HY 2022/23 Technical guidance

Income statement

• Space
  • Net space growth to impact total sales by c.+1.5%, largely from Screwfix and Poland
• Gross margin %
  • In line with pre-pandemic level (FY 19/20: 37.0%)
• New businesses
  • ‘Other’ retail losses of c.£30m (FY 21/22: £10m) (previous guidance c.£20m, with increase driven by accelerated investment in Screwfix France). ‘Other’ consists of the consolidated results of NeedHelp, Screwfix International, and franchise agreements, recorded within the ‘Other International’ division
  • Retail loss of c.£5m in relation to investment in B&Q’s e-commerce marketplace, recorded within the results of B&Q in the ‘UK & Ireland’ division
• Central costs
  • Broadly flat YoY (FY 21/22: £60m)
• Net finance costs
  • Decrease by c.£20m mainly as a result of lower lease liability interest rate (FY 21/22: £137m) (previous guidance decrease by c.£15m)
• Adjusted pre-tax profit
  • Full year adjusted pre-tax profit⁽¹⁾ in the range of c.£730m to £770m (previous guidance c.£770m)
• Tax rate
  • Group adjusted effective tax rate* of c.22%⁽²⁾ (FY 21/22: 22%)

Balance sheet and cash flow

• Inventory – anticipate reduction of stock levels in H2 22/23 related to sell-through of a large part of ‘buffer’ stock previously held to protect product availability
• Capital expenditure – targeting gross capex of c.3.5% of total sales (FY 21/22: £397m; c.3.0% of total sales)
• Tax – in February 2022, a payment of €40m (c.£34m) was made to the French tax authorities with regards to a historic tax liability. The amount was fully provided for in prior periods
• Share buybacks – c.£325m outflow for share buybacks (c.£145m for the first £300m programme completed in April, and a further c.£180m related to the second £300m programme)
• Dividends – c.£246m outflow for dividends (£172m related to the FY 21/22 final dividend of 8.60p, and c.£74m related to the FY 22/23 interim dividend of 3.80p). For the total dividend in respect of FY 22/23, our dividend policy target cover range remains 2.25 to 2.75 times, based on adjusted basic earnings per share

⁽¹⁾ Guidance assumes current exchange rates

⁽²⁾ Subject to the blend of profit within the Group’s various jurisdictions

Forward-looking statements

You are not to construe the content of this announcement as investment, legal or tax advice and you should make your own evaluation of the Company and the market. If you are in any doubt about the contents of this announcement or the action you should take, you should consult a person authorised under the Financial Services and Markets Act 2000 (as amended) (or if you are a person outside the UK, otherwise duly qualified in your jurisdiction).

This announcement has been prepared in relation to the financial results for the six months ended 31 July 2022. The financial information referenced in this announcement is not audited and does not contain sufficient detail to allow a full understanding of the results of the Group. Nothing in this announcement should be construed as either an offer or invitation to sell or any offering of securities or any invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Group or an invitation or inducement to engage in investment activity under section 21 of the Financial Services and Markets Act 2000 (as amended) (or, otherwise under any other law, regulation or exchange rules in any other applicable jurisdiction).

Certain information contained in this announcement may constitute "forward-looking statements" (including within the meaning of the safe harbour provisions of the United States Private Securities Litigation Reform Act of 1995), which can be identified by the use of terms such as "may", "will", "would", "could", "should", "expect", "anticipate", "project", "estimate", "intend", "continue", "target", "plan", "goal", "aim", forecast, or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. These forward-looking statements are based on currently available information and our current assumptions, expectations and projections about future events. These forward-looking statements include all matters that are not historical facts and include statements which look forward in time or statements regarding the Company's intentions, beliefs or current expectations and those of our Officers, Directors and employees concerning, amongst other things, the Company's results of operations, financial condition, changes in global or regional trade conditions (including a downturn in the retail or financial services industries), competitive influences, changes in tax rates, exchange rates or interest rates, changes to customer preferences, the state of the housing and home improvement markets, share repurchases and dividends, capital expenditure and capital allocation, liquidity, prospects, growth and strategies, litigation or other proceedings to which we are subject, acts of war or terrorism worldwide, work stoppages, slowdowns or strikes, public health crises, outbreaks of contagious disease (including but not limited to the COVID pandemic), environmental disruption or political volatility. By their nature, forward-looking statements are not guarantees of future performance and are subject to future events, risks and uncertainties – many of which are beyond our control, dependent on actions of third parties, or currently unknown to us – as well as potentially inaccurate assumptions that could cause actual events or results or actual performance of the Group to differ materially from those reflected or contemplated in such forward-looking statements. For further information regarding risks to Kingfisher's business, please consult the risk management section of the Company's Annual Report (as published). No representation, warranty or other assurance is made as to the achievement or reasonableness of, and no reliance should be placed on, such forward-looking statements.

The forward-looking statements contained in this announcement speak only as of the date of this announcement and the Company does not undertake any obligation to update or revise any forward-looking statement to reflect any new information, change in circumstances, or change in the Company's expectations to reflect events or circumstances after the date of this announcement or to reflect the occurrence of unanticipated events.