)      (24) 
 Retained earnings                                         3,837     3,637 
 Other reserves                                              384       (6) 
----------------------------------------------  ------  --------  -------- 
 Total equity                                              6,771     6,186 
----------------------------------------------  ------  --------  -------- 
 

The financial statements were approved by the Board of Directors on 21 March 2017 and signed on its behalf by:

   Véronique Laury                                                          Karen Witts 
   Chief Executive Officer                                                 Chief Financial Officer 
 
 Consolidated cash flow statement 
 Year ended 31 January 2017 
 
 GBP millions                                                                          Notes    2016/17    2015/16 
------------------------------------------------------------------------------------  ------  ---------  --------- 
 Operating activities 
 Cash generated by operations                                                           10          925        931 
 Income tax paid                                                                                  (144)      (118) 
                                                                                              --------- 
 Net cash flows from operating activities                                                           781        813 
 
 Investing activities 
 Purchase of property, plant and equipment and intangible assets                                  (406)      (333) 
 Disposal of property, plant and equipment, investment property and property held 
  for sale                                                                                           20         25 
 Disposal of property company                                                           12            -         18 
 Disposal of B&Q China:                                                                 12 
    Proceeds (net of costs and cash disposed)                                                        63        102 
    Deposit repaid                                                                                    -       (12) 
 Decrease/(increase) in short-term deposits                                                          70       (22) 
 Interest received                                                                                    5          3 
 Dividends received from joint ventures and associates                                                -          5 
------------------------------------------------------------------------------------  ------  ---------  --------- 
 Net cash flows from investing activities                                                         (248)      (214) 
 
 Financing activities 
 Interest paid                                                                                     (10)       (12) 
 Interest element of finance lease rental payments                                                  (2)        (3) 
 Repayment of bank loans                                                                            (2)        (1) 
 Repayment of fixed term debt                                                                      (47)          - 
 Receipt on financing derivatives                                                                    10          - 
 Capital element of finance lease rental payments                                                  (12)       (13) 
 New shares issued under share schemes                                                                3          4 
 Own shares issued under share schemes                                                                1          1 
 Purchase of own shares for ESOP trust                                                              (6)       (16) 
 Purchase of own shares for cancellation                                                          (200)      (200) 
 Ordinary dividends paid to equity shareholders of the Company                                    (230)      (232) 
 Net cash flows from financing activities                                                         (495)      (472) 
 
 Net increase in cash and cash equivalents and bank overdrafts, including amounts 
  classified 
  as held for sale                                                                                   38        127 
 Cash and cash equivalents and bank overdrafts, including amounts classified as held 
  for sale, 
  at beginning of year                                                                              654        527 
 Exchange differences                                                                               103          - 
 Cash and cash equivalents and bank overdrafts at end of year                           11          795        654 
------------------------------------------------------------------------------------  ------  ---------  --------- 
 
 

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

   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 calendar year ended 31 January 2017 ('the year' or '2016/17'). The comparative financial year is the calendar year ended 31 January 2016 ('the prior year' or '2015/16').

The directors of Kingfisher plc, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence and that, therefore, it is appropriate to adopt the going concern basis in preparing the consolidated financial statements for the year ended 31 January 2017.

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 2017, but are derived from those statements. Statutory financial statements for 2015/16 have been filed with the Registrar of Companies and those for 2016/17 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 2016/17 statutory financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS') and those parts of the Companies Act 2006 applicable to companies reporting under IFRS and therefore the consolidated financial statements comply with Article 4 of the EU IAS legislation. 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.

Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2016, as described in note 2 of those financial statements.

Principal rates of exchange against Sterling

 
                              2016/17              2015/16 
                  --------  ---------  --------  --------- 
                   Average   Year end   Average   Year end 
                      rate       rate      rate       rate 
----------------  --------  ---------  --------  --------- 
 Euro                 1.21       1.16      1.38       1.31 
 US Dollar            1.34       1.26      1.52       1.42 
 Polish Zloty         5.28       5.03      5.78       5.78 
 Russian Rouble      87.98      75.72     94.54     107.52 
----------------  --------  ---------  --------  --------- 
 

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 adjusted sales, retail profit, underlying pre-tax profit, adjusted pre-tax profit, effective tax rate, underlying earnings per share and adjusted earnings per share provide additional useful information on performance and trends to shareholders. These and other non-GAAP measures, such as net cash, are used by Kingfisher for internal performance analysis and incentive compensation arrangements for employees. The terms 'retail profit', 'exceptional items', 'transformation costs', 'underlying', 'adjusted', 'effective tax rate' and 'net cash' 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, transformation costs, exceptional items and amortisation of acquisition intangibles. It includes the sustainable benefits of the Group's transformation programme. 2015/16 comparatives exclude B&Q China's operating results. Central costs principally comprise the costs of the Group's head office before transformation costs.

The separate reporting of non-recurring exceptional items, which are presented as exceptional within their relevant income statement category, helps provide an indication of the Group's ongoing business performance. The principal items which are included as exceptional items are:

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

-- profits and losses on the disposal of properties and impairment losses on non-operational assets; and

-- the costs of significant restructuring, including certain restructuring costs of the Group's five-year transformation programme launched in 2016/17, and incremental acquisition integration costs.

The term 'adjusted' refers to the relevant measure being reported for continuing operations excluding exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and prior year tax items (including the impact of changes in tax rates on deferred tax). 2015/16 comparatives exclude B&Q China's operating results. Financing fair value remeasurements represent 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 hedge relationships. Financing derivatives are those that relate to hedged items of a financing nature.

The term 'underlying' refers to the relevant adjusted measure being reported before non-exceptional transformation costs. Non-exceptional transformation costs represent the short-term additional costs that arise only as a result of the transformation programme launched in 2016/17, which either because of their nature or the length of the period over which they are incurred are not considered as exceptional items. These costs principally relate to the unified and unique offer range implementation and the digital strategic initiative. The separate reporting of such costs (in addition to exceptional items) helps provide an indication of the Group's underlying business performance, which includes the sustainable benefits of the transformation programme.

The effective tax rate is calculated as continuing income tax expense excluding tax on exceptional items and adjustments in respect of prior years and the impact of changes in tax rates on deferred tax, divided by continuing profit before taxation excluding exceptional items.

Net cash comprises cash and cash equivalents and short-term deposits less borrowings and financing derivatives (excluding accrued interest). It excludes balances classified as assets and liabilities held for sale.

   3          Segmental analysis 

Income statement

 
                                                                                                               2016/17 
                                                             --------------------------------------------------------- 
                                                                                        Other International 
-----------------------------------------------------------  -------------  -------  ----------------------  ------- 
 GBP millions                                                 UK & Ireland   France       Poland      Other    Total 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Adjusted sales                                                      4,979    4,254        1,191        801   11,225 
 B&Q China sales                                                                                                   - 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Sales                                                                                                        11,225 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Retail profit                                                         358      353          144        (8)      847 
 Central costs                                                                                                  (48) 
 Share of interest and tax of joint ventures and associates                                                      (5) 
 Transformation costs before exceptional items                                                                  (44) 
 Exceptional items                                                                                                23 
 Operating profit                                                                                                773 
 Net finance costs                                                                                              (14) 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Profit before taxation                                                                                          759 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 
 
                                                                                                               2015/16 
                                                             --------------------------------------------------------- 
                                                                                        Other International 
-----------------------------------------------------------  -------------  -------  ----------------------  ------- 
 GBP millions                                                 UK & Ireland   France       Poland      Other    Total 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Adjusted sales                                                      4,853    3,786          987        705   10,331 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 B&Q China sales                                                                                                 110 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Sales                                                                                                        10,441 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Retail profit                                                         326      311          113        (4)      746 
 Central costs                                                                                                  (45) 
 Share of interest and tax of joint ventures and associates                                                      (5) 
 B&Q China operating loss                                                                                        (4) 
 Exceptional items                                                                                             (166) 
 Operating profit                                                                                                526 
 Net finance costs                                                                                              (14) 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 Profit before taxation                                                                                          512 
-----------------------------------------------------------  -------------  -------  -----------  ---------  ------- 
 

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 business segment being the supply of home improvement products and services.

The 'Other International' segment consists of Poland, Spain, Portugal, Germany, Russia, Romania and the joint venture Koçta in Turkey. Poland has been shown separately due to its significance.

Central costs principally comprise the costs of the Group's head office before transformation costs.

   4        Exceptional items 
 
 GBP millions                                          2016/17   2015/16 
----------------------------------------------------  --------  -------- 
 Included within selling and distribution expenses 
 UK & Ireland and continental Europe restructuring          21     (305) 
 Brico Dépôt Romania impairment                    -       (3) 
                                                            21     (308) 
----------------------------------------------------  --------  -------- 
 Included within administrative expenses 
  Transformation exceptional costs                         (5)         - 
 Brico Dépôt Romania impairment                    -      (15) 
                                                           (5)      (15) 
----------------------------------------------------  --------  -------- 
 Included within other income 
  Profit on disposal of B&Q China                            3       143 
 Profit on disposal of property and other companies          -        13 
 Profit on disposal of properties                            4         1 
----------------------------------------------------  --------  -------- 
                                                             7       157 
----------------------------------------------------  --------  -------- 
 Included within net finance costs 
 UK & Ireland and continental Europe restructuring         (6)         - 
----------------------------------------------------  --------  -------- 
                                                           (6)         - 
----------------------------------------------------  --------  -------- 
 Exceptional items before tax                               17     (166) 
 Exceptional tax items                                     (6)        67 
 Exceptional items                                          11      (99) 
----------------------------------------------------  --------  -------- 
 

Current year exceptional items include a GBP21m net credit (2015/16: GBP305m charge) relating to the B&Q store closure programme in the UK and the closure of loss-making stores in France and other countries in continental Europe. In addition, a GBP6m exceptional interest charge relating to the reduction in discount rate used to measure the overall UK restructuring provision was recognised.

The net credit principally arises due to savings on B&Q store exit costs as compared with the original restructuring provisions recognised, and the reversal of a restructuring provision following the announcement that one of the B&Q stores originally earmarked for closure would remain open, offset mainly by store asset impairments relating to the closure of additional loss-making stores in continental Europe.

Transformation exceptional costs of GBP5m have been recorded in the year relating to the initial costs of setting up the Group's new offer and supply chain organisation.

A profit of GBP3m was recognised on disposal of the Group's remaining 30% stake in B&Q China - refer to note 12 for further information. In the prior year a profit of GBP143m was recorded on disposal of the Group's controlling 70% stake.

In the prior year, an exceptional loss of GBP18m was recorded relating to the impairment of goodwill and certain stores in the Brico Dépôt Romania business.

   5        Net finance costs 
 
 GBP millions                                              2016/17   2015/16 
--------------------------------------------------------  --------  -------- 
 Bank overdrafts and bank loans                               (10)       (8) 
 Fixed term debt                                               (2)       (3) 
 Finance leases                                                (2)       (3) 
 Financing fair value remeasurements                           (1)       (4) 
 Unwinding of discount on provisions                           (7)       (1) 
 Other interest payable                                        (5)       (3) 
 Finance costs                                                (27)      (22) 
--------------------------------------------------------  --------  -------- 
 
 Cash and cash equivalents and short-term deposits               6         3 
 Net interest income on defined benefit pension schemes          7         5 
 Finance income                                                 13         8 
--------------------------------------------------------  --------  -------- 
 
 Net finance costs                                            (14)      (14) 
--------------------------------------------------------  --------  -------- 
 

The GBP7m charge relating to the unwinding of discount on provisions includes a GBP6m exceptional charge relating to the reduction in discount rate used to measure the overall UK restructuring provision.

   6        Income tax expense 
 
 GBP millions                                                      2016/17   2015/16 
----------------------------------------------------------------  --------  -------- 
 UK corporation tax 
 Current tax on profits for the year                                  (66)       (7) 
 Adjustments in respect of prior years                                  10         4 
                                                                      (56)       (3) 
----------------------------------------------------------------  --------  -------- 
 Overseas tax 
 Current tax on profits for the year                                 (155)     (117) 
 Adjustments in respect of prior years                                (11)         7 
----------------------------------------------------------------  --------  -------- 
                                                                     (166)     (110) 
----------------------------------------------------------------  --------  -------- 
 Deferred tax 
 Current year                                                           22        14 
 Adjustments in respect of prior years and changes in tax rates         51       (1) 
                                                                        73        13 
----------------------------------------------------------------  --------  -------- 
 
 Income tax expense                                                  (149)     (100) 
----------------------------------------------------------------  --------  -------- 
 

The effective tax rate on profit before exceptional items and excluding prior year tax adjustments and the impact of changes in tax rates on deferred tax is 26% (2015/16: 26%). Exceptional tax items for the year amount to a charge of GBP6m, of which a GBP1m credit relates to prior year items. In 2015/16 exceptional tax items amounted to a credit of GBP67m, of which a GBP1m credit was relating to prior year items.

   7          Earnings per share 
 
                                                              2016/17                                          2015/16 
                      -------------  --------------------------------  -------------  -------------------------------- 
                                        Weighted                                         Weighted 
                                         average                                          average 
                                          number         Earnings per                      number         Earnings per 
                           Earnings    of shares                share       Earnings    of shares                share 
                       GBP millions     millions                Pence   GBP millions     millions                pence 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 Basic earnings per 
  share                         610        2,256                 27.1            412        2,311                 17.8 
 Effect of dilutive 
  share options                                7                (0.1)                           8                    - 
--------------------                                                   -------------  -----------  ------------------- 
 Diluted earnings 
  per share                     610        2,263                 27.0            412        2,319                 17.8 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 
 Basic earnings per 
  share                         610        2,256                 27.1            412        2,311                 17.8 
 B&Q China operating 
  loss                            -                                 -              4                               0.2 
 Exceptional items 
  before tax                   (17)                             (0.8)            166                               7.2 
 Tax on exceptional 
  and prior year 
  items                        (43)                             (2.0)           (76)                             (3.3) 
 Financing fair 
  value 
  remeasurements                  1                               0.1              4                               0.2 
 Tax on financing 
  fair value 
  remeasurements                  -                                 -            (1)                             (0.1) 
--------------------                                                   -------------  -----------  ------------------- 
 Adjusted basic 
  earnings per share            551        2,256                 24.4            509        2,311                 22.0 
 Transformation 
  costs before 
  exceptional items              44                               2.0              -                                 - 
 Tax on 
  transformation 
  costs before 
  exceptional items            (11)                             (0.5)              -                                 - 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 Underlying basic 
  earnings per share            584        2,256                 25.9            509        2,311                 22.0 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 
 Diluted earnings 
  per share                     610        2,263                 27.0            412        2,319                 17.8 
 B&Q China operating 
  loss                            -                                 -              4                               0.2 
 Exceptional items 
  before tax                   (17)                             (0.8)            166                               7.2 
 Tax on exceptional 
  and prior year 
  items                        (43)                             (2.0)           (76)                             (3.3) 
 Financing fair 
  value 
  remeasurements                  1                               0.1              4                               0.2 
 Tax on financing 
  fair value 
  remeasurements                  -                                 -            (1)                             (0.1) 
--------------------                                                   -------------  -----------  ------------------- 
 Adjusted diluted 
  earnings per share            551        2,263                 24.3            509        2,319                 22.0 
 Transformation 
  costs before 
  exceptional items              44                               2.0              -                                 - 
 Tax on 
  transformation 
  costs before 
  exceptional items            (11)                             (0.5)              -                                 - 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 Underlying diluted 
  earnings per share            584        2,263                 25.8            509        2,319                 22.0 
--------------------  -------------  -----------  -------------------  -------------  -----------  ------------------- 
 

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') 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.

   8          Dividends 
 
 GBP millions                                                                       2016/17   2015/16 
---------------------------------------------------------------------------------  --------  -------- 
 Dividends to equity shareholders of the Company 
 Ordinary interim dividend for the year ended 31 January 2017 of 3.25p per share 
  (year ended 31 January 2016: 3.18p per share)                                          73        72 
 Ordinary final dividend for the year ended 31 January 2016 of 6.92p per share 
  (year ended 31 January 2015: 6.85p per share)                                         157       160 
                                                                                        230       232 
---------------------------------------------------------------------------------  --------  -------- 
 

The proposed final dividend for the year ended 31 January 2017 of 7.15p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in the financial statements.

    9            Post-employment benefits 
 
                                                                         2016/17                        2015/16 
                                                   -----------------------------  ----------------------------- 
 GBP millions                                            UK   Overseas     Total        UK   Overseas     Total 
                                                   --------  ---------  --------  --------  ---------  -------- 
 Net surplus/(deficit) in schemes 
  at beginning of year                                  246       (87)       159       194       (82)       112 
 Current service cost                                   (2)        (7)       (9)       (2)        (6)       (8) 
 Administration costs                                   (4)          -       (4)       (4)          -       (4) 
 Net interest income/(expense)                            9        (2)         7         6        (1)         5 
 Net actuarial (losses)/gains                          (46)        (4)      (50)        16          3        19 
 Contributions paid by employer                          36          2        38        36          1        37 
 Exchange differences                                     -       (10)      (10)         -        (2)       (2) 
-------------------------------------------------  --------  ---------  --------  --------  ---------  -------- 
 Net surplus/(deficit) in schemes at end of year        239      (108)       131       246       (87)       159 
-------------------------------------------------  --------  ---------  --------  --------  ---------  -------- 
 
 Present value of defined benefit obligations       (2,999)      (126)   (3,125)   (2,374)      (102)   (2,476) 
 Fair value of scheme assets                          3,238         18     3,256     2,620         15     2,635 
-------------------------------------------------  --------  ---------  --------  --------  ---------  -------- 
 Net surplus/(deficit) in schemes                       239      (108)       131       246       (87)       159 
-------------------------------------------------  --------  ---------  --------  --------  ---------  -------- 
 

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 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      2016/17   2015/16 
-----------------  --------  -------- 
 Discount rate          2.7       3.6 
 Price inflation        3.6       3.1 
-----------------  --------  -------- 
 

For the UK scheme, the mortality assumptions used have been selected with regard to the characteristics and experience of the membership of the scheme from time to time in connection with triennial funding valuations. The assumptions for life expectancy of UK scheme members are as follows:

 
 Years                                   2016/17   2015/16 
---------------------------------  ---  --------  -------- 
 Age to which current pensioners 
  are expected to live (60 now) 
 - Male                                     87.1      86.8 
 - Female                                   88.8      87.4 
 Age to which future pensioners 
  are expected to live (60 in 15 
  years' time) 
 - Male                                     88.3      87.5 
 - Female                                   90.7      88.6 
----------------------------------      --------  -------- 
 
 

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.

 
                                                   Impact on defined 
 Assumption               Change in assumption    benefit obligation 
----------------  ----------------------------  -------------------- 
                             Increase/decrease     Decrease/increase 
 Discount rate                         by 0.1%             by GBP57m 
                             Increase/decrease     Increase/decrease 
 Price inflation                       by 0.1%             by GBP46m 
                   Increase in life expectancy 
 Mortality                         by one year    Increase by GBP96m 
----------------  ----------------------------  -------------------- 
 
   10       Cash generated by operations 
 
 GBP millions                                                                  2016/17   2015/16 
----------------------------------------------------------------------------  --------  -------- 
 Operating profit                                                                  773       526 
 Share of post-tax results of joint ventures and associates                        (1)       (3) 
 Depreciation and amortisation                                                     253       240 
 Impairment losses                                                                  14        55 
 Loss on disposal of property, plant and equipment, investment property and 
  property held for sale                                                             4         3 
 Profit on disposal of B&Q China                                                   (3)     (143) 
 Profit on disposal of property and other companies                                  -      (13) 
 Share-based compensation charge                                                    15        11 
 (Increase)/decrease in inventories                                               (46)        56 
 Decrease/(increase) in trade and other receivables                                 62      (36) 
 Increase in trade and other payables                                                4        27 
 Movement in provisions                                                          (125)       233 
 Movement in post-employment benefits                                             (25)      (25) 
----------------------------------------------------------------------------  --------  -------- 
 Cash generated by operations                                                      925       931 
----------------------------------------------------------------------------  --------  -------- 
 
   11        Net cash 
 
 GBP millions                                                                2016/17   2015/16 
--------------------------------------------------------------------------  --------  -------- 
 Cash and cash equivalents                                                       795       730 
 Bank overdrafts                                                                   -      (76) 
--------------------------------------------------------------------------  --------  -------- 
 Cash and cash equivalents and bank overdrafts                                   795       654 
 Short-term deposits                                                               -        70 
 Bank loans                                                                      (9)      (10) 
 Fixed term debt                                                               (147)     (185) 
 Financing derivatives                                                            44        63 
 Finance leases                                                                 (42)      (46) 
 Net cash                                                                        641       546 
--------------------------------------------------------------------------  --------  -------- 
 
 GBP millions                                                                2016/17   2015/16 
--------------------------------------------------------------------------  --------  -------- 
 Net cash at beginning of year                                                   546       329 
--------------------------------------------------------------------------  --------  -------- 
 Net increase in cash and cash equivalents and bank overdrafts, including 
  amounts classified as held for sale                                             38       127 
 (Decrease)/increase in short term deposits                                     (70)        22 
 Repayment of bank loans                                                           2         1 
 Repayment of fixed term debt                                                     47         - 
 Receipt on financing derivatives                                               (10)         - 
 Capital element of finance lease rental payments                                 12        13 
--------------------------------------------------------------------------  --------  -------- 
 Cash flow movement in net cash                                                   19       163 
 Adjustment for cash classified as held for sale (B&Q China)                       -        57 
 Exchange differences and other non-cash movements                                76       (3) 
 Net cash at end of year                                                         641       546 
--------------------------------------------------------------------------  --------  -------- 
 
 
   12        Disposals 

On 5 July 2016, the Group disposed of its remaining 30% interest in the B&Q China business to Wumei Holdings Inc. for a gross consideration of GBP67m, being the Sterling equivalent of RMB 582m. The profit on disposal of GBP3m is analysed as follows:

 
 GBP millions 
--------------------------------------------------------------   ----- 
 Proceeds                                                           67 
 Disposal costs                                                    (4) 
---------------------------------------------------------------  ----- 
 Net disposal proceeds                                              63 
 Fair value of investment disposed                                (67) 
 Fair value gains transferred from available-for-sale reserve        7 
---------------------------------------------------------------  ----- 
 Exceptional profit on disposal                                      3 
---------------------------------------------------------------  ----- 
 

In the prior year, the Group received gross proceeds of GBP140m (before disposal costs of GBP6m) and recognised a profit on disposal of GBP143m in respect of Wumei Holdings Inc. acquiring a controlling 70% stake in the B&Q China business. In the prior year, the Group also completed the sale of a property company for proceeds of GBP18m and a profit of GBP16m, along with the sale of a UK company for proceeds of GBPnil and a loss of GBP3m.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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