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KGF Kingfisher Plc

249.40
3.40 (1.38%)
28 Mar 2024 - Closed
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
  3.40 1.38% 249.40 249.60 249.80 249.80 244.90 248.50 7,208,435 16:35:22
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Misc General Mdse Stores 13.06B 471M 0.2483 10.06 4.74B

Kingfisher PLC Annual Financial Report & Notice of AGM (5444Y)

09/05/2019 12:17pm

UK Regulatory


Kingfisher (LSE:KGF)
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TIDMKGF

RNS Number : 5444Y

Kingfisher PLC

09 May 2019

9 May 2019

KINGFISHER PLC

(the "Company")

Annual Report and Accounts 2019 and Notice of 2019 Annual General Meeting

The Company's Annual Report and Accounts for the year ended 31 January 2019 (the 'Annual Report') and Notice of Annual General Meeting to be held on 9 July 2019 have been published on the Company's website www.kingfisher.com (together 'the Documents'). The Documents have also been posted or otherwise made available to shareholders, depending on their elected method of communication.

In accordance with Listing Rule 9.6.1 a copy of the Documents, together with the Form of Proxy and Notice of Availability for documents on the Company's website have also been submitted to the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/nsm.

The final results for the year ended 31 January 2019, released by the Company on 20 March 2019, include the information required pursuant to Rules 4.1 and 6.3.5 of the UK Disclosure Guidance and Transparency Rules, excepting publication of the responsibility statement of the Directors in respect of the 2019 Annual Report, a description of the principal risks and uncertainties facing the Company, and the related party transactions carried out by the Company and its subsidiaries during the year, which are detailed below:

   1.       Principal risks 

The principal risks and uncertainties facing the Company are set out below.

 
 1. LEVEL AND IMPACT OF CHANGE 
 As our transformation to ONE Kingfisher progresses we are continuing 
  to carry out a number of significant projects across the Group, 
  while facing issues due to the external environment. The scope 
  and pace of change may disrupt our business as usual activities 
  and the external factors may 
  increase this risk. 
 Strategic pillar 
 - Unified & Unique offer 
  - Digital 
  - Operational efficiency 
 How our risks have changed 
 Increasing. This is an area of increasing risk for us as we 
  transform the business in a changing external environment. 
 How we manage and monitor the risk 
 
                    *    Programme of strategic updates to the Board planned 
                         during the year. 
 
 
                    *    Monthly tracking against key milestones and reporting 
                         to the Group Executive and the Board. 
 
 
                    *    Transformation function to coordinate and monitor 
                         progress. 
 
 
                    *    Operating Company Transformation Directors in place 
                         to deliver the transformational change. 
 
 
                    *    A release approach in place which: 
 
 
                   o Delivers groups of internally consistent deliverables. 
                   o Improves dependency management. 
                   o Delivers clearer implementation path. 
 2. 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. Having completed all the core activities within 
  B&Q and Castorama France (our biggest Operating Companies) 
  as well as implemented a number of key modules in all other 
  markets, which includes the rollout to stores, we have learnt 
  and continue to learn with each implementation and this is 
  then rolled into the next area of change. 
 How we manage and monitor the risk 
 
        *    Change control procedure in place with the leadership 
             team having final approval on all functional changes. 
 
 
        *    The rollout 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 rollouts. 
 
 
        *    '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. 
 
 
        *    We have good quality skills and capabilities both in 
             the central team and in the local teams which has 
             been essential as we have rolled out further and will 
             be important for maintaining and enhancing the 
             platform in the future. 
 
 
        *    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. 
 3. UNIFYING OUR OFFER AND PROCESSES 
 We aim to offer customers a product range which is differentiated 
  from that of our competitors through innovation, exclusivity 
  and affordability. 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 executing this across the 
  Group and delivering the projected benefits. 
 Strategic pillar 
 - Unified & Unique offer 
 How our risks have changed 
 No change. As the project progresses we have a better understanding 
  of the risks following previous implementations and have used 
  this information to improve our planning, execution and implementation 
  of range changes. 
 How we manage and monitor the risk 
 
        *    A clearly defined set of range principles and the 
             main customer projects that will provide the 
             opportunity to create the unique offer have been 
             defined. 
 
 
        *    Teams with specialised roles are tasked to develop 
             and take best practice and the best products from 
             across the company. 
 
 
        *    Strong sourcing network which is focused on securing 
             company buying opportunities. 
 
 
        *    Validation and governance processes in place for 
             business case approvals of range and procurement 
             decisions. 
 
 
        *    The plan for each range change is discussed and 
             agreed with the trading function and Directors at key 
             points in the process. 
 
 
        *    Strong project management process including capturing 
             lessons learned for continuous improvement. 
 
 
        *    Monthly tracking and review by the Offer & Sourcing 
             board to identify and respond to potential risks. 
 
 
        *    Performance of the ranges and brands is tracked, and 
             strategies updated accordingly. 
 
 
        *    Vendor management process in place which includes 
             vendor selection, risk assessments, monitoring of 
             vendor responses, and communication. 
 
 
        *    We have a systems roadmap which is reviewed regularly 
             with IT to identify and prioritise key programmes. 
 4. CHANNEL DEVELOPMENT 
 As consumer preferences continue to change, we must ensure 
  we create and deliver a culture of innovation in our format 
  and digital channels that keeps pace with changing consumers 
  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. 
 
 
        *    Rollout of next generation e-commerce in local 
             markets and development of new kitchens and bathroom 
             capability to be deployed in local markets. 
 
 
        *    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 and 
             features to customers through our online channels and 
             in store. 
 
 
        *    Group mobile and desktop platform has been built and 
             launched in B&Q; new online search and content 
             management capabilities will be launched in 2019 to 
             improve diy.com customers' experience further. A 
             rollout plan has also been developed for our other 
             local markets in line with unified IT platform and 
             Group transformation timelines. 
 
 
        *    Digital ways of working and increasing levels of 
             Agile development are being progressed in all digital 
             functions. 
 
 
        *    Unified IT Platform continues to be rolled out across 
             the Group to provide the systems and capabilities 
             required to deliver the foundations for the digital 
             strategy. 
 
 
        *    Group Concept Director appointed. 
 
 
        *    Developing the concept combining the best of store 
             format and digital in pilot stores to be launched in 
             2019. 
 
 
        *    Group Trading Director and trading team established. 
 
 
        *    Director of Pricing and Pricing Centre of Excellence 
             created. 
 
 
        *    A Group pricing strategy is in place. The Offer & 
             Sourcing and Trading functions set recommended prices 
             on all unified ranges, securing the best selling 
             price whilst optimising margin. 
 
 
        *    Pricing tools and tracking compliance in place. 
 5. POLITICAL ENVIRONMENT 
 With continuing geopolitical and local market uncertainty and 
  market volatility across all the economies in which we operate, 
  we are exposed to potential risks which may both impact consumer 
  confidence and disrupt the day-to-day operations of the business. 
 Strategic pillar 
 - Retail operations 
 How our risks have changed 
 Increasing. We have seen an increased number of uncertainties 
  relating to the economy across our key markets, heightened 
  geopolitical tensions, disruption in some of our markets and 
  continued currency volatility. 
 How we manage and monitor the risk 
 
         *    Provision of supply chain finance programmes to 
              support suppliers. Additional information on these 
              arrangements can be found on page 150. 
 
 
         *    Portfolio of international banking partners that 
              provide flexibility and reliable local retail cash 
              and card payment processing services. 
 
 
         *    Access to funding: both debt funding, including an 
              up-to-date debt capital markets programme, and 
              significant committed liquidity facilities. 
 
 
         *    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. 
 
 
         *    Corporate Affairs team actively monitors the 
              political and economic situations in the countries in 
              which we operate or those which may impact our 
              operations. 
 
 
         *    Strategies in place to identify, monitor and aim to 
              influence changes to legislation which may impact the 
              business. 
 
 
         *    Corporate Affairs team oversees direct policy and 
              political engagement with dedicated resource in the 
              UK, France, Belgium, Poland and Romania. This is 
              supported by local representatives in our Operating 
              Companies and our membership of key business trade 
              associations in every market. 
 
 
         *    Crisis management processes and teams in place to 
              monitor and manage situations as they arise. 
 6. EU REFERUM 
 Following the UK's decision to leave the EU we continue to 
  see increased economic uncertainty, exchange rate volatility 
  and an impact on consumer confidence in the UK market. These 
  issues may impact our purchase costs, including additional 
  import tariffs and packaging costs, and our operations, including 
  supply chain delays for the UK, Ireland and Northern Europe. 
  Assuming an agreement to exit is reached, the negotiations 
  on the future relationship may also 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. 
 How we manage and monitor the risk 
 
        *    A Brexit Steering Group has been in place since the 
             2016 referendum. This group is responsible for 
             monitoring the Brexit process and agreeing actions. 
             The Group consists of Finance, Tax, Treasury, HR, IT, 
             Legal, Corporate Affairs, Regulatory and Operational 
             teams. 
 
 
        *    Third-party advisors were engaged to advise on risk 
             and mitigation plans, especially in the event of a 
             'No Deal', and action plans developed. 
 
 
        *    We continue to engage directly with government and 
             alongside key trade bodies. 
 
 
        *    Work has been done to consider the implications of 
             Brexit, considering different scenarios and preparing 
             mitigation plans across key operational areas 
             including: 
 
 
       Import tariffs 
        *    We have assessed the impact of a 'No Deal' scenario 
             on our tariff rates and have built mitigation 
             contingency plans in case required. 
 
 
        *    We have also updated our sourcing tender process to 
             take account of Brexit related risk in the selection 
             of new vendors. 
 
 
       Customs clearance 
        *    We are taking steps to mitigate the risk of UK port 
             delays in the event that customs clearance processes 
             and transport infrastructures become overwhelmed, 
             including improving our customs and import management 
             capability. 
 
 
       Vendor readiness 
        *    We are working with our vendors through our buying 
             offices to check that vendors are as ready as they 
             can be for Brexit with necessary processes in place 
             where they are responsible for importing product from 
             EU to UK and from UK to EU. 
 
 
       Product standards 
        *    We are working with vendors to ensure they have taken 
             necessary steps to update product testing 
             accreditation and regulations around chemicals, 
             horticulture etc. so they remain valid both in the UK 
             and EU markets as regulations start to diverge. 
 
 
       Data 
        *    In order to continue to comply with General Data 
             Protection Regulation we are acting to add additional 
             clauses in some vendor agreements and inter-company 
             agreements. 
 7. ATTRACTING, RETAINING AND INVESTING IN OUR PEOPLE CAPABILITY 
 Our colleagues are critical to the successful delivery of our 
  strategy and business. We must ensure we take steps to retain 
  and attract talent to the company and make the necessary investment 
  in our people to ensure that we have the appropriate capacity, 
  skills and capabilities. 
 Strategic pillar 
 
   *    Unified & Unique offer 
 
 
   *    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. 
 
 
         *    Engagement process in place to ensure we have an 
              appropriate and timely engagement methodology which 
              enables us to check across all colleagues 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. 
 
 
         *    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. 
 
 
         *    Remuneration committee oversees reward policy. 
 
 
         *    Nomination committee oversees Board composition and 
              succession planning. 
 8. LEGAL AND REGULATORY 
 The Group's operations are subject to an increasing 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 and could expose 
  us to significant fines. 
 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. 
 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 CEO. 
 
 
        *    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 at Kingfisher and each of our Operating 
             Companies work and communicate together to form a 
             legal and 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 and 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 operates throughout the Group 
             and all calls are followed up, including monitoring 
             at the local Audit Committee level. 
 
 
        *    Market Abuse Regulation 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. We continue to see an increase in the frequency 
  and sophistication of cyber-attacks and security incidents 
  which require us to remain vigilant in this area. 
 How we manage and monitor the risk 
      Cyber security 
        *    Cyber security continues to receive Executive level 
             sponsorship and Board focus. 
 
 
        *    Dedicated IT governance boards are established to 
             monitor this evolving risk and the associated 
             mitigating controls. 
 
 
        *    As part of the IT planning process, we have 
             established a roadmap which covers security, 
             governance and identity initiatives to continue to 
             mature the tools and capabilities we have available 
             to us. 
 
 
        *    Independent reviews are performed of the Group's 
             cyber security processes and initiatives on an annual 
             basis. 
 
 
        *    We regularly review the threats facing Kingfisher and 
             have been working with partners and security 
             specialists to implement tools and processes to 
             identify and remediate vulnerabilities. 
 
 
       Data protection 
        *    We have data protection and management policies in 
             place. 
 
 
        *    Data protection has been enhanced in light of the 
             General Data Protection Regulation. 
 
 
        *    IT solutions and appropriate training regarding data 
             protection and management in place. 
 
   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:

 
                                          2018/19               2017/18 
 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          0.4            -      0.7          0.2 
                                   -------  -----------  -------  ----------- 
 Transactions with Crealfi 
  S.A. in which the Group 
  holds a 49% interest                 0.6            -      0.2            - 
  Provision of employee services       5.7          0.3      6.6          0.2 
  Commission and other income 
                                   -------  -----------  -------  ----------- 
 Transactions with Kingfisher 
  Pension Scheme 
  Provision of administrative 
  services                             1.5            -      1.3            - 
                                   -------  -----------  -------  ----------- 
 

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.

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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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May 09, 2019 07:17 ET (11:17 GMT)

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