Kingfisher procures construction work through Chartwell Land, the group's specialist retail property division, or directly as in the case of B&Q. Almost all work is procured by competitive tender.
Current and future projects
As of end of 2001, the restructured Kingfisher Group comprised just B&Q and Comet, the number one in the DIY market and number two in the electrical goods market respectively. In the year to February 2002, group investment fell slightly to about £720m. About 50% of group sales are based in the UK, and a similar proportion relates to capital expenditure. Much of this will be dominated by investment in B&Q stores, which the group now plans to concentrate on. B&Q opened about 20 new warehouses in 2001, and a further eight were opened in the six months to August 2002. It now has almost 80 major outlets, and is nearly halfway to meeting its target of 175 warehouses by 2006.
With Kingfisher set to become a DIY-only company (with the planned sale of Comet), capital expenditure in future years will be concentrated on B&Q outlets. The company is expected to open about 20 new B&Q warehouses a year for the next four years. The average cost of a new stores is £7m, which suggests a total new spend of £150m a year. Allowing for additional expenditure on refurbishments and maintenance of other stores, capital expenditure for B&Q alone could total about £200m a year. The extent to which it keeps this level of spending up will be determined by the health of the housing market, which at present looks unsustainable. Capital expenditure in the six months to end August 2002 was £85m.
In November 2002 Kingfisher announced that it was to put up for sale £500m of prime retail parks in an effort to tidy up its property portfolio in preparation for the move to becoming a pure DIY retailer. Kingfisher said it wanted to sell 15 retail parks, plus five park development sites. The properties are held by Chartwell Land, Kingfisher's specialist property company. The move is the latest in a series of deals as the group restructures.
Once these parks are sold, Chartwell Land will be left with about £2bn of property, a quarter of which will be in the UK. The property has a rental value of £29m, and each of the retail parks has a B&Q store on them. B&Q will continue to operate in the sold locations, in most cases acting as the key tenant. Kingfisher hopes to benefit from the current high level of demand for retail park space.
Property services director Mark Elliott Contact details
North West House, 119 Marylebone Road,
London NW1 5PX
phone: 020-7724 7749
fax: 020-7724 2964
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