Final Results - Year Ended 29 January 2000
Kingfisher PLC
22 March 2000
Preliminary results for 52 weeks ended 29 January 2000
2000 2000 1999 Change %
Euro m** £m £m
Turnover 16,720 10,885.0 7,457.8 +45.9%
Retail Profit* 1,162 756.7 554.3 +36.5%
Pre-tax Profits* 1,127 734.0 584.7 +25.5%
Net operating cash
flow 1,327 863.8 698.3 +23.7%
Property
revaluation
surplus 218 142.0 58.4 -
Capital investment 1,255 816.8 743.6 +9.8%
Net debt 1,568 1,020.8 693.4 +47.2%
Gearing 33.1% 26.5%
Earnings per share
(p)*
Pre e-commerce
and other new
channel
development 32.8p 30.3p +8.5%
Earnings per share
(p)*
Post e-commerce
and new channel
development 31.5p 30.1p +4.7%
Dividends
(per share) (p) 14.5p 13.0p +11.5%
* before exceptional items and acquisition goodwill amortisation
** £1= Euro 1.5361
* Highest Ever Sales and Retail Profits
* Strong Underlying Growth
* Group Margins Maintained
* Record New Store Openings
* E-commerce Strategy Announced
Kingfisher, the European retailer, today reported its highest ever sales and
retail profits, a record number of new store openings and accelerated
investment in other key areas.
Turnover at £10.9 billion was ahead by 45.9% and the retail profits earned by
the three retail sectors grew by 36.5% to £756.7 million.
The Group maintained its overall gross profit margins. All its core
businesses, B&Q, Castorama, Comet, Darty, Superdrug and Woolworths, increased
their cash gross profits.
Pre-tax profits were strongly ahead by 25.5% at £734 million despite a
strengthening of Sterling, which reduced profits by £14 million, and e-
commerce costs of £23 million.
Both turnover and pre-tax profits benefited from annualisation of acquisitions
made last year and this year. Turnover benefited by £2.56 billion, and pre-
tax profits by £146 million. Like-for-like sales for the Group overall grew
by 5.1%.
Cash generation continued to be very strong, enabling the Group to increase
its capital investment programme to a record level of £817 million. The full
year dividend of 14.5p, up 11.5% on last year, is covered 2.1 times by
earnings.
Kingfisher's Chief Executive Sir Geoffrey Mulcahy said:
'This was a year of strong growth driven by several key factors. Underlying
growth was strong with like-for-like sales increasing 5.1%; we achieved a
record store expansion programme with 120 openings; the benefits of the
integration of Castorama and B&Q started to flow through; our global sourcing
operations made a significant contribution and we expanded in our new
markets.'
He continued: 'The other major factor contributing both to our growth and
margin control, was the impact of Every Day Low Pricing (EDLP) in B&Q and
Comet, complementing similar policies in Darty, BUT and Brico Depot.'
'Customers, our research has shown us, want above all else, EDLP from brands
they can trust, and this is supported by the performance of these brands. All
of them have increased volume, profits and like-for-like growth.
'EDLP enables us to cut down on the very significant cost of promotions and
associated advertising and to cut out store discounts. By smoothing out the
peaks and troughs of sales we can work closely with our suppliers, who are
therefore able to organise their businesses more effectively.
'These efficiencies, allied to the strength we gain from having leading retail
brands and our scale, mean we have the right economics both to drive our
businesses for volume and control our margins.'
Highlights Of The Year
Backing Success - New Store Openings at Record Level
Kingfisher opened a record 120 new stores during the year. This is in line
with the company's strategy of strengthening its core brands. There were two
new formats launched - the innovative Comet interactive stores, which
achieved immediate success, and the Big W stores. With their massive range
and depth of product Big W has become a general merchandise destination store
bringing a new dynamic to the market and Kingfisher sees the potential for a
chain of 100. This year Kingfisher will accelerate its store expansion
programme at an even faster rate with over 160 openings.
Sourcing Benefits Flow Through
During the year the Group's Far East sourcing operation based in Hong Kong
substantially increased in size and a new office will be opened in Shanghai
this year. Kingfisher Electrical's central sourcing operation, which
increasingly sources for all of Kingfisher's electrical businesses, was also
strengthened.
Sourcing cost reductions of £29 million were achieved through our global
sourcing activities of which over £15 million related to DIY, exceeding our
sector target.
Further Growth in New Markets
Kingfisher achieved further growth in new markets. Store openings included:
the first B&Q in China, two new B&Q's in Taiwan, five Castorama stores and two
NOMI stores in Poland. During the current year it is planned to open a total
of 29 further DIY stores including openings in China, Taiwan, Poland and
Brazil. Since the year end Kingfisher has announced its move into the Turkish
DIY market.
Kingfisher announces Strategy for Rapid Growth in e-commerce
Kingfisher today announces plans for the rapid growth of its existing e-
commerce activities and the development of new businesses.
In the year, Kingfisher invested in LibertySurf jointly with Group Arnault.
The value of Kingfisher's stake following last week's IPO is currently over £1
billion.
Other activities which have been operated as adjuncts of Kingfisher's main
businesses, such as B&Q and Comet, will become separate entities with their
own dedicated management teams. There will be five discrete units, each
capable of being externally financed and floated in the future.
The five units will be grouped into a new sector, e-Kingfisher, which will be
headed by a Chief Executive, who will be on Kingfisher's main board.
The five units will be: DIY; Electricals; Woolworths (also responsible for
entertainment); Health and Beauty; and e-Kingfisher Investments. The overall
objective for e-Kingfisher will be to achieve substantial and rapid growth
following a three pronged strategy.
Firstly, to extend the current brands' businesses by using the internet and
other new channels to offer more products to more customers. Secondly, by
using the Kingfisher brands as the basis for launching new initiatives across
Europe including: a 'home' portal, offering a wide range of products for the
home; a health and beauty portal; and a DIY trade Business to Business portal.
Thirdly, e-Kingfisher will invest in new businesses where it can leverage
Kingfisher's skills and assets.
Sir Geoffrey said: 'During the year we have been preparing the way for e-
Kingfisher taking all our main businesses on-line and developing our
infrastructure. Excluding the £83.7 million investment in Screwfix, the e-
commerce and mail order company, we invested a little over £50 million in this
area, with a P&L impact of £23.3 million. This year we plan to step up that
investment to an amount expected to be around £60 million with about half,
excluding our share of LibertySurf losses, impacting the P&L.
'As e-commerce moves towards volume sales Kingfisher's scale, sourcing
capability and brand strength become relevant and a major advantage providing
us with a unique opportunity for rapid and substantial new growth.'
Kingfisher also announced today that it is taking a minority stake in an e-
commerce company, ThinkNatural.com, which focuses on health and beauty
products.
Kingfisher said it would hold an analysts' seminar in late May/early June when
it would give further details about its e-commerce strategy.
Outlook
Sir Geoffrey said: 'Sales in the current year are showing encouraging growth.
Looking ahead with the growing strength we are gaining from our international
activities, our successful brands and the important innovations I've outlined,
I am confident that Kingfisher is on course to sustain future growth.'
SUMMARY RESULTS BY SECTOR
SECTOR Retail sales (£m) Retail profit (£m)
% %
2000 1999 change 2000 1999 change
DIY 4,528.3 2,055.4 120.3 372.6 191.1 95.0
ELECTRICALS 3,188.0 2,458.1 29.7 197.0 173.4 13.6
GENERAL
MERCHANDISE 3,065.5 2,840.9 7.9 187.1 189.8 (1.4)
*KINGFISHER
TOTAL 10,781.8 7,354.4 46.6 756.7 554.3 36.5
* Retail sectors only, excludes property, financial services, e-commerce and
other new channels, acquisition goodwill amortisation and other operating
costs.
OTHER YEAR-END DATA
SECTOR Store Selling space Employees
nos. (FTE)
(000s sq.ft.) (000s sq. m.)
DIY 506 32,521 3,020.8 38,863
ELECTRICALS 733 8,884 825.5 23,760
GENERAL
MERCHANDISE 1,584 9,177 852.7 25,933
KINGFISHER
TOTAL 2,823 50,582 4,699.0 88,556
DIY SECTOR
£m Sales % £m Retail Profit %
Company 99/00 98/99 change 99/00 98/99 change
B&Q* 2,312.3 1,908.4 21.2 224.7 188.7 19.1
CASTORAMA** 1,717.1 118.3 N/A 129.1 4.2 N/A
Other*** 498.9 28.7 N/A 18.8 (1.8) N/A
Total 4,528.3 2,055.4 120.3 372.6 191.1 95.0
* B&Q includes all B&Q UK operations plus a 6 month contribution from
Screwfix
** Castorama figures relate to Castorama domestic French operations only
*** Includes all DIY activities outside of France and the UK. Nomi's
results are for the 13 months to 31 January 2000, B&Q China and B&Q Taiwan
for the 12 months to 31 December 1999.
* Good Profits Performance
* Further Strong Growth Prospects
* B&Q/Castorama Integration Progressing
The DIY sector achieved a strong performance, aided by the continued strength
of its main markets. In the UK, the RMI market grew by 7.0% in 1999 whilst
the French DIY market grew by 4.1%. Sales for the sector were ahead 120.3% at
£4,528.3 million, with profits of £372.6 million. On a proforma basis,
assuming Castorama had been included for the whole of 1998/99, the sector's
profits would have increased by 18.4%.
In terms of the integration of B&Q and Castorama, we have successfully worked
on sourcing cost reductions which have resulted in net benefits of £15
million. These have been incorporated in the individual companies' profits
for the year. We now have cross-business groups addressing a number of areas,
including format development, sourcing, logistics and expansion in new
markets.
UK
B&Q maintained its strong growth record, sales increasing by 21.2% to £2,312.3
million, another year of market share gains. Profits were ahead 19.1% at
£224.7 million.
In the last two years, the B&Q Warehouse opening programme has contributed 67%
of the total sales growth. Fourteen new Warehouses were opened during the
year. Included in the opening programme were conversions of three ex-Dickens
stores, two former CRS outlets and the reopening of the Leicester Warehouse.
At the year end there were 48 Warehouse outlets open. Warehouse sales
accounted for 37% of the B&Q store sales for the year, with almost two-thirds
of the Warehouse stores achieving annualised sales of over £20 million.
In the current year B&Q plans to open a further 12 Warehouses, bringing it
closer to its stated objective of a total of 125, and also plans to open a
further three Supercentres. Overall B&Q will add around one million square
feet of selling space by the year end.
Like-for-like sales for the B&Q chain were ahead 8.6%, the key elements in
this growth being a focus on reducing prices, driving volume through best
sellers and continued range innovation, including the introduction of 'B&Q
Value', an entry price-point range. A particular feature in the second half
of the year was the growth in basket size with an increased average number of
items purchased and an increased average item value. This was driven by
improved stock availability and great prices on highly visible lines such as
power tools.
Included in the B&Q figures is a six month contribution from Screwfix. Since
its acquisition in July, the performance of Screwfix has significantly
exceeded expectations, with sales at £32.9 million for the six months
representing an annualised increase of over 100%.
France
Castorama in France achieved sales growth of 6.5%, and increased like-for-like
sales by 4.4%, driven in particular by a strong performance by Brico Depot
which achieved a sales increase of 30.7% and like-for-like growth, driven by
the increase in the number of transactions, of 16%. During the year one new
Castorama France store was opened and there were two extensions and one
relocation. In the current year it is intended to transfer five Castorama
France stores to Brico Depot and to trial a Warehouse format, this opening in
the second half of the year. During the year one new Brico Depot store was
opened and two stores were refurbished. In the current year it is planned to
increase the number of Brico Depot stores by 12, including the five that will
be transferred from Castorama France.
Other
Outside of the UK and France, the DIY sector's activities have grown rapidly
during the year. The number of stores trading increased to 67. Sales
increased to £498.9 million, partly as a result of the acquisition of
Castorama. B&Q's first store was opened in China and a further store is
planned to open in Shanghai in June 2000. In the current year B&Q Taiwan
plans to open four new stores.
In Poland, Castorama, which opened five new stores during the year, taking the
total to eight, more than doubled its sales and profit. In the current year
Castorama plans to open a further three Polish stores. The NOMI business, in
which Kingfisher increased its stake to 75% in December 1999, suffered adverse
trading conditions in the first half of the year but saw strong growth in the
final quarter. A new format store has been developed and successfully launched
and will be rolled out in new stores and rolled back into the existing chain.
There are six new openings planned for the current year, taking the total to
30 stores by the year end.
Good progress was achieved in Italy where one new store was opened during the
year, taking the total to 10 stores. In Canada, Reno Depot announced the
planned opening of seven new stores in the current year, three in Quebec and
four in Ontario, taking the total to 17. Other developments planned for the
current year include expansion in Brazil and a further two new store openings
in Italy.
Since the year end two further developments have been announced. In February,
Kingfisher (through B&Q) acquired a 22.5% minority stake in Virtueller Bau-
Markt AG, the operator of heimwerker.de, the leading German DIY e-commerce
business. Also, in February, it was announced that B&Q International will
enter the Turkish market in a joint venture with the KOC group, Turkey's most
important conglomerate. From an initial five stores it is planned to reach a
total of 30 stores by the end of 2004, and over 60 stores by the end of 2009.
NOTE: The results include the first full year contribution from Castorama.
At the time of the merger of B&Q with Castorama, Kingfisher took a 57.9% stake
in the enlarged Castorama group, fully consolidating its figures and reporting
a minority interest for the share of the business not owned. Since the
merger, following the exercise of share options in Castorama, the stake has
reduced to 56.6%.
Castorama, which retains its separate listing on the Paris Bourse, has
reported separately under French Accounting Standards its results for the
thirteen months, having changed its year end to January from December to come
into line with Kingfisher.
Castorama's results as reviewed here do not include B&Q and cover the year
ended 31st January 2000. The figures are restated under UK GAAP, the main
impact of which is the reversal of property depreciation, partially offset by
the reclassification of certain exceptional charges against operating profits.
Although Castorama was owned for only one month in 1998/1999, on a proforma
basis sales growth in the year reported would have been 9.3% and like-for-like
sales growth would have been 4.6%, both figures stated at constant exchange
rates.
On the same proforma basis Castorama's profits rose by 18.8% to £148.4
million.
ELECTRICAL SECTOR
£m Sales % £m Retail Profit %
Company 99/00 98/99 change 99/00 98/99 change
Darty 1,162.5 1,123.8 3.4 125.9 115.1 9.4
Comet 982.0 862.4 13.9 38.6 33.4 15.6
*Wegert 541.0 253.0 N/A (1.0) 7.5 N/A
**BUT 329.6 80.3 N/A 38.2 15.0 N/A
Other 172.9 138.6 N/A (4.7) 2.4 N/A
Total 3,188.0 2,458.1 29.7 197.0 173.4 13.6
* 1998/99 includes 6 months to 31 December 1998 and 1999/00 includes 12
months to 31 December 1999
** 1998/99 includes 9 months associate retail profit at 26% to 24 September
1998 and 3 months as a subsidiary to 31 December 1998 and in 1999/00
includes 13 months' subsidiary turnover and retail profits to 31 January
2000
* Sector Structure Delivering Benefits
* Further European Expansion
* Revitalised Comet Delivers Strong Growth
* Darty Grows Strongly In PCs and Mobile Phones
The sector overall achieved sales growth of 29.7%, to £3,188 million,
reflecting both the renewed organic growth during the year, with 49 new stores
opened, and the significant impact of the acquisitions made in 1998/99 in
France and Germany. Like-for-like sales growth for the sector was 5.0%, while
on a proforma basis all store sales growth was 12.9%.
Strong growth was achieved in mobile phones, multimedia and, increasingly,
digital products, despite price deflation remaining a feature of electrical
retailing, particularly in brown goods.
Electrical sector profits increased by 13.6% to £197 million. Own brand
development remains an important part of the sourcing strategy and the PROline
own label brand was introduced to all sector formats during the year, as well
as being sold through Woolworths. In the current year, it is planned to
achieve sales of PROline in excess of £200 million.
France
Darty achieved sales growth of 8.7% in the year overall which after exchange
translation reduces to 3.4%. Like-for-like growth in local currency was 5.8%.
Profits in local currency terms increased by 14.6% to FF 1,269.4 million and
in Sterling terms were 9.4% ahead at £125.9 million.
The main drivers of sales growth were strong performances in mobile phones and
PC's and Darty again increased its market share in both areas.
In the year Darty opened 10 new stores, taking the total to 173 at the year
end, and refurbished a further 10 stores. In the current year Darty plans to
open eight new stores and refurbish another 20. Over the course of the next
five to seven years it is intended to increase the number of outlets to a
total of 240 in France.
BUT, the furniture and electrical retailer, in its first full year as a Group
subsidiary, achieved sales growth of 15.0% and a profits increase of 10.0% in
local currency. Like-for-like sales growth of 5.8% was driven largely by
strong demand for furniture in a market which was ahead only 1.0%. During the
year EDLP was introduced in two of the three main furniture categories, and is
planned to be extended to the third category in the current year. The year
also marked the roll-out of the new concept store, first launched in Fresnes
in January 1999, with this format being applied to the new store openings in
Albi, Amiens, and Blois. Space expansion included the opening of these three
new stores and the purchase of five stores operated by franchisees. Other
initiatives undertaken during the year included: a new promotion campaign,
reflecting the image of the new concept stores; the extension of the BUT
customer card and the development of a transactional internet site, which was
opened to customers at the start of the current financial year.
UK
Comet increased its profits by 15.6% to £38.6 million in a year of
considerable change for the business. Significant strategic developments
included the national launch of EDLP in October; the opening of three new
format interactive destination stores and the first new interactive
Superstore; the opening of a further four new local after sales service
centres, taking the total to seven; the expansion of the central Call Centre
in Hull and the formal launch of Comet's transactional website in September.
All these developments contributed to sales growth of 13.9%, with like-for-
like growth of 7.5%. This progress was achieved despite significant price
deflation, particularly in brown goods. Strong sales growth in both white
goods and brown goods was experienced in the second half of the year,
especially following the introduction of EDLP, and Comet continued to gain
market share, which increased from 12.1% to 12.9% for the year overall.
Significant investment was undertaken in the year and, including the
developments mentioned above, six stores were opened, taking the total number
to 262, four were relocated and there were five refurbishments. Following the
success of the interactive stores all new stores will be of this format, and
in the current year it is planned to open or refurbish 10 destination stores
and eight of the smaller Superstores. Although 19 stores are planned to be
closed in the current year, the net effect will be to increase selling space
by 217,000 square feet by the year end.
This year Comet plans to launch an offering on Open..Digital TV,
complementing the existing internet offer. Both offers will be supported by a
further expansion of the Hull Call Centre in the current year to handle all
calls made to Comet stores.
Germany
The results include Wegert (60% owned by Kingfisher) for the twelve months
ending 31st December 1999. During 1999 Wegert expanded significantly its
Promarkt and Makromarkt stores portfolio, adding 24 new stores through
acquisition and store openings, taking the total to 79 by the end of the
period. In the current year it is planned to open a further 14 Promarkt
stores. Retail sales increased by 56% but like-for-like growth was only 1.4%,
reflecting difficult trading conditions and significant price deflation. This,
together with the investment costs of store expansion, resulted in a small
loss for the year.
Other
New Vanden Borre, the Belgian electricals chain, increased like-for-like sales
by 13.4%, outperforming a market that grew by 5.1%. The major event of the
year was the agreement announced in November to acquire, as from 1 February
2000, the Hugo Van Praag business, a chain of 30 stores. The combined group
becomes the market leader in electrical retailing in Belgium and provides an
ideal platform for further growth.
BCC in Holland increased sales by 7.1%, mainly due to the opening of two new
stores earlier in the year, taking the total to 22 stores. Like-for-like
growth was 1.9%, driven by telecom and multimedia. Electric City in Singapore
suffered from intense competitive pressures and a declining market, and
produced a loss in its first full year as part of the Kingfisher Group.
GENERAL MERCHANDISE
£m Sales % £m Retail Profit %
Company 99/00 98/99 change 99/00 98/99 change
Woolworths 1,860.4 1,763.2 5.5 118.8 118.1 0.6
Superdrug 842.3 798.6 5.5 41.4 41.1 0.7
Other* 362.8 279.1 30.0 26.9 30.6 (12.1)
Total 3,065.5 2,840.9 7.9 187.1 189.8 (1.4)
* Includes EUK, MVC, VCI, and central sector costs. VCI's figures are for the
12 months to 31 December 1999
* Superdrug Expands Further In Health & Beauty
* Big W Launch
* Underlying Profit Growth Adversely Affected By Entertainment Pricing
In a tough trading environment, characterised by slower growth, price
competition, and a focus on value by customers, both Woolworths and Superdrug
produced good performances, securing sales growth ahead of the market in both
total and like-for-like terms.
The sector was strongly impacted by one-off cut-price promotions of
entertainment products in the market. Whilst still profitable for Kingfisher,
this led to a year on year profit decline in entertainment of £16 million.
Suppliers are now recognising the problems that this has created and, as one
part of our entertainment strategy, we are working closely with them to
improve our margins and, at the same time, deliver great value to our
customers.
Initiatives to establish profitable platforms for continued growth are being
pursued, including a more significant Internet and Digital TV presence.
Woolworths
Woolworths increased sales by 5.5% to £1,860.4 million, driven equally by
like-
for-like growth and new space sales. Like-for-like sales growth of 2.7% was
driven by strong performances in Mobile Communications and Confectionery
supported by the ongoing modernisation of the Woolworths Local stores.
However, as mentioned above, entertainment margins suffered.
During the year Woolworths achieved considerable progress in its expansion
programme, opening 11 stores, relocating one store and extending nine stores.
New space contributed an additional 237,000 square feet, taking the new
trading space opened over the past two years to 314,000 square feet. This
marks a significant step towards Woolworths' strategic objective of adding one
million square feet to the stores' base by 2002/03. Also, a further 49 stores
were refurbished during the year.
In the current year it is planned to open 14 Woolworths stores, adding a
further 207,000 square feet of trading space.
The first two Big W stores, opened during the year, added a further 164,000
square feet of trading space to the Woolworths total. Customer reaction has
exceeded our expectations. The concept offers customers a massive range of
products under one roof and for the first time brings together product lines
associated with all the main Kingfisher UK brands. Since the year end a
further two Big W stores have been opened, at Bristol and Rotherham, and in
the remainder of the year a minimum of another four stores will be opened. The
target is to take the Big W chain to a total of ten outlets by the year end,
with approximately 805,000 square feet of trading space, including the first
purpose built store in Glasgow.
Also since the year end Woolworths has launched its Woolworths General Store
format, opening stores in Palmers Green and in Muswell Hill. This new store
format combines a pharmacy with Health & Beauty, general merchandise and a
convenience food offer.
Significant progress has also been achieved in the development of Woolworths
e-
commerce activity. In August Woolworths was one of the first retailers to
launch on Open..Digital TV, with sales generated to date far exceeding
original expectations. In December Woolworths launched its internet site
offering a limited selection of Entertainment and Toys products. It is planned
to expand the range offered on both Open and internet significantly in the
current year. Woolworths has established a 572,000 square feet dedicated
singles picking warehouse in order to cope with increased volumes from e-
commerce and the on-going catalogue activities.
Superdrug
At Superdrug sales increased by 5.5% to £842.3 million, with like-for-like
sales growth of 3.5% driven by previous years' investments in new stores and
pharmacies. Profits were marginally ahead at £41.4 million despite difficult
market conditions, with price deflation, driven by competitive activity,
contributing to a significant slow-down in market growth during the year.
Superdrug continued to benefit from its focus on Health & Beauty, with sales
in these categories up by 8.5% and 20.4% respectively. These gains, however,
did not compensate fully for the decline in the toiletries market.
Investment has been maintained in Superdrug, continuing the greater focus on
the Health and Beauty offer. Twenty-three new pharmacies were opened during
the year, bringing the total to 200. Five new stores were opened, another ten
were either relocated or extended and 160 stores were refurbished, bringing
the total number of rebranded stores to 347 out of a total estate of 704
stores.
In the current year Superdrug will continue its investment programme,
targeting 8 new store openings, 12 relocations, 10 extensions, and 50
refurbishments and adding another 50 pharmacies.
Other
Entertainment UK, the Group's entertainment products wholesaler, increased
sales by 10.1% in a market that overall showed little growth. During the year
a new business was established to provide fulfilment services for Direct to
Home retailers, including EUK's existing Bricks and Mortar customers. Sales
between the launch in October and the year-end exceeded expectations and
trading with several more major internet customers will begin in the first
half of the current year.
VCI, the video, music and book publisher acquired in November 1998, achieved a
considerable profits turnaround in its first full year as part of the Group as
a result of lower overhead costs. Problems in the book division, which
depressed profits for the year, have been addressed and improvements in this
area should underpin further profits progression for VCI overall in the
current year.
MVC grew sales during the year as a result of increased store openings and
like-for-like sales up by 2.0%. During the year 22 stores were opened,
bringing the total to 83 stores, making MVC a significant player within the
market in terms of store numbers and selling space. In the current year it is
planned to open a further eight stores.
PROPERTY
Chartwell Land, Kingfisher's specialist retail property company, increased
operating profit by 10% to £76.0 million (£69.1 million). Total returns
comprising operating profit, profit on investment property sales and the
portfolio revaluation surplus, showed strong growth to £230.0 million (£129.1
million). This represents a return on average gross assets of 15%.
The increase in total returns was driven by an improvement in revaluation
surplus to £140.1 million (£56.7 million). The performance of retail
warehousing was particularly strong. Profit on disposals of investment
property was £6.9 million (£3.3 million) as disposals were concluded at an
average of around 13% more than December 1998 book values.
Of the total gross rents of £95.2 million, £68.9 million (72%) came from group
tenants. Development activity reported a small loss of £1.0 million (£6.3
million profit), although this did not reflect the development surplus of over
£6 million on schemes retained within the investment portfolio.
During the year Chartwell Land's activities secured over 1m sq. ft of new
retail space for Group companies. This included a portfolio of eight stores
acquired from CRS in April 1999 which included opportunities for two B&Q
Warehouses and four new Big W stores. Gross assets at the end of the year
were valued at £1.59 billion compared to £1.29 billion at the previous year
end.
CENTRAL COSTS
Other operating costs increased year on year reflecting the development of
global sourcing, European supply chain and IT capabilities.
E-COMMERCE COSTS
E-commerce costs relate to the set up of internet operations, the commencement
of trading on Open..Digital TV, further development of home delivery catalogue
activities and our share of the losses incurred in the LibertySurf operation.
KINGFISHER DATA BY SECTOR AND COMPANY
DIY SECTOR
Company Store Selling space Employees
nos. (FTE)
(000s sq.ft.) (000s sq. m.)
B&Q 297 16,162 1,501.0 17,579
Castorama 142 11,500 1,068.4 14,190
Other 67 4,859 451.4 7,094
TOTAL 506 32,521 3,020.8 38,863
ELECTRICAL SECTOR
Company Store Selling space Employees
nos. (FTE)
(000s sq.ft.) (000s sq.m.)
Darty 173 2,133 198.2 9,175
Comet 262 2,091 194.3 8,012
Wegert 186 2,219 206.2 3,278
BUT* 63 2,021 187.8 2,257
Other 49 420 39.0 1,038
TOTAL 733 8,884 825.5 23,760
GENERAL MERCHANDISE
Company Store Selling space Employees
nos. (FTE)
(000s sq.ft.) (000s sq.m.)
Woolworths 797 6,657 618.5 17,529
Superdrug 704 2,203 204.7 6,462
Other 83 317 29.5 1,942
TOTAL 1,584 9,177 852.7 25,933
KINGFISHER
TOTAL 2,823 50,582 4,699.0 88,556
The figures for BUT include only those stores consolidated in the Group's
figures.
BUT also operates the following non-consolidated franchises.
*BUT non
consolidated
franchises 162 4,120.7 382.8 3,743
FINANCIAL REVIEW
Shareholder Return and Dividends
Earning per share before exceptional items and goodwill amortisation and
expenditure on e-commerce and other new channel development increased by 8.5%
to 32.8p (1999: 30.3p). After including the £23.3 million costs of e-
commerce and other new channel development the earnings per share figure is
31.5p, up 4.7%. The revaluation surplus of £140.1 million on Chartwell's
property portfolio was equivalent to a further increase in shareholder value
of 10.3p per share.
The Board has proposed a final dividend of 10.5p per share making the total
dividend for the year of 14.5p per share. This represents an increase of
11.5% and is covered 2.1 times from pre-exceptional earnings.
Cashflow and Investment in the Businesses
Net debt grew from £693.4 million at the start of the year to £1,020.8 million
by the year end. Cash generation across the Group remained strong with £863.8
million being generated from operating activities before tax.
Net capital expenditure for the year of £816.8 million was £73.2 million up on
last year. Organic expenditure was £589.9 million, up 55.8% as the enlarged
Group continues to expand and improve its store portfolio and supporting
infrastructure. Expenditure on acquisitions resulted in a further cash out
flow of £226.9 million.
Interest
Net interest payable increased by £27.6 million to £37.5 million. This
increase reflects both the funding of the acquisitions made in the last two
years plus the inclusion of a full year interest charge for those businesses
acquired last year. There was also a general increase in Sterling and Euro
interest rates.
Exceptional Items
The exceptional item within operating profit represents the costs incurred
during the period on the attempted merger with ASDA Group plc. Last year the
exceptional item represents the release of an accrual for VAT on the
outstanding credit balances as 28 February 1997 following the withdrawal of
the Standard Method of Gross Takings by HM Customs and Excise. Following a
Court of Appeal ruling the accrual was no longer required.
Taxation
The overall rate for the year decreased from 29.2% to 28.1%. The reduction is
largely explained by an adjustment to the charge for previous years. The rate
on current year profits was 29.5% (down from 30%). The current year rate has
come down partly because statutory rates have fallen in both the UK and France
and partly because tax relief on capital expenditure has been running ahead of
the corresponding accounting charge. Against this a greater proportion of the
group's profits arose in countries with tax rates higher than the UK, chiefly
France. In the current year the overall rate is expected to rise to something
in excess of 30%.
Mergers and Acquisitions
During the year the Group made three principal acquisitions. In each case the
goodwill arising has been capitalised and is being amortised in accordance
with Group policy.
DIY SECTOR
On 26 July 1999, B&Q plc acquired the entire share capital of Screwfix Direct
Limited, a mail order and e-commerce retailer of building, plumbing and
electrical products. Total consideration was £83.7 million giving rise to
goodwill of £80.9 million.
On 22 April 1999, B&Q plc acquired the entire share capital of Dickens
Limited, a DIY retailer in the North East of England. Total consideration was
£41.0 million giving rise to goodwill of £24.0 million.
Since the year end the Group has announced two more acquisitions in the DIY
sector.
On 8 February 2000, B&Q plc acquired a 22.5% minority share in Virtueller Bau-
Markt AG, the operator of heimwerker.de, the leading German DIY e-commerce
business.
On 29 February 2000, B&Q plc acquired a 50% stake in Koctas Yapi Marketleri
Ticaret A.S, the new operator of Koctas, the leading Turkish DIY retail chain.
ELECTRICAL SECTOR
On 31 May 1999 the Group subscribed for a 40% interest in Liberty Surf Group
SA, a pan-European internet service provider. By the year end this interest
had increased to 45.5%. Total consideration was £34.9 million.
During the year the Sector made several other smaller acquisitions including
Wegert Grosslabor GmbH, a German photographic processing company and ProMarkt
GmbH & Co. KG Audio Video Elektro Foto, a German electrical retailer.
Since the year end LibertySurf has listed on the Premier Marche of the Paris
Bourse. Kingfisher retains an interest of 38.0%, which at the closing price
on the day of initial listing values this interest at over £1 billion. The
dilution in interest from 45.5% to 38.0% will result in an exceptional profit
in 2000/01 results of £118 million.
Since the year end the Group has completed the acquisition of Hugo Van Praag,
Belgium's number two electrical group.
PROPERTY
On 14 January 2000, the group acquired 92.5% of the share capital of Leicester
Centre Property Ltd., the owner of the Haymarket Shopping Centre in Leicester.
YEAR 2000
The Group successfully prepared for the potential year 2000 problems. The
costs of rendering existing software year 2000 compliant was charged to the
profit and loss account as incurred. These costs amounted to £8.7 million
(1999: £11.2 million).
DIVIDEND
The final dividend for the year ended 29 January 2000 will be paid on 22 June
2000 to shareholders on the register at close of business on 14 April 2000
subject to the approval of shareholders at the Company's Annual General
Meeting to be held at 11.00 a.m. on 24 May 2000 at The Dorchester Hotel,
London.
ANNUAL REPORT AND ACCOUNTS
The Summary of Group Results, Consolidated Balance Sheet, Consolidated Cash
Flow Statement, Consolidated Statement of Total Recognised Gains and Losses
and extracts from the notes to the accounts are extracted from the Group's
Report and Accounts. The auditors have made a report on the Group's statutory
accounts under section 235 of the Companies Act 1985 which does not contain a
statement under sections 237 (2) or (3) of the Companies Act and is
unqualified. The statutory accounts will be filed with the Registrar of
Companies in due course.
Copies of the annual report and accounts will be posted to shareholders no
later than 21 April 2000.
Further copies of this announcement are available from:
The Company Secretary
Kingfisher plc
North West House
119, Marylebone Road
London
NW1 5PX
KINGFISHER plc AND SUBSIDIARY COMPANIES
Summary of Group Results
For year ended 29 January 2000
£ millions Note 2000 1999
Group turnover 1 10,885.0 7,457.8
Group Operating Profit
DIY 372.6 191.1
Electrical 197.0 173.4
General merchandise 187.1 189.8
Property 76.0 69.1
e-commerce & other new channels (23.3) (3.7)
Exceptional item - operating 3 (3.5) 44.7
Other operating costs (37.9) (25.1)
Acquisition goodwill
amortisation (10.5) (2.2)
Group Operating Profit 2 757.5 637.1
Exceptional items - non
operating 3 6.2 2.1
Profit before interest 763.7 639.2
Net interest payable 4 (37.5) (9.9)
Profit before tax 726.2 629.3
Taxation 5 (204.4) (183.5)
Profit after tax 521.8 445.8
Minority interests (102.4) (8.9)
Profit for the financial year 419.4 436.9
Dividends (198.2) (175.3)
Retained profit for the year 221.2 261.6
Earnings per share -
Basic 6 30.9p 32.3p
Before exceptional items,
acquisition goodwill
amortisation, and e-commerce
and other new channels
32.8p 30.3p
Group Balance Sheet
As at 29 January 2000
£ millions Note 2000 1999
Fixed assets
Intangible assets 400.9 267.3
Tangible assets 3,432.5 2,885.4
Investments in joint ventures
Share of gross assets 109.0 105.1
Share of gross liabilities (93.1) 15.9 (94.9) 10.2
Investments in associates 39.2 11.2
Other investments 40.3 45.0
3,928.8 3,219.1
Current assets
Development work in progress 96.7 69.0
Stocks 1,669.4 1,465.4
Debtors due within one year 687.3 608.8
Debtors due after more than
One year 146.8 144.1
Securitised consumer
Receivables 303.8 321.0
Less: non-recourse secured
notes (234.5) 69.3 (247.4) 73.6
Investments 352.3 311.7
Cash at bank and in hand 156.6 241.2
3,178.4 2,913.8
Creditors
Amounts falling due within one year (3,377.1) (2,726.0)
Net current (liabilities)/assets (198.7) 187.8
Total assets less current liabilities 3,730.1 3,406.9
Creditors
Amounts falling due after more than
one year (626.0) (768.8)
Provisions for liabilities and charges (18.6) (21.8)
3,085.5 2,616.3
Capital and reserves
Called up share capital 171.0 170.0
Share premium account 255.2 237.7
Revaluation reserve 534.4 395.4
Non-distributable reserves 148.2 146.3
Profit and loss account 1,519.8 1,301.2
Equity shareholders' funds 7 2,628.6 2,250.6
Equity minority interests 456.9 365.7
3,085.5 2,616.3
Consolidated Cash Flow Statement
For the financial year ended 29 January 2000
£ millions Note 2000 1999
Net cash flow from operating activities 8863.8 698.3
Returns on investment and servicing of
finance
Interest received 31.5 35.2
Interest paid (68.2) (46.1)
Interest element of finance lease rental
payments (4.0) (2.4)
Dividends paid by subsidiaries to
minorities (20.2) -
Net cash outflow from returns on
investment and servicing of finance (60.9) (13.3)
Taxation
UK Corporation tax paid (127.8) (125.2)
Overseas tax paid (73.0) (44.0)
Tax paid (200.8) (169.2)
Capital expenditure and financial
investment
Payments to acquire tangible fixed assets (664.8) (416.0)
Receipts from the sale of tangible fixed
assets 74.9 37.4
Payments for additions to investments (14.2) (15.3)
Receipts from sale of investments 3.4 0.9
Net cash outflow from capital expenditure
and financial investment (600.7) (393.0)
Acquisitions and disposals
Purchase of subsidiary and business
undertakings (187.5) (361.2)
Net cash/(overdrafts) acquired with 4.8 (69.4)
subsidiary undertakings
Payments for additions to joint
ventures/associated undertakings (39.4) (3.8)
Issue of shares by group companies to
minority shareholders 58.7 -
Net cash outflow from acquisitions and
disposals (163.4) (434.4)
Equity dividends paid to shareholders (146.4) (153.8)
Management of liquid resources
Net movement in short term deposits 120.2 22.3
Net purchase of short term investments (39.9) (43.1)
Net cash inflow/(outflow) from management
of liquid resources 80.3 (20.8)
Financing
Issue of ordinary share capital 10.8 13.6
Capital element of finance lease rental
payments (8.8) (6.4)
Net increase in loans 379.2 433.2
Net cash inflow from financing 381.2 440.4
Increase/(decrease) in cash 153.1 (45.8)
Reconciliation of Net Cash Flow to Movement in Net Debt
For the financial year ended 29 January 2000
£ millions 2000 1999
Net debt at start of year (693.4) (203.5)
Increase/(decrease) in cash 153.1 (45.8)
Debt in subsidiaries acquired (44.5) (41.0)
Net movement in short term deposits (120.2) (22.3)
Net purchase of short term investments 39.9 43.1
Change in market value of investments 0.7 (0.5)
Net increase in loans (379.2) (433.2)
Foreign exchange effects 22.8 9.8
Net debt at end of year (1,020.8) (693.4)
Consolidated Statement of Total Recognised Gains and Losses
For the financial year ended 29 January 2000
£ millions 2000 1999
Profit for the financial year 419.4 436.9
Unrealised surplus on revaluation of
properties 142.0 58.4
Non-distributable reserve arising on the
combination of B&Q and Castorama 1.9 146.3
Minority increase in Castorama 21.2 -
Exchange adjustments offset in reserves (46.4) (10.0)
Tax on exchange adjustments offset in
reserves (6.8) -
Total recognised gains and losses
relating to the year 531.3 631.6
1.Turnover
£ millions 2000 1999
DIY 4,528.3 2,055.4
Electrical 3,188.0 2,458.1
General Merchandise 3,065.5 2,840.9
Property 32.5 41.1
Financial Services 70.7 62.3
Total turnover 10,885.0 7,457.8
2. Operating Profit
£ millions 2000 1999
Group Turnover 10,885.0 7,457.8
Cost of Sales (7,248.5) (4,960.9)
Gross Profit 3,636.5 2,496.9
Other income and expenses (2,873.5) (1,909.1)
Exceptional items-operating (3.5) 44.7
Share of joint ventures and associates (2.0) 4.6
Group Operating Profit 757.5 637.1
3.Exceptional items
£ millions 2000 1999
Operating exceptionals
- Costs of attempted merger (3.5) -
- VAT accrual release - 44.7
(3.5) 44.7
Non operating exceptionals
- Profit on disposal of fixed assets 6.2 2.1
4.Net interest payable
£ millions 2000 1999
Interest payable 76.5 49.2
Interest receivable (36.6) (35.2)
39.9 14.0
Interest capitalised (2.4) (4.1)
Net interest payable 37.5 9.9
5.Taxation
£ millions 2000 1999
Tax charge on profit for the year:
UK corporation tax at 30.16% (1999 : 123.9 148.6
31%)
Relief for double taxation (3.2) (1.2)
Overseas taxation 93.6 40.2
Deferred tax (0.3) (0.2)
Associated undertakings 0.8 1.5
Joint ventures 0.7 -
215.5 188.9
Prior year adjustments (11.1) (5.4)
204.4 183.5
6.Earnings per share
Pence 2000 1999
Basic earnings per share 30.9 32.3
Attributable to VAT accrual release - (2.3)
Attributable to other exceptional items (0.2) (0.1)
Earnings per share before exceptional
items 30.7 29.9
Attributable to acquisition goodwill
amortisation 0.8 0.2
E-commerce & other new channels 1.3 0.2
Basic - adjusted earnings per share 32.8 30.3
7.Reconciliation of movement in shareholders' funds
£ millions 2000 1999
Profit for the financial year
attributable to the members of
Kingfisher plc 419.4 436.9
Dividends (198.2) (175.3)
221.2 261.6
Foreign exchange adjustments (net of
tax) (53.2) (10.0)
Unrealised surplus on revaluation of
properties 142.0 58.4
Shares issued under option schemes 10.3 13.4
Scrip issue 34.6 9.3
Non-distributable reserve arising on the
combination of B&Q and Castorama 1.9 146.3
Minority increase in Castorama 21.2 -
Movement in Darty minority interest - 1.0
Net addition to shareholders' funds 378.0 480.0
Opening shareholders' funds 2,250.6 1,770.6
Closing shareholders' funds 2,628.6 2,250.6
8.Net cash flow from operating activities
£ millions 2000 1999
Group operating profit 759.5 632.5
Depreciation and amortisation 191.3 141.0
Increase in development work in progress (25.3) (15.8)
Increase in stock (272.3) (94.3)
(Increase)/decrease in debtors (119.6) 66.1
Increase/(decrease) in creditors 326.0 (46.0)
Loss on disposal of fixed assets 4.2 14.8
Net cash inflow from operating activities
863.8 698.3
For further information
Media Enquiries
Gwen Gober, Director of Corporate Affairs + 44 (0) 20 7725 5714
Gail Lavielle, Director of Corporate Communications + 33 (1) 43 18 52 68
Broker and Institutional Enquiries
Keith Williams, Director of Investor Relations + 44 (0) 20 7725 5776
Graham Fairbank, Head of Corporate Communications + 33 (1) 43 18 52 26
Kingfisher plc + 44 (0) 20 7724 7749
Kingfisher Website www.kingfisher.co.uk
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