Interim Results - Part 1

Kingfisher PLC
14 September 2006

EMBARGOED UNTIL 0700 HOURS

Thursday 14 September 2006



                                 Kingfisher plc

              Interim results for the 26 weeks ended 29 July 2006



Group Financial Highlights


                                                       2006/07           2005/06       Change       Constant Currency
                                                                        (restated)

Retail sales                                          £4,349.1m          £4,079.4m      6.6%               6.0%

Retail profit (1)                                       £231.5m            £288.0m     (19.6)%           (20.0)%

LFL sales                                                (0.5)%             (3.4)%

Adjusted pre-tax profit (2)                             £178.5m            £252.5m     (29.3)%

Adjusted post-tax profit (2)                            £116.9m            £166.2m     (29.7)%

Adjusted basic EPS (2)                                     5.1p               7.1p     (28.2)%

Pre-tax profit                                          £223.1m            £255.2m     (12.6)%

Post-tax profit (3)                                     £168.5m            £168.5m        -

Basic EPS                                                  7.2p               7.2p        -

Interim dividend                                          3.85p              3.85p        -

Net debt                                              £1,153.7m (£1,355.2m as at 28 January 2006)



First Half Highlights

•   Group sales up 6%, up 8% in the second quarter;
•   Retail profit down 20% in the first half, flat in the second quarter;
•   Property disposal of £210 million, exceptional profit of £42 million;
•   Net debt £1.2 billion;
•   Interim dividend maintained.


Operating Highlights

•   UK home improvement market continues to be tough;
•   Encouraging signs of progress on development initiatives at B&Q;
•   Sales outside the UK up 16%, underlying retail profit(4) up 9%.



(1) Retail profit is stated before central costs, exceptional items, acquisition
intangibles amortisation and share of joint venture and associate interest and
tax.

(2) Adjusted measures are before exceptional items, financing fair value
remeasurements and amortisation of acquisition intangibles. A reconciliation is
provided in the Group Financial Review.

(3) Profit for the period attributable to equity shareholders.

(4) Underlying retail profit is stated before the costs from SAP implementation
at Brico Depot, the transfer of Castorama France stores to Brico Depot and OBI
losses in China.



Gerry Murphy, Group Chief Executive, said:

'The continuing weakness of the UK home improvement market has again impacted B&
Q's overall sales and margin performance. However, management's action programme
is now showing encouraging signs of progress.

'Outside the UK, Kingfisher's sales were strongly ahead, reflecting good
like-for-like sales and continuing expansion with 19 new stores opened in seven
countries in Europe and Asia, including our first two stores in Russia.
Kingfisher now operates 339 stores outside the UK, delivering half of total
sales.

'Although there are signs of stabilisation in the UK, we expect our major
markets here and in France to remain challenging for the balance of the year.
Overall, we expect Kingfisher to make progress in the second half, with B&Q UK
returning to profit growth.'


FIRST HALF PROGRESS

During the period, progress was made on Kingfisher's strategic priorities:

•  Building on strong leadership positions in the UK and France;

There were early and encouraging signs of progress from key strategic
initiatives at B&Q, including the development of a new Warehouse store format
for implementation in all 114 larger stores and improvement of in-store service
and product ranges. In France, Kingfisher delivered good sales growth in a more
competitive market despite the impact of transferring three Castorama stores to
Brico Depot.


•  Expanding proven growth businesses;

In Poland, Italy and China, 6% new retail space was added during the first half.
In Poland and Italy, retail profits grew by 26% and the conversion of the OBI
stores in China was completed ahead of schedule. In the UK, Screwfix Direct
Trade Counters have performed well and the network will double to 37 branches in
the second half. In total, these businesses, along with Taiwan, represent 14% of
Kingfisher's invested capital. In aggregate, they are expected to be cash
generative in the current financial year, after expansion capital expenditure.


•  Investing in development opportunities in new markets;

The first two Castorama Russia stores opened and have been well received. In
Turkey, Kingfisher's Koctas joint venture is now the market leader. In Spain,
Brico Depot now has seven stores, with three more planned for the second half.


•  Capitalising on buying scale and international diversity;

Sourcing initiatives have offset raw material and energy cost pressures. Outside
the UK, the development of Kingfisher's own-brands progressed, with overall
sales increasing 19%, representing a 2% increase in their share of total sales.
Kingfisher companies continued to share ideas, talent and best practice in the
development of the new B&Q Warehouse format in the UK, the first Brico Depot
store in Poland and the first Castorama stores in Russia.



UK

For the 26 weeks ended 29 July 2006

                             Retail Sales £m             % Total          % LFL     Retail Profit £m            % Total
                                                          Change         Change                                  Change
                           2006/7       2005/6                                     2006/7       2005/6

UK(1)                     2,169.7      2,224.9            (2.5)%         (4.0)%      90.5        149.2          (39.3)%



(1)     UK includes B&Q in the UK, Screwfix Direct and Trade Depot.

UK Market. According to the British Retail Consortium, sales of non-food
products in the UK grew by 4.4% in the first half (+1.4% LFL). However, DIY
sales continued to be weak, although the second quarter did show some
stabilisation against weaker comparatives. Sales to the Trade sector fared
better.


B&Q

B&Q's total sales fell 4.4% to £2,005.2 million (-5.5% LFL), although sales
showed an improving trend as the period progressed with LFL sales down 8.8% in
the first quarter and down 2.3% in the second quarter. B&Q estimates that its
market share was broadly stable despite the impact in the first quarter of a
fire at a major distribution centre.

The best sales performers in the first half were kitchens, kitchen appliances
and tiles, benefiting from new ranges, better merchandising and targeted
promotions. Sales of outdoor seasonal products were weaker, particularly in the
South East which was affected by water restrictions.

Retail profit declined 42.7% to £82.6 million in the first half, reflecting
lower sales. Gross margin percentage declined 150 basis points as B&Q has yet to
annualise against the significant price roll-backs on everyday home improvement
products and the additional promotions launched in the second half of last year.
Compared with a weaker first quarter, improving sales trends, strong cost
control and reduced margin impact from stock clearance, limited the retail
profit decline in the second quarter to 11.4%.

Underlying cost inflation continued at 4% with net new space increasing costs by
a further 2%. B&Q delivered cost savings in head office and in stores which kept
overall cost growth to 1% in the first half. For the full year costs are
expected to increase by 5%, including in the second half the additional costs of
an extra week (2006/07 financial reporting is for 53 weeks versus 52 weeks in
2005/6) and the expected normalisation of staff bonus this year.


Development plan update

In June 2005, a new management team launched a comprehensive action plan to
support trading during the sharp downturn in demand, and to develop B&Q for the
future. Four key areas - price competitiveness, customer service, new products
and store development - were prioritised to ensure B&Q is the store of first
choice for customers for a greater proportion of their home improvement needs.

Price competitiveness - B&Q maintained its long-term 'Every Day Low Pricing'
strategy for everyday products. On non-everyday products, such as major kitchen
and bathroom projects, B&Q has introduced rolling, targeted promotions.
Independent customer surveys have confirmed progress in B&Q's price perception.

Customer service  - Availability of the top 100 products on-shelf now stands at
just under 98%, an improvement on the same period last year. In-store Service
Squads (store staff wholly dedicated to customer service using radio
communications to speed up service levels) were in operation in over 230 stores
by the end of the first half and independent research confirms that customers'
perception of service levels is improving.

Building on the impact of these Service Squads, an enhanced service model is
being trialled in six stores, with more staff deployed in areas where customers
need more assistance and advice. Results in these stores are encouraging and the
trial will be extended in the second half to another 28 stores.

New products - In the first half, 28 major range reviews were launched,
including key decorative and trade categories.  A similar number are planned for
the second half with new ranges progressively rolled out to more stores.

Store environment - Following a series of trials in newly built Warehouse
stores, an existing Warehouse at Wednesbury in the West Midlands was extensively
revamped to B&Q's latest format which includes more clearly defined
shop-within-shop sections, room-set displays, new customer service points around
the store and more space allocated to kitchens, bathrooms and flooring. A
further two newly built stores were opened in this format and these three now
rank in B&Q's top 10 turnover stores.

Early results from the new format stores are encouraging with double-digit
increases in average basket sizes relative to comparable stores, driven by
higher sales of core categories, such as kitchens, bathrooms, flooring, tiling
and lighting. A further eight Warehouses will be revamped into the latest format
in the second half. The capital cost of revamping each Warehouse store is
expected to be around £2.5 million, with estimated revenue pre-opening costs of
£1 million.

B&Q is targeting an eventual 25% increase in Warehouse store sales densities
from the combined benefits of store revamps, new product ranges and improved
service.

Full mini-Warehouse revamps continued to out-perform with double-digit uplifts
and a further 13 were completed, including seven less extensive, lower cost
projects.

Following the closure of 15 Supercentres in January 2006, a further Supercentre
was closed during the first half. In total this amounts to a reduction of just
over 59,000 square metres of space (3% of total space) of which nearly a third
has now been sublet.

B&Q now has 116 Warehouse stores (a net increase of two stores), 102
mini-Warehouses and 105 of the original Supercentres, with an overall net
increase of 1.8% in total retail space in the first half.

Thirteen more Supercentres will be converted into the mini-Warehouse format in
the second half. No new store openings are planned during the second half.


UK TRADE

Screwfix Direct - Sales increased 24.7% (+19.3% LFL) to £159.9 million with both
the number of active customers and the average order value increasing, boosted
by an expanded catalogue. Retail profit increased by 75.8% to £10.9 million with
a new semi-automated distribution centre reducing average fulfilment costs.

Twelve new Screwfix Direct Trade Counters were opened in the period, taking the
total to 19. Aimed at customers needing immediate availability, the Trade
Counters have proved popular and the number of branches is planned to almost
double by the end of the year. Openings are expected to continue at a similar
pace for a number of years. To support continued growth, a second distribution
centre will be commissioned next year.

Trade Depot - Focused on serving general builders and specialist trade
customers, another trial 'Trade Depot' branch was opened taking the total to
three. One more opening is planned for the second half.


FRANCE

For the 26 weeks ended 29 July 2006


Retail sales £m                             2006/7          2005/6           % Change           % Change          % LFL
                                                                           (Reported)         (Constant)         Change

France                                     1,497.0         1,381.7               8.3%               7.8%           1.4%


Retail profit £m                            2006/7          2005/6           % Change           % Change
                                                                           (Reported)         (Constant)

France                                        95.5           102.0             (6.4)%             (6.7)%



2006/07 £1 =1.4554 euro 2005/06 £1 = 1.4622 euro

All percentage increases are in constant currencies.


In France, total sales grew 7.8% (+1.4% LFL) to £1,497.0 million with average
basket value ahead of last year. Banque de France data shows that growth in
comparable DIY store sales was around 2% in the year to date. Kingfisher's
business delivered comparable stores sales growth of 2.7% (on the same basis as
Banque de France) despite a more price competitive market, disruption from store
transfers and a major systems upgrade.

Retail profit was £95.5 million, after charging approximately £8 million of
development costs for the transfer of three Castorama stores to the Brico Depot
format and the introduction of a major new IT system at Brico Depot. Excluding
these charges and additional pre-opening costs at Brico Depot, retail profit in
France would have been ahead 5%. Gross margins were flat compared to last year
with own brand sales and Group sourcing benefits offsetting price competition.

Castorama - Sales increased by 4.0% (+2.0% LFL, +4.0% on a comparable store
basis) to £854.3 million. Castorama continued to revitalise stores and develop
ranges during the first half.

New ranges of kitchens, bathrooms, flooring and air conditioning performed well,
partly offset by a weaker performance in garden products, affected by
unfavourable weather.

Following the success of last year's catalogue launches, and to support the
roll-out of new ranges, Castorama increased the distribution of its new kitchen
and bathroom catalogue in May. A new Decorative catalogue will be launched in
September.

Two new stores were opened in Toulouse and Rennes, five stores were relocated
and three stores not suitable for revamping were closed prior to conversion to
the Brico Depot format. Castorama plans to relocate a further two stores in the
second half and, as previously announced,  transfer a further three to Brico
Depot. At the half year Castorama operated 101 stores of which 31 are in the
latest format, with the new store format stores continuing to outperform.  Over
the next five years Castorama expects to open up to 15 new stores in new
locations.

Brico Depot - sales increased by 13.5% to £642.7 million (+0.6% LFL) against
strong comparatives (+8.3% LFL in H1 05/06). Seven new stores were opened taking
the total to 80.

Work continued on the implementation of a new SAP information technology
platform to ensure better availability and stock control and to improve customer
service during the next phase of Brico Depot's growth. This major project, which
affects all areas of Brico Depot's business, is proceeding to plan, but
represents a major commitment of energy and resource during 2006. Brico Depot's
first central distribution centre opened in north-west France last year, with a
second due to open in southern France by the year end.

In July, two of the three stores transferred from Castorama re-opened as Brico
Depots with the third planned early in the second half. Two further new stores
are planned for the balance of the year. During 2006/07, Brico Depot expects to
have opened 16% new space.


REST OF EUROPE

For the 26 weeks ended 29 July 2006

Retail sales £m                         2006/7          2005/6            % Change           % Change          % LFL
                                                                        (Reported)         (Constant)         Change
Rest of Europe(1) (2)                    473.4           361.5               31.0%              27.7%           9.2%


Retail profit £m                         2006/7          2005/6            % Change            % Change
                                                                         (Reported)          (Constant)
Rest of Europe(1)                          52.1            38.3               36.0%               32.6%



(1)     Rest of Europe includes Castorama Poland, Castorama Italy, Brico Depot
in Spain, Koctas in Turkey, B&Q in Ireland, Castorama Russia and Hornbach in
Germany.

(2)     Joint venture sales are not consolidated.

All percentage increases are in constant currencies.


Rest of Europe sales increased 27.7% (+9.2% LFL) to £473.4 million, and profits
increased by 32.6% to £52.1 million, despite higher development costs in Spain
and Russia of £4.8 million (H1 2005/06: £3.2 million). Eight new stores were
opened across four countries including the first two Russian stores. Operating
margins benefited from Kingfisher's direct sourcing and own-brand initiatives.


Poland

Total sales grew 22.1% (+13.1% LFL) to £230.7 million with LFL transactions and
average basket values ahead of last year. Four new Castorama stores were opened
taking the total to 34. A further new Castorama store is planned to open in the
second half.  Poland's first Brico Depot store was opened in Warsaw in June to
test the demand for a smaller, more trade-orientated store.


Italy

Total sales increased 21.5% (+5.0% LFL) to £158.5 million with both LFL
transactions and average basket values ahead of last year. However, growth
slowed in the second quarter in a weaker Italian retail market. Castorama Italy
opened one new Warehouse store and relocated one other taking the total to 27.
There are no further openings planned for the remainder of the year.

In Ireland, sales from the seven B&Q stores grew 40.7%, reflecting new store
openings in the second half of last year. No further store openings are planned
this year. Brico Depot's expansion into Spain continued with seven stores now
open and a further three due to open by the end of the year. In Russia,
Castorama now has two stores open, in St Petersburg and Samara, a large
provincial city. Early signs are encouraging and a further store is planned to
open by the year end.  Koctas in Turkey, a 50% joint venture, opened two new
stores, taking the total to nine, with one more store planned this year.
Hornbach, in which Kingfisher has a 21% economic interest, contributed £6.5
million to retail profit (£4.8 million in H1 2005/06).


ASIA

For the 26 weeks ended 29 July 2006


Retail sales £m                         2006/7          2005/6            % Change           % Change          % LFL
                                                                        (Reported)         (Constant)         Change
Asia(1) (2)                              209.0           111.3               87.8%              74.0%          11.0%


Retail profit £m                         2006/7          2005/6            % Change            % Change
                                                                         (Reported)          (Constant)
Asia(1)                                   (6.6)           (1.5)                 n/a                 n/a



(1) Asia includes B&Q China, B&Q Taiwan, and B&Q Home in South Korea.

(2) Joint venture sales are not consolidated.

All percentage increases are in constant currencies.


Asia sales grew 74.0% (+11.0% LFL) to £209.0 million. Retail losses increased to
£6.6 million from £1.5 million, largely due to the costs of converting the OBI
stores acquired in June last year. This process is now complete and, combined
with the usual seasonal pattern of trading, B&Q China is expected to return to
profitability in the second half.


China

B&Q China sales were £204.6 million, up 71.4% (+10.9% LFL) reflecting new store
openings, continuing strong consumer demand and the development of new ranges.
Retail losses of £5.1 million included £3.2 million from the OBI stores. B&Q
China completed the conversion of the OBI stores ahead of schedule and opened a
further three new stores, consolidating its position as clear market leader with
51 stores. A further eight new store openings are planned for the balance of
year.

In South Korea, where the first B&Q Home store opened last year, development
losses were £2.6 million (H1 2005/06 losses of £2.9 million). A further store is
due to open later in the year. B&Q Taiwan, a 50% joint venture, performed well
in a difficult market, limiting retail profit impact to £0.7 million. One store
was opened in the period taking the total to 21. No further new openings are
planned for the second half.



GROUP FINANCIAL REVIEW

Total reported sales grew 6.6% to £4.3 billion (2005/06: £4.1 billion), up 6.0%
on a constant currency basis.  During the first half, an additional 39 net new
stores were added, taking the store network to 684. On a like-for-like (LFL)
basis, Group sales were down by 0.5% (2005/06: - 3.4%).

Retail profit fell 19.6% to £231.5 million (2005/06: £288.0 million), down by
20.0% on a constant currency basis. The profit decline was driven by lower
LFL's, operating cost inflation and investment in developing businesses.

Central costs increased 13.8% to £18.2 million (2005/06: £16.0 million)
reflecting cost phasing in the previous year. Costs for the full year are
expected to grow in line with general inflation.

Operating profit fell by 7.3% to £249.4 million (2005/06: £269.1 million).
Operating profit benefited from income on exceptional items of £42.0 million
(2005/06: £1.9 million) relating primarily to property disposals.  The majority
of the profit on disposal of properties arose in connection with the sale and
leaseback of seven UK warehouse stores to The British Land Company in July.

Net interest costs increased by 89.2% to £26.3 million (2005/06: £13.9 million).
Last year, net interest costs were reduced by one-off interest receipts of
£5.5 million from refunds on property acquisitions not completed and tax
refunds. On an underlying basis, net interest costs increased by 35.6% primarily
due to higher average net debt.

The effective tax rate on profit before exceptional items and prior year tax
adjustments is 34.5% (2005/06: 34.1%) based on current expectations for the 2006
/07 full year, with the increase primarily due to a lower proportion of UK
generated profits and an increase in losses from developing businesses.

Profit after tax (attributable to equity shareholders) was unchanged at £168.5
million.

Adjusted basic earnings per share were down 28.2% to 5.1p (2005/06: 7.1p)
reflecting the decline in retail profit, and higher central costs and financing
charges.


Reconciliation of statutory profit to adjusted profit                                    2006          2005
                                                                                           £m            £m

Profit before tax                                                                       223.1         255.2
Exceptional items                                                                      (42.0)         (1.9)
Financing fair value remeasurements                                                     (2.7)         (0.8)
Amortisation of acquisition intangibles                                                   0.1             -
Adjusted profit before tax                                                              178.5         252.5
Income tax expense                                                                     (56.0)        (86.5)
Adjustments to income tax expense                                                       (5.6)           0.2
Adjusted profit after tax                                                               116.9         166.2
Minority interest                                                                         1.4         (0.2)
Adjusted profit after tax attributable to equity shareholders                           118.3         166.0


The interim dividend is proposed at 3.85p per share, unchanged on last year.

Net debt decreased 14.9% to £1,153.7 million (£1,355.2 million at 28 January
2006).  Lower operating cash flows were more than offset by improvements in
working capital and lower tax payments during the period.  Gross capital
expenditure on new stores, revamps and supporting infrastructure was £265.8
million (2005/06: £256.5 million), with disposal proceeds of £210.2 million
(2005/06: £17.2 million) principally due to the £198 million of proceeds
realised from sale and leaseback of seven B&Q UK warehouse stores.



Enquiries:


Ian Harding, Group Communications Director                      020 7644 1029

Nigel Cope, Head of Communications                              020 7644 1030

Sarah Gerrand, Head of Investor Relations                       020 7644 1032



Further copies of this announcement can be downloaded from www.kingfisher.com
or by application to: The Company Secretary, Kingfisher plc, 3 Sheldon Square,
London, W2 6PX.


Company Profile

Kingfisher plc is Europe's leading home improvement retail group and the third
largest in the world, with over 680 stores in 11 countries in Europe and Asia.
Its main retail brands are B&Q, Castorama, Brico Depot and Screwfix Direct.
Kingfisher also has a 21% interest in, and strategic alliance with, Hornbach,
Germany's leading DIY Warehouse retailer, with over 120 stores in Germany and
seven neighbouring countries.


DATA BY COUNTRY as at 29 July 2006

                                                 Store numbers              Selling space             Employees
                                                                             (000s sq.m.)                 (FTE)

B&Q                                                        323                      2,310                26,555
UK Trade                                                    22                         14                 1,706
Total UK                                                   345                      2,324                28,261
Castorama                                                  101                        982                13,417
Brico Depot                                                 80                        422                 5,250
Total France                                               181                      1,404                18,667
Castorama Poland                                            34                        282                 5,915
Castorama Italy                                             27                        171                 2,156
Other                                                       24                        133                 2,570
Total Rest of Europe                                        85                        586                10,641
B&Q China                                                   51                        490                 9,868
B&Q Taiwan                                                  21                         97                 1,857
Other                                                        1                          7                   174
Total Asia                                                  73                        594                11,899
Total                                                      684                      4,908                69,468



SECOND QUARTER -13 weeks to 29 July 2006


                           Retail Sales £m          % Total         % LFL        Retail Profit £m         % Total
                        2006/07      2005/06         Change         Change    2006/07         2005/06      Change
                                                   (Reported)                                            (Reported)

UK                      1,140.5      1,135.6             0.4%       (1.3%)        68.6        75.5           (9.1%)
France                    796.1        730.1             9.0%         1.2%        55.3        61.8          (10.5%)
Rest of Europe (1)(3)     267.5        206.0            29.9%         8.4%        38.1        25.8            47.7%
Asia (2)(3)               124.9         67.2            85.9%        10.4%         1.1       (0.4)              n/a
Total                   2,329.0      2,138.9             8.9%         1.0%       163.1       162.7             0.2%

(1)     Rest of Europe includes Castorama Poland, Castorama Italy, Brico Depot
in Spain, Koctas in Turkey, B&Q in Ireland, Castorama Russia and Hornbach in
Germany

(2)  Asia includes B&Q China, B&Q Taiwan and B&Q Home in South Korea.

(3) Joint venture sales are not consolidated.




                      This information is provided by RNS
            The company news service from the London Stock Exchange