CREATING THE LEADER Progress report on our strategy Annual Report and Accounts 2012/13 Our online reporting Increasing numbers of our shareholders are choosing to receive their annual report online, which helps us reduce the impact on the environment through lower paper usage. The online version, available at www.kingfisher.com, enables you to download the report to your computer desktop and access supplementary content, such as video interviews with the Group Chief Executive and Group Finance Director, and case studies from around the Group businesses which highlight some of the year’s achievements. If you have a smartphone or tablet device, use the links and QR codes in this printed copy to take you straight to that part of the online report. For the online report, go to Key highlights http://annualreport.kingfisher.com/2012-13 Adjusted pre-tax profit*(m) Adjusted basic earnings per share*(p) Full year dividend (p) £715m 22.3p 9.46p -11.4% -11.2% +7.0% 9.46 807 8.84 25.1 715 22.3 670 20.5 7.07 547 5.5 16.4 5.32 368 11.0 08/09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13 08/09 09/10 10/11 11/12 12/13 * For definitions see the Financial Review on pages 17 to 24. Business review Governance Accounts 1 Kingfisher plc is Europe’s leading home improvement retail Group and the third largest in the world, with over 1,000 stores in eight countries in Europe and Asia. Its main retail brands are B&Q, Castorama, Brico Dépôt and Screwfix. Kingfisher also operates the Koçtas¸ brand, a 50% joint venture in Turkey with the Koç Group, and has a 21% interest in Hornbach, Germany’s leading large format DIY retailer. Contents Business review Accounts 02 Kingfisher at a glance 60 Consolidated income statement 04 Chairman’s statement 61 Consolidated statement of comprehensive income 05 Chief Executive’s statement 62 Consolidated statement of changes in equity 06 Strategy: Creating the Leader 63 Consolidated balance sheet 16 Sustainability: becoming Net Positive 64 Consolidated cash flow statement 17 Financial review 65 Notes to the consolidated financial statements 25 Risks 99 Independent auditors’ report to the members of Kingfisher plc Governance 100 Company balance sheet 28 Board of Directors 101 Notes to the Company financial statements 30 Senior management 113 Independent auditors’ report to the members 31 Directors’ report of Kingfisher plc 34 Corporate governance 114 Group five year financial summary 45 Directors’ remuneration report 115 Shareholder information Contribution to Group sales (bn) Contribution to Group retail profit (m) Property (at market value) (bn) £10.6bn £781m £3.6bn France £4.2bn 39% France £397m 51% France £1.5bn 42% UK & Ireland £4.3bn 41% UK & Ireland £234m 30% UK & Ireland £0.9bn 25% Other international* £2.1bn 20% Other international £150m 19% Other international* £1.2bn 33% * Excludes Turkey. www.kingfi sher.com 2 BUSINESS REVIEW Kingfisher at a glance Our purpose To make it easier for customers to have better and more sustainable homes This approach will unlock more customer demand and grow our business to the benefit of all our stakeholders, creating a more valuable business for our shareholders, a better partner for our suppliers, a more secure and brighter future for our colleagues and a more sustainable business for our local communities. Our key figures Total sales Adjusted Employees Stores pre-tax profit £10.6bn £715m 78,000 1,025 Our brands B&Q is the largest With up to 50,000 In both France and Screwfix is the UK’s Koçtas ¸, Kingfisher’s home improvement and products under one Spain Brico Dépôt is largest omnichannel joint venture in Turkey, garden centre retailer in roof, Castorama France primarily aimed at serious supplier of trade tools, is now the number one the UK with 358 stores is one of the leading DIYers and professional accessories and hardware home improvement across the UK and home improvement builders. It operates a to trade professionals and retailer in the country. Ireland offering around retailers in France with low-price format which serious DIY enthusiasts. Its 37 stores are 40,000 products for the 103 stores. Like B&Q, offers customers a In addition to its catalogue aimed at mainstream homemaker, occasional Castorama targets retail choice of 10,000 and website, Screwfix consumers, homemakers to serious DIYers, and customers and DIYers products available in operates 275 stores and occasional to trade professionals. and has an emphasis on larger product quantities. across the UK. serious DIYers. In China, the business style and inspiration for is adapted to the homemakers. In Poland local preference for a and Russia there is a “Do-it-for-Me” model. bigger emphasis on It specialises in the projects, as the home fitting out and decoration improvement market of new apartments. is at an earlier stage of its development. Our operating countries Operating Countries Joint Venture (Koc¸tas¸) Strategic Alliance (Hornbach) For our European Home Report, a survey of 15,000 households and their attitudes to home improvement, visit www.kingfisher.com/EuropeanHomeReport Annual Report and Accounts 2012/13 Business review Governance Accounts 3 Our markets France GDP growth Employees Population Households Market 2013 estimated Market Store Selling space (full time Country (m)* (m)* position (%)§ brand numbers (‘000s sq m) equivalent) France 63 27 1 +0.5% 103 1,085 11,139 104 576 6,819 UK & Ireland GDP growth Employees Population Households Market 2013 estimated Market Store Selling space (full time Country (m)* (m)* position (%)§ brand numbers (‘000s sq m) equivalent) UK 62 27 1+0.9 358† 2,561† 21,473‡ 275 20 3,804 Ireland 5 1.7 –+1.4 Other International GDP growth Employees Population Households Market 2013 estimated Market Store Selling space (full time Country (m)* (m)* position (%)§ brand numbers (‘000s sq m) equivalent) Poland 38 14 1+1.5 65 487 10,576 5 26 361 China 1,354 393 –+8.0 39 326 4,449 Spain 45 18 2-1.2 20 116 992 Russia 140 53 3+2.8 19 170 2,483 Turkey 76 19 1+4.5 37 194 3,240 Total 1,025 5,561 65,336 Store numbers, selling space and employee data as at 2 February 2013. * The Economist Pocket World in Figures 2013. † Including Ireland (9 stores). § Credit Suisse. ‡ Including Ireland and Kingfisher Future Homes. Kingfisher Group Executive Kingfisher’s Group Executive team meets monthly and is responsible for the overall strategic decision-making of the Group. It is supported by the Group Operating Board and the One Team Board, more information about which can be found on page 30. Ian Cheshire Guy Colleau Kevin O’Byrne Philippe Tible Steve Willett Karen Witts Group Chief CEO, Group CEO, B&Q and CEO, Castorama CEO, Group Group Finance Executive Sourcing and Offer Koçtas ¸ brands and Brico Productivity Director Dépôt brands and Development www.kingfi sher.com 4 BUSINESS REVIEW Chairman’s statement It has been a challenging year for We have also continued to make good Key highlights Kingfisher, but I am pleased to report that progress on our sustainability agenda, we finished the year in good shape, with with the launch in October of our Net a strong balance sheet, higher market Positive plan. You can read more £715m share in Europe and with our medium about Net Positive on page 16. Adjusted pre-tax profit term programme of self-help initiatives I would like to welcome two new directors (Creating the Leader) progressing well. who joined the Board in October. Karen Our reported results were affected by Witts joined as Group Finance Director adverse currency movements, and the and brings with her a wealth of financial £691m particularly poor summer weather in and operational management experience Pre-tax profit Northern Europe literally dampened from her previous roles at Vodafone and customer demand during our peak BT, among others. Philippe Tible, a season. Add to this the economic highly experienced retailer, who is uncertainty our customers are facing responsible for our Castorama and Brico across Europe and it is no surprise that Dépôt brands across Europe, also joined 22.3p 2012 was difficult for retailers in general. the board. Euan Sutherland stepped Adjusted basic EPS down from the Board in January to take But our teams have worked hard, actively up a CEO role outside the Group and we managing the business, focusing on wish him well in his new position. improving our customer offer and optimising our cash generation in these I would like to thank our 78,000 staff for 24.1p difficult markets. These are the right their hard work and commitment during Basic EPS things to do to ensure we can deliver these difficult economic times. They have value for shareholders over the medium done an excellent job providing the level term. We achieved growth in France, our of service which customers expect and most significant market, and continued to ensuring that we start the new year 9.46p expand in Poland, Russia, Turkey and with confidence. Spain. Whilst B&Q found the UK Full year dividend consumer market difficult, our trade businesses in the UK, Screwfix and Daniel Bernard TradePoint, grew strongly. We remain Chairman confident in our future prospects and it is for this reason that we are proposing to raise the dividend by 7.0% despite adjusted pre-tax profits being down 11.4% to £715m. OUR TEAMS HAVE WORKED HARD, ACTIVELY MANAGING THE BUSINESS, FOCUSING ON “ IMPROVING OUR CUSTOMER OFFER AND OPTIMISING OUR CASH GENERATION IN THESE DIFFICULT MARKETS.” Daniel Bernard Chairman Annual Report and Accounts 2012/13 Business review Governance Accounts 5 Chief Executive’s statement As the Chairman says in his review, it Grown the amount of product that is During the year we developed the wider has been a tough year for Kingfisher, with sourced direct from suppliers around management team, mostly through currency movements, weather and weak the world using our global network of internal promotion, adding Steve Willett consumer markets providing significant sourcing offices.