We use cookies to give you the best possible experience on our site.
By continuing to use the site you agree to our use of cookies.

We have a new privacy policy

Accept Cookies

Interim results for the 26 weeks ended 30 July 2011


15 September 2011


Financial review

A summary of the reported financial results for the six months ended 30 July 2011 is set out below:

Sales 5,662 5,454 3.8%
Adjusted pre-tax profit 439 354 24.0%
Profit before taxation after exceptional items 438 351 24.8%
Adjusted basic earnings per share 13.5p 10.6p 27.4%
Dividends 2.47p 1.925p 28.3%

A reconciliation of statutory profit to adjusted profit is set out below:

Profit before taxation 438 351 24.8%
Exceptional items (net) 7  
Profit before exceptional items and taxation 438 358 22.3%
Financing fair value remeasurements 1 (4)  
Adjusted pre-tax profit 439 354 24.0%
Income tax expense on pre-exceptional profit (118) (107)  
Impact of prior year items on income tax (6) (2)  
Income tax on fair value remeasurements 1  
Adjusted post-tax profit 315 246 28.0%
Minority interests 1 2  
Adjusted post-tax profit attributable to equity shareholders 316 248 27.4%

Profit after tax and EPS including all exceptional items for the six months ended 30 July 2011 is set out below:

  2011/12 2010/11 Increase
Profit after tax £320m £248m 29.0%
Basic EPS 13.7p 10.6p 29.2%


Total sales grew by 3.0% on a constant currency basis and 3.8% to £5.7 billion on a reported rate basis. On a like-for-like basis, Group sales were up 1.6% (2010/11: down 1.3%). During the period, a net additional 17 new stores were opened taking the store network to 843 stores (excluding 32 Turkey JV stores). During H1 we received clearance for B&Q UK to acquire 29 stores from Focus DIY, with 28 due to open in H2.

Retail profit before exceptional items grew by 17.6% to £473 million (2010/11: £402 million), and by 19.7% to £473 million (2010/11: £395 million) including exceptional items.

The net interest charge for the six months was £5 million, down £11 million on the prior period. A breakdown of this is shown below.

Profit before tax grew by 24.8% to £438 million as a result of improved trading in the period and a reduction of net finance costs. On a more comparable basis, which removes the impact of one-off items and fair value remeasurements, adjusted pre-tax profit grew by 24% to £439 million.

Profit after tax for the period grew by 29% to £320 million. This resulted in the Group recording a basic EPS of 13.7p which is up 3.1p (+29.2%) in the period.


Net interest has decreased by £11 million in the period. The breakdown is as follows:

Interest on net debt (6) (16)
Non Cash    
Interest return/(charge) on defined benefit pension scheme 1 (4)
Other 1
Underlying net interest (4) (20)
Financing fair value remeasurements (1) 4
Statutory net interest (5) (16)

Underlying net interest has fallen by £16 million driven by a fall in interest on net debt and the interest on our defined benefit pension scheme. Interest on net debt has fallen principally as a result of long-term debt bought back and redeemed in the past year. The debt buybacks were enabled by the Group's focus on cash as part of the 'Delivering Value' programme. Pensions interest is calculated using the gross asset and liability positions and market return and discount rates at the start of the year. The year on year movement is mainly due to a higher asset position at the start of the current period.


The effective rate of tax, calculated on profit before exceptional items, prior year tax adjustments and the impact of rate changes is 28% (2010/11: 30%).

Effective tax rate calculation 2011/12 Profit
rate %
Profit before tax and tax thereon 438 118 27
Adjusted for prior year tax and rate changes   6  
Total – adjusted 438 124 28

The Group's effective tax rate is sensitive to the blend of tax rates and profits in the Group's various jurisdictions. Whilst we will continue to plan our tax affairs efficiently and adopt a prudent approach towards providing for uncertain tax positions we are aware that with pressure on government finances the tax cost of multinationals may increase over time.

Exceptional items

Exceptional items are a net £nil post tax charge in the first half (2010/11: charge of £3 million). This comprises a £2 million exceptional credit for the release of the UK restructuring provision following the exit of an idle store offset by a £2 million exceptional cost incurred starting the integration of ex-Focus DIY stores into the B&Q UK store network. We anticipate the full exceptional integration cost will be £13 million, all of which will be charged in this financial year (H1 £2 million, H2 £11 million).

Earnings per share

Basic earnings per share have increased by 29.2% to 13.7p (2010/11: 10.6p). On a more comparable basis, removing the impact of exceptional items, prior year tax items and financing fair value remeasurements, adjusted basic earnings per share have increased by 27.4% to 13.5p (2010/11: 10.6p).

  2011/12 2010/11
Basic earnings per share 13.7p 10.6p
Exceptional items 0.3p
Tax on exceptional and prior year items (0.3)p (0.2)p
Financing fair value remeasurements (net of tax) 0.1p (0.1)p
Adjusted earnings per share 13.5p 10.6p


The interim dividend has been calculated, as in the prior year, automatically as 35% of the prior year's total dividend. Any increase in the full year dividend is considered annually in March. As announced at the year end, the interim dividend is proposed at 2.47p per share (2010/11: 1.925p per share). The ex-dividend date will be 5 October 2011 and the dividend will be paid on 11 November 2011, to those shareholders who are on the Register of Members at the close of business on 7 October 2011. Shareholders are able to take this dividend as cash or in shares, through the Dividend Reinvestment Plan (DRIP). Shareholders who wish to elect for the DRIP for the forthcoming interim dividend but have not already done so must notify the Registrars, Computershare Investor Services plc, by 21 October 2011.

Free cash flow

A reconciliation of free cash flow and cash flow movement in financial net debt/cash is set out below:

Operating profit (before exceptional items) 443 374
Other non-cash items(1) 134 135
Change in working capital pre-exceptionals (170) 25
Pensions and provisions pre-exceptionals (26) (30)
Operating cash flow 381 504
Net interest paid (5) (12)
Tax paid (68) (51)
Gross capital expenditure (175) (127)
Disposal of assets 73
Free cash flow 133 387
Dividends paid (121) (84)
Share purchase for employee incentive schemes (117)
Strategic capex investments(2)    
- Focus (24)
- UK (64)
Other(3) (4) (5)
Cash flow movement in net (debt)/cash (197) 298
Opening net (debt)/cash 14 (250)
FX impacts (3) (29)
Closing net (debt)/cash (186) 19

(1) Includes depreciation and amortisation, share-based compensation charge, pre-exceptional non cash movement in pensions and provisions, share of post-tax results of JVs and associates and profit/loss on retail disposals.

(2) Investments of a one-off nature, such as bolt-on acquisitions and buy outs of freehold in existing leased stores

(3) Includes dividends received from JVs and associates, issue of share capital to equity shareholders, disposal of own shares, business acquisitions and cash utilisation of exceptional items.

Free cash flow of £133 million was generated in the period, a decrease of £254 million year on year due to increases in working capital and net capex which were partially offset by the increase in operating profit.

As anticipated working capital has increased during the period driven by new stores, higher import stock holdings and LME(1) (impact £80 million in the period). The opportunity exists to reduce stock in certain territories and categories and we will continue to focus on this area.

Gross capex has increased by £48 million year on year as a result of investment in our store networks in Poland and Russia, and in our group IT systems. During the prior year we received £73 million net proceeds principally on property sales.

During the period we have invested additional funds outside of our normal 'free cash flow' with £88 million allocated to strategic capex investments and £117 million on the employee share trust acquiring 42 million Kingfisher shares to match existing share incentive schemes, avoiding dilution of shareholder interests when the schemes mature. The strategic capex spend includes £64 million in the UK where we have actively decided to purchase freeholds already occupied and £24 million on the acquisition of 29 Focus stores.

Further capex of £20 million is anticipated on the Focus stores during the year and £13 million of exceptional costs will be incurred whilst we integrate the stores before they open.

(1) Legislative changes shortening French payment terms, implemented over the 3 years to 2012

Financial net debt at the end of the period was £186 million (29 January 2011: £14 million net cash; 31 July 2010: £19 million net cash). The Group maintains a stable investment grade credit rating of BBB-. The Group refinanced its £500 million 2012 facility with a £200 million 2016 committed facility in the period with no changes to the covenant terms. This facility was undrawn at 30 July 2011. The next significant debt maturity arises in November 2012. During the period, the Group has bought back December 2014 bonds with a nominal value of £9.4 million.

The maturity profile of Kingfisher's debt is illustrated in the Debt investors section.


The IAS 19 net pension position at 30 July 2011 was a deficit of £68 million, compared with £58 million at 29 January 2011. The decline in the position since 29 January 2011 is due principally to updating the financial assumptions based on market conditions at 30 July 2011. This has led to the discount rate assumption being reduced from 5.6% to 5.3%.

In the previous financial year the Group established a partnership, giving the UK defined benefit pension scheme recourse to property assets in the event of Kingfisher's insolvency and a regular income stream forming part of the Group's annual cash contributions. In the period a further two UK properties with a combined market value of £119 million were transferred into the partnership and leased back to B&Q plc bringing the total contribution to £184 million to date.