Full year results 2006/07 Slides will be available at www.kingfisher.com
Gerry Murphy Group Chief Executive
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
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
Duncan Tatton-Brown Group Finance Director
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)
2006/07 - Group sales up 7.4% (52 weeks) Retail Sales 8,676m Constant Currency YOY growth 8,007* 10 244 200 0.2% 9.0% 25.0% 136 42.2% 7.4% 79 8,597 8,676 2005/06 @ 2006/07 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
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% 504 2005/06 UK France Rest of Europe & Asia 2006/07 Net nil impact of currency and 53 rd week
2006/07 - Adjusted EPS down 3% 2006/07 2005/06 % 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
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
2006/07 - Cashflow 2006/07 m 2005/06 Operating profit pre exceptionals 452 485 Other non-cash* 211 211 Change in working capital 124 (108) Retail Capex (247) (319) Underlying free cashflow 540 269 Property disposals 252 115 Property capex (219) (188) Non property exceptionals (47) (20) Business acquisitions (2) (163) Free cashflow 524 13 * Includes depreciation, share based compensation charge, amortisation of intangibles and share of post tax results of JVs and associates.
2006/07 - Net debt 2006/07 m 2005/06 Free cash flow 524 13 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
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
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
Returns on invested capital Cost of Capital 7.4% 1.8% Post goodwill 1.7% Cost of Capital 7.9% 6.9% 7.3% 2006/07 2005/06 Underlying Revaluation impact
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%
Returns on invested capital pre-goodwill 2006/07 2007/08 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%
Investing for future growth 2004/05 - total gross capex 408m 2007/08 - total gross capex 500-550m 550m 14% 3% 33% 45% 64% 41% 2004/05 2007/08 Strengthening developed businesses Expanding proven growth businesses Establishing new opportunities
Duncan Tatton-Brown Group Finance Director
Ian Cheshire B&Q - CEO
B&Q First and Only for Home Improvement Photo of DIYer DIY DFM
B&Q - vision First and Only For Home Improvement Product authority Multi specialist store Newness/style Easy to shop Great value
B&Q 3 stage programme a call to action test and measure roll out Jan 06 July 06 March 2007
B&Q better motivated colleagues 4.2 4.0 3.98 3.98 4.06 4.06 4.17 4.17 3.8 3.6 3.4 3.2 3.0 Jun 04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 B&Q Stores engagement Gallup best practice
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
B&Q more service where it matters Service Squads in 240 stores Specialist colleagues in key project areas
B&Q new products, more style
B&Q new products, new themes
B&Q new format, better store environment
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
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
B&Q store modernisation Jan 06 Jan 07 Jan 08 Modern: Large stores Medium stores 0 88 11 117 36 154 Remaining: Large stores Medium stores 114 120 104 92 78 56 Modern format space 22% 33% 57%
B&Q new opportunities
B&Q new opportunities
Ian Cheshire B&Q - CEO
Gerry Murphy Group Chief Executive
Castorama France
Castorama revitalisation programme launched 2003 Cost efficiency 2003 2004 2005 2006 2007 CPR Price Product Store development Supply chain Re-define Change Benefits
Castorama price sensitive market
Castorama France new own brands
Castorama France new premium ranges
France store development 18% 6 17-5 13 26-9 9 23-7 16% 14% 16.0 16.3 16.2 15.3 14.7 14.4 14.2 14.3 13.8 32 81 Castorama transferred to Brico-Dépôt Total Brico-Dépôt stores opened 12% 10% 8% 6% 4.6 5.9 7.2 9.0 9.9-21 Net Castorama Opened stores Castorama Brico-Dépôt 4% 2% 1.4 2.2 2.8 3.6 0% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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
Expand proven growth businesses Castorama Poland & Italy Brico Dépôt France & Poland B&Q China, Taiwan & Ireland Screwfix Direct
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%
Expand proven growth businesses Number of stores 250 200 150 100 50 109 129 153 211 267 0 2002/03 2003/04 2004/05 2005/06 2006/07
Brico Dépôt France (81 stores, 10 new)
Brico Dépôt France supporting growth
Castorama Poland evolving with the market (35 stores, 5 new)
Castorama Italy evolving with the market (27 stores, 1 new)
B&Q ChinaC (58 stores, 10 new) Dec 1998 Dec 2004 Dec 2005 Dec 2006 1 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 3 2 3 Shanghai 2 Dongguan 2 Dalian 1 Wuxi 1 Suzhou 1 Hangzhou 3 10 Fuzhou 2 Xiamen 1 5 Shenzhen
Screwfix Direct (38 counters, 31 new)
Establishing new opportunities Castorama Russia Brico Dépôt Spain Trade Depot Koçtaş Turkey
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%
Establishing new store opportunities Russia 3 stores UK Trade Depot 4 stores Spain 10 stores Turkey 10 stores
Castorama Russia (3 new stores)
Castorama Russia - store format Format based on Castorama Poland Harder offer Focused on building/maintenance EDLP
Capitalising on scale sharing brands Colours sells in 7 countries
Capitalising on diversity sharing formats France Spain Poland
Capitalising on diversity sharing ideas Castorama France Castorama Italy
Capitalising on diversity sharing ideas B&Q UK Castorama France
Capitalising on diversity sharing ideas Castorama Poland Castorama Italy
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
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
Full year results 2006/07 Slides will be available at www.kingfisher.com
Appendices
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 2006/07 465 842 (330) 977 3,507 5,208 2,555 11,270 2005/06 495 740 (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
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 2006/07 465 547 (242) 770 3,403 5,208 2,555 11,166 2005/06 495 485 (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
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 2006/07 465 547 (242) 770 3,403 5,208 8,611 2005/06 495 485 (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
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