FY 2020/21 Technical guidance

Income statement:

• Sales outlook
  • Q3 trends to date remain encouraging, but continued uncertainty and concerns over COVID and wider economic environment limit visibility
• Costs
  • COVID-related costs – incremental costs⁽¹⁾ expected to be c.£40m
  • Central costs – expected to be c.£58-60m (FY 19/20: £62m)
  • UK business rates – payment relief for parts of the UK, effective for 20/21 tax year. c.£130m of Kingfisher’s annual business rates bill is eligible for this relief
  • Furlough – no claims under furlough programmes in the UK and France from 1 July; not claiming UK government Job Retention Bonus. Intending to repay UK furlough benefit (c.£23m) in second half of the year, unless any material changes in the trading environment occur
• Net finance costs
  • Expected to be in line with prior year (FY 19/20: £173m, before exceptional items) due to incremental financing costs for PGE, CCFF and RCFs, offset by impact of reduced lease liability
• Tax rate
  • Group adjusted effective tax rate expected to be c.24%⁽²⁾ (FY 19/20: 26%)

Cash flow:

• Prêt garanti par l’État – subject to circumstances and certain conditions being met, the Group is considering a repayment of the c.£540m French Term facility in H2
• Working capital – anticipate rebuild of inventory and reversal of creditor positions in H2
• Capital expenditure – gross capex of up to c.£300m (FY 19/20: £342m); c.£50m of further expenditure deferred into FY 21/22
• Tax – HMRC accelerated UK corporation tax payments (incremental one-off cash impact this year of c.£45-50m)

Previously announced 11 store closures in France:

• 3 stores closed in France (1 Castorama, 2 Brico Dépôt) in H2 19/20
• 4 Castorama stores closed in H1 20/21; 2 further Castorama stores to close in H2 20/21. Cash costs of exit in FY 20/21 fully provided for in previous periods
• 2 Castorama stores now to be converted to Brico Dépôt stores

⁽¹⁾ Includes incremental costs of PPE & social distancing, donations, new store layouts, additional store security, and bonuses to frontline store staff

⁽²⁾ Subject to the blend of profit within the companies’ various jurisdictions, as well as the timing of the planned sale of Russia

Information correct as at 22 September 2020.

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 2020. 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).

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" or "believe" (or the negatives thereof) or other variations thereon or comparable terminology. These forward-looking statements include all matters that are not historical facts and include 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, changes in tax rates, changes to customer preferences, liquidity, prospects, growth and strategies, acts of war or terrorism worldwide, work stoppages, slowdowns or strikes, public health crises, outbreaks of contagious disease, environmental disruption or political volatility . By their nature, forward-looking statements involve inherent risks, assumptions and uncertainties that could cause actual events or results or actual performance of the Company 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 in the FY 2020/21 half year results announcement and in the company’s Annual Report (as published). No representation or warranty is made as to the achievement or reasonableness of and no reliance should be placed on such forward-looking statements.

The Company does not undertake any obligation to update or revise any forward-looking statement to reflect any new information or change in circumstances or in the Company's expectations.