6 Finance costs
| £ millions | 2006 | 2006 | 2005 | 2005 |
|---|---|---|---|---|
| Bank and other interest payable | 46.7 | 36.7 | ||
| Less amounts capitalised in the cost of qualifying assets | (3.3) | (3.8) | ||
| Interest payable | 43.4 | 32.9 | ||
| Finance lease charges | 6.0 | 5.9 | ||
| Net interest charge on pension schemes (note 27) | 3.8 | 5.1 | ||
| Financing fair value remeasurements | (1.6) | – | ||
| Total finance cost | 51.6 | 43.9 | ||
| Bank and other interest receivable | (13.9) | (15.2) | ||
| Total finance income | (13.9) | (15.2) | ||
| Net finance costs | 37.7 | 28.7 |
Borrowing costs included in the cost of qualifying assets during the year arose on the general borrowing pool and are calculated by applying a capitalisation rate of 5.3% (2005: 5.1%) to expenditure on such assets.
Interest payable above includes amortisation of underwriting and issue costs of new debt of £0.5m (2005: £nil).
7 Profit before taxation
The following items have been charged/(credited) in arriving at profit before taxation:
| £ millions | 2006 | 2005 |
|---|---|---|
|
||
| Operating lease rentals1 | ||
| Minimum lease payments | 316.3 | 262.1 |
| Contingent rents | 0.3 | – |
| Sublease income | (14.9) | (12.5) |
| 301.7 | 249.6 | |
| Depreciation of property, plant and equipment and investment properties | ||
| Owned assets | 139.2 | 125.4 |
| Under finance leases | 10.6 | 10.2 |
| Impairment of property, plant and equipment and investment properties | 40.1 | – |
| Amortisation of intangibles2 | 32.0 | 23.7 |
| Impairment of intangibles2 | 7.5 | – |
| Loss/(profit) on the disposal: | ||
| Land and buildings | (15.3) | (3.1) |
| Fixtures, fittings & equipment3 | 37.8 | 5.9 |
| Available for sale financial assets | (3.6) | (0.9) |
| Intangible assets | 2.0 | – |
| Repairs and maintenance | 58.6 | 43.9 |
| Provisions to write inventories down to net realisable value4 | 47.4 | 28.1 |
| Trade receivables: impairment of bad and doubtful debts | 0.4 | 0.5 |
| Staff costs (note 8) | 1,106.0 | 1,054.7 |
| Auditors’ remuneration (see below) | 2.7 | 2.2 |
Auditors’ remuneration
| £ millions | 2006 | 2005 |
|---|---|---|
| Audit and related services | ||
| Statutory audit services 5 | 1.6 | 1.2 |
| Further assurance services | ||
| IFRS transition | 0.1 | 0.4 |
| Other assurance services | 0.2 | 0.3 |
| Taxation services | 0.5 | 0.3 |
| Other non-audit services | 0.3 | – |
| 2.7 | 2.2 | |
8 Employees and directors
| £ millions | 2006 | 2005 | |
|---|---|---|---|
| Employee benefit expenses: | |||
| Wages and salaries | 917.5 | 880.4 | |
| Social security costs | 147.9 | 134.2 | |
| Post employment benefits | – defined benefit (note 27) | 36.9 | 38.0 |
| – defined contribution (note 27) | 3.7 | 2.1 | |
| 1,106.0 | 1,054.7 | ||
| Number ’000 | |||
| Average number of persons employed: | |||
| Stores | 71.6 | 67.2 | |
| Administration | 3.9 | 3.5 | |
| 75.5 | 70.7 | ||
| The equivalent number of employees working full-time would have been | 63.8 | 58.7 |
Remuneration of key management personnel
The remuneration of the Directors and senior management (as shown in Our management), who are the key management personnel of the Group, is set out below in aggregate for each of the categories specified in IAS 24 Related Party Disclosures. The prior year information related to the Directors and members of the Executive Committee as shown in the Annual Report and Accounts 2004/05 which consisted of a smaller number of people and is therefore not directly comparable.
| £’000 | 2006 | 2005 |
|---|---|---|
|
||
| Short-term employee benefits | 9,174 | 6,964 |
| Post employment benefits | 743 | 608 |
| Other long-term benefits | 7 | 6 |
| Termination benefits | – | – |
| Share-based payment | 2,978 | 2,461 |
| 12,902 | 10,039 | |
Further detail in respect to Directors’ remuneration is set out in the Directors’ Remuneration Report. During the year, the actual aggregate gains on the Directors’ Kingfisher share options at the date of exercise were £nil (2005: £8,747).
Directors’ transactions
There were no transactions with the Directors during the period (2005: £nil).
For information concerning related party transactions, see note 36.
9 Income tax expense
| £ millions | 2006 | 2005 |
|---|---|---|
| UK corporation tax | ||
| Current tax on profits for the period | 7.2 | 280.8 |
| Adjustment in respect of prior periods | (15.8) | (8.3) |
| (8.6) | 272.5 | |
| Double taxation relief | (0.4) | (156.1) |
| (9.0) | 116.4 | |
| Foreign tax | ||
| Current tax on profits for the period | 86.9 | 73.9 |
| Adjustments in respect of prior periods | 0.2 | 0.2 |
| 87.1 | 74.1 | |
| Deferred tax | ||
| Current year | 20.2 | 13.4 |
| Adjustment in respect of prior periods | (4.3) | (1.8) |
| Attributable to changes in tax rates | (1.2) | (0.9) |
| 14.7 | 10.7 | |
| 92.8 | 201.2 |
Factors affecting tax charge for the period
The tax charge for the period differs from the standard rate of corporation tax in the UK of 30%. The differences are explained below:
| £ millions | 2006 | 2005 |
|---|---|---|
| Profit before tax | 231.8 | 647.7 |
| Profit multiplied by the standard rate of corporation tax in the UK of 30% (2005: 30%) | 69.5 | 194.3 |
| Effects of: | ||
| Share of results of associates and joint ventures | (3.4) | (4.3) |
| Expenses not deductible for tax purposes | 30.3 | 14.1 |
| Losses not recognised | 10.7 | 2.8 |
| Foreign tax rate differences | 6.8 | 5.1 |
| Adjustments in respect of prior periods/attributable to change in tax rates | (21.1) | (10.8) |
| 92.8 | 201.2 |
In addition to the amount charged to the income statement, the following amounts of deferred tax have been credited directly to equity: £1.1m (2005: £3.2m) relating to gains on property other than investment property; £4.5m (2005: £0.3m) relating to foreign exchange; £14.5m (2005: £23.8m) relating to the actuarial valuation of the Group’s pension scheme (see note 30).
A tax credit of £68.8m has been recognised in the income statement relating to exceptional items, of which £40.1m is credited against the current year tax charge in relation to the £215.4m net exceptional charge, with the remaining £28.7m credited in respect of prior periods, relating to tax previously provided on exceptional items which is no longer required.
Kingfisher paid €137.5m (£98.5m) tax to the French tax authorities in the year ended 31 January 2004 as a consequence of the Kesa Electricals demerger and recorded this as an exceptional tax charge. Proceedings for the recovery of this tax have been initiated and although this may take several years to be resolved, Kingfisher believes that the risk of ultimately being liable for this amount is low. No asset has been recognised in these accounts as the recovery of this amount is not sufficiently certain at this time.
In certain circumstances, it is possible that the conditions of the UK and French tax clearances for the demerger of Kesa Electricals in the year to 31 January 2004 could be breached. Whilst the consequences of such a breach could be significant, the Group actively monitors compliance with these conditions and believes that the likelihood of any breach is remote.
10 Dividends
| £ millions | 2006 | 2005 |
|---|---|---|
| Amounts recognised as distributions to equity holders in the year: | ||
| Final dividend for the year ended 29 January 2005 of 6.8p per share (31 January 2004: 6.15p per share) | 159.7 | 143.4 |
| Interim dividend for the year ended 28 January 2006 of 3.85p per share (29 January 2005: 3.85p per share) | 89.5 | 89.9 |
| Dividend paid to Employee Share Ownership Plan Trust (ESOP) shares | (1.8) | (3.1) |
| 247.4 | 230.2 | |
| Proposed final dividend for the year ended 28 January 2006 of 6.8p per share | 160.0 |
The proposed final dividend for the year ended 28 January 2006 is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.
For the 2005 interim dividend, a scrip dividend alternative was offered to shareholders at 1 share for every 80 ordinary shares and was elected for by holders of 520.9 million shares. For the 2004 final dividend, a scrip dividend alternative was offered to shareholders at 1 share for every 47 ordinary shares and was elected for by holders of 86.5 million shares.
A cash dividend and the Dividend Reinvestment Plan (DRIP) for the year ended 28 January 2006 has been approved for payment with allotment due on 2 June 2006. The ex-dividend date will be 5 April 2006 and the record date will be 7 April 2006. If shareholders wish to elect for the DRIP for the dividend for the year ended 28 January 2006 and have not already done so, a letter or completed DRIP mandate form must be received by Kingfisher’s Registrars, Computershare Investor Services PLC, by 11 May 2006 at the latest.