FY 19/20 Technical guidance

Employees, new stores and space growth:

(1)    Screwfix sales area relates to the front of counter area of an outlet

(2)    Brico Dépôt Spain & Portugal

Income statement:

• Sales outlook:
  • UK – expect continuation of softer market backdrop and range disruption
  • France – expect Castorama to continue to underperform the home improvement market; ongoing impact from reduction in promotional activity at Brico Dépôt
  • Poland – continued impact from Sunday trading restrictions (three non-trading Sundays from January 2019, previously two; four non-trading Sundays from January 2020); softer overall market outlook
• Continue to expect full year gross margin % after clearance to be flat⁽³⁾
  • c. £30-35m incremental clearance costs (previously £25-30m), including B&Q kitchens in H2 19/20
• Central costs expected to be up to c. £55m (previously c. £50m)
• Total transformation costs over five years to FY 20/21 expected to be less than £800m
  • Transformation P&L costs in FY 19/20 expected to be c.£40-45m (previously £50-60m)
  • Transformation exceptional costs in FY 19/20 expected to be minimal (previously up to c.£40m)
• Group adjusted effective tax rate expected to be around 26-27%⁽⁴⁾
• Tax: Kingfisher has concluded a final settlement with the French Tax Authority (FTA) regarding the treatment of interest paid since FY 09/10. A contingent liability for €101m (£92m) was disclosed in Kingfisher’s FY 19/20 interim condensed financial statements with respect to this matter related to the periods FY 09/10 to FY 11/12. At the end of Q3 19/20, Kingfisher was given the opportunity by the FTA to settle for all periods under review (FY 09/10 to FY 18/19). Subsequently, discussions have been held with the FTA to reach a comprehensive settlement. The P&L and cash impacts of the settlement are c.€90m (c.£80m) and will be paid, and recorded as an exceptional charge, in FY 19/20

Cash flow:

• Continue to expect total capex (including transformation) of up to c. £375m
• 15 store closures over next 18 months, including 11 in France; cash costs expected to be covered by store disposal proceeds

⁽³⁾ Gross margin % movement excluding Russia and Iberia

⁽⁴⁾ Subject to the blend of profit within the companies' various jurisdictions, as well as the timing of exits from Russia and Iberia

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 Quarter ended 31 October 2019. 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 concerning, among other things, the Company's results of operations, financial condition, changes in global or regional trade conditions, changes in tax rates, liquidity, prospects, growth and strategies. By their nature, forward-looking statements involve 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. 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 change in circumstances or in the Company's expectations.