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| 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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| -1.30 | -0.52% | 248.00 | 248.00 | 248.20 | 252.00 | 247.70 | 250.80 | 4,149,297 | 16:29:55 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Misc General Mdse Stores | 12.98B | 345M | 0.1819 | 13.63 | 4.7B |
From Apr 2019 to Apr 2024
TIDMKGF
RNS Number : 6533L
Kingfisher PLC
20 April 2018
20 April 2018
KINGFISHER PLC
(the "Company")
Annual Report and Accounts
In compliance with Listing Rule 9.6.1, the Company announces that the following documents have today been submitted to the UK Listing Authority and will shortly be available for inspection via the National Store Mechanism at www.hemscott.com/nsm.do
-- Annual Report and Accounts for the year ended 31 January 2018 (the "2017/18 Annual Report")
-- Notice of Annual General Meeting 2018 -- Proxy Form in respect of the Annual General Meeting 2018
The above documents have also been posted or otherwise made available to shareholders. The 2017/18 Annual Report and the Notice of Annual General Meeting 2018 have also been published on the Company's website at Kingfisher plc - Investors.
Additional Information required by Disclosure and Transparency Rule 6.3.5
In compliance with DTR 6.3.5, the following information is extracted from the 2017/18 Annual Report and should be read in conjunction with the Company's Final Results announcement for the year ended 31 January 2018 issued on 21 March 2018. Both documents are available at www.kingfisher.com and together constitute the material required by DTR 6.3.5 to be communicated to the media in unedited full text through a Regulatory Information Service. Page and note references in the text refer to page numbers and notes contained in the 2017/18 Annual Report. This announcement is not a substitute for reading the 2017/18 Annual Report in full.
1. Risks
RISK MANAGEMENT
Given the scale of our businesses, the Board recognises that the nature, scope and potential impact of our business and strategic risks is subject to constant change. As such, the Board has implemented the necessary framework to ensure that it has sufficient visibility of the principal risks and the opportunity to regularly review the adequacy and effectiveness of our mitigating controls and strategies.
OUR APPROACH TO RISK MANAGEMENT
To Identify Our Risks, we start with our strategic pillars and consider what might stop us achieving our ONE Kingfisher plan. The process is therefore looking at the risks we face within our strategic planning period. The approach combines a top-down strategic company-level view and a bottom-up operational view of the risks at Operating Company and functional level. Meetings are held with our Operating Company leadership teams to identify the risks within the operations. To identify our principal risks, discussions are held with the Group Executive and non-executive directors. The information from the operational assessments is also considered to arrive at our principal risks. The table on page 41 shows how the principal risks link to the strategic pillars.
To Assess Our Risks, we consider the potential financial, reputational, regulatory or operational impact and probability that the risk may materialise. This helps us to assess the level of control we need to put in place. For each of the principal risks, we have included an assessment of the change in risk from last year. This assessment is based on the external environment, the company's operations, and before considering the impact of the controls in place. We have considered whether the risk is increasing, decreasing or remains unchanged.
To Manage Our Risks, ownership is assigned at all levels. Each Operating Company leadership team owns and is responsible for managing its own risks, putting appropriate controls in place and procedures to ensure that the controls are operating effectively. The same process is followed for our principal risks.
To ensure we effectively Monitor Our Risks, the principal risks are reviewed by the Group Executive and Board twice a year. Changes to the principal risks and mitigation strategies are considered as part of this review. During the year, the Audit Committee reviews the risk assessment process and receives presentations from some of the Operating Companies. These presentations include the risk assessment for the Operating Company enabling the Audit Committee to monitor the risks and level of control in place. Internal Audit also considers the risks at Operating Company and Group level when developing the internal audit plan.
The Corporate Governance report on page 54 gives further details about our governance processes.
Risk management process
Management
Group Executive
The Group Executive takes ownership of the principal risks. They are accountable for identifying, assessing and managing the principal risks, and for reviewing and assessing the Operating Company risks.
Operating Company Boards
The Operating Company boards are accountable for identifying, assessing and managing the risks within their Operating Company.
Governance
Board
The Board has overall responsibility for our risk management, and for the level of risk that the company is willing to take.
Audit Committee
The Audit Committee takes responsibility for overseeing the effectiveness of risk management and internal control systems, including reviewing the process the company has put in place to identify, assess and manage our risks.
THIS YEAR'S UPDATE
The principal risks have been reviewed this year in light of the progress made against our transformation plan. We have decided that the following risks are no longer principal risks. Each of these areas are still monitored and managed, however we do not believe they are principal risks for us.
-- We fail to manage the transformation of organising Kingfisher as a more unified company with a unified customer offer rather than a collection of individual businesses, impacting the delivery of the anticipated benefits and disrupting the underlying business.
This risk relates to our transformation and strategic pillars. The principal risks for 2018/19 cover each of our strategic pillars and this risk is reflected in those risks.
-- Our investments fail to deliver value to the company.
As the key investment in the Company relates to our transformation we believe that this risk is also covered in our other principal risks
-- We fail to identify and maximise potential cost reductions and efficiency savings.
A plan is in place to deliver the savings and is delivering against targets to date, therefore we do not think this is a principal risk.
-- We fail to deliver our sustainability targets due to not integrating our sustainability plan into the day to day operations of the business.
Sustainability remains an important area for the Group and is now integrated into the operations and therefore we do not think this is one of our principal risks.
-- We fail to maintain a safe environment for our customers and store colleagues which results in a major incident or fatality that is directly attributable to a failure in our Health & Safety management systems.
Health & Safety is a very important area to the company and is managed and monitored in each of our operations. This area does by its nature present some risk to the business, but we no longer consider it a principal risk.
We have added two new principal risks relating to the EU referendum outcome and cyber and data security. Both these areas have been considered in previous years by the Group Executive and Board as potential principal risks. This year, we think the risk has increased and therefore included both areas in our principal risks. Further details are included on pages 42 to 47.
OUR PRINCIPAL RISKS
The principal risks to delivering our strategy are set out on the following pages.
Hot Features
Premium
1. TECHNOLOGY DELIVERY
---------------------------------------------------------------
Technology is key to enabling our strategy,
meeting customer needs and growing the business.
Our Unified IT platform is designed to deliver
our requirements in line with the plan to support
the strategy. Failure to do this may impact
the anticipated benefits and disrupt the underlying
business.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
- Digital
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
No change. The implementation is complete at
B&Q and is nearing completion at Castorama France.
The roll-out is commencing in the remainder
of our Operating Companies. The risk is increased
for us as more of the estate is exposed to the
implementation. However this is balanced by
the lessons learnt to date and the opportunity
to see the systems running day to day and helping
us identify any additional capacity or actions
required.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* Change control procedure in place with the leadership
team having final approval on all functional changes.
* The roll-out plan avoids a 'big bang' implementation
approach. Instead gradual increments are implemented
over a short period, ensuring that dual running is
kept to a minimum and allowing any issues to be
identified and resolved before moving on.
* Process in place to establish learning points and to
ensure these are built into future roll outs.
* 'Agile' ways of working are already in place and are
currently being enhanced to support the appropriate
areas.
* Existing partners have skills that can support our
needs in this area.
* Retaining knowledge by ensuring the colleagues who
established the template are involved in the
programme through the central team or via the local
roll-out.
* Applications are being provided in accordance with
our proposed three-tier architecture, which provides
flexibility to areas where innovative ideas are most
likely, tools are typically agnostic and therefore
can be interchanged in the event this is required.
* Digital IT team is integrated within the overall IT
function with common release management and
operations in place.
* Transformation team and Operating Company
transformation directors in place to deliver the
transformational change.
---------------------------------------------------------------
2. UNIFYING OUR OFFER & PROCESSES
---------------------------------------------------------------
We aim to offer customers a product range which
is differentiated from that of our competitors
through innovation and exclusivity. We are unifying
our offer and standardising our activities and
processes. This is a large and complex project,
therefore there is a risk of not delivering
the projected benefits.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
- Unified & Unique Offer
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
Increasing. There are plans in place for the
range changes and the process is better understood
following the implementations from last year,
however as this project progresses the level
of ranges impacted continues to increase and
our risk exposure increases.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* Teams with specialised roles to develop and take the
best practice and the best products from across the
company.
* Strong project management process in place, including
capturing lessons learned for continuous improvement.
* Monthly tracking and review by the Offer & Supply
Chain board to identify and respond to potential
risks.
* Validation and governance processes in place for
business case approvals of range and procurement
decisions.
* Clearly defined range and purchasing standards,
principles and methodology with guidance and support
from expert leads.
* Performance of the ranges and brands is tracked and
strategies updated accordingly.
* A strong sourcing network which is focused on
securing company buying opportunities.
* Vendor management process in place which includes
vendor selection, risk assessments, monitoring of
vendor responses, and communication.
* Systems and data improvements have been identified
and are part of the unified IT platform
implementation.
---------------------------------------------------------------
3. CHANNEL DEVELOPMENT
---------------------------------------------------------------
As consumer preferences continue to change we
must ensure we create a culture of innovation
in our offer, format and digital channels that
keeps pace with changing consumer behaviours
and our competitors, to be able to stimulate
spend and deliver the desired sales growth.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
- Unified & Unique Offer
- Digital
- Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
No change. Failing to keep pace within the digital
area is a risk for us. However, we have continued
to make good progress this year to ensure we
are better positioned to fulfil our digital
ambitions.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* A Group digital strategy has been developed and a
prioritised delivery roadmap is underway across the
local markets.
* Digital priorities programmes underway, Brilliant
Basics and Home Improvement Platform.
* A monthly Digital Governance forum is in place to
monitor financial and project portfolio performance
and to prioritise upcoming digital initiatives,
ensuring we deliver the greatest benefits/features to
customers through our digital channels across our
Brilliant Basics and Home Improvement Platform
developments.
* Group mobile platform built and launched in B&Q; this
will extend to desktop during 2018 to improve diy.com
customers' experience further. A roll-out plan has
also been developed for our other local markets in
line with Easier and Group Transformation timelines.
* Plans in place for a digital centre of excellence and
digital delivery, roles, skills and knowledge have
been defined. Resource recruitment underway. The ways
of working are also being reviewed across all digital
functions.
* Unified IT programme continues to be rolled out
across the Group to provide the systems and
capabilities required to deliver the foundations for
the digital strategy.
* Click & Collect now live in B&Q stores to join up
digital and offline journeys. This will be rolled
group wide with the unified IT platform.
* Group Concept Director appointed.
* Retail concepts and common and unique customer
experience being developed.
* Starting to develop plans combining the best of store
format and digital.
---------------------------------------------------------------
4. MACRO-ECONOMIC FACTORS
---------------------------------------------------------------
With continuing geopolitical uncertainty and
market volatility across all the economies in
which we operate, we are exposed to potential
risks which may impact both consumer confidence
and the long-term sustainability and capabilities
of our supplier base.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
- Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
Increasing. There are still a number of uncertainties
relating to the economy and heightened geopolitical
tensions in some of our markets.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* The provision of supply chain finance programmes to
support suppliers.
* Portfolio of international banking partners that
provide flexibility, access to funding and reliable
local retail cash and card payment processing
services.
* Diversification of cash holdings across a number of
financial institutions with the strongest short-term
credit rating.
* An appropriate and prudent mix of hedging policies,
cash deposits and debt financing to minimise the
impact of foreign exchange currency volatility on the
company.
* Offer and pricing strategies designed to address
consumer confidence.
* Government Affairs team actively monitors the
political and economic situations in the countries in
which we operate or may impact our operations.
* Strategies in place to identify, monitor and aim to
influence changes to legislation which may impact the
business.
* The Government Affairs team oversees direct policy
and political engagement with dedicated resource in
the UK, France, Belgium, Poland and Russia, supported
by local representatives in our Operating Companies
and our membership of key business trade associations
in every market.
---------------------------------------------------------------
5. EU REFERUM
---------------------------------------------------------------
Following the decision to leave the EU we have
seen increased economic uncertainty, exchange
rate volatility and an impact on consumer confidence
in the UK market. This is likely to continue
until EU exit negotiations are complete. These
negotiations may result in further changes to
regulation and operational frameworks which
may impact our ability to operate across our
European businesses as we do today.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
* Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
Increasing. This risk has increased due to the
continuing uncertainty as to the operational
implications of the decision to leave the EU
and the impact on trading performance from impacts
on the economy in our key markets. We have therefore
decided to specifically include this within
our principal risks.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* Brexit Steering Group has been in place since the
2016 referendum.
* Actively monitoring the Brexit process via the
Government Affairs team, Treasury, Finance and Tax,
People and IT teams alongside UK and French Operating
Companies.
* Work is underway to consider the implications of
Brexit, considering different scenarios and preparing
mitigation plans.
* As the situation becomes clearer and the mechanics of
an exit are known, more detailed plans will be
prepared.
* Updates are planned for the Board as part of the
forward plan of work for the year.
---------------------------------------------------------------
6. INVESTING IN OUR PEOPLE
---------------------------------------------------------------
Our colleagues are critical to the successful
delivery of our strategy and business. We must
make the necessary investment in our people
to ensure that we have the appropriate capacity,
skills and experience.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
* Unique and Unified
* Digital
* Operational Efficiency
* Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
No change. We continue to monitor and manage
this risk closely. While the risk exposure is
significant we have a clear understanding of
the scale of the change and plans in place to
deliver the model.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* The Chief People Officer is leading the work to
improve our capabilities, ensuring we have effective
KPIs and relevant reward structures.
* Work is underway to redesign, where required, HR
processes, policies and guidelines to ensure they are
fit for purpose and in line with our ambition.
Initial focus will be on recruitment, reward, talent
and engagement.
* Remuneration Committee oversees the reward policy.
* New engagement tool introduced to ensure we have an
appropriate and timely engagement methodology which
enables us to check across all staff our ability to
drive the changes we need whilst being able to
respond to any insights which may impact upon our
duty of care as an employer.
* Creating a strong pipeline of developing talent
through structured programmes including graduate and
high potential schemes for the development of senior
leaders.
* Nomination Committee oversees the Board composition
and succession planning.
* Continue to invest in development activities for our
store-based colleagues and in how we support and
recognise the role of our customer advisors across
the organisation.
* Home Improvement and Range Academies developed to
build capability and inform colleagues on the new
ways of working and product ranges.
---------------------------------------------------------------
7. PRICE COMPETITIVENESS
---------------------------------------------------------------
We continue to face a broad range of competitors
across our markets. A lack of actual or perceived
price competitiveness, particularly when compared
to more discount based or online competitors,
would affect our ability to maintain market
share or result in a loss of market share
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
Unified and Unique Offer
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
No change. We have taken further steps this
year to monitor and manage this risk and therefore
believe the risk level is unchanged.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* A group pricing strategy is in place. The Offer &
Supply Chain and trading functions set recommended
prices on all unified ranges, securing the best
selling price whilst optimising margin.
* Regular pricing studies undertaken with regards to
the market and price positioning aligned with
competition.
* Investment in pricing to reinforce and communicate
our value credentials.
* Developing improved customer insight and analytical
tools to optimise product ranging and pricing
strategies.
* More targeted use of online and mass media tools to
communicate and reinforce price perception.
* Role of Director of Pricing created, responsibilities
include overseeing the pricing strategy for the
Group.
---------------------------------------------------------------
8. LEGAL AND REGULATORY
---------------------------------------------------------------
The Group's operations are subject to a broad
range of regulatory requirements in the countries
in which it operates. A major corporate issue
or crisis, a significant corporate fraud or
material non-compliance with legislative or
regulatory requirements would impact Kingfisher's
brand and reputation.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
* Unified & Unique Offer
* Digital
* Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
Increasing. Regulatory requirements are increasing
in many areas and therefore we see this as an
area of increasing risk for us.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
* Employees and suppliers working for or with
Kingfisher must conduct themselves according to our
minimum standards of ethics and behaviours as defined
by our Code of Conduct.
* Responsibility for compliance with our Code of
Conduct rests with each Operating Company Chief
Executive.
* Appropriate resources are available to our Operating
Companies to ensure that both colleagues and
suppliers are aware of, and comply with, the Code.
* Legal teams in Group and each of our Operating
Companies work and communicate together to form a
legal compliance network.
* Communications teams at Kingfisher and each of our
Operating Companies work together to form a
communications network.
* A Crisis Communications team is in place to manage
major incidents.
* Policies and procedures in place to support the
health & safety, environmental, ethical, fraud,
crisis management, legislative and regulatory areas.
* Anti-bribery training in place and all key
individuals must complete this training.
* Whistleblowing hotline throughout the Group and all
calls are followed up, including monitoring at the
local Audit Committee level.
* Market Abuse Regulations policy and training in
place.
---------------------------------------------------------------
9. CYBER AND DATA SECURITY
---------------------------------------------------------------
Cyber attacks and security incidents have increased
in recent years and the retail sector is now
a target. There have been a number of high profile
attacks in the sector in recent times that have
had an impact on operations, profitability and
reputation.
---------------------------------------------------------------
Strategic Pillar
---------------------------------------------------------------
* Digital
* Retail Operations
---------------------------------------------------------------
How our risks have changed
---------------------------------------------------------------
Increasing. This risk has been monitored by
the Group Executive and Audit Committee for
the last few years, however this year we have
decided to add this area to our principal risks
as we believe the risk of this type of incident
is increasing.
---------------------------------------------------------------
How we manage and monitor the risk
---------------------------------------------------------------
Cyber Security
* Cyber security continues to receive Executive level
sponsorship and Group Audit Committee focus.
* Dedicated IT Governance boards are established to
monitor this evolving risk and the associated
mitigating controls.
* Independent reviews are performed of the Cyber
security processes and initiatives on an annual
basis.
* We have reviewed the threats facing Kingfisher and
have been working with partners and security
specialists to implement tools and processes to
identify and remediate vulnerabilities.
* We have a clear roadmap for 2018 to further enhance
our threat intelligence and incident responses to
meet the challenges of the continually changing cyber
environment.
Data Protection
* We have data protection and management policies in
place.
* Steps are being taken to enhance data protection in
light of the General Data Protection Regulation
(GDPR) being introduced in May 2018.
* IT solutions and appropriate training regarding data
protection and management.
---------------------------------------------------------------
2. Details of Related Party Transactions
During the year, the Company and its subsidiaries carried out a number of transactions with related parties in the normal course of business and on an arm's length basis. The names of the related parties, the nature of these transactions and their total value are shown below:
2017/18 2016/17
------------------------------ -------------------- --------------------
GBPmillions Income Receivable Income Receivable
------------------------------ ------- ----------- ------- -----------
Transactions with
Koçtas Yapi
Marketleri Ticaret
A.S. in which the
Group holds a 50%
interest
Commission and other
income 0.7 0.2 1.0 0.4
------------------------------ ------- ----------- ------- -----------
Transactions with
Crealfi S.A. in which
the Group holds a
49% interest 0.2 - 0.1 -
Provision of employee
services 6.6 0.2 6.4 0.3
Commission and other
income
------------------------------ ------- ----------- ------- -----------
Transactions with
Kingfisher Pension
Scheme
Provision of administrative
services 1.3 - 1.3 0.1
------------------------------ ------- ----------- ------- -----------
Services are usually negotiated with related parties on a cost-plus basis. Goods are sold or bought on the basis of the price lists in force with non-related parties.
The remuneration of key management personnel is given in note 8.
Other transactions with the Kingfisher Pension Scheme are detailed in note 26.
3. Directors' Statement of Responsibility
The directors confirm that to the best of their knowledge:
-- the financial statements, prepared in accordance with the relevant financial reporting framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole;
-- the strategic report includes a fair review of the development and performance of the business and the position of the company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face; and
-- the Annual Report and financial statements, taken as a whole are fair, balanced and understandable and provide the information necessary for shareholders to assess the company's performance, business model and strategy.
4. Events after the balance sheet date
In February 2018, the Group commenced formal consultation with employee representatives regarding its plans in France to restructure the business as part of the Group's transformation plan. This is expected to result in an exceptional cost of around GBP35m.
Paul Moore, Group Company Secretary
Tel: +44 (0)207 644 1041
Kingfisher plc
3 Sheldon Square, London W2 6PX
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
ACSSEFFFSFASEDL
(END) Dow Jones Newswires
April 20, 2018 08:00 ET (12:00 GMT)
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