Kingfisher plc

Of course, we've got Thierry Garnier, CEO, Bernard Bott, CFO. We've also got the chair of our board, Andy Coslett, as well. So just a couple of small housekeeping items before we kick off. So first of all, there are no planned fire alarm drills today. So if you do hear the buzzer, it is time to go. But staff will be on hand to... Guy just said fire exits. Secondly, we're going to take a quick two or three minute break after the presentation before Q&A. So I'll ask you guys to stay in the auditorium, give the guys a couple of minutes to catch their breath, and then we'll kick off with Q&A. And then finally, very sadly for a few of you like Tony, I'll be moderating the Q&As. So... But I'll have a couple of my colleagues on hand with microphones. So usual protocol, state your name, institution, etc. So I think that's it actually on the housekeeping side. So make yourself comfortable. It is just before nine. So maybe Paul, give it 30 seconds and we'll kick off. Just give me a thumbs up when we're ready. You might as well stand up there.

Good morning, everyone. Welcome to everyone here in person at the London Stock Exchange and also to those of you joining online. On behalf of our group executive and board, I would like to begin by thanking my 80,000 colleagues across the group for their commitment and dedication. They continue to deliver incredible work in an environment that stays very demanding, We are proud of them and proud to be part of this team. Turning now to our agenda for today on slide three, as usual, Bernard will provide a detailed review of our financial performance and outlook for the year ahead. I will then update on our operational and strategic progress, as well as our medium-term financial priorities before we take your questions. But first of all, let's start with the key messages here on slide four. It has been a year of solid execution. We delivered in line with our expectations, in line with our guidance and against a market backdrop that saw many new economic challenges. We have outperformed the home improvement industry and our sales are significantly ahead of pre-pandemic levels. We are pursuing multiple growth opportunities at pace and we are well positioned to navigate the year ahead. We maintain a sharp focus on pricing to deliver value to our customers and we continue to manage cost inflation pressures effectively. Strong supply chain management has ensured good product availability and a firm grip on our inventories. Bernard will say more on the outlook for the year, but overall, we're in good shape. Finally, we're announcing today a new medium-term financial priorities, including our commitments on growth and cash generation, and I will come back to this shortly. Turning to slide five and our full-year performance across retail and trade channels, sales have been resilient. lower by just 0.7% or 2.1% on a like-for-like basis. On a three-year basis, like-for-like sales were up 15.6%. Over this period, sales have grown ahead of our markets, growing by an average of 5.9% every year, versus a market growth of 4.9%. and the underlying resilience of our sales has continued into the new year. In February, total sales growth was plus 1.9%, with like-for-like sales up 0.5%, although we expect seasonal categories in March to be impacted by weather. E-commerce has been a big success for us. Sales have grown by 146% over three years, and our e-commerce penetration is now 16.3%, twice the level of 2019. Adjusted PBT was £758 million, at the top of the range we gave in November. This is nearly 40% ahead of the 2019 level. And during the year, we also exceeded our near-term scope 1 and 2 carbon reduction targets. At last, on shareholder returns, including dividends and buybacks, we returned over £580 million to shareholders during the year. We are now proposing a final dividend of 12.4 pence, which is in line with last year. We also intend to announce a new share buyback program following completion of the existing program later this year, subject to our capital allocation framework and market conditions. I will now hand over to Bernard. Thank you.

Thank you, Jerry. Good morning, everyone. And moving to slide seven and the key financials for the year. Total sales in constant currency were down 0.7% to 13.1 billion, reflecting a resilient top-line performance against strong prior-year comparatives. Like-for-like sales were down 2.1% and up 15.6% versus three years ago. We generated gross profit of 4.8 billion, with gross profit margin down 70 basis points year-on-year. This movement, which was largely UK-driven, was mainly the result of favourable banner and category weightings last year and more normalised level of promotional activity in H1. We also incurred some one-off logistics spend in H1 this year to secure and manage seasonal and buffer stock. While our H1 gross margin was down 130 basis points a year, in H2 our gross margin was flat at 36.8%. In constant currency, retail profit decreased by 19.2% to 923 million, with retail profit margin down 160 basis points to 7.1%. Adjusted PBT decreased by 20.2% to 758 million, which is 39% higher than 2019. Free cash flow was negative 40 million, absorbing a negative working capital impact for the year, a large portion of which we expect to unwind this year. And our total liquidity position remains strong at over 800 million. Our net debt, which is mainly comprised of lease debt, is just under 2.3 billion, with net leverage of 1.6 times EBITDA. Moving to slide 8 and the performance of our major geographies. All year-on-year variances are in constant currency, starting with the UK and Ireland, where like-for-like sales for the year were 6.9% lower, reflecting very strong prior-year comparatives in H1. On a three-year basis, like-for-like sales were up 15.3%, with the trend accelerating from Q3 to Q4 in both P&Q and Screwfix. Total sales decreased by 4.7% to 6.2 billion, with base growth contributing plus 2.2%, mainly from Screwfix. Of note, in H2, sales increased by 1.5%, with Screwfix growing plus 8%. Looking by banner, like-for-like sales at B&Q were down by 8.8%, with sales trends improving markedly in H2 versus H1. Three-year like-for-like sales for the year were up 15.8%. TradePoint outperformed the rest of B&Q with like-for-like sales down just 1.2% and up 31.5% on a three-year basis. TradePoint's penetration of B&Q sales increased two points to 22%. Like-for-like sales at Screwfix were down 3.4%, however, with growth returning through the year, ending with a like-for-like of plus 4.9% in Q4. Space growth contributed plus 5% for the year, for total sales growth of 1.6%. Over the last three years, B&Q, including TradePoint and Screwfix, have grown their respective market shares in the UK. UK and Ireland retail profit decreased by 24% to 603 million and retail profit margin for the year decreased 250 basis points to 9.7%. This reflects the exceptionally high sales and gross margin in H1 last year. In H2, retail profit increased 22.4% to 264 million. Operating costs in the UK and Ireland were 1.3% higher year on year. This was driven by 86 new store openings, higher technology spend, the normalization of COVID related underspend last year and operating cost inflation, including significantly higher energy cost. Increases were substantially offset by lower staff cost and cost reductions achieved as part of our strategic cost reduction program. Turning to France, where like-for-like sales were down 1.4% against a strong prior year comparative in H1, and up by 13.2% on a three-year basis. In H2, like-for-like sales increased by 0.5%. Both Castorama and Brico Depot continued to focus on strengthening their respective competitive positions in the market. improving their digital capabilities, product ranges, and overall customer propositions, all resulting in higher store and online NPS scores. Overall, sales decreased by 1.2% year-on-year. Retail profit decreased by 12% to 195 million, with a 50 basis points decrease in the retail profit margin. The gross margin rate in France decreased by 30 basis points, largely reflecting category mix impacts. Operating costs decreased by 0.6% due to lower staff costs and cost reductions achieved as part of our strategic cost reduction program. In the year, the French banners absorbed operating cost inflation, including significantly higher energy costs. Performance in Poland was strong. Like-for-like sales grew by 13.8%, with space growth contributing 2.9% for a total sales increase of 16.7%. This performance partly reflects the temporary store closures in the prior year first quarter, but the business also delivered strong market share gains during the year. Nearly all categories achieved double-digit like-for-like growth, with the standout performance in the kitchens category, where its new OEB kitchen ranges delivered over 40% like-for-like growth. Like-for-like sales were up by 19.8% on a three-year basis. Poland's growth margin rates decreased by 30 basis points, largely reflecting normalized promotional activity versus the prior year. Retail profit increased by 12.4% to 148 million, with growth in gross profit partially offset by an increase in operating costs of 16.8%. These were driven by higher staff and operating cost inflation, including higher energy costs, space growth, and new store opening costs. In Iberia, like-for-like sales increased by 1.9% and by 16.7% on a three-year basis. Retail profit of 9 million were 3 million lower than the prior year as a result of lower gross margin and a 1.2% increase in operating costs. Romania's sales increased by 1.7% to 285 million, despite the inclusion of one additional month of sales in the prior year comparative and the impact of COVID-related trading restrictions earlier in the year. On a like-for-like basis, growth was 7.8% and 38% on a three-year basis. Excluding the additional months of business included in the prior year comparative, which is there to align with Kingfisher's reporting calendar last year, the retail loss of the business increased slightly to 10 million. This represents significant progress from the 23 million loss recorded three years ago. Other consists of the consolidated results of our new businesses, Screwfix International, Need Help and Franchise Agreements. Due to these businesses being in their early investment phase, a combined retail loss of 30 million was realized, up 20 million year on year. This was largely driven by Screwfix France as the business invested to support the opening of its first stores. Our Turkish joint venture, Kostas, contributed an equity-accounted retail profit of 8 million, up from 7 million in the prior year. To slide 9, and the movement in group retail profit. In constant currency, this was down 219 million, or 19.2% for the year. Lower like-for-like sales at a constant gross margin rate contributed 106 million to this decline, all of which related to H1. The lower like-for-like gross margin rate, as already described, was also H1-driven, contributing 97 million to the overall decrease. Operating cost inflation was 153 million, largely driven by increases in pay rates, significantly higher energy costs, and the normalization of COVID-related underspend in the prior year. We were able to substantially offset this increase by flexing our staff cost, and through savings achieved as part of our strategic cost reduction program, while absorbing higher technology spend. The contribution from our new stores was 31 million before the allocation of any fixed IT and overhead cost. This was mainly driven by our new stores at Screwfix and in Poland. And finally, we spent 20 million more year on year on the development of our new businesses, primarily related to the investment in Screwfix France. So slide 10 and the summary of cash flow movements during the year. We generated an EBITDA of circa 1.5 billion in the year. The working capital outflow of 469 million was the result of an increase in inventory of 234 million and a negative movement in payables and receivables of 235 million. Over 100% of the increase in inventory was driven by inflation, with further increases resulting from higher levels of carryover seasonal items and stock to support store expansion. These were partially offset by lower stock purchases and our ongoing strategic actions to reduce inventory. The decrease in payables largely reflects higher level of inventory purchases in the prior year as we rebuilt product availability, built seasonal and buffer stock, and secured lower cost stock. Overall, we expect a large portion of this working capital outflow to unwind this year, which I will cover shortly. Capital expenditure in the year was 449 million, which at 3.4% of sales was in line with our guidance. Free cash flow was minus 40 million. As disclosed in H1, we paid 40 million euros or 34 million pounds to the French tax authorities with regard to historic tax liability. The amount was fully provided for in prior periods. Dividends of 246 million were paid, and a further 337 million was returned to shareholders via our share buyback programs. Overall, this resulted in a net decrease in cash of 654 million. Now moving to slide 11 and our current liquidity and financial position. As of 31st of January, we had over 800 million of total liquidity available, including 270 million of cash and an undrawn credit facility of 550 million. Our financial debt consists of two fixed-term loans totaling 100 million, which were taken out in H2 to top up our liquidity and help manage our working capital cycle. Net leverage was 1.6 times EBITDA at the end of the year, below our maximum threshold of two times. On slide 12, I'd like to cover how we successfully responded to the pressures of an uncertain and increasingly challenging economic backdrop last year. We delivered a gross margin that was broadly aligned with our pre-pandemic level of 37%. Over this period, we maintained a sharp focus on price, investing significantly in Screwfix and France, and managed unprecedented increase in product input costs and doubled our e-commerce sales penetration. Last year, we engaged with our suppliers and purchased stock early in order to reduce import cost pressures. We managed our retail prices effectively while maintaining a price index across all key banners, either below or close to 100 throughout the year. We also maintained a disciplined approach to promotions and clearance and achieved lower overall logistics and distribution costs. Turning to OPEX, it's important to highlight that we brought forward pay awards and support for colleagues during the year to help them manage higher cost of living. This was mainly focused on our store colleagues. And it comes as no surprise that our energy costs increased significantly year on year for an overall bill of circa 1% of our sales. Through a combination of planned and technical initiatives, we managed to reduce our overall energy consumptions by 15% year on year. Measures included installing air source heat pumps in screw-fixed doors, further rollouts of LED lighting, and introducing controls over store temperatures. As demonstrated in our retail profit bridge, we continue to deliver on our strategic cost reduction programs across the group, helping to substantially offset cost inflation. Finally, I have already mentioned that inflation was a principal driver of the increase in inventory. This masked our ongoing strategic actions to reduce inventory, which resulted in units or volume being lower year on year. Since Q1 2022, product availability has been back to pre-pandemic levels, and in H2 we started to reduce our buffer stock levels. Our stock provisioning and delisted stock rates remain below pre-pandemic levels. turning to slide 13 and the puts and takes for the year ahead. First, on cost prices. While we continue to expect input cost inflation year on year, including in H2, we are seeing some easing of the inflation rate and anticipate this to moderate further as we go through the year. Declines in several raw material prices, for example, metals and plastics, is expected to lead to an easing of product cost inflation. For container shipping from Asia, which applies to around 20% of our purchases, maritime freight prices have eased significantly. Please note that there is a delayed impact of these reductions due to the time lag between ordering and shipping of products and their subsequent sale. Our foreign exchange exposure from US dollar purchases are substantially hedged, but overall US dollar strength is anticipated to be a year-on-year headwind. I remind you that circa 20% of our COGS are purchased in US dollars. On operating costs, we aim to continue delivering cost reductions to help relieve some of the OPEX pressure we will face this year, which includes our expectation of higher staff, technology and energy costs. We are currently around 50% hedged on forecast energy consumption this year. While we have recently seen some moderation in market prices and we continue to work hard to reduce overall consumption, as of today, we still expect total energy costs to be higher year on year. In addition to our ongoing cost reduction program, we continuously plan for a wide range of different trading scenarios to ensure we can tailor our costs to reflect different demand levels. We therefore have the ability to pull tactical levels where and when appropriate. Finally, to our inventory management, we anticipate a working capital unwind as our seasonal and buffer stock continues to sell through and our supply payables normalize. As a reminder, most of our stock is neither perishable nor seasonable, and therefore we have no pressure to clear. We are working hard to further optimize our supply chain and sourcing footprint to reduce same store inventory levels and improve our stock turn. Finally, moving to slide 14 and our outlook for the year ahead. Further technical guidance can be found in the appendix on slide 41. We have seen resilient underlying sales trends in the new financial year. Total sales in February were up 1.9%, with like-for-like sales up 0.5%, largely reflecting a good performance at both B&Q and Screwfix. Group big ticket sales, which is kitchen, bathroom and storage, are broadly flat year on year. We expect some impact in March from adverse weather conditions and a strong prior year comparative in Poland. Looking forward, you can continue to expect from us a focus on the top line and market share gains. New store openings, largely from Screwfix and Castorama Poland, are expected to contribute circa 1.5% to total sales growth. We also remain committed to actively managing our costs, which will help offset against higher staff, technology and energy costs year on year. Additionally, we expect P&L investments of circa 40 million in new businesses, 10 million higher year on year to drive further store rollouts and brand building of Screwfix France. Even after these additional investments, we are comfortable with the current consensus for full year adjusted PBT, which is 633 million. We also expect to generate more than 500 million of free cash flow this year, supported by the unwind of prior year working capital outflows. Given our confidence in our cash generation, our intention is to announce a new share buyback program following completion of the current program this year, subject to market conditions and our capital allocation framework that Thierry will discuss shortly. And with that, let me indeed now hand back to Thierry.

Thank you, Bernard. So moving on to an update on our operations and strategy, Kingfisher has continued to adapt and transform over the last three years. We have achieved a lot, and as a result, we are a stronger business. After joining the business in late 2019, we set up into place a material shift in culture, behaviors, operations, and organizational balance. These early changes served us well when the pandemic struck a few months later. In 2020, we launched a Powered Banking Fisher strategy with a focus on transforming the business through our new priorities, including e-commerce, our own exclusive brands, ESG, tighter disciplines over costs and inventories, and optimizing our store estate. And last year, we continued to execute against these priorities, delivering further market share gains, a record number of new stores, while maintaining a strong balance sheet. On the next slide, I want to highlight a number of KPIs which reflect how much we have grown as a business. And we are extremely proud of the progress our teams have made financially and operationally. Having driven strong life-for-life and profit growth, we have returned a total of 1.1 billion pounds to shareholders in the last three years. Our customer NPS scores have improved both in stores and online across our banners, and we have increased our market share gains. At the start of these results are our 80,000 colleagues, Our internal engagement surveys show our colleagues' satisfaction now ranks us within the top 5% of retailers worldwide. We also continue to lead in the field of responsible business practices. Last year, we exceeded our near-term scope 1 and 2 carbon reduction targets by reducing emissions by 52.7% against our baseline year. Some of this progress last year was driven by short-term tactical measures to reduce energy consumption, but the underlying progress sets us on a strong path toward achieving our Scope 1 and 2 target of net zero by 2040. And through our sustainable home products, we are helping our customers make their home more efficient, while also lowering their impact on the environment. Sustainable home products now represent 47% of group sales, up 10 percentage points in three years. And all this has been delivered in a fast-changing environment, summarized on slide 18. I think you are all familiar with the many macroeconomic challenges over the last years. Kingfisher has adapted to accelerated changes in lifestyle and technology adoption, as well as a positive shift in attitude towards climate. It has been an extraordinary operating environment. This has made our industry stronger, made us a stronger business, and taught us to be more agile. Moving on to slide 19, which brings us where Kingfisher is today. Firstly, we see a resilience in our hand market demand. This is supported by low unemployment in our key markets and customers having built up savings during the pandemic. Home ownership is high across our markets and our key customer group. many of whom own their home outright. Housing transactions, while slowing down, remain above 2019 levels across our key markets. With a strong rise in activity seen in 2021 and 2022, we know that these households spend disproportionately more in home improvement in the 18 months after moving. In our most recent customer surveys, we continue to see high levels of intention to move home in 2023. And even without moving, renovating and protecting the value of homes has historically proven to be a key driver of home improvement when housing activity slows. Secondly, We benefit from structural growth drivers in our industry, which are now supported by new trends, such as working from home and energy efficiency, which I will say more about on the next slide. And finally, we are a well-balanced group with financial flexibility through our strong balance sheet. We have diversity through our banners and our geographic coverage. Our exposure to DIY and DIFM trade are split evenly, and essential repairs and maintenance categories make up the majority of our sales. Big ticket items, by contrast, only account for 15% of sales. We have proven that we are a strong and resilient business in an ever-changing and demanding environment. Now to slide 20. As with our previous presentations, we have carried out extensive consumer and trade surveys in our markets over the last few weeks. Overall sentiment remains encouraging, with many indications of consumers feeling more positive for home improvement than six months ago. We see that more working from home is now the new normal for many. And on average, we are working from home at twice the level of 2019 across Europe. And we continue to see a clear correlation of higher spend on home improvement for home workers. Energy efficiency is increasingly becoming a key reason for undertaking home improvement. More people have purchased an energy efficiency product in the last 12 months. And looking ahead, six in 10 would like to further reduce the impact of their homes on the environment. Our banners are well positioned to support customers with a growing range of energy-saving products and innovative diagnostic tools, which we have launched in the UK and France in recent months. There remains a strong desire to renovate homes, with the majority of consumers in our key markets intending to undertake home improvements this year. On the trade front, our surveys show that tradespeople remain busy, with a healthy pipeline. Over 90% of tradespeople in the UK are currently busy, with nearly 80% having more work in the pipeline at levels equivalent to 2019. Turning now to slide 21, and we continue to execute strongly against our power banking fissure priorities. Reflecting the fast-moving world in which we live, we have adapted our strategic plan to ensure data, trade, culture and agility are given more focus and to better align to our investments for growth. On this slide, you can see our refreshed strategic pillars. We are confident they will drive continued growth ahead of our markets and deliver higher levels of profit and cash generation. I will now briefly cover each in turn on the next few slides, and starting with slide 22. Our aim is to grow by building on our different formats in existing and new markets, leveraging the power of the Kingfisher Group. Over the medium term, we believe net space growth will drive an uplift in sales of circa 1.5 to 2.5 percent per annum. For B&Q, we believe there are over 50 white spaces in the UK where the banner is currently underrepresented. I will talk shortly about our compact format strategy, which B&Q is leveraging. Treadpoint is Kingfisher's fastest growing banner. We have opened 38 new Treadpoint counters in the UK and Ireland over the last three years, with a total of 189 now in operation. There is good potential to add trade points across much more of the BNQ estate. Screwfix is a UK number one trade retailer and continues to grow at pace. Last year, it opened a record 82 stores in the UK and Ireland and is on track to meet its goal of over 1,000 Screwfix stores in those countries. We expect to open up to 60 new stores this year. Scrufix has also opened its first store in France, having launched as a pure play online retailer in April 2021. While it's clearly early days for our journey in France, we are happy with the results of our first few months of operations, and we intend to open up to 25 further stores this year. We believe the business is well positioned to take share of the large trade segment estimated to be worth around 29 billion euros. Assuming the success of the format is confirmed, we believe there is potential for more than 600 stores in France over the longer term. And there is also potential to transfer the success of the Scofix model to other Kingfisher markets over time. Poland remains a huge opportunity for Castorama. There is significant white space in this country, which offers potential for all formats, in particular our medium box and compact store formats. We see scope to add up to 80 such stores over the next five years. Elsewhere, Ricodepot is well positioned to penetrate more white space in France and is testing its first ever compact store this year, a 1,000 square meter format. And in Turkey, our joint venture, Kostas, continues to expand its innovative convenience format called Kostas Fix. The business currently operates over 350 stores with significant runway for growth. While there are multiple opportunities across our markets, compact stores are a common denominator. The demand for convenience and speed is a significant retail trend across countries and across industries, and we believe this represents a key long-term growth opportunity for many of our banners. Turning to slide 23, an e-commerce. We have spoken before about leveraging our store assets to improve the speed and cost of delivery of our customers, as well as expanding customer choice. Great progress has been made with our e-commerce sales penetration of 16.3%, now over twice the level of 2019. Click and Collect accounts for 87% of all e-commerce orders. And last year, we expanded our options for Click and Collect through the rollout of lockers in Poland and continue to test these at B&Q stores. We also introduced more last-mile delivery options, including the successful rollout of our one-hour delivery service, Scufix Sprint. We are optimizing operations through a new order management tool, which we introduced in the UK last year. This enables our digital app stores to cast a wider net for the availability of products ordered online, thereby lowering the rate of abandonment of online baskets. And through optimized carrier management, we can fulfill deliveries to the customer homes at lower cost, whether from their local store or one of our app stores. More choice for our customers is also a key driver of our online e-commerce ambitions. In March last year, we successfully launched Marketplace in the UK, followed by Brico Depot, Spain and Portugal in H2. We now offer customers an additional 340,000 SKUs at B&Q, supporting our own proposition of 40,000 SKU in-store and online. Since launch, we have seen strong Marketplace GMV growth, reaching 24% of total e-commerce sales at B&Q last month. We plan to build on this success and are now preparing the rollout of Marketplaces in Poland and France. Our target is for Marketplace to reach 1 million SKU in the medium term and to scale in new markets, generating 40% of the group's e-commerce sales, excluding Screwfix, over time. Overall, with our plans for growth, ambition is to reach an e-commerce penetration for the group of 25%. Now to slide 24. And we are increasingly embedding data across our organization. And now is the right time to talk about the significant potential for us in this area. Since early 2021, we have been developing new data capabilities for our banners. With the acquisition of 20 million new identifiable customers since 2019, we have increased our personalization capabilities as well as enabling much greater customer loyalty and retention. To support this, we have put new technology and data foundations in place. We have built a center of excellence in data with expertise in AI, machine learnings, advanced analytics, and data platform engineering. This has helped drive growth and efficiencies in the business, as well as an improved customer experience. We are building talent in this area within Kingfisher by leveraging strategic partnerships where that makes sense, for example, with Google Cloud. So our forward focus is to leverage our data expertise to drive profit. And we are doing this in three ways. First, we are building a data-driven tool that will support more efficient pricing decisions and increase the effectiveness of promotional, markdown and clearance campaigns. Implementation in B&Q will begin this year, followed by rollout to our other banners. We are also building a solution to enable real-time analysis and visibility at SKU level over our entire supply chain. This will allow us to optimize our inventory levels and replenishment cycles, resulting in higher availability, reduced inventory days, shorter product in times and ultimately higher profitability. And in a new initiative for Kingfisher, we are developing new opportunities to monetize our scale through retail media, including advertising. I will cover this in more detail on the next slide. Overall, we are convinced that our ongoing investment in data will drive faster and more efficient decision making with clear opportunities to generate new sources of revenue. And turning now to slide 25 and the retail media opportunity. In 2023, global retail media revenues are estimated to be more than $120 million. This is forecast to grow up to $200 billion by 2026. Some of our retail peers are already monetizing their e-commerce channels, driving significant additional income from advertising. And Kingfisher is well positioned to unlock the potential values of this opportunity. Our banner websites already have scale, with some of the most visited shopping websites in their respective markets. Collectively, we have around 1 billion visits annually. Over time, many of our suppliers and marketplace merchants could become advertisers. We are already working with many of them on digital proposition and have onboarded 400 new merchants into our marketplaces in less than 12 months. Last month, we commenced our online advertising operations at Castorama France with our partnership with Citrusad. This is the first of many developments in this area, and over time, we see the potential for retail media revenues to reach up to 3% of our online sales. Turning now to slide 26, and our OEB ranges continue to provide our banners with differentiation, delivering innovative products at affordable prices. Our OEB ranges are on average 15% to 30% cheaper than branded equivalents, giving our customers value at the time they need it most, and they provide us with a higher gross margin on average than branded products. Our three-year like-for-like OEB sales were up 15.4%, with sales of £5.8 billion last year. OEB now represents 45% of group sales, with our top five OEBs accounting for 20% alone. All OEB categories showed growth on an annual and three-year like-for-like basis, We saw particularly strong performances for our new OEB kitchen ranges with like-for-all growth of over 50% on a three-year basis. And we have continued to expand our ranges, launching 32 new and redeveloped brands over the last two years. Looking forward, we aim to grow our OEB sales further, leveraging our strong capabilities at Kingfisher to bring more solutions to our banners and their customers. And a strong example of this are the key areas of energy and water efficiency. On slide 27, and developing our trade business, trade represents a 50 billion pounds addressable opportunity in our markets, with activity levels of trade people remaining resilient. The average trade customer spends nearly 70% more than retail customers and shops three times more frequently. The pro market is therefore a key priority for Kingfisher. At Tradepoint, three-year like-for-like sales are up 31.5%, reaching a sales penetration of 22% of BNQ. This has been achieved through Tradepoint's increasingly personalized approach to serving trade customers, including pro-dedicated products, services, and colleagues. Last year, we refreshed and expanded our trade counters in the UK and in H2 launched our first counters in Ireland. The business is targeting sales of over £1 million in the medium term from £833 million today. The success of this relaunch format alongside ScrooFix gives us full confidence in our ambitions to grow trade customer penetration across our banners outside the UK. During the year, we launched a trade center of excellence at Kingfisher, bringing together experts from across our banners to share knowledge, insights, and feedback from customers, and focusing on the six key areas you see on the right of this slide. Over time, we expect increased trade customer penetration to contribute to higher sales and profit growth across the group. And turning to slide 28 and our compact store rollout strategy, compact stores are a key enabler for the expansion plans of many of our banners, supporting market share growth, optimizing our overall store footprint, and supporting the growth of sales density and store profitability. We have made good progress on testing different concepts. Today, we have 33 compact stores in operation across our major banners, including B&Q, Screwfix, Castorama France and Poland. We are also testing a new compact format store at Brico Depot France this year. These stores, primarily on high street and small retail parks, allow us to deliver our core offer in smaller footprint. We can offer up to 12,000 SKUs in store under 2,000 square meters, which is a fantastic choice for such a small space. And of course, customers can get next day delivery of the full range. Our trials are showing very encouraging results. As we continue to learn from our tests, we are creating blueprints that can be scaled and rolled out across our markets. Moving on to slide 29, and we are committed to leading the industry in responsible business practices with four key priority areas. We have taken swift action to support colleagues in our stores and head offices, given the rising cost of living. We are becoming a more inclusive company, improving our gender balance, and progressing towards our target for women in leadership and management roles. On planet, we are passionate about tackling climate change and creating more forests than we use. I mentioned earlier the progress we are making against our near-term carbon reduction targets for Scope 1 and 2 emissions, and we are working hard to reduce Scope 3 emissions, which we will report on in Q2 within our Responsible Business Report. We are helping to make homes greener, healthier, and more affordable for our customers. Our sales of sustainable home products now represent 47% of group sales, up 10% versus three years ago. We aim to drive further sales by leveraging our OEB ranges. We are also very well placed to help our customers on energy efficiency, which I will cover on the next slide. Our targets, as announced last year, are for 60% of group sales and 70% of OEB sales from sustainable home products by the end of 2025. And finally, on communities, We're helping to fix bad housing, which remains a pressing issue. Over the last six years, we have helped 2.1 million people with the greatest housing needs, and we aim to do even more in the coming years. And turning now to slide 30 and our energy efficiency ambitions, We have spoken before about the unmet need for energy efficient housing. The problems this creates for both the environment and the finances of our customers is significant. We are continuing our work to highlight and address these issues. Demand for energy efficient products remain high. Energy and water savings products comprised 11% of group sales in 2022, with sales increasing by 23% over three years. And we are well positioned to meet demand with over 11,500 energy efficiency products. Last year, we launched innovative diagnostic solutions at B&Q, Castorama France, and Brico Dépôt France. These bespoke solutions help customers create personalized energy action plans for their homes, including access to products and services. Take-up so far has been strong. And we have established partnership to address installation of more efficient heating solutions, including heat pump, solar panels, and roof and wall insulation. We know this topic is more important than ever, and we now have the product and services to help customers save energy and money. And this is not a short-term trend. Energy efficiency is here to stay. We also know customers are increasingly focused on saving or collecting water, especially in light of more recent pressures of water shortages in part of Europe. So we'll continue to expand our product range to support both energy and water efficiency in the years to come, supported by our OEB capabilities. Turning to slide 31. We are building a business that has strong human values and is adaptable to the needs of the future. We are embedding a collaborative and curious mindset across Kingfisher. Part of this is encouraging more of a test and learn culture of experimentation and pace with an agile mindset and building trust between teams. We also need to be more agile and efficient with our use of technology. We want to improve the speed and cost of deploying new technologies around the group over the last three years. we have been gradually adapting our organizational model to one that is product-led to help us to be more flexible in our approach. In addition, we are increasing talent and capabilities in key areas of the business that can drive innovation, including technology, data, and trade. And finally, building a linear business, as Bernard set out earlier, challenging our cost base is a permanent focus. We have set multi-year cost reduction programs that are helping offset inflationary pressures while also ensuring we are constantly improving productivity. We are also reviewing our inventory and supply chain management to extract further value from our scale. And turning now to slide 32, and now we are driving these strategic priorities forward through the Power Banking Fisher model. Each of our banners has a clear positioning. We serve trade customers through Screwfix and TradePoint. We have discount banners in Brico-Depot France and Iberia. And we serve more general DIY needs through B&Q, Castorama France and Poland, Brico-Depot Romania and Kostas. This gives us strength, resilience and diversity in an uncertain world. We have set up a balanced banner group operating model so that technology and commercial solutions can be developed quickly and efficiently. At the center, the group provides skills and resources that create competitive advantages for our banners to leverage. This means technology and digital capabilities and group support through data-driven tools. It means differentiation that come from the product development in our group-wide own exclusive brands. It also means international support, and Yescofix is a good example, and scale in the form of sourcing, buying, supply chain management, and ESG. In summary, Powered by Kingfisher is about combining the benefit of our distinct retail banners with the scale, strengths, and expertise of Kingfisher. And moving to slide 33, you can see how this structure supports our banner to achieve their full potential. We are prioritizing capital allocation with a disciplined approach to our clearest growth opportunities. And you see here the priority given to the expansion of Scofix and the start-up program in Kastorama, Poland. In France, Ricodepot margin is above the group average and has clear leadership in the discount space. Castorama France is fully focused on improving its profitability, building on the work done around its range improvements, e-commerce proposition, and logistic optimization. And as you can see along the bottom of the slide, Powered by Kingfisher is about providing the banners with group powers, scale benefits, where that makes sense to accelerate their strategy for growth and profitability. Moving to our capital allocation priorities on slide 34, as is clear from this presentation, our priorities is to reinvest in the business when they are compelling and profitable growth opportunities. Our target growth capex is unchanged at 3 to 3.5 percent of sales per year to drive our gaining growth. For M&A, we would only consider bolt-on opportunities that accelerate our strategy. On dividends, our aim is to grow progressively over time. Our target dividend cover range remains at 2.25 to 2.75 times based on adjusted earnings per share. and we have a clear track record of returning surplus capital to shareholders. Our current £300 million share buyback is around two thirds complete, and we intend to announce a new program following completion of the current buyback later this year, subject to our allocation framework and markets conditions. Bernard discussed earlier our guidance for this year, which takes into account the uncertain macro and consumer environment, as well as cost headwinds, some of which will ease as time goes on. But here on slide 35, we look beyond 2023. We have updated our medium-term financial priorities to reflect the confidence we have in our growth and cash generation opportunities. First, it is clear that we operate in attractive markets with positive and supportive long-term trends, and we are confident we'll deliver sales growth ahead of these markets. That growth would be driven by like-for-like sales, supported by our areas of strategic focus, e-commerce, marketplace, OEB, and our continued penetration into trade segment of the market, but it will also be driven by more stores, which we believe can drive an uplift to sales of circa 1.5 to 2.5% per annum over the medium term. Secondly, we grow our adjusted PBT faster than we grow sales. And this is supported by scale benefits and higher margin initiatives, such as marketplace and retail media, as well as from operating cost leverage and our cost reduction programs. And we'll also generate strong free cash flows, which in turn will drive investment and shoulder returns. Next year, financial year 2024-2025, we aim to generate free cash flow of between 400 to 500 million pounds, which is a step up from underlying cash generation this year. And beyond 2024, we aim to deliver in excess of 500 million pounds of free cash flow per annum. supported by profit growth and inventory self-help measures. Underlying our confidence is our intention to announce a new share buyback program this year after the current program is completed. In summary, the compelling strategic drivers of the business provide an opportunity to deliver attractive top line and earning growth, as well as our continued focus on shareholder returns. So, summarizing now on slide 36, there's been another year of solid execution. This shows in the bottom line with our profit performance in line with the top end of our guidance. Our sales performance is ahead of the market and substantially ahead of where we were three years ago. As you have seen, we are pursuing multiple growth opportunities at pace, in Scofix, in Poland, in e-commerce, data, and many more. And there are multiple supportive trends underpinning our industry. Survey data from our core customer demographics and from our trade customers suggest there is a resilience to our business. That resilience continues to show through in our underlying sales trend in current trading, We have a firm grip on the business. We remain focused on delivering on value for our customers and maintaining strong price indices in our key market. Cost inflation pressures are being managed effectively. And we continue to see good product availability and a firm control on our inventories. So looking at the year ahead, we are comfortable with current consensus on adjusted PBT and confident in delivering over £500 million of free cash flow this year. We believe the business is in great shape and we are well placed over the medium term to consistently deliver growth, cash and shareholder returns.

thank you all for listening this morning bernard and i would now be happy to answer your question in in a few minutes thank you much over to you thank you so we're going to take two or three minutes now for a quick break uh before q and a's and just ask all of you to stay in the auditorium for now thank you All right, thank you. So we're going to start the questions from the floor before we go to the telephone line. So first question, we're going to go with Richard, please.

Thank you. Morning, everybody. That was quite intrusive. I'll kick off. So a couple from me, please. Can I start with the free cash flow guidance? I think you said you're looking to generate about £500 million a year in the medium term. I guess if we average what you achieved last year and what you're looking to achieve this year, it's more in the 200 to 300 range, so that's quite a meaningful step up. So does that imply that you think you can run the business I guess, structurally with a lower level of inventory and lower capital intensity going forward. And then the other question I had was on the other businesses, P&L investment. How do you see the sort of shape of that panning out medium term? I appreciate there's a debate about how fast you go in with Screwfix France and so on. But I mean, when do you see the sort of break-even point there? Or how many stores would you have in France, I guess, before that could occur? Thanks.

Yeah, thank you, Richard. I start, and then you, Steve, and Bernard will. We'll give you a few comments on free cash flow. Maybe first on inventory and on screw fix. I think what you see this year is we have a bit more seasonal stock. You know, remember we discussed that in September. We have decided to keep this stock because, in fact, the purchasing price is pretty good versus what you can find today. So, plus we are really comfortable overall with the level of our inventory. You know, as Bernard said, all the inventory increases due to inflation, and we are seeing volume down on inventory. And I think, to be honest, I think we're in a pretty good place versus many of our peers. So first, we have more inventory because of seasonal products. We have... During COVID adjusted a lot of parameters of our supply chain to increase the security. So since last year, we have started to adjust all those parameters. So we'll gradually come through in H2 and as well next year. And we have as well a lot of structural actions that we have not really been able to roll out in the past years due to COVID on supply chain efficiency. We are building a tool that gives you the real-time inventory value from a factory in China to a restore in the UK, and that is bringing a lot of efficiency. On P&L investment, In fact, the capex for scuffing stores are pretty small. But when you open a new store, you have some loss. So it depends if you want to go fast, how much faster you want to go. If you open a lot of stores, you'll have more losses at the beginning, but a quicker breakeven. And if you have slightly slower rollout, you have less loss but a longer break even. So we are still measuring all that. We have our plan A. But we'll see how the first store sales density is coming out in the coming weeks. And then we can adjust how far we want to go. But overall, we expect a loss for a few years in France with ScrooFix because we want to open a lot of stores.

Yes, maybe a little bit on the inventory dynamic. If you look last year, actually our worker capital was also negative, but it had $359 million of negative inventory, but a positive creditor position, $144 million. If you look at this year, because we slowed down some of the purchases, and at some point you've got to pay what you ordered previously, but you're not ordering more, the payables was a negative. And on top of that, as Thierry just described, we had some additional inventory investments, mainly through inflation. But those two levels, I would say, are not the normal rate. So if you look at the year to come, 23, 24, We expect the payables position to be much more normalized, and we expect the inventory position to improve as we sell through inventory, that seasonal and a little bit of the buffer stock that we had, and obviously are working hard to reduce the overall inventory levels. Then if you look into 24, 25, the working capital this year, bigger inflow normalizes. On an underlying basis, we still think we'll be doing better. And that's going to be supported by, obviously, our ambitions to grow profit, not only next year, but also the years thereafter. while at the same time continuously trying to reduce or improve our stock turn and reduce our stock days. So it'll be in that combination that we're going to work to meet those free cash flow targets.

Thank you. Good morning. It's Warwick Okinds from BNP Paribas XM. You've spoken quite a lot about strategic initiatives, but not so much about the margin opportunity in France. Could you please talk a little bit more about France? Are all of your organisational and sort of structural initiatives, IT for example, are they largely complete now? And what sort of like-for-like growth would you need to see margin leverage there? Thank you for this question.

Again, when you look at France, you should always remind that there are two different components. You have seen Brico is in a good shape. I think for me, Brico question is more around how we make 1,000 square meters more successful. We can open more Brico depot. How we can continuously improve our price positioning through cost reduction. Now moving to Casto, you know, in retail, you never win the profit war without the top line. So first is around sales density. You know, I say that each time. Yes, there are some clear pockets of cost, you know, on Casto where we believe on head office, on part of the business, we can do better. You have seen that we improve our supply chain efficiency. We reduce the number of square meter in France by 27% the past three years. But first thing is top line. And the top line is driven by the group strategy. You know, OEB, we have improved the ranges. It's done. You know, I said last year that we fix that. We are happy with overall the range. that you will be supported by the full group strategy, OEB, a better e-commerce, marketplace, retail media. France is the first country, Castor is the first country to start retail media already the past weeks, you know, with Citrusad. So markdown, all those group initiatives will flow to the Castorama France action plan.

Hey, it's Adam Cochrane at Deutsche Bank here. I've got one question on inflation and then one on capital allocation. In terms of inflation, is it fair to assume that if your year-end stock is up 12 but down in units, that 12% plus is the level of price inflation that you're pushing through to the consumer last year? And then as we look at next year, is there a benefit because you've bought your product these points you're saying, at a cheaper rate, but the market prices are going up, can you take some margin or do you, because you bought it cheaper, just pass that through to the consumer to improve your relative price position maybe compared to other retailers? And then on the cost, on that inflation impact or volume impact, how does that impact your cost profile or how did it impact it last year and is it going to be another benefit for the year ahead? On capital allocation, you said that you're going to reduce relative capital allocation to Castorama, but there's an 80 store growth opening plan. How do I reconcile sort of relative reduction in capital allocation, but at the same time having quite a significant store expansion plan?

Thanks. Just maybe a small clarification on the second point, and Bernard will – when we say 80 new stores is Castorama in Poland. So what you see in the chart, we want to be very disciplined for Castorama in France because we want to focus Castorama France on profit. But in Poland, we are very happy with the profit. And this is in Poland where we believe there are more stores to open. So moving to your inflation and volume questions, you know, I never answer on overall volume and inflation for Kingfisher because it's very, very different by banner and by category. You have different profiles, Skoufix versus Poland, some categories you say building material are relatively elastic because you have a lot of trade, people know the prices. Paint is relatively elastic. But there are many categories in our business, even if you take screws or kitchen, where the elasticity is not obvious at all. So that's why I don't want to give too much granularity of that. And then to make it even more complex, the inflation and inventory can be slightly different from the inflation to your sales price because your mix of your sales price, the mix of your inventory can be different. So then I leave you to your own assumption on this one. On seasonal, yes, we might have some opportunities. But overall, I think, you know, we will see H1 broadly with inflation pretty consistent with 2022. and then H2 with inflation but at a lower level. So we really believe we'll see the freight impact, the raw material impact, mainly in H2 and next year, while as Bernard said, we have a headwind on the dollar hedging on our contract. Basically that's how we see the margin in 2023. There is no specific point. We have overall a normalized promotional level. We see competitors' behavior on prices fairly rational. We don't have stock to clear. So I would say I don't expect very specific things on the gross margin for 23 so far.

Bernard, go ahead. Maybe to add a couple of things on the inventory. If you look at same store inventory, that's plus 8%, and I think in the 12% there's some currency movements you need to abstract for. And within that number, as we also highlighted, we did increase the seasonal stock that we want to sell through, and obviously we're expanding our stores, which also adds to the stock build. So just that we're clear on the moving pieces. Then in terms of the inflation year over year, I think some of the effects that we've seen this year will continue. So obviously we've spoken about the pay rate increases that we're giving to our colleagues, energy cost increase, and we expect to see a little bit of an increase in this year, even though we're taking quite a few measures to reduce consumption. As you saw, we reduced it by 15%. but we expect still to see a little bit of a nudge up. And then obviously we're going to continue some of the technology investments, and we're going to continue to invest in the business, especially in screw-fix grants, so the new business investments will be about $10 million higher. Now, obviously, next to that, and I think we could be quite happy, is we also have cost reduction programs. And if you saw in the past year, while we had a big inflation amount, we also had a fairly sizable amount of cost reduction measures. And obviously, we'll continue taking those to try to offset the inflationary pressures.

Thanks. It's Anne Critchlow from SG. I've got two questions, please. So first of all, on the compact stores, it feels like many years that they've been trialed at Kingfisher, also by previous managements. I just wondered whether there's anything holding you back from pushing for a rollout sooner. And also a quick update on the Screwfix ultra-compact format, please. And then on Marketplace, what percentage of sales does Marketplace now represent at B&Q? And do you have any kind of view where it could get to in the medium term? Thank you.

So on formats, just to answer, when you know how to do big boxes or medium box, to learn how to do convenience store is a journey. I've seen that in my previous life. In a convenience store, you need to be obsessed by SKU density. And that's a technique you have to learn. Shelves are different. Supply chain can't be the same. You can't deliver in big quantity in a convenience store. Otherwise, after two weeks, they are overwhelmed by stock. And then the fine-tuning on ranges always takes time. I've never seen a new concept in retail being successful in a few months time. So what I see today is fairly normal. And we clearly see the green shoots, you know, the area when clearly that's something to push. And the area, you know, we have decided, and just to say, we have decided to close our eight B&Q into ASDA. And I think it's a proof that we are agile. You know, we are testing. We are not happy. We stop. But it will push other tests. So I think we are getting more and more learning, and we are closer to a blueprint, especially for B&Q. B&Q, we are probably the closer to a clear blueprint for rollout. So I know I'm very happy with the timing. We really started testing in 2020. So before there was one store, we closed it. So now we have 33 stores. It's the right thing to do. The Scrufix Compact XSR as well, very encouraging. And we have a plan for 1,000 stores, standard Scrufix stores. Clearly, it could be the next generation of Scrufix stores if we are successful. Marketplace. A hell of a plan at BNQ. February, 24% of BNQ online sales were made by Marketplace. I'm not sure we have ever guided clearly on... I think we are giving BNQ online sales sometimes. You can make your assumption on the... penetration of marketplace. But clearly, we are very happy with the results. We have set the tech rates between 10 and 15. We are happy with these two. And therefore, we are planning to scale up the BNQ marketplace fast and to start new countries. You're welcome.

Interesting. SR, if I pronounce it correctly, is we've got 11 going. We opened six, and it's a combination of things in urban areas where we can't find the retail space or in small towns where basically it's a more compact footprint, lower cost, but you can still access it. So we'll test further, but we've got a good testing ground as of yet.

George Ospolokitis from Numis. First one is just on capital returns. I guess just wanted to thought the balance between the progressive dividend versus the dividend, the cover range for next year, given if consensus earnings come down and slightly higher tax rates, I think you'd drop out of that cover range. And so how are you prioritising those two? And then just a couple of clarifications on the cash flow for next year. First one is to the four, six, nine million working capital in outflow this year. Can you be a bit more specific on how much of that inflows? Is it half, kind of 250-ish, 300? I don't know if you can be a little bit more specific. I appreciate there's always some uncertainty. And then just the cash rent bill came in quite a bit lower for this year. At kind of 454, it had been at 470, 480, despite the number of stores increasing. So just wanting to understand, is that more of a steady state level? Was there any kind of temporary... deferrals that we should be aware of? What is kind of the underlying rent bill going forwards?

No, so on the dividends, you've seen despite a lower profit this year compared to the prior year, we're maintaining the dividend at 1240. And I think that's the philosophy we have for our dividend to have a sustainable level and then when we can to try to grow. So let's see where the year pans out in terms of its overall profitability. Then in terms of cash flow, 469 indeed was the outflow this year. That is going to normalize. There's going to be an inflow, but we're not guiding to any specific number beyond the more than 500 overall free cash flow, which obviously will include a working capital inflow. But at the same time, also more than 100 million lower profit as we've guided in expectation for this year. And it continued investment at the same level of Capex at around 450. And then in the rentals, obviously, we're successful in a number of the re-gears that we do and in managing our rental base. And if you look at many of the, obviously, the numbers of the rentals they do, there's a lot of screw-fix stores which are relatively smaller. So obviously, as we expand the base, you should expect some increase, but there's no specific one-off in this year.

Thank you. Amigala from Citi. Just a few from me. The first one was on fixed cost reductions that you've taken last year. Can you give us some color, the scale of the fixed cost reductions, where are they coming from? The second one really is a couple of clarifications on ScrewFix France. Do you have a view of what the mature ScrewFix store looks like in terms of scale? Is it quite similar to a UK store? And the sort of the years to maturity that we should think about in terms of that network? And the third one really is more a medium-term outlook. You've given us a view that you're quite balanced in your exposure between DIY and Do It For Me, but you've also talked about the strength in TradePoint. Over the medium term, do you see further investments really going towards that pro side of the business? And in that context, how sustainable is your free cash flow guidance? Because obviously the sort of Do It For Me probably needs more credit exposure to an extent.

So in terms of the cost reduction, so in the past year, 126 million, there are really a couple of components. One is staff flex, and you'll see their overall staff numbers for the company have gone down as we've flexed away from the heights of the pandemic. which I think is proof to the agility that we have in our model. And that's a combination of staff numbers and some of the incentive plans that adjust to a different performance condition. And the other part is all the continuous cost improvement programs that we have. which go from anywhere from our stores, introducing anything from self-checkouts, different operating models, improving shrinkage, to GNFR, to our supply chain, reduction of space, managing contracts to our property where we do a lot of re-gears. So it's in that combination. that we were able to offset part of the inflationary pressure in the year. And going forward, obviously, we can be agile for different trading conditions, but in addition, we'll continue to pursue the structural cost reduction programs, which are now part and parcel of what we do.

To go ahead and to fix France, the shape of the store is pretty similar to the UK and the business model. We feel the business model is a key competitive advantage. We say sometime in the UK, you do the click and collect in one minute. So that's true. So that's very, very critical ways of working. So if you enter in a Screwfix France store, you say, well, that's exactly the same. Now, the range is probably half different. And we are relying a lot on our private label. But there are specificity. If you want to have a knitting system in France or electricals in France, it's different plugs, different system. So probably half of the range is different. And that's why we have been leveraging our existing operation in France. Because we know suppliers. We know the range. We have been able to bring very quickly the right local range to the scruffy stores. And we have a DC now close to Paris to deliver online across France and to all our scruffy stores. Maturity, so far we would expect similar to the UK. We know where we are on capex, you know, on pricing, on lease. The key component now is how fast sales per That's, you know, if you ask me what is, we are really happy with everything that is going on in France, you know, the online traffic and PS, pricing, supply chain. The thing you don't know is how fast the sales per store will grow in the coming months. And depending on that, we'll decide the ultimate profile of growth and expansion. Trade points, you know, we are really learning from trade points and as well from other peers. You know, we know Home Depot, Lowe's, they are really a very consistent strategy over years on trade. It's a relatively low capex, you know, it's existing still, so it's not high capex. And we are now building plans in all our big boxes to speed up our trade penetration. And I think it's a multi-year journey. TradePoint has a target of £1 billion, but all across the group we have additional local targets, obviously. Then specifically on credit, and I'm happy for Bernard to comment, you know, TradePoint today is not heavily relying on credit, so it's not a big topic for us at the moment when we think about trade. Yes, it's a service, but it's not a big topic for cash.

Yes, maybe just that. So we have Trade UK, where we do provide credit for our customers in TradePoint and at Screwfix, where they've joined the program. It's mostly shorter-term credit, just to see them over the jobs that they do. That is unbalanced, but obviously we've got many other products, credit products, which are off-balance, and obviously we work with our... fellow colleague banks, some of which are here, and partner banks to provide credit. And should that be a bigger need, I'm sure we will introduce some attractive arrangements.

All right. Thanks, everyone. We're going to check.

Sorry, Simon, do you want to? On Marketplace, we're a year in. Can you just talk through your kind of learnings to date from it? I mean, if we look at other examples of Marketplace, it seems to be one of these areas where it's very easy to build a sales base. It's much harder to for that aid to trickle down in terms of profit contribution, but also to keep standards up in terms of the kind of coherence of the retail offer and the presentation of the product, et cetera. So I'm just wondering what your experience to date has been and how soon you think you can introduce that to click and collect in store.

Thank you. That's a great question. I think overall, we... Our learning is that the choice is creating traffic in short. So we have decided to scale up very quickly. If you compare us to other peers, marketplaces, to build 340,000 additional SKUs in 10 months' time, it's good. You can talk to Miracle, too. So that's the key learning. So we are working hard to continue to build on that. You are right to say there is an offer consistency, and we are looking at that very seriously. But I tell you how we are doing things. If you think about wallpaper, that's typical DIY story, you never had enough wallpaper design. So if you can increase by 5,000, 10,000 additional design online, that's only a benefit, including to your own OEB. lighting, you know, you want to buy a desk lamp, there is not enough offer, never enough offer in the store. That's the perfect category online. So that's something we are looking at because we don't want, you could easily go to So we are looking at that. But up to now, we are very happy about all of this. The take rates, we always said between 10 and 15. We are very happy with the results so far. And that's before we could even start to add additional services on monetization. We don't speak retail media. You can sell more data, more services, fulfillment center, blah, blah, blah. So we have this journey in mind, step by step. But up to now, we are happy with the results. Costs are fairly limited because we already have a lot of traffic. So we don't need to pay a lot to Google. Our IT investments are already made. We are working with Miracle. That is a kind of SaaS system or fee system. So pretty happy with the profit. And pick and collect, it's an excellent question. We really believe in all what we are doing online that having a store is a benefit. So you can already return everything to a store today. The level of return is in line or below even our normal operation. But we are working hard in the coming months. Can't even give you a date today, but we are working hard to be able to provide to customer click and collect. So you order a marketplace, you can have a click and collect in a store. So that's the next step because we really want to keep stores and online operation really close together.

Yeah, Tony Sherratt, Pamela Gordon, a couple of quick questions. French online business obviously doubled since pre-COVID, but it's still quite a low penetration. I wondered if you were sort of happy with that or whether you had any sort of view that it could get up to double digits, excluding marketplace, what you'd need to do to drive it more? And the second one is, I note your B&Q rent reviews are only yielding you a 10% rent reduction now. Do you feel you've got to the end of the sort of material rent reductions on review in the UK and that that's sort of, you know, we're sort of rebased now effectively? That's it. Thank you for your question.

I think when you look at the French online penetration, they are indeed lower than the UK. What you say is perfectly true. First, the French market itself is less mature. So you have clearly a difference for everyone in France. The online penetration is, on average, lower than in the UK. Two, I think B&Q had a better technology for years. We rolled out our group technology to Castorama two years ago. There are even some components we just finished one year ago. They don't have a marketplace yet in France. So that would come. So clearly, the technology is we are more advanced at B&Q than in France. It should come. And at the end is the conversion rate, you know, is traffic and conversion. And the conversion at B&Q is higher than in France. So that's clearly the area where, and that's a lot of detail, is the speed. For example, the website speed had been multiplied by three or four in France the past month because we were too slow. Our website was not good enough. The visibility, real-time visibility of inventory was not precise enough. In France, we have corrected that. So we have a clear plan to drive this online penetration without marketplace to double digits. I am with you.

on range reviews at bnq i'm not sure i i fully understand the the question so please uh if you rent reduction so the we didn't do range reduction uh no no it's the rentals the lease the lease uh previous renegotiation so already today i mean it's it's a mix of some situations where actually the rents do go up because it's a very you know sought after locations and their competitors etc so But then there are many opportunities that we still have to do a good deal, both for us in terms of a lower rent by extending and renewing the rent. And we think that that balance will continue. I mean, we've got an ongoing portfolio of rents that come up for renegotiation, and we'll grab those opportunities. So I'm not calling a hard stop. It should continue, yeah.

Thank you. We're going to check in with Christoph, the call operator, for any questions over the phones. So, Christoph, over to you.

Thank you. We will now bring in questions from the phone lines. To ask a question on the phone lines, please signal by pressing star 1 on your telephone keypad. We will pause for a moment to assemble the queue. And our next question is coming from Georgina Johanan from JP Morgan. Georgina, please go ahead.

Hi, thanks for taking my questions. I've got three, please. The first one, sorry if I missed it in the details, but just if you could clarify, are you expecting to push more price increase through to the consumer market? this year, or should we sort of assume broadly stable pricing? The second one was just in terms of your modelling assumptions where you're comfortable with PBT consensus. I mean, is it fair to assume that you're kind of broadly comfortable with that group-like consensus of down low single digit, or do you have quite a different shape in mind to what's being modelled at the moment? And then finally, and again, sorry if I've missed this in some of the details, but I think Poland came in a fair bit weaker for both the quarter and on profit than most of us were expecting. Just to check if there's anything sort of specifically of a one-off nature in there, or if instead when we're coming to think about fiscal 24, I mean, should we be expecting that business to go down? quite materially backwards year on year, albeit on what was understandably a somewhat exceptional year in terms of circumstances for that business. Thank you.

Thank you, Georgina. So let me answer on the first and third, and Bernard will come back on the... question on the profit. First, we see H1 on purchasing price. We see H1 broadly in line with what you have seen in 2022. And H2 clearly with inflation, but at a lower level. Then again, we are Our first priority for us is to keep our strong price index. Again, we are very happy today with the price index across the group in every banner. And that's the first priority. So, you know, I would not guide or answer specifically on... price to customer because my first answer would be we want to keep strong, very strong price positioning while we would continue to see COGS purchase prices increase in H1 and in H2 at a lower level. Poland, you are right to say that Q4 was worse than the Q1 to Q3. And let's say the start of the year is as well more difficult in Poland. And it's not due to us. In short, we are clearly continuing to gain market share, including February. We are... clearly above the market in February too. But the market has deteriorated in Poland during Q4. Inflation is above 17% in this country. The mood sentiment is really around cost of living still at the moment. with a lot of discussion around energy, et cetera. This is as well an election year in Poland, so all the components we have seen during Q4 and earlier this year were not very good. Why? We are clearly above the market. When I look at the macroeconomy, but it's not for me to comment, I start to see slightly better KPIs for the Polish economy arriving. So we hope, let's say, we'll see a better trend in the future. But again, with a very strong position of Kastorama Poland, and we continue to strongly gain market shares.

Yes, Georgina. And then on the guidance for the year, as said, comfortable with 633, which is the compiled consensus until now. We haven't guided on like for like. I think probably best to say that we basically plan for different trading scenarios, and depending on those trading scenarios, we can adapt our cost position. In terms of the things that we see, sales in February, as you've seen, the underlying sales are resilient. Seen a little bit, some weakness in March. In terms of COGS, Thierry just discussed the easing of inflation, and we're comfortable that we'll be able to manage that effectively as we've had in the prior years. And then on operating costs, yes, there is inflation, as we said, in pay rates, in energy, a little bit more on technology and additional investments in new business, but looking to, again, as we did this year, to substantially offset those by cost reduction measures.

Thank you very much.

You're welcome.

Thank you. There are no further questions on the conference line. I will now hand back over to the room.

Thanks, Christoph. Quick check, any more questions from the floor here? No, I think we're done. Thierry, over to you for closing remarks.

Thank you, everyone. It's great to be able to see you and to answer your question. And you've seen we have, I think, a stronger business in a fairly resilient environment. We are committed on medium-term new priorities. And we have many opportunities for growth. And I hope it makes Kingfisher an attractive investment. So we are fully focused on managing 23 and pushing our strategic priorities. So thank you again and talk to you very soon. Thank you very much.