Kingfisher Plc · LSE:KGF
Kingfisher — FY2000/01 Earnings Presentation
62 slides from Kingfisher's earnings presentation, Mar 14, 2001
Slide 1: Kingfisher
KINGPSHER
Slide 2: Preliminary Full Year Results
Preliminary Full Year Results 12 months ending 3 February 2001 Sir Geoffrey Mulcahy Group Chief Executive 14 March 2001
Slide 3: Good growth over the medium term
Good growth over the medium term 5 year 10 year CAGR% CAGR% Sales 18.1% 14.1% Earnings 12.5% 15.0%
Slide 4: How we have got there
How we have got there • Leading brands in the high growth markets • Innovation of customer proposition • Expansion into new markets • Investment in infrastructure
Slide 5: Objectives for today
Objectives for today are to • Explain the results • Update on the separation • Outline strategy for growth
Slide 6: Continued sales growth
Continued sales growth £12.1bn 11.5% £10.9bn 5.0% LFL All Store 99/00 00/01 Growth Growth
Slide 7: Pre tax profit decline but an increase in earnings
Pre tax profit decline But an increase in earnings Pre tax profit* Earnings £720.6m £605.8m £409.0m £415.5m 99/00 00/01 99/00 00/01 * Pre-exceptionals & goodwill
Slide 8: Many of the businesses had a record year
Many of the businesses had a record year Record profit at a number of businesses helped add £86m profit B&Q BUT Brico Dépôt Comet Darty Nomi
Slide 9: Three main elements led to the year on year decline
However, three main elements led to the year on year decline £m Trading Factors 50 Non-trading factors 70 Investment 42
Slide 10: The £50m relates to two businesses
The £50m relates to two businesses £m ProMarkt 19 Woolworths 31
Slide 11: ProMarkt's performance reflected a number of factors
ProMarkt’s performance reflected a number of factors • Difficult trading environment • Integration of three businesses • Lack of infrastructure
Slide 12: New Management Team leading the recovery
New Management Team leading the recovery • More customer focus • Better ranging • Improved availability • A central infrastructure
Slide 13: Woolworths - a difficult year
Woolworths - a difficult year • Intensely competitive market • Invested in growing share • High growth in low margin categories • Cash margin fell short of target • Market share objectives achieved
Slide 14: Recovery plans in place
Recovery plans in place to • Improve sales densities • Improve margins • Ensure price competitiveness • Reduce operating and sourcing costs
Slide 15: Record number of stores opened
Record number of stores opened Stores Opened Home Improvement 44 Electricals 31 General Merchandise 27
Slide 16: New format innovation
New format innovation • Castorama L’Entrepôt • Comet Interactive • Big W • Woolworths General Store • Darty Euro Disney • B&Q “The DIY Store” concept
Slide 17: Focus on emerging markets
Focus on emerging markets Positioned for growth at a Global level • B&Q Shanghai • 56 further Chinese stores planned by 2005 • Poland sales up 52% • Acquisition of Datart
Slide 18: E-Kingfisher successes
E-Kingfisher successes • Launched in the year to bring enhanced focus, best practice and efficiency • Led to accelerated development • All major brands on-line, supported by our existing operations • Noticeable successes
Slide 19: Progress has been made on infrastructure
Progress has been made on infrastructure • Product sourced through Hong Kong has doubled • New buying offices in India and China • European supply agreements in place • Central buying introduced at both Castorama and ProMarkt
Slide 20: 2000/01 Financial Performance
Helen Weir Group Finance Director 2000/01 Financial Performance
Slide 21: Financial Performance
Financial Performance • Performance summary • Summary financials • Looking forward
Slide 22: Performance summary
Performance summary • Good growth in core businesses • Results impacted by number of key factors – Disappointing performance in Woolworths and ProMarkt – Non trading factors – Investment in business
Slide 23: Summary of key factors
Summary of key factors Profit before tax, goodwill and exceptional items 86 (50) (70) 721 Under Growth performing (42) businesses Non (39) Trading Investment 606 Interest 1999/00 2000/01 +£200m
Slide 24: Non trading factors
Non trading factors £M • Exchange movement 17 • Accounting Standard changes 18 • LibertySurf losses 35 70 All figures represent YOY adverse movement
Slide 25: Exchange impact on retail profit
Exchange impact on retail profit (0.5%) 744 723 (2.8%) 1999/00 2000/01 Reported
Slide 26: Exchange impact on retail profit
Exchange impact on retail profit (0.5%) 744 17 740 723 (2.8%) 1999/00 2000/01 Exchange 2000/01 Reported Impact Constant
Slide 27: Impact of FRS 15
Impact of FRS 15 £m Home Improvement 9 Electricals 4 General Merchandise - Chartwell Land 5 Group 18 1.3p impact on EPS
Slide 28: Total LibertySurf return
Total LibertySurf return £m Initial investment 35 Exceptional profit on listing 121 Cumulative losses (49) Profit from investment 72 ROI 104% Further potential profit on sale of Tiscali shares
Slide 29: Significant investment in business
Significant investment in business £m Increase in pre-opening costs 12 New format development 7 E-commerce 23 42
Slide 30: Increased debt and interest expense
Increased Debt and Interest expense Net Debt £bn Interest £m 1.9 77 1.0 38 1999/00 2000/01 1999/00 2000/01
Slide 31: Closing net debt increases
Closing net debt increases £m Net debt at the start of the year (1,021) Net cash from operating activities Before 53rd week 913 Impact of 53rd week (350) 563 Capital investment (943) Interest, tax and other items (327) Dividends (147) Net debt at the end of the year (1,874)
Slide 32: Financial Summary
Financial Summary
Slide 33: Financial summary
Financial summary 00/01 £m 99/00 £m % increase decrease Pre tax profits 606 721 (15.9) Goodwill amortisation (18) (11) Exceptionals 103 3 Profit before tax 691 713 (3.0) Taxation (171) (204) Minority interests (105) (99) Profit after tax 416 409 1.6 and minority interest
Slide 34: Earnings per Share
Earnings per Share 00/01 99/00 Change Basic EPS 30.3p 30.1p 0.7% Adjusted* EPS 27.4p 31.3p (12.5)% * Adjusted for goodwill amortisation, exceptional items and LibertySurf losses
Slide 35: Financial summary
Financial summary 00/01 99/00 Change Basic EPS 30.3p 30.1p 0.7% Adjusted* EPS 27.4p 31.3p (12.5%) Dividend 15.5p 14.5p 6.9% Dividend Cover 1.8x 2.2x (Adjusted) * Adjusted for goodwill amortisation, exceptional items and LibertySurf losses
Slide 36: Looking forward
Looking forward
Slide 37: Non trading factors next year
Non trading factors next year • Current (relative) strength of the Euro • Impact of accounting policy changes – FRS 17 – FRS 19 • Business separation exceptional charge
Slide 38: Focused on cash management
Focused on cash management • Ensuring strong underlying business performance • Driving improvements in working capital • More efficient capital expenditure
Slide 39: Reporting approach
Reporting approach • Strategy and business model analyst workshops in second half • Replacement of Christmas trading update with 4th Quarter sales update (Early Feb) • Quarterly profit reporting from Q1 2002
Slide 40: Kingfisher - The Future
Sir Geoffrey Mulcahy Kingfisher - The Future
Slide 41: Reasons for demerger
Reasons for demerger • We have two types of business within the Group – General Merchandise Concentrated in the UK – Home Improvement and Electricals Specialist European retailers Global Scope
Slide 42: Reasons for demerger: New Kingfisher
Reasons for demerger New Kingfisher • Continued acceleration towards global retail • Further consolidation • Focus on domestic and international expansion • Scale essential
Slide 43: Reasons for demerger: General Merchandise
Reasons for demerger General Merchandise • Reinvigorate the existing chains • Simplify the businesses • Clarify the customer proposition • Exploit the new formats
Slide 44: Demerger update
Demerger update • Demerger Listing Particulars filed with the UKLA at the end of next week • Inland Revenue clearance for demerger via exempt distribution received • Pension Fund split agreed • e-Commerce separation plans finalised • Intra-Group supply arrangements are being set up • Gerald Corbett
Slide 45: Alternatives which may create greater shareholder value
Alternatives which may create greater shareholder value • Trade sale of Superdrug • LBO of the rest of General Merchandise
Slide 46: Impacts on property
Impacts on property • Chartwell Land will remain part of Kingfisher, investing in and developing OOT properties • Rationale for holding long leasehold and freehold high street properties has changed • Arrangements to realise value from the High Street properties are being actively progressed
Slide 47: Position on potential buy out of CDI Minorities
Kingfisher’s position on potential buy out of CDI Minorities • From July 2001 we can choose to buy the minority shareholding • Not currently in the best interest of shareholders • Strengthen management • Improve the performance of Castorama France
Slide 48: Our Objective
Our Objective To become a Global retail business focused on growing Home Improvement and Electricals markets, producing consistent above average return for our shareholders
Slide 49: Kingfisher's evolution
Kingfisher’s evolution Growth National Time
Slide 50: Kingfisher's evolution
Kingfisher’s evolution Growth Pan-continental National Time
Slide 51: Kingfisher's evolution
Kingfisher’s evolution Growth Global Pan-continental National Time
Slide 52: Kingfisher's evolution
Kingfisher’s evolution Growth Home Improvement Electricals Global European National Time
Slide 53: Kingfisher's evolution
Kingfisher’s evolution Our Objective Growth Global European National Time
Slide 54: Strategic approach
Strategic approach • Optimizing our market leading positions and profitability • Leverage existing expertise in new markets either organically or through acquisition • Driving maximum economies of scale • Roll out of best practice
Slide 55: Optimising the Home Improvement sector
Optimising the Home Improvement sector • Roll out of Warehouse • Brico Dépôt expansion • Improve the performance of Castorama France • Accelerate growth in Poland, Canada, Italy and the Far East • Reconsider presence in markets where our position is weak
Slide 56: Optimising the Electricals sector
Optimising the Electricals sector • Grow Darty in France • Grow and improve the profitability of Comet • Resolve ProMarkt • Continue the successful development in Belgium and Holland
Slide 57: Geographic expansion
Geographic expansion MATURE MARKETS DEVELOPING MARKETS MERGERS OR ORGANIC AQUISITIONS GROWTH Number 1 Fit with Rollout of Adapted for or 2 in the Format & Existing Local market Proposition Successful context Formats
Slide 58: Achieving the benefits of scale
Achieving the benefits of scale • Developing value-adding formats across countries based on a consistent set of principles • Achieving purchasing synergies • Developing a common supply chain and IT infrastructures
Slide 59: Financial Objective
Financial Objective Over the next five years we are targeting and average annual earnings growth of over 10%
Slide 60: Why are we confident of this growth
Why are we confident of this growth • Leading brands in the high growth markets - that will continue to grow • Our record of innovation • Depth and quality of management and their track record of expansion in existing and new markets • Investment we have already made in infrastructure
Slide 61: Focus on delivery
Short Term Priority Focus on delivery
Slide 62: An international growth business focused on shareholder value
An international growth business focused on shareholder value