Interim Results 2010 Slides will be available at www.kingfisher.com
Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation ti may lawfully ll be communicated ( relevant persons ). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group. For legal reasons, it should be noted that past performance cannot be relied on as a guide to future performance. This presentation contains forward-looking statements with respect to the Group s plans and objectives regarding the Group s financial conditions, results of operations and businesses. Some of the factors which may cause actual results to differ from these forward-looking statements are discussed in the cautionary note regarding forward-looking statements set out in the final slide of this presentation. The financial information referenced in this presentation does not contain sufficient detail to allow a full understanding of the results of the Group. For more detailed information, the entire text of the year end announcement for the year ended 30 January 2010, can be found on the Investor Relations section of the Kingfisher website (www.kingfisher.com).
Ian Cheshire hi Group Chief Executive
Agenda Introduction Financial Review Delivering Value Questions Ian Cheshire Group CEO Kevin O Byrne Group CFO Ian Cheshire Group CEO
Summary Strong results in challenging markets Sales flat, adjusted d PBT + 23% Self-help initiatives driving our performance Sales outperformance in France Group gross margin +130bps Costs (SG&A) ratio to sales flat Delivering Value programme progressing well
Delivering Value update 1. Driving up B&Q UK & Ireland s profit Retail profit + 15% 2. Exploiting the UK Trade opportunity TradePoint rolled out into 118 large B&Q stores 3. Expanding our total French business Profits up +14% 3 new stores, +2% additional space
Delivering Value update 4. Rolling out in Eastern Europe Sales + 6%, profit +3% 2 new stores, 10 under development for H2 5. Turning around B&Q China Prior year H1 losses almost halved 80,000m 2 space closed, over 95% sublet New range introduction underway 6. Growing Group sourcing Shipments running ahead of plan 7. Reducing working capital Slightly down, on top of last year s 300m reduction
Kevin O Byrne Group Finance Director
Financial highlights Constant currency sales flat, LFL down 1.3% Gross profit up 2.7%* (GM%+130bps*) Costs (SG&A) to sales ratio held flat Adjusted d pre-tax profit 354m, up 23% Free cashflow 387m (2009/10: 347m) Reported net cash 19m * constant currencies
Group sales flat* Retail Sales 5,454m +2.9%* (2.9)%* +0.7%* (0.1)%* Reported Rate (0.9)% 5,502 5,454 2009/10 France UK & Ireland Other International * constant currencies 2010/11
Group retail profit up 15.8%* Retail Profit 402m +21.0%* 15.8%* +15.8%* +13.7%* Reported Rate 15.7% 347 402 2009/10 France UK & Ireland Other International * constant currencies 2010/11
Financial highlights 2010/11 2009/10 % Reported Change Adjusted PBT* 354m 288m +22.9% Adjusted basic EPS* 10.6p 8.6p +23.3% Exceptional items (3)m nil n/a Effective tax rate 30% 30% - Profit for the period 248m 198m +25.3% *Before exceptional items, IAS39, amortisation of acquisition intangibles and tax on prior year items
Net finance costs down 50% m 2010/11 2009/10 Cash Interest on net debt (16) (31) Non Cash Interest charge on defined benefit pension scheme (4) (2) Other 4 1 Statutory net interest (16) (32)
Strong free cashflow m 2010/11 2009/10 Operating profit pre-exceptionals 374 320 Other non-cash items* 135 146 Change in working capital 25 163 Pensions and provisions pre-exceptionals (30) (32) Operating cashflow 504 597 Interest (12) (36) Tax (51) (79) Free cashflow before capex 441 482 Gross capex (127) (140) Property and retail disposals 73 5 Net capex (54) (135) Free cashflow 387 347 *Includes depreciation and amortisation, share based compensation charge, pre exceptional non cash movement in pensions and provisions, share of post tax tax results of JVs and associates and profit/loss on retail disposals
Targeted investment New stores Refresh the offer HI 9 opened 17 in development 7 revamps across the UK & France Range change merchandising TradePoint in 118 stores H2 17 to open 23 new stores, 20 new Screwfix counters in development 20 revamps across the UK & France Range change merchandising Updating IT IT capabilities B&Q distribution network
Interim dividend pence Total dividend 2009/10 5.5 Interim dividend 2010/11: 35% of 2009/10 total dividend 1.925 It is anticipated that, subject to final approval in March when the Board considers the Groups performance, outlook and capital needs, the current year s full year dividend will rise broadly in line with adjusted earnings
Capital structure Equity Leasehold debt Headline gearing 0% Underlying gearing c50% Solid capital structure Now rated stable BBB- Metrics improving Operational flexibility 3bn* of freehold property Reported net cash * As at 30 January 2010
Summary Strong results in challenging markets Sales flat, adjusted PBT + 23% Self-help initiatives driving our performance Sales outperformance in France Group gross margin +130bps Costs (SG&A) ratio to sales flat Strong balance sheet Investing for future growth where returns proven
Ian Cheshire hi Group Chief Executive
Delivering Value 1. Driving up B&Q UK & Ireland s profit 2. Exploiting the UK Trade opportunity 3. Expanding our total French business 4. Rolling out in Eastern Europe 5. Turning around B&Q China 6. Growing Group sourcing 7. Reducing working capital
Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity UK & Ireland
UK & Ireland Our self-help journey back to 7% continues to progress well Retail Engineering Proposition Development Mostly done Well underway Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Update on 2010/11 key priorities Store Standards Clean 230m Inventory less Remaining 19 Store 95%+ Clean Low Cost stock in 2 Standards Stores Showroom showroom Inventory large store Revamps Cost tcontrol Costs Cost down Control 3%* years More direct sourcing revamps Intensify Trial new Our Space categories revamps Roll out Trade TradePoint Retail Engineering i Proposition Developmentelopment Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Direct sourcing ahead of plan H1 H2 Xmas Kitchen appliances Outdoor leisure Lighting JCB power tools Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Shrinkage reduced New Store Standards driving a cultural shift GM benefit +50bps Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Future efficiencies 5% routed direct to store Worksop RCC RCC RCC RCC RCC RCC RCC Doncaster 95% via RCC* Preston Brook * Regional Consolidation Centre Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Future efficiencies 75% routed direct to store Worksop RCC RCC 25% via RCC RCC RCC Doncaster Swindon Enables more direct sourcing Quicker to store Lower stocks, better availability Lower distribution costs Less CO 2 Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity More innovation and eco
TradePoint now nationwide Now in all 118 large stores 250,000 registered trade customers National advertising recently launched Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Good early results Average only 11 weeks trading Maturing well, advertising helping In 4 original trial stores: Annualised trade sales now 13% of total store sales (vs 9% previously) ATV c 50 50% new customers, 50% existing customers Higher frequency of spend Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Trade growth in H2 Trial TradePoint order & collect counter in medium stores 7 further Screwfix outlets Launch new trade credit offer (valid in B&Q, TradePoint and Screwfix) Driving up B&Q UK & Ireland s profit Exploiting our UK Trade opportunity
Expanding our total French business Kingfisher France
Kingfisher France Outperforming the market, particularly Castorama Sales (comparable store) 5.6 % Feb 10 July 10 3.6 1.6 0.4 2.4 4.4 Kingfisher France Market* *Source: Banque de France Expanding our total French business
Kingfisher France Retail profit up 13.7%, boosted by self help Good sales growth Margin Initiatives Store modernisation and new marketing Product innovation More direct sourcing Buying optimisation i i benefits Fewer promotions Expanding our total French business
Product innovation at Castorama 8% of total tile sales 10% of total toilet sales Expanding our total French business
Expanding our total French business Direct sourcing ahead of plan
Expansion potential Before After La Rochelle La Rochelle 8,700 sqm 17% market share 15,000 sqm (Casto 11,000 sqm; Brico Dépôt 4,000sqm) 30 % market share Expanding our total French business
Expanding our total French business Castorama: 60% modern format
Other International
Good growth continues Poland H1 Gross margins +70bps Profit decline 4m H2 5 new stores Central DC opens Turkey 1new store Profits +22% 4 new stores Russia 1new store Sales +38% 1new store (2 in progress) Develop city it store format Moscow Rolling out in Eastern Europe
Castorama Poland Very tough H1 conditions, some one-off events First Distribution Centre opens September 2010 Immediate opportunity is Direct Sourcing now only 2%* Longer term opportunity is full national central distribution Now targeting g 100 stores in Poland * As a % of COGS (cost of goods sold) Rolling out in Eastern Europe
B&Q China Fix it Grow it Store rationalisation complete Stock clearance complete Costs reduced Sub let income secured Losses halved, on track for breakeven in 2011 New format now in 16 stores Strong management team Range re engineering 20% complete Introducing group own brands Turning around B&Q China
Fix it Longyang store H1 2009/10 H1 2010/11 Sales 9m 8m Space 13,600 sqm 6,950 sqm (-48%) Sales/sqm 628 1,115 (+77%) Profit 0.5m 0.8 m* *Excludes annual sublease income of c 1.2m - Starts in H2 2010. Turning around B&Q China
Leveraging sourcing scale H1 H2 Direct sourced shipments running ahead of plan Payment terms improved by 5 days 10 Superbrands created to enable development of common ranges On track to increase direct sourced shipments to at least USD1 billion Growing Group sourcing
10 Group Superbrands Hardware Decoration Outdoors leisure Power tools Kitchens, Bath & Bed Horticulture Heating & cooling Storage Opening Price Point Growing Group sourcing
Growing Group sourcing 10 Group Superbrands
Summary & Outlook H1 Strong performance in challenging markets Self help driving our performance Delivering Value programme progressing well Short term outlook Short term outlook Still not expecting any help from our markets The business is in robust shape Investing for future growth
Long term growth Good long term growth prospects Leading in 5 markets, developing fast in another 3 Good store development pipeline Now have a more profitable, higher returning model Financial i flexibility to accelerate growth Initiatives today will drive tomorrow s growth
Financial timetable 2010/11 Period Reporting date Detail Communication Q3 13 weeks to 30 October 2010 2 December 2010 Sales and retail profit Conference call at 1300hrs GMT Q4 13 weeks to 29 January 2011 17 February 2011 Sales Press release Prelims Year ended 29 January 2011 24 March 2011 Full year results Presentation/webcast at 0915hrs GMT
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