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68 5 Exceptional items Notes to the consolidated fi nancial statements Kingfi sher plc Annual Report and Accounts 2009/10 £ millions 2009/10 2008/09 Included within cost of sales China restructuring – (21) Included within selling and distribution expenses China restructuring – (86) UK restructuring – (19) – (105) Included within administrative expenses Impairment of goodwill – (124) Included within other income Profi t on disposal of properties 17 13 Included within share of post-tax results of joint ventures and associates Impairment of investment in Hornbach – (36) Exceptional items before tax 17 (273) Tax on exceptional items (7) 7 Exceptional items – continuing operations 10 (266) Exceptional items – discontinued operations – 178 Exceptional items 10 (88) The Group has recorded an exceptional profi t of £17m on the disposal of properties (2008/09: £13m profi t). In the prior year, an exceptional loss of £107m was recorded relating to the B&Q China turnaround plan. The plan involved rationalising the store portfolio from 63 to 41 and then revamping the remaining stores. The exceptional loss comprised store asset impairments, lease exits, inventory write downs and employee redundancy costs. The total charge included £19m relating to the termination of leases, which was included within restructuring provisions, £55m relating to the impairment of property, plant and equipment and £21m relating to the write down of inventories. In the prior year, the Group recorded an exceptional loss of £19m following the announcement that Trade Depot in the UK would be closed, which included a loss on disposal of properties of £6m. In the prior year, an exceptional loss of £124m was recorded on the impairment of goodwill in China based on a review of its recoverable amount. The goodwill balance was fully written down. In the prior year, an exceptional loss of £36m was recorded on the write down of the Group’s investment in Hornbach. In the prior year the Group disposed of Castorama Italy. Refer to note 34 for further information. 6 Net fi nance costs £ millions 2009/10 2008/09 Bank overdrafts and bank loans (25) (23) Medium Term Notes and other fi xed term debt (43) (86) Financing fair value remeasurements 2 (5) Finance leases (5) (5) Unwinding of discount on provisions (4) (3) Expected net interest charge on defi ned benefi t pension schemes (4) – Capitalised interest 3 3 Finance costs (76) (119) Cash and cash equivalents and current other investments 19 23 Expected net interest return on defi ned benefi t pension schemes – 13 Finance income 19 36 Net fi nance costs – continuing operations (57) (83)
Kingfi sher plc Annual Report and Accounts 2009/10 69 Medium Term Notes and other fi xed term debt interest includes net interest income accrued on derivatives of £38m (2008/09: £8m expense) and amortisation of issue costs of borrowings of £3m (2008/09: £1m). Capitalised interest relates to the centrally held borrowing pool and is calculated by applying a capitalisation rate of 2.6% (2008/09: 6.7%) to expenditure on qualifying assets. Financing fair value remeasurements comprise a net loss on derivatives, excluding accrued interest, of £28m (2008/09: £174m gain), offset by a net gain from fair value adjustments to the carrying value of borrowings and cash of £30m (2008/09: £179m loss). The net loss on derivatives includes ineffectiveness gains on net investment hedges of £nil (2008/09: £nil). 7 Profi t before taxation The following items of revenue have been credited in arriving at profi t before taxation for continuing operations: £ millions 2009/10 2008/09 Sales 10,503 10,026 Other income 48 35 Finance income 19 36 Revenue 10,570 10,097 The following items of expense/(income) have been charged/(credited) in arriving at profi t before taxation for continuing operations: £ millions 2009/10 2008/09 Operating lease rentals 1 Minimum lease payments 419 405 Sublease income (17) (17) 402 388 Rental income received on investment property (4) (4) Repairs and maintenance 93 94 Amortisation of other intangible assets 2 34 34 Depreciation of property, plant and equipment and investment property Owned assets 216 225 Under fi nance leases 10 6 Impairment of goodwill – 124 Impairment of property, plant and equipment and investment property 4 61 Write down of investment in associate – 36 (Profi t)/loss on disposal Land and buildings and investment property (17) (7) Fixtures, fi ttings and equipment 13 18 Other intangible assets 3 – Inventories: write down to net realisable value 3 99 63 Trade receivables: write down of bad and doubtful debts 6 7 1 Of the operating lease rental charge for continuing operations, £31m relates to plant and equipment (2008/09: £30m). 2 Of the amortisation of other intangible assets charge for continuing operations, £6m (2008/09: £4m) and £28m (2008/09: £30m) are included in selling and distribution expenses and administrative expenses respectively. 3 There have been no reversals of write downs of inventories in the year (2008/09: £nil). Auditors’ remuneration 2009/10 2008/09 £ millions Deloitte PricewaterhouseCoopers PricewaterhouseCoopers Fees payable for the audit of the Company and consolidated fi nancial statements 0.3 – 0.5 Fees payable for the audit of the Company’s subsidiaries pursuant to legislation 1.0 – 1.8 Audit fees 1.3 – 2.3 Other services supplied pursuant to legislation – 0.1 0.1 Tax advisory services – 0.2 0.7 All other services – 0.1 0.1 Auditors’ remuneration 1.3 0.4 3.2 Deloitte succeeded PricewaterhouseCoopers to become the Group’s auditors in the second half of the year. The auditors’ remuneration given above relates to the respective periods that each fi rm acted as auditors of the Group. The remuneration earned by Deloitte during the year but prior to their appointment as auditors totalled £0.3m, which primarily related to tax advisory services, litigation support and pensions advice.
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