King Fisher PLC 1

King Fisher PLC

[Name of the Writer]
[Name of the Institution]

King Fisher PLC 2

Valuation:

Price Earnings Ratio

Formula:
Market Value per Share
-------------------------------Earnings per Share

417.00p
------------ = 3.322
125.5p

Enterprise Value to Sales Ratio

Formula:
Market Capitalization + Debt + Preferred Shares Cash and Cash Equivalents
----------------------------------------------------------------------------------------------------Annual Sales

9.87 Billion + 3.382 Billion + 0 - 534 Million

------------------------------------------------------------1.125 Billion

Enterprise Value to EBIDTA Ratio:

Formula:
Enterprise Value
---------------------

= 12.254

King Fisher PLC 3

EBITDA

9.87 Billion + 3.382 Billion + 0 - 534 Million

----------------------------------------------------------- = 12.419
1,024 Million

EBITDA to Sales Ratio:

Formula:
EBITDA
-----------Annual Sales

1,024 Million
------------------ = 0.91 or 91 %
1.125 Billion

King Fisher PLC 4

SWOT Analysis of King Fisher PLC

Strength:

Set The Trends:

King Fisher PLC is the largest home improvement retailer across Europe (1), the third Largest in
the world (1). Often when you are a major player in the market, it turns out to be a strength
because you can set the rules of business and the other will most likely follow the route. Lets
look at the example of Apple in this case, Apple became a big player in the market by giving the
people a music player that can store thousands of songs and is portable as well. After that when
Apple finally announced that they are coming to the Mobile Market, everyone looked up to them
for innovations and versatility. Apple came up with IPhone and that change the World of Mobile
Technology. Kingfisher PLC, after acquisition of different big brands throughout Asia and
Europe, now became a really big player in the market. They can set trends and the pool of others
will follow them.

Products:
Often said that To be safe, you dont want to have all eggs in one basket, Kingfisher PLC just
proves that over all. Since King Fisher PLC deals with products such as Home Appliances,
Tools, Hardware, Garden Supplies and Plants (1) through their different brands such as B&Q,
Brico Depot, Castorama, ScrewFix and Koctas (1), they are more or less always in the game
without their name being used too much in the market. Home Appliances itself is a much
diversified market to cater because that can include anything from a toaster to washing machine
and vice versa. If that is not enough, King Fisher PLC brands also deal in tools, Hardware,
Garden Supplies (1) etc. to make it more versified. Customers surely like it more to go to a place
where they can find it all under one roof at a good price rather than going to different places for
different thing which can be annoying and time consuming. Such diversification helps the
company to stay strong in different difficult time because that can be very hard to survive if you
are catering just one product. That shows that the business model is standing on the strong basis.

King Fisher PLC 5

Acquisition:
King Fisher PLC is currently dealing in 8 different countries throughout Europe and Asia (1).
Having said that, King Fisher PLC does not enter any market with their own brand name. In fact,
their strategy is very interesting to examine. Rather than going in all the way into a new market,
without knowing the real players there, that will take an awful lot of time to develop a new name,
new trust with the customers and more time establish a new brand name which will take few
years to say the least, they acquire different retailers and stay behind as a company and support a
company which was already there to see for everyone. A good example will be B&Q acquisition
in the 1982 (4). By the time King Fisher PLC, which was then called Peternoster (4) acquire
B&Q, the brand was already established for more than 10 years (4). It had more than 25 stores
already present throughout UK (4). Therefore, it did not take any extra time to establish a new
brand name or re-establish it. All King Fisher PLC had to do was, to take care of the operations,
manage things properly and keep expanding in the time to come which they did very efficiently.

E-Shopping:
Since the world has move on into a world that I call E-Life, where everything that you do, be
one way or the other connected with the Internet. The trend of people who had to find spare time
to go and do the required shopping has changed a little in the past decade or so. Now people can
shop even while staying at work from their cellphone through the internet and get the desire
products at their door steps in few hours or the next day. Many companies who started this trend
slowly turned into it a Global Giants in over a decade time. Many global giants such as EBay,
Amazon deals in online shopping for over a decade now in the advanced countries in the world.
Smaller and local brands took care of this section in different other countries where this trend is
slowly but surely growing and will become a big market in time to come. To cater that demand,
King Fisher PLC Brands such as B&Q, Screwfix, Castorama, Brico Depot and Koctas offer
online shopping (3) with nearly all the products for the next day delivery option (3). That helps
in attracting customers who do not have spare time to go for shopping. Instead now they can just
order it online whatever that they want and gets it deliver to their door step. The websites are
easy to follow, with multiple cash payment systems that make it even more efficient for the
consumers.

King Fisher PLC 6

Strong Finance:
Strong financial statistics of the company are one of the most important aspects of running a
successful empire. It becomes even more important in a PLC (Public Limited Company) because
that will influence a common trader to have some confidence over a company because if its
stability on the fiscal side. Kingfisher PLC share value on January 2nd 2013 was 269.75P (5)
which increased to 54.58% to 417.00P (6) on April 17th 2014. According to the year that ends on
1st Feb 2014, sales increase from 10,573 Million (7) to 11,125 Million (7) which is an increase
of 5.22 % from the last year. Gross profit increased from 3,955 Million (7) to 4,120 Million
(7), increase of 4.17% from the last year. All of these statistics shows that the companys
financial condition is in very good shape and is constantly moving forward in the right direction.

Weakness:

Market Central:
Kingfisher PLC is the largest home improvement retailer in Europe. Kingfisher PLC headquarter
is based in London, UK. Even though they are currently based in 8 different countries throughout
Europe and Asia, they are mainly focused in the fragile European market. The only operations
outside Europe are being carried out in Peoples Republic of China (1). They are yet to enter in
growing economies such as India, Japan, Australia and Americana that include the United States
of America, Chile, Brazil and Mexico. Compare this with their direct competitors Walmart,
and the difference is there to see. Walmart is currently present in 55 different countries all over
the globe. Compare to 8 different countries where King Fisher PLC is present, which is a huge
difference. They are present in UK, Japan, India, and in many different parts of the World. That
shows that they are not solely depend on the Economy of just Americana Region like King
Fisher is solely dependent on the Europes economy. That shows that Walmarts strategy of
positioning their brand in different economies worked as they enter into different markets with
different names.

King Fisher PLC 7

Lack of Individual Use Products:

Kingfisher PLC stores do not deal with products that are for personal use. Such as Clothing,
Jewelry, Cell phones, Cameras, Shoes and etc. These stores also do not have any thing which
consumer buy for entertainment purposes such as TV, Gaming Consoles etc. Absence of these
products can cause a loss in the junk of big profits for these products.

Opportunities:

Exploring New Markets:

Kingfisher PLC is on 643 Rank (8) on Forbes list of Global 2,000. If we look more into the
Forbes rankings, Kingfisher PLC ranks on 558 (8) in sales list, 657 (8) in profit list, 1,228 (8) in
Assets, and 953 (8) in Market Value in the Forbes list. In a list that was issued on Forbes.com by
a contributor (9) of companies that are most sustainable in the world back in 2010, Kingfisher
PLC was rank on 46 (9) worldwide, which is a very impressive rank to be at considering the fact
that they are solely present in Europe only with a very limited presence in China and that
remains the only presence outside Europe. That leave the Kingfisher group to have the
opportunity to expand into the economies that are growing, such as India, Singapore, Australia,
Brazil and many others. They can enter with one of the brands that they have already acquired
before such as B&Q others or follow their past strategy of acquiring a local brand which
established already and strengthening it further. This will help the Kingfisher to become more
diversified while focusing on different economic growth in different parts of the world, like
Amazon and Walmart did. This will also going to reduce the risk of big loss if one of the
economy of one place or a continent is facing a tough time since the other place will make it up
for that.

Inclusion of More Products:

Up till now, Kingfisher PLC is mainly focused on providing home appliance and products for
home use. However, they are not selling electronic items such as TV, DVDs, LCD TVs,
Gaming Consoles, and Digital Camera etc. They have also not shown interest in selling

King Fisher PLC 8

cellphones, tablets etc. By not focusing on selling these items, they are losing out on a big junk
of share that many other stores enjoy.

Threat:
Kingfisher PLC have different threat at different level. Locally and Internationally.
Global Threat:
At the World Stage, their fierce rival could be considered as Walmart. Many people might not
agree to this, but Walmart is the benchmark if anyone is looking for a retailer group with a
success story. They are currently present in 55 countries (10) and to reach that level, few more
acquisitions might be required. Even not that alone will going to decrease the level of threat that
exist to the company itself, to cater the threat in a far more effective way, Kingfisher PLC will
might have to start adding more products and add more versatility in their menu for customers to
buy from. That will surely going to help the cause in a better way.

Locally:
However, locally they have different threat level to deal within different with different local
rivals. For example, the local rival for the Kingfisher PLC UK Brand B&Q is Argos (11). To
decrease their level of threat however, Kingfisher PLC needs to increase the market share in the
markets that they are currently existing by adding up new products, by getting additional deals to
attract more customers over all.

Conclusion:
To conclude the SWOT Analysis of Kingfisher PLC, it has to be noted that the company has far
more strengths than weaknesses, and the opportunities are greater than the threat over all.
Kingfisher PLC is already diversified in their approach and have shown flexibility throughout.
Companys acquisition policy of the local brands throughout Europe has done wonders till now.
Finances look pretty stable for the company over all and the share price is on the high, especially
in last 12 months time. These all sign shows that the company has a lot potential to go forward

King Fisher PLC 9

in a lot of departments and thus it can be concluded that Kingfisher PLC will become stronger
and bigger force to reckon with in the future to come.

Business Plan:
Executive Summary:
Kingfisher PLC is a big company to set up a business plan. For a company life Kingfisher PLC,
the business plan should be academic and a way to move forward. My Business Plan will be
tantamount to move forward into different economies which will help in generating more
revenues. The business plan will ensure that Kingfisher PLC will keep growing at a far greater
rate than it is already. The purpose of this business plan is to ensure that Kingfisher PLC, which
is undoubtedly one of the biggest firm in Europe, will keep strengthening in every year to come
and will become even a bigger force to reckon with.

Business Description:
Kingfisher PLC is a British company (1). Kingfisher PLC headquarter is located in London (1),
United Kingdom. Kingfisher PLC is the Europes largest home improvement retailer (1).
Kingfisher PLC is currently present in 8 different countries throughout Europe and Asia (1).
Those countries namely are as follows: United Kingdom, France, Spain, Poland, Russia, Turkey,
Ireland and China (1). Kingfisher PLC does not work in the name of their Own Brand name
anywhere in Europe or Asia or anywhere in the World. However, Kingfisher works in the
consumer market in the name of other brands that they have acquired over a number of years
time. Those brands were locally established when Kingfisher PLC acquired them and help them
to grow faster by strengthening them on every aspect. Kingfisher PLC currently has more than
78,000 (1) employees throughout Europe and Asia. In the year 2013, Kingfisher PLC recorded
revenue of 10.3 Billion (1).

Operations:
As of now, Kingfisher PLC is dealing in Home Improvement products (1). Home improvement
products sections include a lot of diversity already as it is divided into home appliances, tools,
hardware, garden supplies and plants (1). For now, Kingfisher is present in Europe centrally,

King Fisher PLC 10

whereas out Europe, they are present in China only. My plan will be to increase the number of
countries that we are already present in and reduce the emphasis on focusing just in Europe. That
is caused by a number of facts. If we stay in Europe only, we are actually not expanding into
different economies which are growing and at the same time, we are paying a very high wage
rate that is reducing our profit margins in the end as well. For instance, if we look into the
minimum wage rate in UK for over 18 years old, its 5.03 per hour (12). However, if we move
into Indian and Bangladeshi and Malaysian markets, the minimum wage rate reduces to $0.09
(12) per hour in Bangladesh, $0.28 in India (12) and $1.24 in Malaysia (12). We can also
establish our manufacturing plants in these countries that will also going to help us reduce the
manufacturing costs over all. As of now, the Cost of Goods Sold (COGS) is nearly 93% (7)
which is way too higher considering the fact that Kingfisher PLC is directly dealing with the
consumers. For this purpose, I will want to carry on the policy of not entering the market with
the name of Kingfisher and will try to acquire a local brand. Since we will be entering 3
completely different markets than the one we are now working in, our every step should be very
precise as well as theoretically accurate as well. For this sole purpose, there can be 2 strategies
that can be followed. One can be sending a scouting team that will go in these countries just to
observe trends, market behaviors, consumer behavior and vice versa. This can take a lot of time
and to cater that we can hire professionals from these countries who have already worked in that
market to help us with their experience that can lead us forward. The margin of profit in these
countries is so vast that if we are able to successfully manage these companies over all, which
can ease the burden from our European outlets. On the other side, it will also give us the
opportunity to enter into different other market such as Australia, Americana, Singapore, Japan,
South Africa and many others. To reduce the expenditure, we will going to reduce the work force
by 1% in all the European stores and will also going to keep the same number of employees in
new markets such as Australia, Americana and etc. This will help Kingfisher PLC reaches the
estimated COGS to 91%, which is currently standing 93% (7)

Investment:
To move forward as a company, Kingfisher PLC needs to invest more and needs to invest it in
the right way. In the year 2013, Kingfisher PLC invested 2.7% (13) to their sales revenue in their

King Fisher PLC 11

net investment with an increase in sales of 5.22% (7) which is a very good performance.
However, since we are seeking to enter into new markets that will give up more working space
as well as more profits in the year to come, Kingfisher PLC will gradually take the investment
side 3.0% in next 3 years time. That will see an investment of over 1 Billion in the next 3 years
in different countries of the world, which will be roughly 67 Million more than what the
company would have invested in the next 3 years with 2.7% investment. That investment
increase will also help us include further products on our stores all over the world. After 3 years,
investment will stay at 3%.

Capital Structure:
Capital structure will also going to see a stability in next 5 years time and beyond. To maintain
an estimated 5% of growth, the change in Working Capital has to be constant and should match
the desired growth rate that is to be expected from the firm in the coming years. For this purpose,
the capital structure will also increase to 5% in the next 5 years to stay on par with that of the
growth rate expected.

Conclusion:
Kingfisher PLC is a company which is growing for some time with the prospect of immense
further growth in the time to come. With a Business Plan that will take care of every aspect in the
time to come, Kingfisher PLC can surely reach new heights and can become even a bigger power
house in the world retailer groups.

King Fisher PLC 12

Free Cash Flow:

Year 0
11,125
10,438

Year 1
11,681
10,804

Year 2
12,265
11,283

Year 3
12,878
11,783

Year 4
13,522
12,305

687

877

982

1,095

1,217

Less Taxation At 20%

137.4

175

196.4

219

243.4

After Tax Profit

549.6

702

786

876

974

301
94

327
99

356
104

386
109

406
114

154.6

276

326

380

453

Sales Revenue
Less Operating Cost
Operating Profit

Less Net Investment

Changes in Working Capital
Future Cash Flow

*All Figures are in Million

King Fisher PLC 13

References:
1- http://en.wikipedia.org/wiki/Kingfisher_plc
2- http://www.kingfisher.com/index.asp?pageid=23
3- http://search.diy.com/search#?p=Q&lbc=diy&uid=27133153&ts=ajax&w=tv&isort=scor
e&method=and&view=grid&af=cat1%3aelectrical
4- http://en.wikipedia.org/wiki/B%26Q
5- https://uk.finance.yahoo.com/q/hp?s=KGF.L&b=1&a=00&c=2013&e=19&d=03&f=201
4&g=m
6- https://uk.finance.yahoo.com/q/ks?s=KGF.L
7- http://www.kingfisher.com/index.asp?pageid=65
8- http://www.forbes.com/companies/kingfisher/
9- http://www.forbes.com/2010/01/26/most-sustainable-companies-leadership-citizenship100.html
10- http://en.wikipedia.org/wiki/Walmart
11- http://www.argos.co.uk/static/Home.htm
12- http://en.wikipedia.org/wiki/List_of_minimum_wages_by_country
13- http://www.kingfisher.com/index.asp?pageid=67