Kingfisher plc (LON:KGF)

Earnings Call: H2 2019

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Mar 20, 2019

Okay. Okay. Thank you very much. And good morning, everybody, and thanks very much for joining us here this morning. For those of you You don't have me. My name's Andy Costler, I'm the chairman of Kingfisher. And I'd just like to say a few words this morning, before we starting the results presentation proper. And the first, obviously, is about that. So you'll no doubt have read morning that, it's our intention to begin a search process to find a successor for Vero as group chief executive of Kingfisher. Vero has been with the company for 16 years, and she's now in her 5th year as Chief Executive Now being CEO of a public company is a big challenge at any time I speak with feelings. But particularly in this retail environment and given the scale of the change that Kingfisher has been undertaking, The CEO role here is particularly grueling. It's therefore fully understandable that as we approach the completion of our main work here. The Vero feels unable to make the multiyear commitment that's now required to tackle the next phase of this journey. And we've therefore agreed together that this is the year in which she will pass the baton to her successor. There'll be many other opportunities to say more about various contributions to Kingfisher. But for now, just let me thank you hugely for a massive energy and passion for her continuing efforts to lead this business and to take charge of the management team. Good morning. Ferro is going to be a hard act to follow because absolutely no doubt about that. Just a couple of other quick mentions. We're also announcing that our Chief Transformation Officer, Steve Willett, has announced his retirement, Steve has been in the organization nearly 20 years, we're going to be able to call on his services for some time to come, but when he does leave, obviously he will be with us to see her thanks and best wishes. We must also thank this morning Karen for her outstanding service to the Kingfisher group over the last 6 years, and we wish her all the very best with her big new challenge. I'm delighted to say that we are appointing John Wartig, who's going to join the company as in an interim capacity as CFO. Now John is a very talented international finance director, with over 35 years experience under his belt. He's someone I know personally well, and I've worked with him down the years in a number of situations. I know that his experience will be very valuable to both the Kingfisher team generally and the board. Now changing big companies, always seems to surprise people, but it's a fact of life. Tend to look at it as a positive because it gives you the opportunity of bringing new talent into the team. Kingfisher has deep management strength in every one of its functions. And last year, we made chief executive changes in our operating companies, which have all bedded in extremely well. So these latest changes are not in any way going to hold up our progress. I'm not going to stop the business and they'll do nothing to deflect us from the pursuit of our strategy that Vero and the team set out a few years ago. I just wanted to let you know that that strategy has been recently checked and reviewed again in-depth by the board And I can confirm to you today that the board is fully behind it, 100% aligned with what it says and what we're doing. And I'm now going to turn it over to Vero, who had the vision and the inspiration of the start to spell out that vision, and I'll give her the floor now. We are here today to discuss 2 things mostly. First, the 1 Kingfisher transformation and its delivery. And secondly, of course, the financial year end, 2018, 2019. And I'm sure you will have plenty of question on other topics too. Just as a start, as I'm used to start we started this journey with a clear purpose to create Google man making home improvement accessible for everyone. This purpose is deeply rooted in a true understanding of customer reality. I'm going to come back on that because this is the thing that is recurrent in everything we do. It's completely still completely relevant from a among point of view, I would even say every day more relevant. We've now built our colleagues belief, which was not the case when we started that journey. And that is what will make us a sustainable business for shareholders. This vision remains intact at Home Depot. So today, the first point I want to make is that we are a strong business, even having gone through 3 years of AV transformation. We are now 3 years into the original 5 year plan. We've reached the critical mass of our transformation activity. So this is a very particular moment in time in that journey we started 3 years ago. The building, remember, I've been already referring to this engine thing. It's, you know, and this building of this engine is almost done right now. It will be finished by the end of this year, and we are going to come back on that. What are the last pieces that we need to put together in this year? But I'm going to talk about this later on. And we have, for the 3rd year in a row, achieve our key strategic milestones. Let me remind you why we've got those strategic milestones. I still remember when I started this conversation with the shareholders 4 years ago, not 3 years ago, they told me, what are you gay? I always said that this plan would be back end loaded. Because we knew it. This is how we've written the plan, and I'm going to come back to that. And they said, what can you give us so we can measure your progress? So we can judge you on what you are doing if you are executing the transformation and we come up with those strategic milestones because the leadership of the company, we knew won't be about the short term financial results. Otherwise, you never do transformation, but it's about doing the right to set up this business for the future. And we've constantly, over the last 3 years, done those things. And again, I'm going to come up on this. Of course, so at the same time, despite the success of the transformation, our underlying business hasn't performed as well as we would have last, over the past 3 years, And that includes this financial year. You remember, and I'm going to come back on that. We did, we say we are going to grow above the business as usual. And our assumption at that time was 2% to 3% like for our growth, which we hadn't. Some of this is obviously down to our environment, but also down to internal reasons. Let's be honest. We have disruption from the transformation, we've made mistakes. We always say we will make mistakes. We've learned from them. We've correct them, but you know, be with me on a transformation of that side. It is almost inevitable. And we still make a significant level of profit. One other way of looking at it is that we maintain our overall gross margin, which is a performer in such an environment. I will come back to that. I will choose some comparison with peers later on. Our balance sheet remains strong. I'm sure you remember we had the stock issue last year. We've eliminated our miseliminated sorry, our mitigation stock in just 12 months. So we act on it, and we're back. We also did Thomas to accelerate return to shareholders, which we did. Over the last three years, we nearly returned 1,000,000,000 to shareholders through share buyback and dividend. The second point I want to make is that the transformation is delivering in line with our original plan. As Andy said, we have commissioned the board has commissioned an external review of the transformation. And if we looked at the strategy, they took out the transformation and they took out the delivery of the information. And they confirmed that the 3 of those elements were on track with what we designed as a plan when we originally started. I always told you that it would be back end loaded because we knew it. Because we knew that GNFR will delivering steadily from the start because in a GNFR matter, as soon as you start to get the benefit, And this is what has happened. We knew that the digital would kick off in year 3, which is exactly what I've happen in this year because first, you need to set up your digital capability before you get some delivery. And we knew as well that the offer will start later because of margin maturity, because of clearance, before or cannibalization of the oil ranges, and before operating investments, but all of that was planned. And all of that is not constant on a year on year basis. It goes as you change the range. If you change your kitchen range, you've got your kitchen clearance. You don't have it before or after. So seeing those results, we remain convinced in our ability to deliver further financial and customer benefit from transformation at a slightly lower cost than planned. At the same time, it has become evident that separating transformation from the rest of the business is no longer relevant. It is not a lack of conviction in the EUR 500,000,000. It is a leadership decision. At that, at this point, It is not it's not the right way of leading the business, know how we actually manage it right now. We can't manage the business, separating transformation on one hand, transformation is more than 50% of the business and business as usual. I need to manage it as a whole. And we believe that looking forward, we should be just by sales, margin, retail profit and working growth over the medium term. And now I'm going to hand over to Karen for the financial results of this year. So thank you, and good morning, everyone. Let me take you through the drivers of our performance today. Before moving on to the outlooks for the coming year. I'll start with Slide 8 in your pack and an overview of the income statement. Total group sales of 1,000,000,000 were up slightly on both a reported and constant currency basis with like for like sales down 1.6%. At a group level, gross margin was flat on a reported basis, and down ten basis points in constant currency as the benefits from unified and unique product were offset principally by a weak performance and higher logistics costs at Castorama France. There was a notable improvement in the second half of the year where gross margin for the group increased by 30 basis points. Retail profit of 1,000,000 was down 11.4% on a constant currency basis. This reflects a good performance in the UK and Poland, offset by significantly weaker profit in France. And just to put this into context, Excluding France, retail profit was up 3% with the main driver being the performance of UK and Ireland and Poland. Which together were up 6.2 percent in constant currency. Underlying profit before tax was 1,000,000 down 13%, broadly in line with reported retail profit and included 1,000,000 of favorable currency impact. Just by way of reminder, all underlying metrics are before transformation costs. We turned our adjusted profit after tax which is after transformation costs. This was down 16.1% in the year to 1,000,000. We incurred 1,000,000 of transformation costs, which was a bit less than our guidance of 1,000,000 because of some phasing into the new year. Transformation costs included re merchandising work associated with new unified range implementation. Our adjusted effective tax rate improved by 3 percentage points to 27%, reflecting last year's one off corporate tax surcharge in France. Underlying earnings per share of 23.9p was down 6.3% with the underlying profit partially mitigated by the lower effective tax rate and the impact of our share buyback plan during the year. Statutory profit before tax and after both transformation costs and exceptional items, which I'll cover in a moment, was down 53% to 1000000. So now let me take you through these exceptional charges for the year 1,000,000. I know there's a lot of content here, but they relate to 3 main topics. The first is organizational restructuring, The second is the way that we're looking at underperforming parts of the business. And the third is the treatment of properties held for sale. In terms of the first topic, organizational restructuring, we incurred 1,000,000 of transformation exceptional charge was in line with our guidance. This was driven by planned restructuring activity in France and the UK including the cost of form roll out. We also had 1,000,000 of redundancy costs associated with the NQ's transfer of store replenishment routines from nighttime to daytime and million related to praktiker store integration costs in Romania. Of the remaining charges, most of this is noncash million relates to the way we're dealing with underperforming parts of the business, which we told you back in Q3 that we'd be focusing on. The first component a charge of 1000000 relates mainly to impairments for stores. This includes 19 Screwfix outlets in Germany, which will close this year and 15 underperforming stores across the rest of our business that we're considering for closure over the next two years. These fifteen stores, 11 of which are in France, are a combination of owned and leased properties. The Russia and Iberia charge of 1,000,000 also mainly relates to store impairment. At quarter 3, we announced that we would focus on markets where we're leading or where we can become the market leader and therefore made our decision to exit Russia and Iberia. This process is underway Although for accounting purposes, at the year end, these businesses are treated as continuing operations as opposed to held for sale. Turning to the million. This is a net balance in relation to property disposals. Included in this number is the profit on disposal a number of properties during the year. This is offset by an accounting adjustment related to certain other properties, which have been designated for sale and leaseback as at the year end. Although these properties should end up being leased back by us, accounting standards assume no value in use if they're classified as held for sale and hence the value is marked down. As I said, there's a lot going on here, but largely this reflects the proactive and decisive way in which we're improving the quality of our business. I'll now cover the performance of our major geographies. Before we go into details, you can see clearly from this overview that the UK and Ireland and Poland, which accounts for 56% of group sales, delivered good profit growth, up 6.2% combined. On the other hand, other parts of the group did not perform well. France, particularly impacted by Castorama, was weak with a 3.7% like for like decline and a 35% decline in retail profit. We all incurred losses of 1,000,000 in the other remaining geographies, including losses of million related to the areas we're exiting. Russia, Iberia and Screwfix Germany, and I'll give you more on this in a moment. In the UK and Ireland, despite a soft macro backdrop, we delivered good profit growth. B and Q's negative 3% like for like performance reflected this backdrop and was also impacted by a like for like headwind of around one percentage point from the discontinuation of showroom installation services. This was weighted to the second half of the year, impacting H2 like for like by about 2 percentage points. Digital sales grew by 9% with Click and Collect up 42% as the new 1 hour service continues to gain traction. Gross margin increased at B and Q reflecting unified and unique sourcing benefits. The business successfully implemented several simplification and efficiency plans during the year. This included leveraging the new unified IT platform using the group's finance shared services center and moving from nighttime stock replenishment to daytime. Employee numbers reduced by in to model and unrivaled strength in digital. Digital sales grew by 19% and now represents 30% of total sales. We opened another 15 new outlets during the year, taking the total to 627 as Screwfix opened its 4th distribution center in Litchfield to create capacity for the future. Vero will explain the clear growth opportunities available for this business in the UK and elsewhere. Overall, the gross margin for UK and Ireland increased by 20 basis points with the increase at B and Q partly offset by the ramp up impact from the new Screwfix distribution center. Good cost control helped to drive an increase in retail profit of 6%, which is a solid result in the context of a weaker UK consumer backdrop and a softer housing market. In France, like for like sales were down 3.7% with Brico Depot's first positive like for like in 6 years, offset by weakness at Castorama. This compares with the French market that was down 0.5%. Looking at each of the brands in town, Brico Depot's 0.4 like for like increase and market share gains reflected good performance from its new unified ranges. However, Castorama sales performance was disappointing due to weak fruit fall and execution issues around transformation which affected the impact of our offer and digital initiatives. Vero will update you later regarding our progress the actions initiated in September by the new French CEO to sustainably improve future performance. We're confident that we'll get customers back in store and online. As you may be aware, our business in France has also adversely impacted in quarter 4 by national demonstrations. We estimate that these demonstrations impacted full year like for like in France by 0.5 percentage points and retail profit by about 1,000,000. Total France gross margin declined 60 basis points reflected an increase in Brico Depot that was outweighed by a decline in Castorama. This was largely the result of logistics and stock inefficiencies in Castorama which had an 80 basis point impact on the overall French gross margin. We did remove some variable costs in France notably through a 5% reduction in headcounts at Castorama. However, overall costs increased as we invested in our digital capabilities and incurred incremental marketing expenditure to support Brico's 25th anniversary and communication of our everyday low price strategy. As a result of these combined factors, retail profit in France decreased by 35%. Adjusting for the impact of the demonstrations, the percentage reduction in retail profit in the second half of the year was similar to the first half. Turning to Slide 13 now. We had a good performance in Poland, reflecting strong execution by the team there. Like for like sales were up 1.7% despite the introduction of the Sunday trading ban, which removed 2 Sundays of trading per month. We estimate that this impacted like for like sales by some 1.5 percentage points. Poland's gross margin performance was strong, up 110 basis points. This reflected sourcing benefits and improved product mix, including a good performance from new unified ranges. Despite higher wage inflation, retail profits grew by 6.6%. And now let's look at the remaining geographies. For Romania, it was a year of transition following the acquisition of praktiker Romania in November 2017, gave us a number 2 position in the market. Significant range change, particularly into praxica, resulted in a retail loss of 1,000,000 for the year. Brico Depot remains profitable. The praktiker integration is progressing and the new Kingfisher ranges are significantly improving its offer. From the start of 2019, we've now rebranded all 19 Practiker stores to Brico Depot and we're confident that we will reduce operational losses Germany made a combined retail loss of 1,000,000. Further to our decision to exit Iberia and Russia, we announced today that we intend to close all 19 of Screwfix outlets in Germany, and we'll concentrate on our online presence there. We now look at the overall gross margin. As expected, we saw good margin progression in the second half of the year, with an increase of 30 basis points and actually up 90 basis points when we exclude Castorama France. This largely reflects the build of buying benefits and the actions we took to improve the overall price architecture. In the full year, gross margin was up in the UK, Poland and Brico Depot France, as we had indicated at our quarter 3 trading update in November. Reported gross margin for the full year was flat on a reported basis and down ten basis points in constant currencies. Slightly below our guidance at the start of the year. Again, excluding Castorama France, the full year gross margin would have been up 30 basis points. Now we can see that unified and unique ranges continue to outperform our non unified ranges in both sales and gross margin. 43% of our sales were from unified and unique ranges, which grew by 1.3% against the 1.8 percent decline in non unified ranges. We achieved sales growth in 4 of the 7 major categories. Of the other 3 categories, 2 were broadly flat and 1 was slightly down, with all 3 improving on their performance from the first half of the year. And one of these categories includes around 1 percentage point headwind from light bulb sales, which is the continuation of an industry wide trend. It's good to know that all seven categories have delivered gross profit growth, which is a clear improvement on the 5 out of 7 at the half year and demonstrates the benefits of maturities within new ranges. I'd like to use this next slide to demonstrate how the increasing maturity of our range implementation is building momentum in terms of margin expansion. On the left hand side of the slide, we see how our range change activity over the last 3 years delivers more sourcing benefits as the ranges mature. For example, our 2016 ranges are delivering well in excess of 300 basis points as expected albeit they have a relatively small weighting within our range portfolio. The 2017 ranges are starting to follow a similar profile and the recent 2018 range benefits are starting to build. On 44% of product unified, financial year 2018, 2019, this was cumulatively driven a 3 year benefit of 230 basis points to gross margin. Of which 120 basis points has been delivered in the most recent year. And just as an approximation, 44 percent of 120 basis points equates to a 50 basis point benefit to the group's margin. And on the next slide, you can see that the 50 basis point benefit from unified and unique offer was the biggest gross margin driver for the group. We've set out a bridge here of the group gross margin movement for the year of 10 basis points in constant currencies. The 50 basis points improvement was after absorbing cost inflation and price investment. Over the last three years, we've experienced significant input cost inflation due to commodity price increases and foreign exchange headwinds. Our unified approach has been critical to managing the impact of this input cost inflation and buying benefits are also helping us to continue to improve our price positioning. We've done this and still delivered a bought in margin upside. We've continued to improve our relative price positioning. Our price index is just below 100 across the group, with everyday low pricing now launched in B and Q and Castorama France. The margin on our non unified offer was flat year on year after absorbing similar headwinds to our unified ranges, but without the scale benefits of our unified approach. Clearance levels were similar to last year, so they had no impact on the margin rate. We do have incremental clearance activity in the coming financial years, which I'll refer to in our outlook update. As mentioned earlier, we opened a 4th warehouse facility at Screwfix, And as utilization is still ramping up, it caused a 10 basis points impact on the group margin. We've now eliminated to mitigate stocks that we brought into our network last year where we wanted to reduce the impact of transformation related disruption to our customers. However, elevated levels of stock as we entered last year and disappointing sales at Castorama France have resulted in a 30 basis point margin drag from additional logistics costs and stock inefficiencies. It's also worth pointing out that as the relatively lower margin Screwfix and Poland businesses have grown, in Castorama France has weakened. Overall, this has had an adverse impact on group operating mix. Now let's take an overview of cash and return. We generated million of free cash flow in the year, ending with a million net cash position. This was after planned transformation costs of 1,000,000 and after returning 1,000,000 to shareholders via share repurchases and dividends. The board is proposing a final dividend of GBP 7.49, which brings the full year to GBP 10.82 which is flat year on year. This dividend will take a slightly below our targeted rate of 3.5 times dividend cover but our confidence in maintaining the dividend reflects the fact that we just had a peak year's P and L transformation costs. We expect these costs to decline as we go forward, and that will therefore help to rebuild our dividend cover. In addition to ordinary dividends of 1,000,000, we also returned million to shareholders via share buyback. This completes our commitment to return million of capital over the 1st 3 years of our transformation plan. And now let's look at cash. In the year, we generated 1,000,000 of EBITDA and there's a million inflow of working capital. As you know, at the end of our prior financial year, our working capital position was adversely impacted by our decision to carry more stock in order to protect the customer against availability issues during a time of disruption. The position at this year end, with, as we said, it would be, with some increase in inventory levels to support our changing operating model and our first time buys of new ranges, but crucially, with full elimination of the million of stock that we've brought in on a temporary basis. The sell through of the stock has been an area of focus for our business for the year, and I'm pleased to say that we've also done this whilst restoring availability levels. Moving through the bridge, we paid tax and interest of 1,000,000 and invested 1,000,000 back into the business. Free cash flow was 1,000,000 up from 1,000,000 a year ago. Turning to leverage. We continue to have financial flexibility whilst retaining an efficient cost of capital. Our lease adjusted net debt to EBITDA ratio increased slightly to 2.6 times from 2.4 times in the previous year, which is slightly above our targeted range of 2, 2.5 times, although we expect this to be temporary. It's worth noting that on a pro form a IFRS 16 basis, we estimate that our net debt to EBITDA ratio would decrease to around 2 times, reflecting the fact that we are relatively advanced in terms of lease maturity. Let me now look at the full year 2019, 'twenty outlook and summary guidance. Full technical guidance is in our results announcement. As we enter FY 2020, the sales outlook by country is mixed. The UK market remains uncertain in the short term. In B and Q, we estimate that the annualization of the discontinuation of Shoreroom installations will impact the H1 B and Q like for like by 1 to 2 percentage points. In France, while we're mindful of weaker housing data, we're encouraged by Castorama's start to the year albeit its very early days. In Poland, whilst the market remains broadly supportive, due to trading laws, We've lost one further Sunday of trading per month as of January 2019, taking the total to 3. Excluding Russia and Iberia, gross margin after clearance is expected to be flat year on year. In FY201920, whilst we still expect to benefit from the continuing maturity of our new ranges, we'll really start to bring more unique product to our customers with 4 launches of innovative new ranges. This includes kitchens into B and Q, which is our single largest range implementation. Overall, we expect incremental clearance costs of around 1000000 to 1000000, which is much more to the first half of the year. We expect transformation P and L costs to roughly half to 1,000,000. As we highlighted in September, There has been some rebalancing of costs between transformation cost categories. However, we anticipate that total transformation costs will be less than our original guidance of 1000000 over the 5 years. Total transformation costs incurred for the 3 years were 1,000,000. We expect total capital expenditures to be up to 1,000,000 This includes CapEx to support the new unified range implementations as well as investment in fulfillment capabilities, offset by a reduction in new store CapEx. And finally, in respect of stores considered for closure, we would expect any future cash costs of exit to be covered by sale proceeds from the owned stores. In addition to the technical guidance, which set out our current views on the impact of IFRS 16 to new accounting standard for leases. With several explanatory sites in the appendices, so I'll focus on the main points here. The first thing say is that the new standard has no adverse impact on cash flows or the underlying economics of our business. We will be adopting a full retrospective approach in the 1st February 2019, and we estimate that retail profit will increase by around 1,000,000 as the pre IFRS 16 rental charge is replaced by depreciation and interest. And there'll be no material impact on underlying profit before tax. In terms of balance sheet, we estimate that net assets would have reduced by around 1,000,000,000 if we adopted the standard on 31st January 2019. This reflects the new right of use asset of around 1,000,000,000 and a new lease liability of 1000000000 which is lower compared And as I mentioned earlier, we would expect FY2019 adjusted net debt to EBITDAR to improve given our relatively short length of leases still to run. So to summarize, against a really tough market backdrop, fy2019 was a mixed bag in terms of our financial performance. We saw good performances in the UK, Brico Depot France and Poland, we're all leveraged the strength of the Kingfisher engine to grow in terms of gross margins. However, this was offset by the performance of Castorama France which was very disappointing, although there are some positive signs of recovery as Vero will explain. And with certain other parts of our business, which are loss making, and achieving low returns, we're acting decisively. And with that, let me hand back to Vero. So when we are on the Kingfisher Transformation Plan 3 years ago, both the macroeconomic, you will be with me. I hope that both the macroeconomic and the return environment were very different. No doubt the macro has become more volatile. We have political uncertainty and social unrest in most our geography in all our markets. Of course, Brexit being the big one, the biggest one, but I'm sure you've heard about the gilet jaunes in France. What we saw as well is unprecedented ways of inflation, and significant cost price inflation as well, which we have never seen in that before. At the same time, and we've discussed that a lot at the IPO results. It was a big part of my presentation. The retail sector is going through so called structural chain at a pace that we've never seen before. We've seen established businesses struggling as legacy operating model, come under increasing pressure. It's almost every day in the press that one business is kind of going over. Although, consumer retail behavior have changed radically. And expectation for seamless customer experience and fulfillment are higher than ever and becomes the norm. For all those reasons, we still believe that starting the transformation 3 years ago was absolutely the right thing to do working Fisher. I've been talking about this engine. Let me come back to that analogy. Our transformation plan is pro form and require to change most of our infrastructures, meaning building what we call our new engine. This has this one that we've been focusing over the last 3 years. It's not very sexy, guys, but we had to do it. And it's not very visible, too. I'm going to come on back to that from a customer point of view. The way I think it's more relevant to explain it we've built all these things that you need to be a want in a company every 15, 20 years. And when you build them, you are not coming back to them. You might improve them a little bit, but it's there for the long run. So almost changing, we're not about fixing the problem of the past. It's really about creating something new. And today's ending is nearly built. Let me go in more detail about what are all those things that you bid every 15, 20 years. The first one is the global IT platform. We've gone with SAP. As you know, we've we are it's nearly done, and we've done that across the group. If you think about how many company have implemented a full SAP system without major problems, I'm interested in the answer. On back of the IT platform, what we are doing, because that finished, and I'm going to come back on that, is really to establish a common digital platform. That is going to be the base to become a more digital company. And it's going to enabling consistent omni channel experiences. What do I what do I talk about? I talk about mobile experience, I talk about click and collect, I talk about home delivery, I talk about personalized combat, all those things you need to do in the new world, but you need the platform to do that. It's nearly it's not finished, but this is one of those big things. And then of course, you improve that platform as you go away, but you don't change it anymore. You change it once. Probably for 10, 15 years. The third thing we've done, which is was probably the most difficult thing. I can't difficult to say what was more difficult than than others. But it's to set up a completely new organization, new organization, new operating model, new ways of working and new competencies as well. And again, this is not fully finished, but we are very well underway. The biggest one, which we talk more about, was, of course, the offer and supply chain organization. Just to remind you a few numbers, guys, we put together 1600 people that never worked together before, working for the sake of the group with new competence such as quality engineer, manufacturing, understanding, designer, and more others. All of that didn't exist before. We have no competence in those areas. We put all of these together. And this is, of course, true for oversupply chain, but it's true for all other functions. The way this company is working right now is completely different from the way it was working. It's true in the finance function. It's true in the HR function. It's true everywhere. And again, this is done once for all. You might improve, you might ask you confidence, but the building of that new organization is done. The 4th biggest thing that we've done is about unification. And I'm going to talk more about uniqueness, not probably not today, but in an event that we will have in 1 month from now. But to unify you to unify your offer is the basis of creating differentiation. I'm sure you remember I'm not sure you remember this number. When we started the journey, we had 400,000 SKUs. 4 in common across the group. 3 years later, we are more than 50% of our offer that is unified. And that you do it once as well. Then you build on that new basis of offers and you improve it, you develop more new products. But again, you do it once. You do that one. And last but not least, we have, as well, implement a global price approach on efficiencies. That cover, of course, Genesar, that has kicked off from the start and is delivering right now, but it cover as well shared service center. Again, we have 305 people working in Crackers. We've got the financial service. It's a financial service manager as we speak. And we have few operating company on it. We will grow with other operating companies, but we will put more services. We will put HR. We can put data on it. And again, when that is created, you don't hit twice. It's done. So that's what all those facts that are making me saying today that the heavy lifting around building the ending is now done. And we are more new Kingfisher that we are old. I'm not saying there is no more work to do, guys. There is still a lot to do. But, you know, we are at that point, where we've reached that critical mass in the building of the engine. So I'll just explain, that This is nearly, completing about the building of the engines. And that's why I can now, which I couldn't before, I sort of started that last year, guys, But I I can now demonstrate that the strategy is working. And I couldn't eat before because I didn't have the scale. Remember, you you are doing, she repeating yes, I'm good to hear repeating because that's the only thing I had, which is not the case anymore. So Let me share facts about why we can say now that this strategy is working. And again, this is not about blah, blah, blah, as I said, it's about real fact. The first one has been covered by Karen, but I think it's worth, you know, going back to it, coming back to it is that the unified offer is constantly delivering sales and market growth and is outperforming the non unified offer, plus 1.3% on one time minus 1.8% on the other side. Almost all categories are positive. As Karen said, I'm the Funch is the ALFMT, 4 of them are positive 2 are flat, minus 0.4% and 1 is still negative But you can see if you go back to your, you know, your not last time, massive improvement. And the one that is negative is impacted by, you know, a kind of market things. So we're nearly there. And more importantly, as well, the profit is improving in every category. We said that as well, this transformation will make us a more digital company. And today, our digital sales are 6% of our sales. It was three when we started the year ago. Don't make me wrong, guys. We are near where we need to be, and we know that there is much more potential in that space. But this is massive progress. We start almost from nowhere. The third point that I want to make is to talk about customers. Because at the end of the day, as I said in my introduction, we do all of this with customers. I know that there were a lot of kept isn't about the fact that the customer will buy in his strategy. I see, you know, remember hearing or reading, it will never work, customer will never buy the center. And the principle of all this strategy, I've been constantly telling you, if you don't believe that customer will buy the same thing across the geography, then run away. But and I've I've never been in that camp. Why I've never been in that camp? Because of my, almost 30 years of experience in an industry because I knew that we were going to do everything based on true understanding of customer needs And this is what we've done. We have studied 20,000 house since we started that journey, and we keep doing it every month. We visited physically visited 3000 around Europe. And bear with me, UK still in Europe right now. So we're visiting the UK houses as well. Just to give you a little bit of it's an anecdote, but I think it really means to me which kind of business we have become. At last year, what we review, the new kitchen range. And of course, the kitchen business case, that goes with it. But I mean, I can tell you right now on top of that station that we did that 63% of the kitchen in Europe are less than 9 square meters. And that kitchen are a little bit bigger in France than they are in the UK, that in the UK, you put your washing machine in your kitchen and you never do that in France. We know all those things, guys. And I can't think of many companies of our size that are talking about those things in their genes. In the field meetings. What I mean by that is that everything we do is really truly a true understanding when you do that, you don't make this mistake. And the customer, they are buying your offer because it makes sense from their perspective and from their needs. So that's what I mean. And the NPS score have improved. The other element I want to say, but in addition of that sales growth I was just talking about, I can tell you that we've improved our price index in every single market. Not only in Castorama France, we are going to come back to that where we had an issue when we started, but everywhere we go. And as a result of that offer, work and the price, we have improved our NCS score, Net Promoter Score in every market. We measure it now from April 2018. We have the same methodology. Okay, this is part of building the engine. We are looking at it in the same way with the same tool. We have the same way of measuring NTS across markets, and we started to measure it in April 2008. And I can tell you that from April 2008, we are acting feature level. I'm not meaning that this measure is relevant because you need to look at every market and we've progressed in every market. But if you do a conglomerate of that, we were 43 in April at Kingfisher level. And in January 2019, we are 64. Which means that the customer our ability to engage our colleagues. Rightly, you asked me very often question about this and you were right through a big transformation, a big and long transformation. And again, I think I'm very pleased to say that we have an engagement score that is largely above the average of retailers and really stable for transformation. Again, same way of measuring it. We're measuring it on 8 on the 80,000 colleagues, so it's not few bits and pieces everywhere. We have the same way, and we've measured it 3 times and this rate is stable. So let me bring probably a slightly different perspective on how you can measure the purpose of the strategy, the fact that the strategy is wise. One of the fact that I thought might be relevant is a comparison of our performance margin without here. And the slide show that our transformation of course, especially the work we've done on unification has helped us to perform better or in line, and broadly management in our margin. Even before the end of the plan, we're not finished. I shared the slide the first time at Altria, guys, if you remember well. And what I said at that time, which is still relevant, is we are seeing the transformation benefit coming through, offer digital operationally in the way that I described in my in my opening statement. However, and again, we knew it, we have those benefits are eroded by taxes. And they are in line with the plan to elaborate by assessment fee run offersourcing and digital organization. We comment a lot of that. We build those organization for free capacity, and we are not yet satisfied. On top of this, we have to face negative external factors. As I said, they are they were they have been more negative than we expected, but we are completely honest. And as well internal factors. Some of them we were expecting. We knew that we would have some transformation disruption and some that were more important. Especially the customer about performance. So I'm now going to focus on internal fact. About the things we can do something about. And let's, this year, to mitigate those internal factors and to redo them, we are 4 clear priorities. The first one being addressing and the performing part of the business. I'm going to talk about three things in that part of course, about Castorama France and how we actually implement our plan and the start of delivery of it. The fact that we will be focusing on market where we have or can reach the market leading position. The second a clear objective priority is to extend the rollout of Screwfix store in the UK and to enter new market. The third is going to be complete, the building of the engine I've been talking about since I started. And of course, the 4th being to make our innovation more visible to customer, which is the first time we will be doing this. So let me first cover Castorama. First, I think, as Karen said, it's important to remind you that we don't have a strength for us. Rico Depot has gained market share and its sale and gross margin improved with clear benefit from the Kingfisher transformation. But Castorama performance, of course, has been for quite a long time disappointing. What is important for me to share with you is that the diagnostic has already been done. There is no new news guys. There is no new problems. We stick to what we've done and it's still relevant. The solution has always been has been identified, and I'll share the solution with you at Altice. We are not changing the solution either. We are just implementing and executing them. And let me now move focus on the progress we've made and share with you a few indicators that demonstrate that we are making progress. So the first one being price index. You knew that the pricing issue was one of the biggest one that we had in that in Castorama France. And we've implemented, and I told you at last year, the EDLP strategy. And on the back of that EDLP implementation and all the work we've been doing, we've moved the price index from one to way when we started, if you remember, to 101, right? So we're nearly there. We're not there, but we're nearly there. Digital was the single problem as well, and we have addressed it We put the next gen platform into Castorama France to improve the website. Actually, again, we are not where we need to be, but the Castorama website traffic has doubled between 20172018 and the conversion rate, which is still too low, but has gone up by 50%. So this is good progress. There was a there was independent survey, which we haven't ordered in October 2018. And we were the 2nd preferred website in France, of course after L'Oreal Mala, but in terms of home improvement, which I think is a massive improvement as well. We've taken the decision as well to put more means in terms of marketing and are supporting, of course, a new unique and unified offer. But as well as the AD campaign. So we've launched, we have been more visible in Castorama, with Castorama brand, in TV, impress everywhere that we've been for quite a long time. And finally, the Castorama Net Promoter Score has improved by 10 points since July. So these are all the actions we've taken towards the customer. At the same time, we've taken as well efficiency measures. And we've reduced our Feet in Gatorama by 5%. We are considering, as seen this morning the closure of 9 underperforming Castorama store over the next 2 years. You know what's all that is starting to pay. The 1st month of the year has been positive in Castorama. I'm not here doing your trading update, but I think it's important for me to share. Football has been growing for the first time in a long time. And as you say in English, one swallow doesn't make the summer, but this is a good start of the year. We have said that we would address all areas of underperformance. And we know that we have some stores that are underperforming. And we've demonstrated, as it's shown on this slide, an active management or our property portfolio everywhere. This focus continues, and we announced today that we are considering closing 5th underperforming store across the business over the next 2 years, 9 being Castorama once. Again, I'm going to go quick on this, but I think we did an announcement at Q3 that we would be exiting Russia and Iberia in order to really focus on those markets where we are already or can be leading. So the exit processes are ongoing and I have already outlined to you the decision to close the 19 Screwfix Store in Germany and really concentrating on our online presence. Darren has really covered that part in our whole presentation. So that's for the first priority. The second priority is about KUVIC has been a star performer in our business over the past 5 years. They deliver a CAGR of almost 20% off sale. 15% of customers with 13% growth in terms of the number of stores. So very healthy profitable business. At the end of this year, Screwfix at 6 27 stores. It's near the double that what it was 5 years ago. And today, we are setting out exciting plans to be on this growth, both in UK and new markets. In the UK, We will continue to strengthen our customer proposition. We need to keep going with the customer, while also extending our fallout a target to 800 stores. It was previously 700. In the Republic of Ireland, what Screwfix has already established a strong online business for 4 years. We will open a number of physical stores to support further growth. And this is starting now. We've learned from Ireland. That was a really interesting experience, and this is why we've decided that we will do the same in Poland and France. Clearly, these are both markets where we have existing scale, infrastructure, in this market knowledge and competencies. The third priority for this team for this year is to complete the building of the engine. I said, we are nearly there, but we are not there yet. So what are we going to do? There are a few actions that we will be taking this year. After that, this engine will be completed. The first one being unification. I told you we were at 50%. We will complete 70% by the end of next year. On the digital front, aside from completing the very final stages of the IT platform, we will be launching our new digital common platform, which is going to enable our digital capability in Brico Depot France Castorama Poland and Romania. And finally, we will continue to implement our shared service center capability across geographies. So the last point for this year, the 4th and last question is probably the most exciting one, guys. And it's probably the biggest change in this year is that we are going to show the customer what we've done. Again, this is the time we can start to do this. We are going to use the engine that we've built to deliver benefits to our customers. We will have lots of example of using the engine for the benefit of I'm going to share a few with you. First of all, thanks to the engine. We are now ready for the first time ever to create big global launches to share our new offer with our customers. Karen said we'll do 4. I'm not going to tell you what our for because this is very competition sensitive. I don't want to give them everything we are going to do this year, but we are doing So we are going to do multi country, multi sector launches, supported by the launch of our new global product owned brands, which is going to call, which we'll refer to our purpose. You can see here the paint example, it's on the B and Q shelves already. We start to implement that everywhere, but this is going to be something very big and significant. CCAT campaign. And as an example, you see here the 3 catalogs, the Polish 1, the French 1, and the UK 1. And we will have a Romanian 1 as well. Normally the way we would have demand without that engine is that you would have 4 different catalogs with 4 different set of photography and everything. What we've done is because the range is the same, the the, you know, the look and feel of the brand is the same. We have 1, and we have, of course, a major geneFR tender on the paper, and we've done one set of photography. And that's how we will improve over time the quality because you put less money to do more things with better quality. But again, this is a very concrete example, guys, on using this engine I've been talking about. This year, we will through those launch as well, we will improving affordability for our customer as we continue with the unification of the range. And as we are launching them in line with our ADLP strategy, every new category, every new Bing loan will be fully ADLP. Along with these new ranges, we will be implementing new digital tools to support the customer in their home improvement project, for example, We are launching the app plan by bathroom in the B and Q and in France already to aid them plan to for their project platform. And finally, and it's really important as well, is that we are now able to train colleagues globally. This is a part of the engine. We haven't talked a lot about it, but we have now 1, 1 home improvement academy. And we are going to spend this year 3000 colleagues through that for an improvement academy to have better equipped colleagues about their knowledge of the range and their understanding of the customer needs and the customer So here are a few examples of those new launches, but of course, you will discover much more of this on 15th or 14th. 15th May. So this is, I'm coming to the end of this presentation. As you just seen, we've achieved a critical mass transformation over the past 3 years. This year, we'll be finishing the building of the engine as well as focusing on those 4 priorities that I've just discussed. From next year, we will enter into a next phase of the transformation. Of course, we will continue to drive profit from digital and operational efficiency but we will also move to a more centric customer centric space of the transformation. And that will cover, of course, the development of more unique ranges and the development of new formats. I will update you on all those things on what we call Kingfisher Innovation Day, whatever we call it, where we will be showing you all those new things. And it will be on the 54th May here in London. And finally and based on everything I've just shared with you, I just want to say that I am fully confident that we are creating a stronger sustainable and more profitable business. I must probably finish before your question on a more personal note. I first thank Andy for his work. I truly believe in our purpose, I think this is a way of making the world a a bit better, but as always, we're happy from the start, and I'm still there. I'm not declaring Victoria guys. That's not the point at all. I hope I confidently show that this transformation is happening and this strategy is working. But this is not about declaring victory. We are not done yet, but we've been doing what we say we will be doing. And I think that's very important to me. I'm not leaving because the strategy is not working. On the contrary, every month, I'm seeing more evidence that it is working. This business will be totally different one at the end of this year that it was 5 years ago. We have all those facts, all those numbers that are demonstrated. It will be ready to face the future and be truly sustainable. I've been in the company for 16 years, and I wouldn't have that conversation, if I thought we were not in good shape. And I think it's now the right timing because of the I say there is 2 phase in that transformation. The 1st phase is nearly finished. We are finishing it this year, and then we'll, as Andy said, I didn't want it for personal reason to commit to that second phase. But the thing is I've done my part, and I will still do my part, since the day I will depart, It's very demanding. It has been a very demanding 5 years of my life. And to be fair, you have probably almost dedicated all my life over the last 2 years to this company. Whatever has been written or the delivery or will be written today in the press, I just want to thank the 80,000 colleagues within Kingfisher. They work very hard, hasn't been easy, but they have done something extraordinary, extraordinary, and they can be very prudent themselves. And they need to keep doing. That's the thing. As long as I'm here, I will be as demanding as ever, for the one that is in the room, they know that. King Fisher will be the leading home improvement company. I'm 100% sure of that. That's one thing I'm sure about. And still, I remain in Daxi, I remain 100% every day. I will be on the ground visiting the operating company working with ERC all the functions to deliver this year. Thank you. It's a very practical situation today, And I want to take the time to thank Darren as well. He's on the end of the ball as delay. I think it's it doesn't really work in English, but we'll get the idea about this within almost a couple for 4 years and a half. But a couple like a CEO and a CFO needs to be arguing sometimes, talking a lot, taking decision together, but, overall, caring a lot about the family. And the family's team. Karen has been instrumental to the success of this transformation. The tradition would like Would like that I wish her good luck for her next adventure, but I kind of used to say it's not about luck. It's about work, and talent. And she definitely has got the work piece. I've never been, I've never seen anybody that is working so hard as well, but she has got the talent. Here. Yes. Hi, there. Jeff Monroe at Redburn. Two questions, please. Can you sort of compare and contrast Brico Depot and stronger for us in terms of the way the new ranges have landed, how you've executed that, how you feel about their competitive positions now. It's just those striking to see such a big delta in top line between your two businesses. And second one, a question for the chairman, Given your comments about the board being 100 percent behind the existing strategy, what flexibility is there for the next CEO he or she to come in and say, actually, we want to do things differently. We want to trade business differently. The equity market is not recognized in the value of Screwfix. Therefore, we need to change. What scope is there for evolution and strategy? I probably should answer the first one. So I think the starting point in Castorama and Rucadipo were very different. The offer was different. You had the starting point, the number of categories that were covered in both businesses were the same, the number of keywords, not just as I remember, our record departure is 11,000 SKU today. The Castorama is more 50,000. So the way the new offer as lending was different. In Brico, we have had a coverage of customer needs. And as well, the price positioning of Brico Depot were good at the beginning. So you had that flow of customer coming in because they knew what they were finding. And you know what? They start to continue to come in, and they found more stuff. Better quality because Brico has been always very well regarding in terms of flight. But less well regarding in terms of quality. So you know what? We have the strong customer coming in. Price was there, Steve, as they were before. Very good, very strong affordability for customer. And quality was improving, and we were covering more needs. So hang on, this is great. Both. On the Castorama side, that was different. With the unique and unified, in the first instance, we do with unique, but we didn't with unified. We didn't cover more customer needs. We do with unit. Imandro is performing very well in Castorama, as an example, the bathroom furniture, I think, because here, you cover So I think the landing of those things. And as well, in Castorama, even before we started, we knew we had the problem and that we had the you know, we didn't have the right traffic. We were losing share and all. And it takes time for people to understand that first because the price index is the same. You move your pricing, right, but your perception is moving afterwards. People need to take the time to realize that the price has increased. At the same time, when you decrease the price, if you sell the same number of products of SKU, you have to sell more. So you need time to cover this. So this is what is happening in Castorama France. And this is why, first, you need to do the work before shouting to the customer. And we've only started to shout to the customers that price for good and product has improved right now. And I think that's why I shared this NPS the improvement score with you because I think that matters at all. It doesn't trigger to sales right at the beginning, but it means that customers start to realize that Castorama is changing, and that's good news for the future. Hello? Just to answer the other question. I mean, CEO has always won maximum flexibility and that's to be understood. But I think what the board is very clear on it, we've done a lot of work on this in the past few months, for obvious reasons. There is clearly no doubt in under any review that the logic that underpins the strategy for Kingfisher is clear. And I think what we're seeing today and what we'll continue to see as we roll through this year is more that buying as a group, working as a group in a coordinated and coherent way is the right thing for us to do. And the competitive advantage that Fisher has is defined by its scale. You don't use that scale. You give it your primary competitive advantage and use coming also around. That's what underpins this based on the inside of customers, they will tolerate next steps happily, better product at the right price across across our geographies and what Ferrosyntoday demonstrates that. The component parts of our business change, as you've seen, we've made exit announcements over the last few months where we don't feel we can build scale and contribute to the group in a winning way. That will always be under review, but for my money, the Chief Executive who comes in will come into a strategy that's clear. We will clarify more parts of that strategy later in the year, and we've already nice event because we have other things we would like to share with you, which demonstrate this strategy in action. So the CEO will be moving in whoever that is and whenever they arrive. Into a business that's starting to really start to move as we go through this year. And accepting that and understanding that and buying into it, I think will be an important part of what we're looking for. We're looking for a great executive who can follow Vero, buy into the vision and take the team through and with I'm sure there'll be some changes around, on various elements of it. I'm sure there'll be further reviews of different parts of the business, but the underlying logic that supports this strategy is very clear. I think it's highly compelling. It's one that bought under significant examination recently as reinforced and confirmed. Thank you. Richard Chamberlain RBC. I asked a question about the store closures, please. What criteria are you using to determine, which stores are closed? I think you said 15 of which 9 are in France. And maybe linked to that, Vero, maybe you can just elaborate on, Slide 33, where you say, the strategy is to focus on mark where you have or can reach a market leading position. So I kind of get in what you're doing in Russia, Spain and Screwfix Germany with the it, but obviously now in France, it looked like the market leader eventually has reached an unassailable market, leading position. So Where does that leave Casper Armour in terms of store footprint, an optimal store footprint? I mean, do you think that 9 stores is it's really enough given Leroy Milan is so far ahead now. So, I actually don't think that it's very complicated to answer that, but Richard, I mean, these represent a review of what we would call the tale of the portfolio. Some of the stores are actually loss making stores, and they haven't been very well performing over the last recent years. Some of them, are not loss making, but they're giving us low returns, and we're actually taking advantage of some lease breaks, and we would rather not re sign a lease on a very low returning store, when we could actually refocus and put our money into something give us a higher return? Okay. So I think on France, this is a challenge you are giving me about market leading position in France. I don't think we are not thinking of France, you know, putting Castorama on one side, Brico Depot on one side. We are talking about Kingfisher as well. And I think with Kingfisher in France, with 222, if I am right, so that we have in France, we can definitely compete with the run up. That's true. They are the market leaders. But I think we are going to compete with the new and unique offer with the buying power that we have with the scale of Kingfisher, we can compete with them with a digital new platform that is the capability that we have in Screwfix, we can definitely compete in this market. And you know, this market is moving massively to digital as well. And, we can take advantage of that. So We are going to fight. And in terms of the scope, Yes. And this is why we've taken the decision when we started the journey to implement the same range across the two brands. That has been a conscious decision. We use our buying scale across the group, and we're we're putting the same offer in everywhere. That's actually a different strategy from the Ooma line. Adam Cochrane, Citi. First question on clearance and gross margin guidance. Would you be able to sort of discuss over the last few years, how much in pounds notes you've given to GBP 25,000,000 to GBP 30,000,000 for next year? How much was there in the last of years. And as I look forward 2 years, should I be able to add all of that back? Will that clearance reverse once you stop clearing? First of all. And in terms of the gross margin, you talked about the logistics cost in France in the year, will that reverse next year? Is that something that's been fixed? Is it an ongoing problem or is it very least first or repeat, sorry. And then the sort of other one I was thinking about is talks about Screwfix being online now in a couple of markets. What is the online proportion of sales of Screwfix in the UK? And is it a business that needs stores in the markets in order to be a material addition to your portfolio in France and Poland. Oh, okay. Few questions, right. I'll start with the clearance and I'll just really sorry about that. Elevated levels of clearance are not part of our new business model. But as Vero kept emphasizing, it's we said this plan was back end loaded. And one of the reasons it's back end loaded is that you haven't finished implementing new ranges until you finished implementing new ranges. And the only way to implement new ranges, unfortunately, is to take some clearance decisions on the old. And we do walk a fine tightrope in terms of deciding how we're going clear because you're looking at a combination of customer experience and economics, and different categories of products who have different clearance characteristics. I'm not actually going to give you the absolute numbers, of of of clearance that are in our gross margin. But I would say that over the last couple of years, they have been several times more than the clearance levels were when we first started. And so we'll be looking to get through this journey and then move her position that is much more normalized. A retailer will always have clearance, but at more normal levels. $25,000,000 to $30,000,000 for this year, just to say we're going back to the prior 3 years guidance on the clearance. I don't want the absolute clearance. Incremental as we create by the implementation of the unified range. Have you given that guidance? Yes, we have. So actually, so we're seeing 1,000,000 to 1,000,000 more clearance in FY 20 nineteentwenty 20. We said in 2018, 2019, there was no incremental clearance. So that was the same as 'seventeen-'eighteen. In 'seventeen-'eighteen, the impact of clearance was, I think, about 40 basis points on the margin. At that time, yes. Logistics, Unfortunately, the logistics and efficiencies are not going to fully reverse this year. All the teams are really, really focused, on moving stock effectively through the system but the the logistics problems that we've got are primarily related to the issues that we're still working through, in Castorama France. And whilst we do hope to make an improvement on the situation that we've got, I think it would be wrong of me to be promising that this will disappear. This year. Screwfix online? I think the percentage of Screwfix online is 27%, 27%. So I don't think we can say that there are very different And I think what we've seen is the store are growing at the same time that online is growing. Just to give you a sort of context, I know from a retail perspective and we come back to the more kind of retail environment exchange questions. We need to move away that it's either online or stores. Amazon is today the retailers that have the most parameter in the world. Probably Walmart is ahead, but they are one of the big ones, investing massively into square meters. So I think the battle for the future of winter is not online, but the store is good. And this is why I think what we we need to keep doing is really having that size management about from a expected, what do you need to have to meet the customer expectation in the future? But it's not about removing to totally. And this is why as well, on 15th August, we would be very happy to show you how we see the future of our And they will be stores. They will be different. They will probably be in different locations. They will be different than that, and they have to provide a different experience, but they are going to be there. And the leading retailer will are going to have both. This is not random if Amazon who is the biggest allowing the work as every investing in time. Thanks. Anne Critchlow from SG. I'm going back to Screwfix Germany, were there any particular challenges in Germany that led to position to close stores. And then just going back to your comments on online versus stores and online only, how promising will that business be as an online only in Germany. And then finally, learning what you did in Germany, what does that mean for future entries into other countries with Screwfix? Is it now the case that it's a very limited expansion project for Screwfix? And then just one question, please, on online in France, what percentage sales are online in France and what proportion is clicked and collected at the moment? So I think the German market is a very particular market, and that's true for all retail. The most competitive market, of course, in the improvement sector, but in any kind, food retail, everything, the more challenging from a very competitive from a pricing. So the thing we had to face is that you are in a very price competitive environment. And at the same time, you don't have the buy in scale. And why we didn't have the buy in scale in Germany? Because first, Cufic Germany has been long before the 1 Kingfisher journey. And even and the thing is because Screwfix is a UK business, and it's a lot of technical categories. You have norms that are very different in the UK than in the rest of Europe. So if the Screwfix business would have been a French business, we could have sell the same stuff in Germany and in France, which was not the case. So we had to buy the offer in Germany just for Germany. So you are subscale. You don't have the right buying power. So you so the problem we had is the margin problem. And this is why we make some losses. So to go to, online, we will do online in Germany as we did in Ireland. And I think we are really building on the of Ireland. So this will be driven from here in the first time when we will be launching and then we'll see. But and we will deliver from the UK. So you maximize your efficiency, your supply chain efficiencies and all the rest of it. To go on front end policy, the situation will be very different from Germany. We know we know those market very well. We have a present there. We are still there. We understand the customer dynamic. We've got infrastructure already. And we are going to use all of this infrastructure to 1st line, because I think this is a good way as ways to think about the expansion in the new You establish your brand, you establish your presence with online, and then you go to open stores. You don't do the other way around. And this is what we are going to do. And just to say that, in despite the fact that Germany is small and despite the fact that we've made the decision to close stores. Actually, one of the things that we were really encouraged about was the speed of e commerce penetration into that business. Which brings me to your second question, which is the online percentage in France, very, very low, still only about 1% that's actually not, a surprise to us because to get to the right level, of e commerce capability, we have to have fully implemented our IT platform and then move to what we're calling our next generation e commerce platform. We're still quite early days, in France. On that, and we've still got some work that we need to do, on the digital offer to the customer in France. So click and collect is still quite small in France as well because unlike, in B and Q, we're still working to get to real time stock file updating. And actually, that is the thing that's really given the momentum behind the click and collect growth in B and Q, where we've now got 1 hour click and collect, but we'll get there in France. And then what we call the new digital path form is going to be implemented in Brico Depot France now. It hasn't been implemented yet. It has been in Casto but not in Brico Depot yet. That's part of the plan for this year. Yes. This is Sharf from Goldman Sachs. Two questions. 1 is on the unique unified ranges growth. Digital rack, it slowed in the second half. It was growing 2% in the first half. It was 1.3%. Is there anything you guys can do in terms of accelerating that growth again? Of unique, unified ranges. And second is on the CapEx. What kind of CapEx we should expect once the transformation is done? Okay. So first one, the growth, we saw some very high levels of growth in the first half of the year. We were looking at a very new range of implementations. So you've got some of those things anniversarying. But if you go back to the slide that actually shows the growth. And I think, you know, we would be quite happy if we get, you know, 5% like for like growth across our our full set of is what we've been seeing. In terms of the CapEx, GBP 375,000,000, there is still about a 100% in there of what we would call, our transformation CapEx. So particularly in FY 2020, we've got CapEx in there that is associated with further development of our capabilities. So we're investing in fulfillment and also, the characteristics of some of the range changes that we'll be doing this year mean that the costs are actually more skewed towards needing CapEx than some of the other implementation costs. So that's the kind of thing that I would say, well, when it's finished, it's finished, I'm not really going to comment on, on the rest of the CapEx. Hi, it's Tom Olson, Numis. 3 questions it's okay. First of all, you made reference to the sale and leaseback within those, and we can kind of update your mind on what you're doing there. And secondly, you spoke to your headcount reductions in, I think, being through Ann Castorama, can you just give us a sense of where that headcount is being taken out from within those businesses? And finally, with the Screwfix and arrays sort of target, should we still expect to run 50 stores a year going down as a similar rate of expansion until we reach about 800 number. Okay. I'll start off with with the sale and leaseback, is sale sale and leaseback is just one of the things that we that we do when we're reviewing the overall, property portfolio. So, you know, just to put it into context, it's not material in the in the overall scheme of our property, and it's quite similar, although it's actually a different activity to the fact that over the last 3 to 5 years, we've sold £150,000,000 of nonoperational estate. We've brought back, we've bought back, some freehold in stores where we were very sure that we wanted to stay there for absolutely the long time, but what the sale leaseback is about is actually about creating a little bit more flexibility. I mean, it's very, very small scale, but on the stores that we are looking to sell and lease back we feel that actually is a good time to crystallize some value and actually get into leases that are not going to be too long. These are stores which are okay stores. They're not in the tail, so they don't need to be closed, but, you know, and we believe that we'll be fading in there for the next few years. But actually if we can get, the right length of lease, and take some money out. That feels like the right thing to do. So that's still in leaseback, headcount reduction, 5% headcount reduction in Castorama, about 5% headcount reduction in, in BNQ. It is a mix of, store and head office headcount. And for instance, in the head offices for both of those, operating companies, it does include, the roles where the work has been taken to our shared service center in Poland. And Screwfix 50 per year. Yeah. I mean, I think that's a reasonable number, you know, still to be, still to be rolling out. And then, of course, if we go into Ireland, we'll we'll see the math we can do. They've got to get the right proper service. You need to find the properties. I think that's one of the things as well. These answers. Thank you. It's where it comes from Exane BNP Paribas. Your £800,000,000 original target total transformation costs, you said today, you're not guiding on that. Could you talk about, or you're not going to spend all of that GBP 800,000,000 Could you talk about the sort of the swing factors in year 5, which will determine whether the final $200,000,000 gets spent or not, please? I said slightly lower. You know, I think this is just reassurance, but it's not going to go above the $100,000,000. We've had people commenting on, you know, is it ever going to end And actually, absolutely, it's going to end. We've got our plans in place. It's a little bit below. I wouldn't be looking to dramatically cut that? And how have we managed to get it a bit below? Well, we are quite rigorous when it comes to this kind of expenditure as other kinds of princeton. And indeed, in some of the areas there, we've actually been able to apply some of the GNFR principles. So we've been able to take out a little bit of CapEx by actually optimizing and utilizing our scale across the group? Our engine. Engine, yes. And then just the mix between CapEx and P and L in the final year, did that change the original 3 components you gave? So in September, I said there would likely be a bit of rebalancing, and that was recognizing that if you just actually looked at previous guidance we'd given, we would only have had £20,000,000, I think, in transformation P and L. And we do recognize that we need a bit more. But overall, what we said was that the important thing was £800,000,000 of cash costs, and that's still the same. And this is really just thinking carefully about, as I said, the ranges that we're going to implement this year and what needs to be needed to go through the P and L type activity, which is typically the the re merchandising, etcetera, and what comes from CapEx. And we will have some further restructuring activity, which we can't talk about right now, which means that we've still got some exceptional item in there. The exceptional items generally being the people cost of change. Few more questions, folks. Thanks, Andy Hughes from UBS. A couple of questions. First one was on your Slide 17, just on the benefits from unified ranges. I mean, the message I think seems to be from that that you are getting you are getting the benefit that you thought you would get that maybe it takes a couple of years longer. Should we assume that they're getting the $350,000,000 over 5 years is really $350,000,000 over $7,000,000 and that you will get there that it's just stretched? I think the answer, Andy, is that the benefits are coming through that the strategy is working and thorough described up front, the strategy is working. And we don't think that, because we don't run the business on the 500,000,000 and the BAU will continue to work through, those same elements of strategy as we've always described and make sure that we get the benefits in as fast as we can. The benefits are in line with the plan we wrote in the beginning. They are in line. Absolutely. The amount and timing? Yes. Right. So you've got a lot to catch up on. Roughly, they are in line. With what we plan. You know, that the offer thing that we've been talking about is that You're not done, you're not done. I think the explanation I was given, it's like if you are in it, the doctor told you, it will get 12 months to be well. And after 6 months, you want to be there. So you have to wait till the end. Okay. And just to follow-up on the transformation costs, is this going to be the last year, FY 'twenty, last year's P and L transformation costs. There's a little bit of CapEx. If you actually just work out the funds, there's probably a little bit of CapEx that we see in the year after. But we should be broadly finished with the P and L cost. I would just go back to the fact that we will not spend as much as 1,000,000 in total Yes. But in terms of what's within the P and L, it said it was $120,000,000 in FY 'nineteen. We're going down to $62,000,000 to $80,000,000. Yes. For this year and then pretty much nothing. And if you actually think about the profile of our offer, we've exited this year with 50% of the offer unified. If you can imagine that we'll exit next year with 70 ish So that doesn't leave us an awful lot left, to work on that. In line. It's Jeff Rodel Morgan Stanley. Just one question, please. In the presentation, you took also in the press release there, you talk about the property having a value of 1,000,000,000 on a 7 leaseback basis. And in your presentation, you alluded to the fact that different bases give different valuations What would be the valuation of the property on a non sale and leaseback basis? That'll be less than 1,000,000,000. But I mean are we talking 1,000,000,000 or 1,000,000,000? I mean, what's not exactly the number, but how much less? I don't know how much that would be. Do not get it valued on that basis as well? It would be $200,000,000 lower than that. Thanks, Tom, everyone. That's appreciated. Thank you.

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