Demerger Update (2)

Kingfisher PLC
14 April 2003


14 April 2003

                               Kingfisher - Financial Effects of Demerger

Kingfisher has today announced further details of the expected demerger of its Electricals business
(KESA), including details of the capital structure and exceptional charges and costs likely to be
incurred as a result of the demerger.

Capital Structure

Kingfisher expects that KESA will be demerged with around £400 million of debt, subject to working
capital movements and finalisation of terms with lending banks.  Kingfisher believes that at this level
of debt, both Kingfisher and KESA will have appropriate capital structures for the future.

Transaction expenses

Transaction expenses will appear as a non-operating exceptional item in Kingfisher's profit and loss
account for 2003/04.  The amount of these costs is expected to be approximately £48 million, in addition
to the £11.8 million incurred and charged in 2002/03.  These charges include:

  • Fees for financial advice to Kingfisher and KESA.


  • Professional and other advisory and listing fees and printing costs.


  • Arrangement fees in relation to the debt facilities for KESA.


Exceptional financing charges relating to the demerger

Financing costs relating to the restructuring of Kingfisher's debt  are expected to result in an
exceptional charge in Kingfisher's profit and loss account for the year ending 31 January 2004 of up to
£54m and consequential income from unwinding associated interest rate swaps of up to £39m, to be
recognised over the lifetime of any new financing.  The net cash cost in 2003/04 may, therefore, be up to
£15m.

In addition following Kingfisher's commitment in 2002 to separate KESA it entered into a forward currency
exchange contract  to protect the Sterling value of its expected Euro receipts from the sale or IPO of
KESA.  After the announcement in March 2003 of the proposed demerger of KESA (in the form of a
London-listed vehicle) part of this contract  was no longer required and the position has been reduced to
cover only the lower level of Euro receipts now expected from the assumption of debt by KESA on demerger.
  This has resulted in an exceptional cost of £79m before tax relief, which will be included as an
exceptional cost in net interest and similar charges in 2003/4.  The unrealised reduction in value of the
contract left outstanding against the Euro debt expected to be assumed by KESA was £38m at close of
business on Friday 11th April 2003.  The movement in exchange rates has, at the same time, increased the
Sterling value for Kingfisher shareholders of the predominantly Euro cash flows and net assets of KESA.

Demerger-related tax charges

The French tax authorities may seek to impose a charge of approximately £100 million as a consequence of
the demerger.  Kingfisher has been advised that its risk of being ultimately liable for this amount is
low.  It nevertheless expects to have to make a payment of this amount to the French tax authorities,
pending resolution of the matter, to avoid the possibility of penalty charges.  As a result of making
this payment, there will be a demerger-related adjustment of this amount to the tax charge for the year
ending 31 January 2004.

Timetable

Subject to the receipt of all relevant regulatory and tax approvals (covering a number of countries) it
is currently anticipated the demerger documentation will be posted in June with, subject to Kingfisher
shareholders' approval, Admission to the London Stock Exchange during July.
                                                 -ends-



Broker and Institutional Enquiries
Loraine Woodhouse, Head of IR, UK & USA                                              [phone]

Media Enquiries
Jonathan Miller, Head of Corporate Comms, UK                                         [phone]

Kingfisher plc                                                                       [phone]
Kingfisher website                                                                     www.kingfisher.com








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