Full year results 2006/07. Slides will be available at

Transcription

1 Full year results 2006/07 Slides will be available at

2 Gerry Murphy Group Chief Executive

3 2006/07- Operating highlights UK Market tough, but stabilised in H2 B&Q grew in H2 Good progress with development programme France Market growing, more price pressure Sales growth ahead of market Rest of Europe/Asia Strong sales and profit growth

4 2006/07 progress on key priorities Strengthening Strengthening developed businesses Modernising existing stores, 422 in UK and France Adding new ranges Improving customer service Expanding proven growth businesses 56 net new stores, 267 in 7 countries Establishing new opportunities 12 new stores, 29 in 5 countries Russia entry Capitalising on buying scale and international diversity 20% more direct sourcing Shared format development Expanding Establishing Capitalising

5 Duncan Tatton-Brown Group Finance Director

6 2006/07 - Financial highlights Sales up 7.4% (52 weeks), LFL +0.9% (+2.4% in H2) Adjusted pre-tax profit down 11%, up 13% in H2 Underlying tax rate 32% (last year 34%) Underlying free cashflow 540m (last year 269m) Full year dividend maintained Property re-valued, +9% in constant currencies UK pension scheme deficit 28m (last year 211m)

7 2006/07 - Group sales up 7.4% (52 weeks) Retail Sales 8,676m Constant Currency YOY growth 8,007* % 9.0% 25.0% % 7.4% 79 8,597 8, /07 rates UK France Rest of Europe Asia 2006/07 (52 weeks) Impact 53rd week 2006/07 (Reported) *Original reported 2005/06 Retail Sales 8,010m

8 2006/07 - Retail Profit down 5% Retail Profit 504m Constant Currency YOY growth (37) (24) 31 (5.3)% 533 (16.8)% (9.9)% 37.0% /06 UK France Rest of Europe & Asia 2006/07 Net nil impact of currency and 53 rd week

9 2006/07 - Adjusted EPS down 3% 2006/ /06 % Change Adjusted PBT* 396.6m 445.7m -11.0% Exceptionals 49.5m (215.4)m n/a Profit before tax 450.5m 231.8m 94.3% Underlying tax rate 32.0% 34.4% +2.4%pts Adjusted basic EPS* 11.9p 12.3p -3.3% Dividends 10.65p 10.65p - *Before exceptionals,, IAS39 and amortisation of acquisition intangibles

10 2006/07 - Exceptionals update Net profit on disposals 50m (2005/06 19m) B&Q s restructuring programme on track* 18 stores closed, 2 downsized 35% of idle space now sublet Total programme cash cost 161m; 39% spent by end 2006/07 *exceptional provision of 224m charged in 2005/06

11 2006/07 - Cashflow 2006/07 m 2005/06 Operating profit pre exceptionals Other non-cash* Change in working capital 124 (108) Retail Capex (247) (319) Underlying free cashflow Property disposals Property capex (219) (188) Non property exceptionals (47) (20) Business acquisitions (2) (163) Free cashflow * Includes depreciation, share based compensation charge, amortisation of intangibles and share of post tax results of JVs and associates.

12 2006/07 - Net debt 2006/07 m 2005/06 Free cash flow Pension contribution (in excess of operating profit charge) (78) (135) Interest Corporation tax (58) (98) (35) (120) Dividends (248) (247) Other 14 9 Movement in net debt Opening net debt 56 (1,355) (515) (841) Translation on net debt* 5 1 Closing net debt (1,294) (1,355) *Including non-cash financing fair value re-measurements

13 2006/07 - Investing for future growth 2006/7 - total gross capex 467m 11% 40% 49% Strengthening developed businesses Expanding proven growth businesses Establishing new opportunities

14 Property 3.2 billion, underlying market value up 9% 23% 6% UK France 36% 35% Rest of Europe Asia Property value by location as at 28 January 2006 Note: Book value of properties 2.4bn. Balance sheet values were frozen at 1 February 2004 on transition to IFRS

15 Returns on invested capital Cost of Capital 7.4% 1.8% Post goodwill 1.7% Cost of Capital 7.9% 6.9% 7.3% 2006/ /06 Underlying Revaluation impact

16 Returns on invested capital pre-goodwill 2006/07 Group sales % Group IC % Returns % (ROIC) B&Q UK Castorama France Strengthening developed businesses 45% 19% 64% 66% 13% 79% 7% 10% 8% Expanding proven growth businesses 35% 19% 13% Establishing new opportunities for the future 1% 2% -2% Group total 100% 100% 9%

17 Returns on invested capital pre-goodwill 2006/ /08 Group sales % Group IC % Returns % (ROIC) Space growth % B&Q UK Castorama France Strengthening developed businesses 45% 19% 64% 66% 13% 79% 7% 10% 8% 2% 1% 2% Expanding proven growth businesses 35% 19% 13% 11% Establishing new opportunities for the future 1% 2% -2% 47% Group total 100% 100% 9% 6%

18 Investing for future growth 2004/05 - total gross capex 408m 2007/08 - total gross capex m 550m 14% 3% 33% 45% 64% 41% 2004/ /08 Strengthening developed businesses Expanding proven growth businesses Establishing new opportunities

19 Duncan Tatton-Brown Group Finance Director

20 Ian Cheshire B&Q - CEO

21 B&Q First and Only for Home Improvement Photo of DIYer DIY DFM

22 B&Q - vision First and Only For Home Improvement Product authority Multi specialist store Newness/style Easy to shop Great value

23 B&Q 3 stage programme a call to action test and measure roll out Jan 06 July 06 March 2007

24 B&Q better motivated colleagues Jun 04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 B&Q Stores engagement Gallup best practice

25 B&Q delivering better customer service 80% 78% 76% 74% 72% 70% 68% 66% 64% Mar 05 May-05 Jul-05 Sep-05 Nov-05 Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07 Mystery shopper overall

26 B&Q more service where it matters Service Squads in 240 stores Specialist colleagues in key project areas

27 B&Q new products, more style

28 B&Q new products, new themes

29 B&Q new format, better store environment

30 B&Q encouraging start for new large store format Cost per store: 2.5m capex,, 0.5m stock 15% more colleague hours Average net disruption revenue cost 1m Target eventual 25% sales density uplift Revamp 10%, new product 10%, improved service 5% Results from original 3 trial stores have exceeded expectations

31 B&Q indicative renewal economics Average large store Current Target Sales Store NOPLAT 1 Invested capital 2 Store return 3 20m 25m 2m 3m 32m 35m 6% 9% 1 before lease costs and after tax 2 including capitalised leases 3 on capitalised basis Note: 30% return on incremental investment

32 B&Q store modernisation Jan 06 Jan 07 Jan 08 Modern: Large stores Medium stores Remaining: Large stores Medium stores Modern format space 22% 33% 57%

33 B&Q new opportunities

34 B&Q new opportunities

35 Ian Cheshire B&Q - CEO

36 Gerry Murphy Group Chief Executive

37 Castorama France

38 Castorama revitalisation programme launched 2003 Cost efficiency CPR Price Product Store development Supply chain Re-define Change Benefits

39 Castorama price sensitive market

40 Castorama France new own brands

41 Castorama France new premium ranges

42 France store development 18% % 14% Castorama transferred to Brico-Dépôt Total Brico-Dépôt stores opened 12% 10% 8% 6% Net Castorama Opened stores Castorama Brico-Dépôt 4% 2% %

43 Castorama France store development 2006/07 6 Brico Dépôt transfers 7 relocations 2 new stores 2007/08 6 revamps Next 4 years 30+ revamps 20+ relocations 10+ new stores

44

45 Expand proven growth businesses Castorama Poland & Italy Brico Dépôt France & Poland B&Q China, Taiwan & Ireland Screwfix Direct

46 Expand proven growth businesses 2006/07 % of Group Retail Sales Retail Profit Invested Capital ROIC Space growth 2007/08 3.1bn 222m 1.6bn 13% 10+% 35% 44% 19%

47 Expand proven growth businesses Number of stores / / / / /07

48 Brico Dépôt France (81 stores, 10 new)

49 Brico Dépôt France supporting growth

50 Castorama Poland evolving with the market (35 stores, 5 new)

51 Castorama Italy evolving with the market (27 stores, 1 new)

52 B&Q ChinaC (58 stores, 10 new) Dec 1998 Dec 2004 Dec 2005 Dec store 21 stores 48 stores 58 stores Chengdu 2 Chongqing 2 Kunming 1 Xian 1 Wuhan Harbin 1 chongchun 1 Beijing 6 1 Tianjin Qingdao Hefei 2 Nanjing Guangzhou 1 Shenyang Shanghai 2 Dongguan 2 Dalian 1 Wuxi 1 Suzhou 1 Hangzhou 3 10 Fuzhou 2 Xiamen 1 5 Shenzhen

53 Screwfix Direct (38 counters, 31 new)

54 Establishing new opportunities Castorama Russia Brico Dépôt Spain Trade Depot Koçtaş Turkey

55 Establishing new opportunities 2006/07 % of Group Retail Sales Retail Profit Invested Capital ROIC Space growth 2007/08 0.1bn (19)m 0.2bn -2% 45+% 1% n/a 2%

56 Establishing new store opportunities Russia 3 stores UK Trade Depot 4 stores Spain 10 stores Turkey 10 stores

57 Castorama Russia (3 new stores)

58 Castorama Russia - store format Format based on Castorama Poland Harder offer Focused on building/maintenance EDLP

59 Capitalising on scale sharing brands Colours sells in 7 countries

60 Capitalising on diversity sharing formats France Spain Poland

61 Capitalising on diversity sharing ideas Castorama France Castorama Italy

62 Capitalising on diversity sharing ideas B&Q UK Castorama France

63 Capitalising on diversity sharing ideas Castorama Poland Castorama Italy

64 2006/07- Summary UK market tough, but stabilised in H2 French market growing, more price pressure Rest of Europe/Asian markets strong Financial results improved in H2 Good progress with key priorities Strengthening B&Q and Castorama Expanding proven growth businesses Establishing new opportunities Capitalising on scale and diversity

65 2007/08 - Outlook UK market stabilising but challenging France continuing to be price competitive Expansion continuing in Rest of Europe and Asia Solid start to 2007/08

66 Full year results 2006/07 Slides will be available at

67 Appendices

68 Headline ROIC is calculated as follows Group operating profit 1 Add Property adjustments 2 Less Tax NOPLAT Average Invested Capital Capitalised leases 3 Goodwill Total Average invested capital 2006/ (330) 977 3,507 5,208 2,555 11, / (328) 907 3,207 4,359 2,512 10,078 ROIC 8.7% 9.0% 1. Excluding goodwill, exceptionals and JV/Associate interest and tax 2. Property lease costs and property depreciation and increase in market value 3. Capitalised at market yields

69 Underlying ROIC assumes value neutral property market growth Group operating profit 1 Add Property adjustments 2 Less Tax NOPLAT Average Invested Capital Capitalised leases 3 Goodwill Total Average invested capital 2006/ (242) 770 3,403 5,208 2,555 11, / (251) 729 3,118 4,359 2,512 9,989 ROIC 6.9% 7.3% 1. Excluding goodwill, exceptionals and JV/Associate interest and tax 2. Property lease costs and property depreciation and assumes value neutral growth 3. Capitalised at market yields

70 Underlying ROIC pre goodwill Group operating profit 1 Add Property adjustments 2 Less Tax NOPLAT Average Invested Capital Capitalised leases 3 Total Average invested capital 2006/ (242) 770 3,403 5,208 8, / (251) 729 3,118 4,359 7,476 ROIC 8.9% 9.8% 1. Excluding goodwill, exceptionals and JV/Associate interest and tax 2. Property lease costs and property depreciation and assumes value neutral growth 3. Capitalised at market yields

71 Financial timetable 2007/08 Period Reporting date Detail Communication Q1 13 weeks to 5 May 31 May Sales and retail profit Conference call H1 pre- close 23 weeks to 14 July 26 July Pre-close guidance Press release Interim results 26 weeks to 4 August 20 September Full interim results Presentation Q3 13 weeks to 3 November 29 November Sales and retail profit Conference call Q4 13 weeks to 2 Feb TBC Sales Conference call Prelims 52 weeks to 2 February TBC Full year results Presentation