The focus on debt reduction continued to deliver results, with financial net debt down to £250 million from £1 billion the previous year, underpinned by strong cash generation.
These results were delivered against the backdrop of the worldwide economic recession, with fears about unemployment and possible tax increases weighing heavily on consumer confidence. However, consumer spending was supported by interest rate cuts, as well as fiscal measures and other incentives.
I believe Kingfisher’s key strengths helped us manage our way through this difficult period. We have strong retail brands, all with a value heritage. We have leading market positions, including the number one position in five of the countries in which we trade. And our international spread, with around 60% of sales and profits coming from outside the UK, gives the Group good geographic balance. In addition, Kingfisher has what I believe to be a strong, experienced management team, led by Ian Cheshire.
Our management took decisive action during the year to improve and grow our business in the face of the downturn. This self-help programme included a continued focus on our three key priorities of Management, Capital and Returns. We managed our business tightly, with a close eye on costs, cash and stock. And we continued to make good progress with our seven point ‘Delivering Value’ plan. This is covered in more detail in the ‘Conversation with the executive team’. However, I would highlight the 80% increase in profits at B&Q in the UK & Ireland and the very resilient performance in France, where profits grew despite a declining market. In addition, our business in Poland delivered another very strong performance, Spain moved from loss to profit and Russia continued to expand whilst becoming profitable at store level for the first time. In China, a well-executed turnaround plan meant that losses were significantly reduced.
There is more that we can do to improve our business and I believe very strongly that Kingfisher is at a very exciting stage of its journey. If we put the customer at the heart of the business and then give our teams the tools and resources to serve these customers, then I am sure that Kingfisher can fulfil its ambition to become the world’s leading local home improvement retailer.
The Board is recommending a final dividend of 3.575p, up 5.1% on the final dividend in the previous year. This represents a return to dividend growth after five years and takes the full year dividend to 5.5p in total.
I am delighted to welcome two new non-executives to the Board. Anders Dahlvig brings to Kingfisher a wealth of international retailing experience having been Chief Executive and President of The IKEA Group from 1999 to 2009, during his 26 years with the company. Whilst at IKEA Mr Dahlvig took the business into Russia and China, having previously run their businesses in Europe and the UK. Andrew Bonfield, who succeeds Phil Bentley, as Chairman of Kingfisher’s audit committee, was previously Finance Director of Cadbury and before that held the same position at Bristol-Myers Squibb, BG Group and SmithKline Beecham. I am sure they will make an extremely valuable contribution to the Board.
I would like to formally acknowledge the Board’s debt of gratitude to Hartmut Krämer, who retired as a non-executive in October due to ill health after seven years as a director. Hartmut sadly passed away towards the end of the year. I would also like to thank Phil Bentley, who retired in March after seven years on the Board. He made a tremendous contribution. Michael Hepher is due to retire from the Board at the next AGM after 12 years as a director. I would like to thank him for his valuable service during this time.
Finally, I would like to pay tribute to the 78,000 Kingfisher employees around the world. It is people who make retail businesses, and I believe we have a great team of loyal hard-working staff at Kingfisher. It is this team which has been collectively responsible for the progress the Group has made this year and I look forward to working with them in the year ahead.
* before exceptional items, financing fair value remeasurements, amortisation of acquisition intangibles, related tax items and tax on prior year items.