The directors present their report and audited financial statements for the financial year ended 29 January 2011.
The principal activity of Kingfisher plc and its wholly-owned subsidiaries, joint venture and associates is the delivery of the full range of products and services of an international home improvement business.
The Business review provides a comprehensive review of the development, performance and future prospects of the Group's operations for the year ended 29 January 2011. The information set out in the Business Review includes the Group's Key Performance Indicators, a statement on Corporate Responsibility, a Financial Review including financial and capital risk, and a description of the principal risks and uncertainties facing the Group. These sections are incorporated by reference and deemed to form part of this report.
The directors recommend a final dividend of 5.145p (2009/10: 3.575p) per ordinary share amounting to £122m (2009/10: £84m) to be paid on 20 June 2011 to members appearing on the Register at the close of business on 6 May 2011. Together with the interim dividend of 1.925p (2009/10: 1.925p) per ordinary share, amounting to £45m (2009/10: £45m), paid on 12 November 2010, the total dividend for the financial year ended 29 January 2011 will be 7.07p (2009/10: 5.50p) per ordinary share, amounting to £167m (2009/10: £129m).
Full biographical details of the current directors are set out in the Board of Directors section.
Phil Bentley and Michael Hepher retired from the Board on 17 March 2010 and 17 June 2010, respectively. Andrew Bonfield joined the Board as a non-executive director on 11 February 2010 and was appointed by shareholders to the Board at the Company's last Annual General Meeting. Pascal Cagni and Clare Chapman joined the Board as non-executive directors on 17 November 2010 and 2 December 2010 respectively, and will seek re-appointment by shareholders at the Annual General Meeting on 16 June 2011. In accordance with the principles of the new UK Corporate Governance Code, all directors will retire and will be submitted for re-appointment as directors at the Annual General Meeting in 2011.
Directors' indemnity arrangements
The Company has provided qualifying third-party deeds of indemnity for the benefit of each director and former director who held office during the 2010/11 financial year. The Company has also purchased and maintained Directors' and Officers' liability insurance throughout 2010/11. Neither the indemnities nor the insurance provide cover in the event that the director concerned is proved to have acted fraudulently.
Details of directors' remuneration, service contracts and interests in the Company's shares and share options are set out in the Directors' remuneration report. No director had a material interest at any time during the year in any derivative or financial instrument relating to the Company's shares.
Principal risk identification and management
The principal risks and uncertainties facing the Group have been reviewed by the Board and its Committees, as appropriate, and are shown in the Risks section. The Risks section also provides information on the performance of the Board in actively managing those risks, to allow assessment of how the directors have performed their statutory duty to promote the success of the Company.
The commitment of the Group's employees is vital to ensure that high standards of customer care and service are maintained throughout the business. The Group is fully committed to treating its employees and customers with dignity and respect, and to valuing diversity. It is Group policy to:
- ensure there is no discrimination in employment on the grounds of race, gender, age, disability, marital status, sexual orientation or religious belief;
- implement measures in stores to ensure a level of customer service for disabled people equivalent to that offered to non-disabled people; and
- maintain a mechanism which customers and employees can use to give feedback on the Group's performance and ensure that all customer comments are analysed, responded to and acted upon.
Across the Group, women accounted for 40% of total employees and 29% of managers in 2010/11. B&Q UK continued its long-established policy of promoting age diversity, with around a quarter of its employees aged over 50.
The Group's statement on employee development is set out in the People section and details of employee involvement through participation in share incentive schemes are contained in the Directors' remuneration report.
There are a number of communication channels in place to help employees to develop their knowledge of, and enhance their involvement with, the Group. These channels include engagement surveys, briefing groups, internal magazines and newsletters that report on business performance and objectives, community involvement and other applicable issues. Directors and senior management regularly visit stores and discuss matters of current interest and concern with employees.
Details of the Group's corporate responsibility policy and operations.
Kingfisher and its subsidiaries made contributions to charity/community projects worth an estimated £1,598,000 (2009/10: £941,000) during the financial year ended 29 January 2011 – equivalent to 0.2% of pre-tax profits. This included cash donations (£952,000) and gifts-in-kind (£443,000 – retail cost). Support was also given through the donation of time by employees (£203,000).
The Board annually seeks and obtains shareholders' approval to enable the Group to make donations or incur expenditure in relation to EU political parties, other political organisations or independent election candidates under section 366 of the Companies Act 2006. The approval given in 2010 restricted such expenditure to an aggregate limit of £75,000 during the period of 12 months following the date of the Annual General Meeting.
The Group has made no political donations during the year (2009/10: Nil). As with previous annual approvals, the Group has no intention of changing its current policy and practice of not making political donations and will not do so without the specific endorsement of shareholders. The Board obtains the approval on a precautionary basis to avoid any possibility of unintentionally breaching the relevant provisions.
Supplier payment policy
The Company does not impose standard payment terms on its suppliers but agrees specific terms with each of them, and then pays in accordance with those terms. On average, the Company's suppliers are paid in 45 days.
Significant agreements – change of control
There are a number of agreements that take effect, alter or terminate upon a change of control of the Company following a takeover bid, such as bank loan agreements, Medium Term Note ('MTN') documentation, private placement debt and employee share plans. None of these are deemed to be significant in terms of their potential impact on the business of the Group as a whole except for:
- the £500 million credit facility dated 15 March 2005 between, the Company, HSBC Bank plc (as the facility agent) and the banks named therein as lenders, which contains a provision such that in the event of a change of control, any lender may, if they so require, notify the agent that they wish to cancel their commitment whereupon the commitment of that lender will be cancelled and all their outstanding loans, together with accrued interest, will become immediately due and payable;
- the US$297 million US Private Placement notes, issued pursuant to a note purchase agreement dated 24 May 2006 by the Company to various institutions, which contains a provision such that in the event of a change of control, the Company is required to make an offer to the holders of the US Private Placement notes to prepay the principal amount of the notes together with interest accrued; and
- the €200 million MTNs, issued on 23 November 2005 under the Group's €2,500 million MTN programme by the Company to various institutions, which contains an option such that in the event of a change of control and, as a result of the change of control, the Company's credit rating is downgraded below investment grade (BBB – or equivalent) any holder of the MTNs may require the Company to prepay the principal amount of that note together with interest accrued.
The Company does not have agreements with any director or officer that would provide compensation for loss of office or employment resulting from a takeover, except that provisions of the Company's share incentive schemes may cause options and awards granted under such schemes to vest on a takeover.
There is no information that the Company would be required to disclose about persons with whom it has contractual or other arrangements which are essential to the business of the Company.
Details of the Company's issued share capital are set out in note 28 of the consolidated financial statements. All of the Company's issued ordinary shares are fully paid up and rank equally in all respects.
The rights and obligations attaching to the Company's ordinary shares, in addition to those conferred on their holders by law, are set out in the Company's Articles of Association, copies of which can be obtained from the Company's website or by writing to the Company Secretary. The holders of ordinary shares are entitled to receive the Company's Annual Report and Accounts, to attend and speak at general meetings of the Company, to appoint proxies and to exercise voting rights.
There are no restrictions on the transfer of ordinary shares or on the exercise of voting rights attached to them, except (i) where the Company has exercised its right to suspend their voting rights or to prohibit their transfer following the omission of their holder or any person interested in them to provide the Company with information requested by it in accordance with Part 22 of the Companies Act 2006 or (ii) where their holder is precluded from exercising voting rights by the Financial Services Authority Listing Rules or the City Code on Takeovers and Mergers.
The Company has a Sponsored Level 1 American Deposit Receipt ('ADR') programme in the United States.
The Group's financial risk management objectives and policies are set out within note 24 to the financial statements. Note 24 also details the Group's exposure to foreign exchange, interest, credit and liquidity risks. These notes are included by reference and form part of this report.
Authority to purchase own shares
At the Annual General Meeting in 2010, shareholders approved a resolution for the Company to make purchases of its own shares to a maximum number of 236,169,964 ordinary shares, being approximately 10% of the issued share capital. This resolution remains valid until the conclusion of this year's Annual General Meeting on 16 June 2011. As at 23 March 2011, the directors have not used this authority. In order to retain maximum flexibility, a resolution will be proposed at this year's Annual General Meeting to renew this authority. It is the Company's current intention that shares acquired under this authority would be cancelled.
Authority to allot shares
At the Annual General Meeting in 2010, shareholders approved a resolution to give the directors authority to allot shares up to an aggregate nominal value of £123,708,076. In addition, shareholders approved a resolution to give the directors authority to allot up to a nominal amount of £247,416,153 in connection with an offer by way of a rights issue in accordance with ABI guidance. If this additional allotment authority were used, the ABI guidance will be followed. The directors have no present intention to issue ordinary shares, other than pursuant to employee share incentive schemes. These resolutions remain valid until the conclusion of this year's Annual General Meeting when resolutions will be proposed to renew these authorities.
As at 15 March 2011, the Company was aware of the following interests in its shares:
|Number of ordinary shares held||% total voting rights|
|Thornberg Investment Management Inc||171,182,863||7.24%|
|Legal & General Investment Management Limited||90,889,283||3.84%|
|Artisan Partners LP||80,420,646||3.40%|
|BlackRock Advisors Inc (US)||77,540,551||3.28%|
|APG Asset Management||73,494,476||3.11%|
Annual General Meeting
The 2011 Annual General Meeting of the Company will be held on 16 June 2011 at the Hilton London Paddington Hotel, Paddington at 11:00am. A full description of the business to be conducted at the meeting is set out in the separate Notice of Annual General Meeting.
By order of the Board
23 March 2011