Kingfisher finances its operations using a number of funding instruments, including bank facilities and leases.
Kingfisher regularly reviews the level of cash and debt facilities required to fund its activities. This involves preparing a prudent cash flow forecast for the medium term, determining the level of debt or facilities required to fund the business, planning for repayment of debt at its maturity, and identifying an appropriate amount of headroom to provide a reserve against unexpected outflows and/or unexpected impacts to cash inflows. To retain financial flexibility, we aim to maintain strong liquidity headroom (including cash and cash equivalents, and committed debt facilities), which is currently set at a minimum of £800m.
As of 31 July 2023, the Group had £2.2bn (FY 22/23: £2.3bn) of net debt on its balance sheet including £2.4bn (FY 22/23: £2.4bn) of total lease liabilities.
The ratio of the Group’s net debt to EBITDA was 1.6 times as of 31 July 2023 (1.6 times as of 31 January 2023). At this level, the Group has the necessary financial flexibility whilst retaining an efficient cost of capital.
To maintain a solid investment grade credit rating, our maximum net debt to EBITDA on an IFRS 16 basis is 2.0 times over the medium term.
Net debt to EBITDA is set out below:
