Business review

A conversation with the executive team

Having transformed Kingfisher into a stronger business, we are now much better placed to accelerate our development and create a truly world-class leader in home improvement retailing.

Kevin O'Byrne Peter Hogsted Kevin O'Byrne Ian Cheshire Euan Sutherland Philippe Tible

Q

Kingfisher with no debt, is it time to give back cash to shareholders?

A

Kevin O'Byrne responds:

I'm delighted that our efforts right across the businesses have eliminated the £1.6bn of financial net debt that we started this journey with. It's true we have a much stronger balance sheet now which means we have options going forward – a nice place to be relative to the depths of the credit crisis barely two years ago. But it's not true we are debt free. We lease over 600 of our 856 stores and using a long-term property yield this equates to additional finance lease debt of £5.8 billion. Under today's accounting rules these can't be shown on the balance sheet but we do include this liability when thinking about our balance sheet and funding.

Our aim is to retain financial flexibility whilst investing in improving and growing our business for the longer term. We are also keen to share our cash generation with shareholders and that's why we have increased our full year dividend by 29% this year, ahead of our earnings growth. And I would expect us to continue to grow our dividends ahead of earnings for the next few years so that our dividend cover gently reduces from 3 times last year to around 2.7 over the medium term, a level at which we can invest in the business, return cash through dividends and maintain an appropriate balance sheet gearing.

£1.6bn

amount of debt eliminated over the past three years

Q

Last year you hinted at acquisitions, are you still in the market?

A

Kevin O'Byrne responds:

First and foremost our investment will be targeted at expanding the store and digital channels for our existing businesses. We are planning to increase our organic investment in areas where high returns are already proven. If we see any opportunities to accelerate this by acquiring small parcels of stores at the right price, we will act. As regards anything more meaningful, you can 'never say never', but we set the hurdles very high indeed when it comes to creating value for shareholders via acquisition, so it would need to be a great deal.