Business review

Chairman's statement

It has been another good year for Kingfisher. Adjusted pre-tax profits were up 22.5% to £670 million, with growth achieved in all our major markets. The dividend was raised again, following the increase in the final dividend last year and we have a strong balance sheet, with net cash standing at £14 million by the end of the financial year. Given net debt stood at £1.6 billion only three years ago, this is a significant achievement.

These results were achieved against an extremely difficult backdrop. The ongoing economic downturn continued to put consumer spending under pressure, as major Western economies, such as the UK, increased taxes and reduced spending.

I believe that Kingfisher's key strengths have helped us withstand these economic headwinds. We have good geographic balance, with approximately 60% of sales and profits coming from outside the UK. We have strong retail brands with a value heritage, which is vital in tougher times. And we have an experienced management team, led by Ian Cheshire, which has taken prompt and decisive action.

We continued to make good progress with our seven step Delivering Value plan. More detail on the plan is provided in the 'Conversation with the Executive Team', but I would like to pick out a few highlights where our focus on 'self-help' has driven very good results. We delivered double digit profit growth in the UK and Ireland, France, Turkey and Spain, where our business was operating in a very difficult economy. Poland also increased profits against a tough backdrop. And in China the losses were significantly reduced as our business there continues to improve.

There is still more to come from the first phase of Delivering Value, which concludes in 2012, but I am excited about the next phase of our growth plan which we outlined in March. Our business has great potential and I believe the plan we have announced, will help us achieve it.

The Board is recommending a final dividend of 5.145p, up 43.9% on the final dividend in the previous year. This takes the full year dividend to 7.07p, a 28.5% increase on the prior year.

I am delighted to welcome two non-executives to the Board. Pascal Cagni is Vice President and General Manager of Apple Europe, Middle-East, India and Africa, and has been with Apple for 10 years in a variety of roles. His background will be of particular help as we develop our multichannel strategy. Clare Chapman is Director General of Workforce for the NHS and Social Care, where she is responsible for a workforce of more than two million people. She was previously Group HR director of Tesco and her experience in talent management and people development will be invaluable. Pascal and Clare will further enhance our board, which already includes directors with experience gained at Ikea, Carrefour and Cadbury, amongst others.

Finally, I would like to pay heartfelt thanks to our 80,000 staff around the world. It is their hard work and dedication that has made this year such a successful one.

Daniel Bernard

Daniel Bernard

Chairman

Financial Highlights 2010/11

Adjusted pre-tax profit*

£670m. +22.5%

Adjusted basic EPS*

20.5p. +25.0%

Basic EPS

21.0p. +27.3%

Full year dividend

7.07p. +28.5%

Net cash

£14m. n/a

* For definition see Financial review