Consolidated income statement - Kingfisher plc

Consolidated income statement - Kingfisher plc Consolidated income statement Year ended 31 January 2016 2014/15 2015/16 (restated – note 2) Before Exceptional Before Exceptional exceptional items exceptional items ? millions Notes Items (note 4) Total items (note 4) Total Sales 3 10,441 - 10,441 10,966 - 10,966 Cost of sales (6,545) - (6,545) (6,918) - (6,918) Gross profit 3,896 - 3,896 4,048 - 4,048 Selling and distribution expenses (2,666) (308) (2,974) (2,835) (32) (2,867) Administrative expenses (567) (15) (582) (571) - (571) Other income 26 157 183 40 (3) 37 Share of post-tax results of joint ventures and associates 3 - 3 5 - 5 Operating profit 692 (166) 526 687 (35) 652 Analysed as: Retail profit 3 746 (166) 580 742 (35) 707 Central costs (45) - (45) (40) - (40) Share of interest and tax of joint ventures and associates (5) - (5) (6) - (6) B&Q China operating loss (4) - (4) (9) - (9) Finance costs (22) - (22) (13) - (13) Finance income 8 - 8 5 - 5 Net finance costs 5 (14) - (14) (8) - (8) Profit before taxation 678 (166) 512 679 (35) 644 Income tax expense 6 (167) 67 (100) (177) 106 (71) Profit for the year 511 (99) 412 502 71 573 Attributable to: Equity shareholders of the Company 412 573 Non-controlling interests - - 412 573 Earnings per share 7 Basic 17.8p 24.3p Diluted 17.8p 24.2p Adjusted basic 22.0p 21.3p Adjusted diluted 22.0p 21.2p The proposed final dividend for the year ended 31 January 2016, subject to approval by shareholders at the Annual General Meeting, is 6.92p per share. 1 Consolidated statement of comprehensive income Year ended 31 January 2016 ? millions Notes 2015/16 2014/15 Profit for the year 412 573 Actuarial gains on post-employment benefits 9 19 175 Tax on items that will not be reclassified (8) (85) Total items that will not be reclassified subsequently to profit or loss 11 90 Currency translation differences Group 1 (308) Joint ventures and associates (3) (2) Transferred to income statement 12 (7) - Cash flow hedges Fair value gains 24 70 Gains transferred to inventories (50) (5) Available-for-sale financial assets Fair value gains 2 - Tax on items that may be reclassified 8 (14) Total items that may be reclassified subsequently to profit or loss (25) (259) Other comprehensive income for the year (14) (169) Total comprehensive income for the year 398 404 Attributable to: Equity shareholders of the Company 398 403 Non-controlling interests - 1 398 404 2 Consolidated statement of changes in equity Year ended 31 January 2016 Attributable to equity shareholders of the Company Own Non- Share Share shares Retained Other controlling Total ? millions capital premium held earnings reserves Total interests equity At 1 February 2015 (restated - note 2) 369 2,214 (26) 3,652 11 6,220 10 6,230 Profit for the year - - - 412 - 412 - 412 Other comprehensive income for the year - - - 11 (25) (14) - (14) Total comprehensive income for the year - - - 423 (25) 398 - 398 Disposal of B&Q China (note 12) - - - - - - (10) (10) Share-based compensation - - - 11 - 11 - 11 New shares issued under share schemes - 4 - - - 4 - 4 Own shares issued under share schemes - - 18 (17) - 1 - 1 Purchase of own shares for cancellation (8) - - (200) 8 (200) - (200) Purchase of own shares for ESOP trust - - (16) - - (16) - (16) Dividends (note 8) - - - (232) - (232) - (232) At 31 January 2016 361 2,218 (24) 3,637 (6) 6,186 - 6,186 At 2 February 2014 (restated - note 2) 373 2,209 (35) 3,486 266 6,299 9 6,308 Profit for the year - - - 573 - 573 - 573 Other comprehensive income for the year - - - 90 (260) (170) 1 (169) Total comprehensive income for the year - - - 663 (260) 403 1 404 Share-based compensation - - - 11 - 11 - 11 New shares issued under share schemes 1 5 - - - 6 - 6 Own shares issued under share schemes - - 26 (24) - 2 - 2 Purchase of own shares for cancellation (5) - - (150) 5 (150) - (150) Purchase of own shares for ESOP trust - - (17) - - (17) - (17) Dividends (note 8) - - - (334) - (334) - (334) At 31 January 2015 (restated - note 2) 369 2,214 (26) 3,652 11 6,220 10 6,230 3 Consolidated balance sheet At 31 January 2016 2014/15 (restated – ? millions Notes 2015/16 note 2) Non-current assets Goodwill 2,397 2,414 Other intangible assets 276 258 Property, plant and equipment 3,212 3,203 Investment property 25 30 Investments in joint ventures and associates 23 28 B&Q China investment 62 - Post-employment benefits 9 246 194 Deferred tax assets 11 10 Derivative assets 43 52 Other receivables 7 7 6,302 6,196 Current assets Inventories 1,957 2,021 Trade and other receivables 568 537 Derivative assets 56 70 Current tax assets 5 6 Short-term deposits 70 48 Cash and cash equivalents 730 561 Assets held for sale 6 274 3,392 3,517 Total assets 9,694 9,713 Current liabilities Trade and other payables (2,369) (2,337) Borrowings (138) (105) Derivative liabilities (6) (10) Current tax liabilities (66) (87) Provisions (69) (13) Liabilities held for sale - (195) (2,648) (2,747) Non-current liabilities Other payables (53) (64) Borrowings (179) (232) Deferred tax liabilities (333) (324) Provisions (208) (34) Post-employment benefits 9 (87) (82) (860) (736) Total liabilities (3,508) (3,483) Net assets 6,186 6,230 Equity Share capital 361 369 Share premium 2,218 2,214 Own shares held in ESOP trust (24) (26) Retained earnings 3,637 3,652 Other reserves (6) 11 Total attributable to equity shareholders of the Company 6,186 6,220 Non-controlling interests - 10 Total equity 6,186 6,230 The financial statements were approved by the Board of Directors on 23 March 2016 and signed on its behalf by: Véronique Laury Karen Witts Chief Executive Officer Chief Financial Officer 4 Consolidated cash flow statement Year ended 31 January 2016 ? millions Notes 2015/16 2014/15 Operating activities Cash generated by operations 10 931 806 Income tax paid (118) (146) Net cash flows from operating activities 813 660 Investing activities Purchase of property, plant and equipment and intangible assets (333) (275) Disposal of property, plant and equipment, investment property and property held for sale 25 50 Disposal of property company 12 18 - Disposal of B&Q China 12 - Proceeds (net of costs and cash disposed) 102 - - Deposit (repaid)/received (12) 12 Disposal of Hornbach 12 - 198 Increase in short-term deposits (22) (48) Interest received 3 5 Dividends received from joint ventures and associates 5 7 Net cash flows from investing activities (214) (51) Financing activities Interest paid (12) (10) Interest element of finance lease rental payments (3) (3) Repayment of bank loans (1) (2) Repayment of fixed term debt - (73) Payment on financing derivatives - (9) Capital element of finance lease rental payments (13) (14) New shares issued under share schemes 4 6 Own shares issued under share schemes 1 2 Purchase of own shares for ESOP trust (16) (17) Purchase of own shares for cancellation (200) (100) Special dividend paid to equity shareholders of the Company - (100) Ordinary dividends paid to equity shareholders of the Company (232) (234) Net cash flows from financing activities (472) (554) Net increase in cash and cash equivalents and bank overdrafts, including amounts classified as held for sale 127 55 Cash and cash equivalents and bank overdrafts, including amounts classified as held for sale, at beginning of year 527 534 Exchange differences - (62) Cash and cash equivalents and bank overdrafts, including amounts classified as held for sale, at end of year 654 527 Cash and cash equivalents classified as held for sale (B&Q China) - (57) Cash and cash equivalents and bank overdrafts at end of year 11 654 470 5 Notes 1 General information Kingfisher plc (‘the Company’), its subsidiaries, joint ventures and associates (together ‘the Group’) supply home improvement products and services through a network of retail stores and other channels, located mainly in the United Kingdom and continental Europe. The Company is incorporated in the United Kingdom and is listed on the London Stock Exchange. The address of its registered office is 3 Sheldon Square, Paddington, London W2 6PX. 2 Basis of preparation The consolidated financial statements of the Company, its subsidiaries, joint ventures and associates are made up to 31 January. The current financial year is the calendar year ended 31 January 2016 (‘the year’ or ‘2015/16’). The comparative financial year is the 52 weeks ended 31 January 2015 (‘the prior year’ or ‘2014/15’). The directors of Kingfisher plc, having made appropriate enquiries, consider that adequate resources exist for the Group to continue in operational existence and that, therefore, it is appropriate to adopt the going concern basis in preparing the consolidated financial statements for the year ended 31 January 2016. The condensed financial information, which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated balance sheet, consolidated cash flow statement and related notes do not constitute statutory financial statements for the year ended 31 January 2016, but are derived from those statements. Statutory financial statements for 2014/15 have been filed with the Registrar of Companies and those for 2015/16 will be filed in due course. The Group's auditors have reported on both years’ accounts; their reports were unqualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006. The condensed financial information has been abridged from the 2015/16 statutory financial statements, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS’) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS and therefore the consolidated financial statements comply with Article 4 of the EU IAS legislation. The consolidated income statement and related notes represent results for continuing operations, there being no discontinued operations in the periods presented. The condensed financial information has been prepared under the historical cost convention, as modified by the use of valuations for certain financial instruments, share-based payments and post-employment benefits. Accounting policies Except as set out below, the accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2015, as described in note 2 of those financial statements. The following new interpretation, which is mandatory for the first time for the financial year ended 31 January 2016, is relevant for the Group: , IFRIC 21, ‘Levies’, sets out the accounting for an obligation to pay a levy that is not income tax. The interpretation changes the timing of when such liabilities are recognised, particularly in connection with levies that are triggered by circumstances on a specific date. This applies from the start of the current financial year, with restatement of 2014/15 comparatives. It has not impacted the annual results, but has had a significant impact on the phasing of operating profit (and related deferred tax) in France, with fewer costs recognised in the first half (and third quarter) but more costs recognised in the final quarter of the year. It has also resulted in a restatement of balance sheet payables and deferred tax. Principal rates of exchange against Sterling 2015/16 2014/15 Average rate Year end rate Average rate Year end rate Euro 1.38 1.31 1.25 1.33 US Dollar 1.52 1.42 1.64 1.50 Polish Zloty 5.78 5.78 5.23 5.57 Russian Rouble 94.54 107.52 66.70 105.58 Use of non-GAAP measures In the reporting of financial information, the Group uses certain measures that are not required under IFRS, the Generally Accepted Accounting Principles (‘GAAP’) under which the Group reports. Kingfisher believes that adjusted sales, retail profit, adjusted pre-tax profit, effective tax rate, adjusted earnings and adjusted earnings per share provide additional useful information on underlying trends to shareholders. These and other non-GAAP measures such as net debt/cash are used by Kingfisher for internal performance analysis and incentive compensation arrangements for employees. The terms ‘retail profit’, ‘exceptional items’, ‘adjusted’, ‘effective tax rate’ and ‘net debt/cash’ are not defined terms under IFRS and may therefore not be comparable with similarly titled measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures. 6 Retail profit is defined as continuing operating profit before central costs (principally the costs of the Group’s head office), exceptional items, amortisation of acquisition intangibles and the Group’s share of interest and tax of joint ventures and associates. 2014/15 comparatives have been restated to exclude B&Q China’s operating results. The separate reporting of non-recurring exceptional items, which are presented as exceptional within their relevant income statement category, helps provide an indication of the Group’s underlying business performance. The principal items which are included as exceptional items are: , non-trading items included in operating profit such as profits and losses on the disposal, closure or impairment of subsidiaries, joint ventures, associates and investments which do not form part of the Group’s trading activities; , profits and losses on the disposal of properties and impairment losses on non-operational assets; and , the costs of significant restructuring and incremental acquisition integration costs. The term ‘adjusted’ refers to the relevant measure being reported for continuing operations excluding exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and prior year tax items (including the impact of changes in tax rates on deferred tax). 2014/15 comparatives have been restated to exclude B&Q China’s operating results. Financing fair value remeasurements represent changes in the fair value of financing derivatives, excluding interest accruals, offset by fair value adjustments to the carrying amount of borrowings and other hedged items under fair value hedge relationships. Financing derivatives are those that relate to underlying items of a financing nature. The effective tax rate is calculated as continuing income tax expense excluding tax on exceptional items and adjustments in respect of prior years and the impact of changes in tax rates on deferred tax, divided by continuing profit before taxation excluding exceptional items. Net debt/cash comprises borrowings and financing derivatives (excluding accrued interest), less cash and cash equivalents and short-term deposits. It excludes balances classified as assets and liabilities held for sale. Prior year restatement The following statutory (GAAP) measures have been restated following the adoption of IFRIC 21 ‘Levies’ in the current year: 2014/15 Before IFRIC 21 After ? millions restatement impact restatement Trade and other payables (2,323) (14) (2,337) Deferred tax liabilities (329) 5 (324) Retained earnings at beginning of year 3,495 (9) 3,486 Retained earnings at end of year 3,661 (9) 3,652 The following adjusted (non-GAAP) measures have been restated in the comparatives to exclude B&Q China’s operating results, in order to improve comparability following the disposal of the Group’s controlling interest in the current year (see note 12): 2014/15 Before B&Q China After ? millions restatement exclusion restatement Adjusted sales 10,966 (361) 10,605 Retail profit 733 9 742 Adjusted pre-tax profit 675 9 684 Adjusted earnings 493 9 502 Adjusted basic earnings per share 20.9p 0.4p 21.3p Adjusted diluted earnings per share 20.8p 0.4p 21.2p The IFRIC 21 and B&Q China restatements have only impacted the France and Other International segments respectively. Refer to the data tables for the full year 2014/15 results at www.kingfisher.com for the impact of the restatements on quarterly segmental sales and retail profit comparatives. 7 3 Segmental analysis Income statement 2015/16 Other International UK & ? millions France Ireland Poland Other Total Adjusted sales 3,786 4,853 987 705 10,331 B&Q China sales 110 Sales 10,441 Retail profit 311 326 113 (4) 746 Central costs (45) Share of interest and tax of joint ventures and associates (5) B&Q China operating loss (4) Exceptional items (166) Operating profit 526 Net finance costs (14) Profit before taxation 512 2014/15 (restated – note 2) Other International UK & ? millions France Ireland Poland Other Total Adjusted sales 4,132 4,600 1,055 818 10,605 B&Q China sales 361 Sales 10,966 Retail profit 349 276 118 (1) 742 Central costs (40) Share of interest and tax of joint ventures and associates (6) B&Q China operating loss (9) Exceptional items (35) Operating profit 652 Net finance costs (8) Profit before taxation 644 The operating segments disclosed above are based on the information reported internally to the Board of Directors and Group Executive, representing the geographical areas in which the Group operates. The Group only has one business segment being the supply of home improvement products and services. The ‘Other International’ segment consists of Poland, Spain, Portugal, Germany, Russia, Romania and the joint venture Koçta? in Turkey. Poland has been shown separately due to its significance. Central costs principally comprise the costs of the Group’s head office. 8 4 Exceptional items ? millions 2015/16 2014/15 Included within selling and distribution expenses UK & Ireland and continental Europe restructuring (305) (17) Brico Depot Romania impairment (3) - Transaction costs - (15) (308) (32) Included within administrative expenses Brico Depot Romania impairment (15) - (15) - Included within other income Profit on disposal of B&Q China 143 - Profit on disposal of property and other companies 13 - Disposal of properties and non-operational asset losses 1 (3) 157 (3) Exceptional items before tax (166) (35) Exceptional tax items 67 106 Exceptional items (99) 71 Current year exceptional items include a ?305m restructuring charge relating to the transformation of B&Q in the UK and the announced closure of loss-making stores in France and other countries in continental Europe. In the UK, the exceptional charge for the transformation of B&Q involves the closure of stores in over-spaced catchments and optimisation of vacant space, along with productivity initiatives aimed at delivering a simpler, more efficient business with a lower cost operating model. The exceptional loss includes lease exit costs, store asset impairments, employee redundancy costs, and inventory write downs arising from store closures and harmonisation of the stock management operating model. In the prior year, transformation costs amounted to ?17m. In continental Europe, the exceptional charge includes lease exit costs and store asset impairments. An exceptional loss of ?18m has been recorded for the impairment of goodwill and certain store properties relating to the Brico Depot Romania business. This has arisen from a strategic review of the business following recent trading results falling below expectations in an ongoing difficult trading environment. In the prior year, exceptional transaction costs were incurred relating to the potential acquisition of Mr Bricolage, which ultimately did not proceed, and the agreement to dispose of a controlling stake in the B&Q China business. Profits were recorded in the year on the disposal of the Group’s controlling 70% stake in B&Q China and the sale of property and other companies. Refer to note 12 for further information. Exceptional tax items for the year amount to a credit of ?67m. In the prior year, exceptional tax credits included the tax impact on exceptional items and the release of prior year provisions, which had either been agreed with the tax authorities, reassessed or time expired. 9 5 Net finance costs ? millions 2015/16 2014/15 Bank overdrafts and bank loans (8) (7) Fixed term debt (3) (3) Finance leases (3) (3) Financing fair value remeasurements (4) 4 Unwinding of discount on provisions (1) (1) Net interest expense on defined benefit pension schemes - (3) Other interest payable (3) - Finance costs (22) (13) Cash and cash equivalents and short-term deposits 3 5 Net interest income on defined benefit pension schemes 5 - Finance income 8 5 Net finance costs (14) (8) 6 Income tax expense ? millions 2015/16 2014/15 UK corporation tax Current tax on profits for the year (7) (46) Adjustments in respect of prior years 4 96 (3) 50 Overseas tax Current tax on profits for the year (117) (138) Adjustments in respect of prior years 7 6 (110) (132) Deferred tax Current year 14 12 Adjustments in respect of changes in tax rates (1) (1) 13 11 Income tax expense (100) (71) The effective rate of tax on profit before exceptional items and excluding prior year tax adjustments and the impact of changes in tax rates on deferred tax is 26% (2014/15: 27%). Exceptional tax items for the year amount to a credit of ?67m, ?1m of which relates to prior year items. In 2014/15 exceptional tax items amounted to a credit of ?106m, ?95m relating to prior year items. 10 7 Earnings per share 2014/15 2015/16 (restated – note 2) Weighted Weighted average average number Earnings number Earnings Earnings of shares per share Earnings of shares per share ? millions millions pence ? millions millions pence Basic earnings per share 412 2,311 17.8 573 2,358 24.3 Effect of dilutive share options 8 - 11 (0.1) Diluted earnings per share 412 2,319 17.8 573 2,369 24.2 Basic earnings per share 412 2,311 17.8 573 2,358 24.3 B&Q China operating loss 4 0.2 9 0.4 Exceptional items before tax 166 7.2 35 1.5 Tax on exceptional and prior year items (76) (3.3) (112) (4.8) Financing fair value remeasurements 4 0.2 (4) (0.2) Tax on financing fair value remeasurements (1) (0.1) 1 0.1 Adjusted basic earnings per share 509 2,311 22.0 502 2,358 21.3 Diluted earnings per share 412 2,319 17.8 573 2,369 24.2 B&Q China operating loss 4 0.2 9 0.4 Exceptional items before tax 166 7.2 35 1.5 Tax on exceptional and prior year items (76) (3.3) (112) (4.8) Financing fair value remeasurements 4 0.2 (4) (0.2) Tax on financing fair value remeasurements (1) (0.1) 1 0.1 Adjusted diluted earnings per share 509 2,319 22.0 502 2,369 21.2 Basic earnings per share is calculated by dividing the profit for the year attributable to equity shareholders of the Company by the weighted average number of shares in issue during the year, excluding those held in the Employee Share Ownership Plan Trust (‘ESOP’) which for the purpose of this calculation are treated as cancelled. For diluted earnings per share, the weighted average number of shares is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees where both the exercise price is less than the average market price of the Company’s shares during the year and any related performance conditions have been met. 8 Dividends ? millions 2015/16 2014/15 Dividends to equity shareholders of the Company Ordinary interim dividend for the year ended 31 January 2016 of 3.18p per share (31 January 2015: 3.15p per share) 72 75 Special interim dividend of 4.2p per share paid 25 July 2014 - 100 Ordinary final dividend for the year ended 31 January 2015 of 6.85p per share (1 February 2014: 6.78p per share) 160 159 232 334 The proposed final dividend for the year ended 31 January 2016 of 6.92p per share is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability. 11 9 Post-employment benefits 2015/16 2014/15 ? millions UK Overseas Total UK Overseas Total Net surplus/(deficit) in schemes at beginning of year 194 (82) 112 (29) (71) (100) Current service cost (2) (6) (8) (2) (7) (9) Administration costs (4) - (4) (3) - (3) Curtailment gain - - - - 9 9 Net interest income/(expense) 6 (1) 5 (1) (2) (3) Net actuarial gains/(losses) 16 3 19 194 (19) 175 Contributions paid by employer 36 1 37 35 1 36 Exchange differences - (2) (2) - 7 7 Net surplus/(deficit) in schemes at end of year 246 (87) 159 194 (82) 112 Present value of defined benefit obligations (2,374) (102) (2,476) (2,606) (97) (2,703) Fair value of scheme assets 2,620 15 2,635 2,800 15 2,815 Net surplus/(deficit) in schemes 246 (87) 159 194 (82) 112 The assumptions used in calculating the costs and obligations of the Group’s defined benefit pension schemes are set by the Directors after consultation with independent professionally qualified actuaries. The assumptions are based on the conditions at the time and changes in these assumptions can lead to significant movements in the estimated obligations, as illustrated in the sensitivity analysis. A key assumption in valuing the pension obligations is the discount rate. Accounting standards require this to be set based on market yields on high quality corporate bonds at the balance sheet date. The UK scheme discount rate is derived using a single equivalent discount rate approach, based on the yields available on a portfolio of high-quality sterling corporate bonds with the same duration to that of the scheme liabilities. The principal financial assumptions for the UK scheme are as follows: Annual % rate 2015/16 2014/15 Discount rate 3.6 3.0 Price inflation 3.1 2.8 For the UK scheme, the mortality assumptions used in the actuarial valuations have been selected with regard to the characteristics and experience of the membership of the scheme from 2010 to 2013. The assumptions for life expectancy of UK scheme members are as follows: Years 2015/16 2014/15 Age to which current pensioners are expected to live (60 now) - Male 86.8 86.7 - Female 87.4 87.3 Age to which future pensioners are expected to live (60 in 15 years’ time) - Male 87.5 87.4 - Female 88.6 88.6 The following sensitivity analysis for the UK scheme shows the estimated impact on the obligation resulting from changes to key actuarial assumptions, whilst holding all other assumptions constant. Assumption Change in assumption Impact on defined benefit obligation Discount rate Increase/decrease by 0.1% Decrease/increase by ?48m Price inflation Increase/decrease by 0.1% Increase/decrease by ?41m Mortality Increase in life expectancy by one year Increase by ?86m 12 10 Cash generated by operations ? millions 2015/16 2014/15 Operating profit 526 652 Share of post-tax results of joint ventures and associates (3) (5) Depreciation and amortisation 240 262 Impairment losses 55 30 Loss/(profit) on disposal of property, plant and equipment, investment property, property held for sale and intangible assets 3 (20) Profit on disposal of B&Q China (143) - Profit on disposal of property and other companies (13) - Share-based compensation charge 11 11 Decrease/(increase) in inventories 56 (150) (Increase)/decrease in trade and other receivables (36) 12 Increase in trade and other payables 27 53 Movement in provisions 233 (6) Movement in post employment benefits (25) (33) Cash generated by operations 931 806 11 Net cash ? millions 2015/16 2014/15 Cash and cash equivalents 730 561 Bank overdrafts (76) (91) Cash and cash equivalents and bank overdrafts 654 470 Short-term deposits 70 48 Bank loans (10) (11) Fixed term debt (185) (183) Financing derivatives 63 57 Finance leases (46) (52) Net cash 546 329 ? millions 2015/16 2014/15 Net cash at beginning of year 329 238 Net increase in cash and cash equivalents and bank overdrafts, including amounts classified as held for sale 127 55 Increase in short-term deposits 22 48 Repayment of bank loans 1 2 Repayment of fixed term debt - 73 Payment on financing derivatives - 9 Capital element of finance lease rental payments 13 14 Cash flow movement in net cash 163 201 Adjustment for cash classified as held for sale (B&Q China) 57 (57) Exchange differences and other non-cash movements (3) (53) Net cash at end of year 546 329 13 12 Disposals On 30 April 2015 Wumei Holdings Inc acquired a controlling 70% stake in the B&Q China business from the Group for a gross cash consideration of ?140m, and a ?12m deposit received in the prior year was repaid. As part of the terms of the transaction, Kingfisher had the option from 1 May 2017, or sooner where agreed by both parties, to require Wumei Holdings Inc to acquire the Group’s remaining 30% interest for a fixed price of the Sterling equivalent of RMB 582m (?62 million at 31 January 2016). This option was exercised on 23 March 2016. The transaction is subject to regulatory approval and, if approved, is expected to close later this year. The profit on disposal of the Group’s controlling 70% stake in B&Q China of ?143m is analysed as follows: ? millions Proceeds (net of disposal costs paid of ?6m) 134 Cash disposed (32) Net disposal proceeds received 102 Fair value at date of disposal of 30% interest retained 60 162 Net assets disposed excluding cash (see below) (32) Non-controlling interests disposed 10 Currency translation gains transferred from translation reserve 3 Exceptional profit on disposal 143 ? millions Property, plant and equipment 150 Inventories, trade and other receivables/(payables) (108) Provisions (3) Deferred tax liabilities (9) Other net assets 2 Net assets disposed excluding cash 32 The Group did not have the ability to exert significant influence on the B&Q China operations, for example, as part of the terms agreed with Wumei Holdings Inc, the Group did not have the right to appoint directors to the board. The remaining 30% B&Q China investment has therefore been classified as a financial asset and not as an associate, with no share of B&Q China’s results being recognised in the income statement after the disposal date. Included within the profit on disposal is a gain of ?44m attributable to measuring this retained 30% investment at fair value. The B&Q China business had been classified as a disposal group held for sale from 22 December 2014 (the date of announcement of the transaction agreement) up to the 30 April 2015 disposal date. Accordingly, depreciation of ?4m was not charged with respect to B&Q China during the year. In April 2015 the Group completed the sale of a property company for proceeds of ?18m and a profit of ?16m. At disposal, the freehold properties had a net book value of ?6m and ?4m of currency translation gains were transferred from the translation reserve. In January 2016 the Group completed the sale of a UK company for proceeds of ?nil and a loss of ?3m. At disposal, the company had goodwill of ?2m and other intangible assets of ?1m. In the prior year the Group received proceeds of ?236m (?198m) following the sale of its 21% stake in Hornbach in March 2014. 13 Post balance sheet events On 23 March 2016 Kingfisher exercised its option to dispose of its 30% interest in the B&Q China business to Wumei Holdings Inc – refer to note 12 for further details. 14