International Review Gerry Murphy Group Chief Executive

Today’s agenda • • • •

Formal presentation General Q&A Buffet lunch Networking with International business heads

International business heads Gerry Murphy

Philippe Tible

Patrick Langlade

Steve Gilman

Castorama France

Brico Depot France

B&Q Asia

George Adams European Development

Didier Cantreau

Mariusz Gliwinski

Claude Acquart

Brico Depot Spain

B&Q China

Castorama Poland

Yi Liu

Peter Partma

B&Q Taiwan

Castorama Russia

David Williams

Giulio Maleci

B&Q Home, Korea

Castorama Italy

Levent Cakiroglu Koctas, Turkey

Kingfisher at a glance • World’s third largest home improvement retailer • Retail sales: £8bn, 50% non UK • Over 680 stores in 11 countries in Europe and Asia

Kingfisher – Europe’s no 1 home improvement retailer Sales €m

12

11.1

10 8 6

5.2

5

4

3

2

2.2

2.2

1.9

1.7

1.3

1.3

Source: Verdict - 2005

ak tik er H om eb as e B au ha us H or nb B ac ric h om ar ch e Fo cu s W ic ke s

B I O

Pr

K

in gf is Le he ro r y M er lin

0

Consistent strategy… • Build on strong leadership positions – UK, France

• Expand proven growth businesses – Screwfix, Poland, Italy, China and Taiwan

• Invest in new opportunities – UK Trade, Spain, Russia, Korea, Turkey

• Capitalise on buying scale and international diversity

18 years of experience outside main domestic markets • In Europe since 1988 – Italy,1988 – Poland,1997 – Turkey, 2001 – Ireland, 2002 – Spain, 2003 – Russia, 2006

• In Asia since 1996 – Taiwan,1996 – China,1999 – South Korea, 2005

Successful, sustainable international development takes... • • • • • •

Time and money Vision and long-term support Champions/evangelists Strong local management Realism And the ability to adapt, adapt and adapt…

International – a huge opportunity • GROWTH – Big markets developing fast – £100 billion in International markets

• RETURNS – Ahead of the cost of capital – Supported by Group supply scale

• ACCELERATED INNOVATION – Global consumer trends – Sharing of products, ideas and talent

International Review Duncan Tatton-Brown Group Finance Director

Our international markets are four times the size of the UK… Markets size in £bn £bn 25

46 128 31 26

UK

France

Proven

New

Total

…with faster forecast growth Forecast DIY Annual Market Growth 20062006-2009 16% 14%

14.0%

12%

10.0%*

10%

7.2%

8%

7.1%

Weighted Average

6.9% 5.5%

6%

5.1%

4.9%

4.2%

4% 2%

* Based on historical growth Source: Euromonitor DIY markets 2005

I ta ly

Fr an ce

K U

an Ta iw

n Sp ai

I re la nd

Po la nd

ia us s R

C

hi na

0%

International – a balanced approach Sales 1

Invested Capital 2

Capex 3

B&Q UK

47%

69%

33%

France

34%

16%

29%

Developed

81%

85%

62%

Proven

17%

14%

28%

New

2%

1%

10%

1. 2. 3.

6 months to 29 July 2006 As at 28 January 2006 2006/07e

Attractive returns Russia

Returns

Turkey Above

Spain France China exc. OBI Korea

Group average

Ireland Taiwan Poland Italy

Below 2005/06 ROIC – size of bubble reflects invested capital weighting

Spain - the Market • Spain Population 44.1 million • Larger cities population: Madrid

2.9m

Barcelona

1.5m

Valencia

0.7m

Seville

0.7m

Zaragoza

0.6m

c. 20 towns 0.2m-0.5m

Sources: CIA World factbook Mongabay.com

Spain - profitable stores provide roll out confidence 2005/06 £m Overall retail loss

(5.5)

Central head office costs

(4.3)

PrePre-opening costs

(2.1)

Underlying store contribution

0.9

Spain - overall profits expected soon €m 20 15 10 5 0

e 11 20 e 10 20 e 09 20 e 08 20 e 07 20 06 20 05 20 04 20 03 20 02 20

-5 -10

Store rollout

International - strong control mechanisms • • • • • • • • •

Extensive country research prior to entry Board approval for new country entry Low cost entry model All store commitments agreed by CEO/CFO 5 year development plan – updated annually Annual budget sign off 3 monthly review with CEO/CFO Monthly accounts Daily sales

International - funding and property strategy • Local borrowing is a natural hedge • Freehold preferable – – –

Helps exit – e.g. Brazil Helps reconfigure – e.g. China Potential for additional value – Poland property cost £208m – Market value £269m*

* As at 28 January 2006

Freehold property - a key asset Market Values*

Yields

UK

£1.2bn

5%

France

£0.9bn

8%

Rest of Europe

£0.7bn

7-10%

Asia

£0.2bn

9%

£3.0bn

* As at 28 January 2006

Access to new products and suppliers Poland

China

Buying power - a local advantage Turkey 20022002-2006 growth Group product ranges Buying margin EBIT

+12% +500bps +204%

International Review Gerry Murphy Group Chief Executive

International - key principles • • • • • •

Retail rules! Vive la difference! Work together where it matters Work independently where it doesn’t Expand at the right rate Be prepared to exit

International - use local teams • Casto Poland – 6,000 FTE Polish – 1 French

• China – 10,000 FTE Chinese – 5 Europeans

International expansion - choosing the right markets • Potential RMI market big enough • No1 or 2 position achievable • Economics potentially attractive • Availability of products/employees • Short time to economic scale

International - using the right format • Castorama, Brico Dépôt or B&Q? • Big box versus small box? • Consumer offer versus trade?

Brand?....usually not critical Planning regime? Property costs?

Russia - a good example

• Population 144 m • 70% of wealth west of the Urals • 2 cities > 4 m

• 11 cities > 1 m • 20 cities > 0.5 m

Russia - growing economy GDP Per Head at PPP

£

8000

6000

R CAG

5.2 % Actual

4000

Forecast

2000

0

Consumer Spend

1995 1997

1999

2001

2003

2005

£m

10 ,0 0 0 9 ,0 0 0 8 ,0 0 0

GR CA

7 ,0 0 0

% 5. 9

6 ,0 0 0

Actual

5 ,0 0 0

Forecast

4 ,0 0 0 3 ,0 0 0 2 ,0 0 0 1,0 0 0 0

Source: EIU 2004

1995 1997

1999

2001

2003

2005

Russia - attractive home improvement market Russian DIY Market Size

£m

Market Fragmentation

6 ,0 0 0

.9 % 0 1 R: G CA

5 ,0 0 0

4 ,0 0 0

Wholesalers

3% Organised Stores

27%

3 ,0 0 0

2 ,0 0 0

70%

1,0 0 0

Open markets 0 19 9 9

2000

2 001

20 02

20 03

20 04

Total market size 2004 £3.8bn

Sources: Euromonitor 2004; Verdict On European DIY retailing

The market is large and growing Free transfer from State

85% of flats need total “remont”

Mortgage market developing, property prices rising

80m sq.m new housing p.a

Apartments delivered bare

45% own a “dacha”

Est £5bn in Moscow alone!

Castorama Russia

Castorama Russia - store format

• • • •

Format based on Castorama Poland Harder offer Focused on building/maintenance EDLP

B&Q China - adapting

• • • • • •

300m+ households Growing middle class Home conscious HI market £27bn Western brands popular Limited DIY knowledge

B&Q China - adapting Offer heavily adapted by local management: • Different store format • Authenticity promise • Different ranges • Different service/services model

B&Q China - store environment

B&Q China - authenticity promise

B&Q China - adapted product ranges

B&Q China - adapted service model • More service – – –

More staff per store 350 vs 180 in UK Inc 200 vendor reps

• Full decoration service – New apartment fitfit-out

B&Q China - full decoration service

15,000 apartment fit-outs in 2005

B&Q China - clubs and DIY training

Children’s clubs and DIY training

B&Q China Comparison with B&Q UK (Warehouse stores)

Store Size Format Number of SKUs

B&Q China

B&Q UK

8-20,000 sq.m

1010-15,000 sq.m

Two floor/one floor with Warehouse – 1 floor mezzanine 50,000

32,000

350

180

Sales/sq. metre

£980*

£1,700

Rent/sq. metre

£40**

£155

Staff/store

* £1900 on purchasing power parity basis (ppp (ppp)) ** £80 on ppp basis

B&Q China Comparison with B&Q UK (Warehouse stores)

B&Q China

B&Q UK

Installed Product

30%

2%

Trade Gardening

20% 1%

11% 18%

Sales Mix:

Sharing format ideas Spain France Poland

Sharing merchandising ideas

B&Q, Wednesbury Castorama, Englos

Sharing new product ideas Disney in China

Disney in Turkey

Sharing international retail talent Claude Acquart – Castorama France 16 years – Castorama Poland CEO 9 years

Mariusz Gliwinski – Nomi Poland 7 years – B&Q Taiwan CEO 3 years – B&Q China CEO from November 06

Steve Gilman – B&Q UK 18 years – B&Q Asia CEO 10 years

Working together on global trends Feminisation

Busy lives

Global trends - Feminisation, busy lives “Dressed” rooms

Tradesman

Installation

International – a huge opportunity • GROWTH – Big markets developing fast – £90 billion International markets

• RETURNS – Ahead of the cost of capital – Buying power

• ACCELERATED INNOVATION – Global consumer trends – Sharing of products, ideas and talent

International Review Questions

Appendix Country level information….sources • Population and GDP data – EIU 2004 • RMI market sizes and own brand penetration – Kingfisher estimates • Sales, EBIT, KPI data – as reported

France Population

61m

GDP growth: average last 5 years

1.1%

GDP growth: forecast 2006

1.6%

Estimated market size Estimated market share

£31bn 9% (24% UNIBAL DIY & gardening)

Sales 2005/06

£2.7bn

EBIT 2005/06

£230m

Store numbers H1 2006/07

181

FTE employee numbers H1 2006/07

18,667

Own brand penetration

17.4%

Competitors

Leroy Merlin, Bricomarché , La Platforme, Bâtiment, Bricoman, Saint Gobain Group

China Population

1.3bn

GDP growth: average last 5 years

8.1%

GDP growth: forecast 2006

9.6%

Estimated market size Estimated market share

£27bn 1%

Sales 2005/06

£312.8m

EBIT 2005/06

£0.2m

Store numbers H1 2006/07

51

FTE employee numbers H1 2006/07

9,868

Own brand penetration

4.2%

Competitors

Orient Home, Homemart, Homeway, Home Improvement malls

Poland Population

38m

GDP growth: average last 5 years

2.9%

GDP growth: forecast 2006

5.2%

Estimated market size

£4bn

Estimated market share

10%

Sales 2005/06

£417.0m

EBIT 2005/06

£52.5m

Store numbers H1 2006/07

34

FTE employee numbers H1 2006/07

5,915

Own brand penetration

3.7%

Competitors

Leroy Merlin, OBI, Praktiker, Platforma, NOMI

Italy Population

58m

GDP growth: average last 5 years

1.0%

GDP growth: forecast 2006

1.8%

Estimated market size Estimated market share

£13bn 2%

Sales 2005/06

£266.9m

EBIT 2005/06

£28.7m

Store numbers H1 2006/07

27

FTE employee numbers H1 2006/07

2,156

Own brand penetration

5.4%

Competitors

Leroy Merlin, OBI

Taiwan Population

23m

GDP growth: average last 5 years

3.1%

GDP growth: forecast 2006

4.3%

Estimated market size

£2bn

Estimated market share

10%

Sales 2005/06

Not consolidated

EBIT 2005/06

£7.4m

Store numbers H1 2006/07

21

FTE employee numbers H1 2006/07

1,857

Own brand penetration

8.1%

Competitors

Hypermarkets, Department stores, Homebox

Spain Population

44.1m

GDP growth: average last 5 years

3.5%

GDP growth: forecast 2006

2.8%

Estimated market size

£5bn

Estimated market share

1%

Sales 2005/06

£49.3m

EBIT 2005/06

£(5.5)m

Store numbers H1 2006/07

7

FTE employee numbers H1 2006/07

473

Own brand penetration

n/a

Competitors

Leroy Merlin, Bricoman, Bricor, Bricorama, BricoGroup, Bauhaus, Saint Gobain Group, AKI

Turkey Population

74m

GDP growth: average last 5 years

4.7%

GDP growth: forecast 2006

6.0%

Estimated market size

£4bn

Estimated market share

3%

Sales 2005/06

Not consolidated

EBIT 2005/06

£2.0m

Store numbers H1 2006/07

9

FTE employee numbers H1 2006/07

1,039

Own brand penetration

17%

Competitors

Praktiker, Bauhaus, Tekzen, IKEA

Russia Population

142.8m

GDP growth: average last 5 years

6.0%

GDP growth: forecast 2006

6.4%

Estimated market size

£10bn

Estimated market share

n/a

Sales 2005/06

n/a

EBIT 2005/06

£(5.4)m

Store numbers H1 2006/07

2

FTE employee numbers H1 2006/07

565

Own brand penetration

n/a

Competitors

OBI, Leroy Merlin, K-rauta, Maxidom, Metrika, Starik Khottabych

South Korea Population

49m

GDP growth: average last 5 years

3.6%

GDP growth: forecast 2006

4.5%

Estimated market size

£6bn

Estimated market share

n/a

Sales 2005/06

£5.2m

EBIT 2005/06

£(6.3)m

Store numbers H1 2006/07

1

FTE employee numbers H1 2006/07

161

Own brand penetration

n/a

Competitors

Hanssem, LG Decovile, Enex