22nd Mar 2006 07:02
Kesa Electricals plc22 March 2006 22 March 2006 Preliminary Results for the year ended 31 January 2006 Highlights • Group turnover increased by 3.6% to £4,100.0 million during the period (3.4% in constant currency(2)). • Group retail profit(1) excluding start up losses for Darty Italy and Darty Switzerland was £176.0 million, down 12.4%. Total Group retail profit(1) fell by 17.5% to £164.9 million. • Total operating profit fell by 16.5% to £159.9 million. • Cash generated from operations was £259.7 million, enabling net debt to be reduced by £44.4 million to £166.3 million. Capital expenditure grew by 5.3% to £97.8 million. • Basic earnings per share were 17.9 pence, down 19.0%. The Board is recommending a final dividend of 9.15 pence per share, making a total dividend for the year of 12.1 pence per share, an increase of 10.0%. (1) Retail profit equates to the total operating profit before the effects of the Demerger Award Plan charge, losses on disposal of property, plant and equipment and the share of joint ventures and associate interest and taxation. (2) Constant exchange rate of £1 = Euro 1.4645 Jean-Noel Labroue, Chief Executive, commented: "Despite tough trading conditions in our core markets, the Group deliveredpositive sales growth. This has been led by increasing consumer demand for newtechnologies, particularly flat screen televisions, MP3 players and DVDrecorders, while sales of white goods remained weak. This sales mix had anegative impact on profit despite strong actions taken on cost control togetherwith margin management by category. "In 2006, sales will again be led by digital products, with the World Cupaccelerating the already fast growing sales of flat screen televisions, althoughwe do not anticipate any significant upturn in the white goods market. In these market conditions, we will continue to focus on cost control and margin management while accelerating investment in our existing businesses and developing the Darty brand in new markets." David Newlands, Chairman, commented: "I am pleased that despite the very difficult trading conditions the strong cashgenerative nature of this business has enabled us to recommend a final dividendof 9.15 pence, giving a full year dividend of 12.1 pence, an increase of 10.0per cent, and also to continue with the on-going investment in the business thatwill secure our future growth. In addition, we have again significantly reducedour debt." ENDS Enquiries Press:Kesa Electricals plcAnnabel Donaldson +44 (0) 20 7269 1400Guy Lavaud +33 (0) 1 43 18 52 00 FinsburyAbigail Irving-Bell +44 (0) 20 7251 3801 Euro RSCGLaurent Dondey +33 (0) 1 58 47 95 17 Analysts:Kesa Electricals plc Simon Herrick +44 (0) 20 7269 1400Simon Ward +44 (0) 20 7269 1400 There will be a presentation today to analysts and institutions at 9.30am atKing Edward's Hall, Merrill Lynch, 2 King Edward Street, London EC1. This announcement is available on the KESA Electricals website:www.kesaelectricals.com. A live webcast of the presentation to analysts andinstitutions will also be available on the site at 9.30am, and recorded foraccess later in the day. Certain statements made in this announcement are forward looking statements.Such statements are based on current expectations and are subject to a number ofrisks and uncertainties that could cause actual results to differ materiallyfrom any expected future results in forward looking statements GROUP OVERVIEW These are Kesa Electricals plc's financial results for the year ending 31January 2006. Results as reported in sterling Turnover Turnover Change Retail profit(1) Retail profit(1) Change 2005/06 2004/05 2005/06 2004/05 £m £m £m £mDarty 1597.4 1536.4 4.0% 109.9 118.5 (7.3)%Comet 1529.8 1538.1 (0.5)% 38.3 48.7 (21.4)%BUT 578.0 548.6 5.4% 34.2 41.5 (17.6)%Other* 394.8 335.7 17.6% (5.4) 2.7 -Central - - - (12.1) (11.5) -Total 4100.0 3958.8 3.6% 164.9 199.9 (17.5)% •/£ exchange rates of 1.4645 (2005/06) and 1.4735 (2004/05)CZK/£ exchange rates of 43.5553 (2005/06) and 47.1433 (2004/05)*Includes BCC, New Vanden Borre, Datart, Darty Italy and Darty Switzerland. Results as reported in local currency Turnover Turnover Change Retail profit(1) Retail profit(1) Change 2005/06 2004/05 2005/06 2004/05 m m m mDarty €2339.4 €2263.9 3.3% €160.9 €174.6 (7.8)%Comet £1529.8 £1538.1 (0.5)% £38.3 £48.7 (21.4)%BUT €846.5 €808.4 4.7% €50.1 €61.2 (18.1)%Other* €578.2 €494.7 16.9% •(7.9) €4.0 -Central - - - -Total - - - -•/£ exchange rates of 1.4645 (2005/06) and 1.4735 (2004/05)CZK/£ exchange rates of 43.5553 (2005/06) and 47.1433 (2004/05)*Includes BCC, New Vanden Borre, Datart, Darty Italy and Darty Switzerland. Financial Highlights Group turnover was £4,100.0 million, up 3.6 per cent on last year (3.4 per centin constant currency and down 0.7 per cent on a like-for-like basis). Groupretail profit(1) was £164.9 million, down 17.5 per cent on last year. (1) Retail profit equates to the total operating profit before the effects of the Demerger Award Plan charge, losses on disposal of property, plant and equipment and the share of joint ventures and associate interest and taxation. Adjusted profit before tax excluding the share of joint venture and associatesinterest and taxation, demerger award plan and loss on disposal of propertyplant and equipment fell 20.4 per cent to £148.3 million. Profit before taxdecreased by 19.4 per cent to £143.3 million. The net interest paid amounted to £16.6 million including a one off £2.1 millionwrite-off of the remaining unamortized fees capitalised when establishing the€1.0 billion funding at the time of the demerger from Kingfisher, which wasreplaced and repaid in July. It also includes an amount of £3.0 million relatingto pension fund costs (£1.8 million last year). The tax charge including the share of joint venture and associates taxation of£50.8 million represents an effective tax rate of 34.9 per cent (35.1 per centin the previous year). The strong cash generative nature of the business was again demonstrated by cashflows from operating activities of £259.7 million (£271.2 million last year)despite a 16.5 per cent fall in operating profit, enabling net debt to bereduced by £44.4 million to £166.3 million. Since demerger, the business hasgenerated over £200 million of free cashflow. Capital expenditure was £97.8million, an increase of 5.3 per cent on the previous year. Basic earnings per share fell by 19.0 per cent to 17.9 pence. The Board is recommending a final dividend of 9.15 pence per share making atotal dividend for the year of 12.1 pence per share, an increase of 10.0 percent, and covered 1.5 times by earnings. Trading Highlights Sales growth across the Group has been led by the continued demand for digitaltechnologies, stimulated by price deflation. All electrical businesses sawstrong year on year growth in products such as flat screen televisions, MP3players and DVD recorders. Sales of white goods were consistently weak acrossEurope, particularly in the UK. Total sales growth at Darty was up 3.3 per cent in local currency (up 1.5 percent on a like-for-like basis). In a French electricals market which isestimated to have grown by slightly more than 2 per cent, Darty increased itsmarket share in all categories except mobile phones. The strong sales growth ofnew technologies negatively affected the gross margin mix but Darty partiallyoffset the impact on retail profitability through productivity gains. In the very tough trading conditions in the UK, Comet's turnover fell by just0.5 per cent, down 3.6 per cent on a like for like basis. The profit decline waslimited by prompt action on the cost base. Average selling price improved in allof Comet's key categories, reflecting the success of the company's on-goingre-positioning and the total store re-branding programme launched during thesecond half of the year. Comet lost a small share of the price-entry end of themarket to the mass merchandisers. With very difficult trading conditions in the second half of the year, BUT'stotal store sales grew by 1.9 per cent in local currency, down 2.2 per cent on alike for like basis. Turnover at the in-house wholesale business grew by 15.0per cent in local currency, diluting BUT's overall profitability. The actionplan put in place last year has progressed. The more contemporary furnitureranges have been rolled out to all stores and the revised electrical offer,which better reflects BUT's customer base, is being finalised. The store relayprogramme started in the third quarter for the small to mid sized stores showedvery encouraging results and will be accelerated during 2006 and thereafter. Total turnover at the other businesses, BCC, Vanden Borre, Datart, Darty Italyand Darty Switzerland, grew by 16.9 per cent in local currency, up 3.8 per centon a like for like basis. This good performance was helped by continued like forlike sales growth at Vanden Borre and particularly strong sales at BCC in thesecond half of the year. Retail profit in the more established businessesincreased by 64.7 per cent to €8.3 million. Start up losses for Darty Italy andDarty Switzerland totalled €16.2 million. Outlook Overall trading since the year-end has improved but it is too early to predictif this will continue. We anticipate that sales will again be led by digital products and the World Cupshould accelerate the sales of flat screen televisions in the first half of theyear. We also expect to see continued price deflation across all digital ranges.We believe we face another year of fragile consumer confidence, although we haveseen early signs of an improvement in France. However, we are not anticipatingany significant upturn in the white goods market in Europe. In these market conditions, it is essential that we mitigate the impact onprofitability by driving our specialist business model with our new storeformats, productivity gains in logistics and back office and by leveraging ourservice propositions. We will continue to focus on cash generation, which willenable us to accelerate the investment in our existing businesses whiledeveloping the Darty brand in new markets. DARTY-------- --------- --------- -------- -------- -------- -------- 2005/06 2004/05 Change 2005/06 2004/05 Change £m £m •m •m-------- --------- --------- -------- -------- -------- --------Turnover 1597.4 1536.4 4.0% 2339.4 2263.9 3.3%-------- --------- --------- -------- -------- -------- --------Retail profit(1) 109.9 118.5 (7.3)% 160.9 174.6 (7.8)%--------- --------- --------- -------- -------- -------- -------- --------- --------- --------- --------No of stores* 206 204--------- --------- --------- --------Sales space* 269.0 261.1 3.0%(000s sq m)--------- --------- --------- --------*as at 31 January 2006 Total turnover grew by 3.3 per cent in local currency with like for like salesincreasing by 1.5 per cent. This was helped by strong sales of new technologies,particularly flat screen televisions, MP3 players and DVD recorders. In a French market which is estimated to have grown by just over 2 per cent*during the period, Darty achieved market share gains in all categories exceptmobile phones, with a particularly good performance in flat screen televisions. Price deflation continued to drive consumer demand for new technologies, with asubsequent negative effect on gross margin. Darty limited the decline in retailprofitability through productivity gains. The warehouse rationalisation wassuccessfully completed with the opening of the new warehouse in Lyon and theclosure of the three remaining regional warehouses in Metz, Marseilles and Lyon.The national after sales service call centre network was completed when thesixth and final centre opened in the first half of the year. Darty continued to invest in its store modernisation programme with the openingof 18 new format stores and the closure of four old stores. Of the 18, six werenew stores, five were relocated stores and seven were refurbished/extendedstores. The total number of new format stores is now 42 and those trading intheir second and third years since opening continue to out-perform the rest ofthe portfolio on a like for like basis. During 2006, Darty will open a further17 new format stores of which 2 will be new stores, three will be relocatedstores and 12 will be refurbished/extended stores. The Darty web site delivered a year on year sales uplift of 44 per cent withsales accelerating during the second half of the year following the launch ofthe revamped site. *GFK / KesaThe success of digital product convergence, and the very fast development ofbroadband internet and ADSL technology in France, has created a new customerdemand for combined telephone, TV and internet access packages. The complexityof this requires a high level of customer service and advice. With its strongreputation for service, Darty is ideally positioned to address these newcustomer needs and will launch its own triple play proposition in the thirdquarter of the year in association with a leading broadband network operator. COMET----------- ----------- ----------- ----------- 2005/06 2004/05 Change £m £m----------- ----------- ----------- -----------Turnover 1529.8 1538.1 (0.5)%----------- ----------- ----------- -----------Retail profit(1) 38.3 48.7 (21.4)%----------- ----------- ----------- ----------- ----------- ----------- ----------- -----------No of stores* 249 250----------- ----------- ----------- -----------Sales space* 258.0 253.3 1.9%(000s sq m)----------- ----------- ----------- -----------* as at 31 January 2006 Comet delivered a total turnover of £1,529.8 million, down 0.5 per cent on theprevious year and down 3.6 per cent on a like for like basis, in very poormarket conditions. Sales were driven by very strong growth in flat screentelevision, MP3 players and multimedia, particularly laptops. Sales of whitegoods declined, in line with market trends. E-comet sales continued to grow and increased by over 20.0 per cent year onyear. Average selling price improved in all of Comet's key categories reflecting thesuccess of the on-going re-positioning and the total store re-branding programmelaunched during the second half of the year. Comet lost a small share of theprice-entry end of the market to the mass merchandisers, but overall marketshare was broadly maintained. Comet quickly reacted to the sharp downturn in the market in the early part ofthe year and accelerated their cost control and margin management programmes.The integration of After Sales Service and Home Delivery continued with theopening of a National Customer Support Centre in Clevedon in July and the fourthDelivery and Repair Centre, in Wolverhampton, in May. The store modernisation programme saw the opening of one new store, threerelocations and seven refurbishments, four of which now trade with a mezzaninefloor. This brings the year end total of new format stores to 73, generating 40per cent of Comet's overall turnover for the year. During the year, two olderstores were closed. To limit the impact of rising rents and rates, Comet will accelerate its storemodernisation programme with specific emphasis on mezzanine trading floors andrightsizing. Of the 12 new, refurbished and relocated stores to be completedduring 2006, most of which will include a trading mezzanine floor. In addition,a further two stores will close at the end of March. *GFK / Kesa BUT--------- -------- -------- -------- --------- -------- -------- 2005/06 2004/05 Change 2005/06 2004/05 Change £m £m •m •m--------- -------- -------- -------- --------- -------- --------Turnover 578.0 548.6 5.4% 846.5 808.4 4.7%-------- -------- -------- -------- --------- -------- --------Retail profit(1) 34.2 41.5 (17.6)% 50.1 61.2 (18.1)%--------- -------- -------- -------- --------- -------- -------- --------- -------- -------- --------No of stores* 106 104--------- -------- -------- --------Sales space* 345.5 330.9 4.4%(000s sq m)--------- -------- -------- --------*at 31 January 2006 Total store turnover at BUT grew 1.9 per cent in local currency, but was down2.2 per cent on a like for like basis. Turnover at the in-house wholesalebusiness grew by 15.0 per cent in local currency, diluting overallprofitability. Following an encouraging first half of the year, BUT's store sales deterioratedas a result of the tough market conditions and aggressive competitiveenvironment reported at the end of the third quarter. These factors, combinedwith the subsequent decline in margin and increased costs, led to a profitdecline of 18.1 per cent. The action plan put in place at the beginning of 2005 has progressed. Moreefficient financial processes are now in place and the centralisation oflogistics will be completed when the fourth and final platform is opened laterin 2006. The new more contemporary furniture ranges have been rolled out to allstores and the revised electrical offer, which better reflects BUT's customerbase, is being finalised. Despite BUT's overall disappointing performance, five of the small to mid sizedstores trading from 2,500 to 4,000 square metres of selling space, whichrepresent 80 per cent of the portfolio, were relayed during the second half ofthe year and are showing particularly promising sales uplifts. BUT will nowfocus its investment on these store formats. 15 stores will be relayed by theend of 2006 and this will be rolled-out at an average rate of 15 per yearthereafter. OTHER BUSINESSES --------- -------- -------- -------- --------- --------- -------- 2005/06 2004/05 Change Local Currency* Local Change £m £m 2005/06 Currency* •m 2004/05 •m--------- -------- -------- -------- --------- --------- --------Turnover 394.8 335.7 17.6% 578.2 494.7 16.9%-------- -------- -------- -------- --------- --------- --------Retail profit(1) 5.7 3.5 62.9% 8.3 5.2 64.7%--------- -------- -------- -------- --------- --------- --------Start uplosses (11.1) (0.8) (16.2) (1.2) ---------- -------- -------- -------- --------- --------- --------Total (5.4) 2.7 (7.9) 4.0--------- -------- -------- -------- --------- --------- -------- --------- -------- -------- --------No of stores** 129 111--------- -------- -------- --------Sales space** 145.5 121.2 20.0%(000s sq m)--------- -------- -------- --------CZK/£ exchange rates of 43.5553 (2005/06) and 47.1433 (2004/05) ** at 31 January 2006 Total turnover for all our Other businesses* grew by 16.9 per cent in localcurrency, 3.8 per cent on a like-for-like basis. For the more establishedbusinesses, BCC, Vanden Borre and Datart, retail profit increased by 64.7 percent to €8.3 million. Start up losses for Darty Italy and Darty Switzerlandtotalled €16.2 million. All three of our existing businesses made significant market share gains.Overall sales growth was helped by a good like for like performance at VandenBorre and particularly strong sales at BCC in the second half of the year whenwe saw an upturn in Dutch consumer confidence. During the year the storemodernisation programme continued with the opening of nine new stores, tworelocated stores and five refurbished/extended stores. In 2006, eight newstores, three relocations and seven refurbishments/extensions will be completedwhile two stores will be closed. The two new ventures, Darty Italy and Darty Switzerland, opened on schedule withpositive customer feedback and we now have five stores in Italy and three storesin Switzerland. During 2006, four new stores will open in Italy and two inSwitzerland. We anticipate that we will break-even in 2008/09 when bothoperations will become self-funding for future development. *BCC, Vanden Borre, Datart, Darty Italy and Darty Switzerland NEW DEVELOPMENTS Following this encouraging progress, Kesa will now open stores in Turkey, againusing the Darty brand. Turkey has significant economic growth potential and isat the very early stages of market consolidation. Working with an experiencedlocal partner we intend to open a cluster of five stores in the Istanbul regionby the end of 2007. The start-up losses for the forthcoming year are expected tobe €3.0 million. CENTRAL COSTS The central costs in retail profit totalled £12.1 million compared to £11.5million last year. (1) Retail profit equates to the total operating profit before the effects of the Demerger Award Plan charge, losses on disposal of property, plant and equipment and the share of joint ventures and associate interest and taxation. KESA ELECTRICALS Group Income statement for the financial year ended 31 January 2006 Year Year Year ended 31 ended 31 31 ended January January January 2006 2005 2006 Note £m £m •m Revenue 4,100.0 3,958.8 6,004.5 Group operating profit 151.8 181.7 222.3Share of post tax profit in joint venture and associates 8.1 9.8 11.9Total operating profit 159.9 191.5 234.2 Analysed as: Retail profit (2) 164.9 199.9 241.5Share of joint venture and associates interest and taxation (2.2) (2.6) (3.2)Demerger award plan charge (1.8) (4.8) (2.6)Loss on disposal of property, plant and equipment (1.0) (1.0) (1.5)Total operating profit 159.9 191.5 234.2 Interest payable and similar charges (24.4) (24.1) (35.7)Interest receivable 7.8 10.5 11.4Profit before tax 143.3 177.9 209.9 Taxation (48.6) (60.7) (71.2)Profit for the financial year from continuing operations 94.7 117.2 138.7 Profit attributable to: - Equity shareholders 94.2 115.7 138.0- Minority interests 0.5 1.5 0.7 94.7 117.2 138.7 Earnings per share - basic and diluted (pence) 17.9 22.1 26.2 Notes 1) Income statement information in Euros is provided for illustrative purposes only and is translated at the average exchange rate of €1.4645 for £1. 2) Retail profit represents total operating profit before the share of joint venture and associates interest and taxation, the demerger award plan charge and losses on disposal of property, plant and equipment. Group statement of recognised income and expense for the financial year ended 31 January 2006 Year Year Year ended ended ended 31 31 31 January January January 2006 2005 2006 Note £m £m •m Exchange differences (2.5) (0.5) (3.7)Actuarial losses on retirement benefit obligations (14.6) (17.7) (21.4)Tax on actuarial losses on retirement benefit obligations 4.4 5.6 6.4Available for sale assets - fair value gains net of tax 2.3 - 3.4- recycled and reported in net profit (0.3) - (0.4)Cash flow hedges - fair value gains net of tax 2.8 - 4.1 Net loss recognised directly in equity (7.9) (12.6) (11.6) Profit for the year 94.7 117.2 138.7 Total recognised income for the year 86.8 104.6 127.1 Adjustment for the first time adoption of IAS 39 2.9 - 4.2 Total recognised income 89.7 104.6 131.3 Attributable to: - Equity shareholders 86.3 103.1 126.4- Minority interests 0.5 1.5 0.7 86.8 104.6 127.1 The adjustment for the first time adoption of IAS39 is attributable to equity shareholders. Notes 1) Statement of recognised income and expense information in Euros is provided for illustrative purposes only and is translated at the average exchange rate of €1.4645 for £1. Group balance sheet As at 31 January 2006 31 January 31 January 31 January 2006 2005 2006 Note £m £m •mAssets Non-current assets Intangible assets 200.8 201.0 293.9Property, plant and equipment 530.8 522.5 777.0Available for sale investments 20.0 - 29.3Other investments - 5.4 -Investments in joint venture and associates 39.1 37.1 57.2Other receivables 9.7 11.2 14.2Deferred tax assets 38.6 34.7 56.5Total non-current assets 839.0 811.9 1,228.1 Current assets Inventories 616.7 601.0 902.7Trade and other receivables 244.5 242.3 357.9Income tax 9.3 6.7 13.6Other investments 80.5 95.6 117.8Derivative financial instruments 1.4 - 2.0Cash and cash equivalents 159.6 275.6 233.6Total current assets 1,112.0 1,221.2 1,627.6 Total assets 1,951.0 2,033.1 2,855.7 Liabilities Current liabilities Borrowings (56.6) (135.8) (82.9)Income tax liabilities (11.9) (16.3) (17.4)Trade and other payables (816.5) (769.4) (1,194.1)Derivative financial instruments (2.9) - (4.3)Provisions (0.6) (0.5) (0.9)Total current liabilities (888.5) (922.0) (1,300.6) Non-current liabilities Borrowings (347.0) (442.0) (507.9)Other payables (238.7) (239.0) (349.4)Deferred tax liabilities (26.4) (24.8) (38.6)Post-employment benefits (119.7) (103.4) (175.2)Provisions (0.5) (0.8) (0.7)Total non-current liabilities (732.3) (810.0) (1,071.8) Total liabilities (1,620.8) (1,732.0) (2,372.4) Net assets 330.2 301.1 483.3 Group balance sheet (contd.) Equity Note Share capital 132.4 132.4 193.8Other reserves 751.8 741.3 1,100.5Retained earnings (565.3) (584.5) (827.6)Total equity shareholders' funds 318.9 289.2 466.7 Minority interests 11.3 11.9 16.5 Total equity 330.2 301.1 483.2 Notes 1) Balance sheet information in Euros is provided for illustrative purposes only and is translated at the closing exchange rate of €1.4638 for £1 Approved by the Board of Directors on 22 March 2006 and signed on its behalf by: Jean-Noel Labroue Simon Herrick Director Director Group cash flow statement for the financial year ended 31 January 2006 Year Year Year ended 31 ended 31 ended 31 January January January 2006 2005 2006 Note £m £m •m Cash flows from operating activities Cash generated from operations 259.7 271.2 380.3Interest received 7.9 9.0 11.6Interest paid (17.5) (22.2) (25.6)Tax paid (54.1) (57.0) (79.2)Net cash flow from operating activities 196.0 201.0 287.1 Cash from investing activities Acquisition of subsidiaries (net of cash acquired) (0.4) (2.8) (0.6)Proceeds from sale of property, plant and equipment 5.2 6.5 7.6Purchase of property, plant and equipment (97.8) (92.9) (143.2)Proceeds from sale of available for sale investments 0.4 - 0.6Purchase of intangible assets (4.9) (3.8) (7.2)Proceeds from sale of intangible assets 0.1 - 0.1Cash inflow/(outflow) from other current investments 14.1 (2.8) 20.6Dividends received from joint ventures 3.4 8.6 5.0Net cash used in investing activities (79.9) (87.2) (117.1) Cash flows from financing activities Finance lease principal payments Proceeds from long-term borrowings (1.7) (1.4) (2.5)Repayment of long term borrowings 472.6 - 692.1Dividends paid to shareholders (602.5) (45.9) (882.4)Dividends paid to minority interests (59.3) (54.4) (86.8)Net cash used in financing activities (0.9) - (1.3) (191.8) (101.7) (280.9)Net cash (outflow)/inflow from cash and cash equivalents (75.7) 12.1 (110.9)Transfers and other non-cash items Effects of exchange rate changes - 21.1 - (3.4) 5.4 (5.0)Net (decrease)/increase in cash and cash equivalents (79.1) 38.6 (115.9)Cash and cash equivalents at start of year 184.9 146.3 270.8Cash and cash equivalents at end of year 105.8 184.9 154.9 Notes 1) Cash flow information in Euros is provided for illustrative purposes only and is translatedat the average exchange rate of €1.4645 for £1. 1 Group operating profit Year ended 31 Year ended 31 January 2006 January 2005 £m £m Group Revenue 4,100.0 3,958.8Cost of sales (2,876.8) (2,735.4)Gross profit 1,223.2 1,223.4 Selling expenses (891.8) (875.5)Administrative expenses (211.9) (203.9)Other income 32.3 37.7Group operating profit 151.8 181.7 Share of post tax profit in joint venture and associates 8.1 9.8Total operating profit 159.9 191.5 The Demerger Award Plan charge and losses on disposal of property, plant and equipment are included within administrative expenses. 2 Segmental analysis Year ended 31 January 2006 Group France France UK Darty BUT Comet Other Unallocated Group £m £m £m £m £m £m Revenue 1,597.4 578.0 1,529.8 394.8 - 4,100.0Retail profit/ (loss) 109.9 34.2 38.3 (5.4) (12.1) 164.9Share of joint venture and associates interest (0.4) (1.8) - - - (2.2)and taxation Demerger award plan charge (0.6) (0.2) (0.3) (0.2) (0.5) (1.8)Loss on disposal of property, plant and equipment (0.8) (0.1) (0.1) - - (1.0)Operating profit/ (loss) 108.1 32.1 37.9 (5.6) (12.6) 159.9 Interest payable and similar charges (24.4)Interest receivable 7.8Net interest (16.6) Profit before tax 143.3Taxation (48.6)Profit for the financial year 94.7 The share of operating profits of joint venture and associates included within the retail profit for Darty and BUT are £5.1m and £5.2m respectively. The share of post tax profits of joint venture and associates included within the operating profit for Darty and BUT are £4.7m and £3.4m respectively. 2 Segmental analysis (contd.) France France UK Darty BUT Comet Other Unallocated Group £m £m £m £m £m £m Revenue 1,536.3 548.6 1,538.1 335.8 - 3,958.8Retail profit 118.5 41.5 48.8 2.6 (11.5) 199.9Share of joint venture and associates interest (0.8) (1.8) - - - (2.6)and taxation Demerger award plan charge (1.6) (0.3) (0.9) (0.6) (1.4) (4.8)(Loss)/profit on disposal of property, plant and (1.1) (0.2) 0.4 - (0.1) (1.0)equipment Operating profit 115.0 39.2 48.3 2.1 (13.1) 191.5 Interest payable and similar charges (24.1)Interest receivable 10.5Net interest (13.6) Profit before tax 177.9Taxation (60.7)Profit for the financial year 117.2 The share of operating profits of joint ventures and associates included within the retail profit for Darty and BUT are £7.4m and £5.0m respectively. The share of post tax profits of joint venture and associates included within the operating profit for Darty and BUT are £6.6m and £3.2m respectively. 2 Segmental analysis (contd.) At 31 January 2006 and 31 January 2005, the Group was organised into two geographical segments - France and UK. These are further analysed between four business segments, as follows: - Darty - BUT - Comet - Other (includes BCC, NVB, Datart, Darty Italy and Darty Switzerland) Segment revenues by origin are not materially different to segment revenues by destination. Unallocated items within operating profit comprise corporate expenses. The Directors do not consider there to be a secondary segment by which the Group is managed. 3 Interest payable and similar charges Group Year ended 31 Year ended 31 January 2006 January 2005 £m £m Interest payable on bank borrowings 18.8 22.1Interest payable on finance leases 0.4 0.2Interest on pension schemes 3.0 1.8Write off of loan arrangement fees 2.1 -Foreign exchange losses 0.1 - Total interest payable and similar charges 24.4 24.1 4 Interest receivable Group Year ended 31 Year ended 31 January 2006 January 2005 £m £m Bank and other interest receivable 7.8 9.3Foreign exchange gains - 1.2 Total interest receivable 7.8 10.5 The foreign exchange gains arise on the re-translation of short term deposits denominated in a currency other than the entity's functional currency. 5 Taxation Group Year Year ended ended 31 31 January January 2006 2005 £m £m Analysis of charge in year UK corporation tax Current tax on profits for the year 4.9 12.7Adjustment in respect of prior years (0.9) (1.0) 4.0 11.7Foreign tax Current tax on profits for the year 41.9 50.0Adjustment in respect of prior years 0.2 0.5 42.1 50.5 Deferred tax 2.5 (1.5)Total Taxation 48.6 60.7 The tax charge relates entirely to continuing operations Tax on items charged to equity: Current tax charge on foreign exchange gains 0.7 -Current tax charge on share schemes 0.1 (0.8)Deferred tax charge on share schemes 0.6 (0.7)Deferred tax charge on cash flow hedges in reserves 1.2 -Deferred tax (credit) on available for sale investments (0.9) - Deferred tax (credit) on actuarial losses on retirement benefit obligations (4.4) (5.6)Adjustments in respect of IAS39 at 1 February 2005 - 0.9 (2.7) (6.2) Factors affecting tax charges for the year The tax for the year is higher (2005: higher) than the standard rate of corporation tax In the UK (30%). The differences are explained below: Profit on ordinary activities before tax 143.3 177.9 Profit on ordinary activities multiplied by rate of corporation tax in the UK of 30% (2005: 30%) 43.0 53.4Effects of: Adjustments in respect of foreign tax rates 5.5 8.0Adjustments in respect of joint ventures and associates (1.5) (1.8)Expenses not deductible for tax purposes 2.1 1.1Losses not recognised as deferred tax asset 0.5 0.4Adjustments to tax in respect of prior years (1.0) (0.4) Total tax charge 48.6 60.7 5 Taxation (contd.) Tax charge per group income statement 48.6 60.7Share of joint venture and associate taxation 2.2 2.6Adjusted tax charge 50.8 63.3 Profit before tax per group income statement 143.3 177.9Share of joint venture and associate taxation 2.2 2.6Adjusted profit before tax 145.5 180.5 Effective tax rate 34.9% 35.1% 6 Earnings per share for the financial year ended 31 January 2006 Group Basic earnings per share is calculated by dividing the earnings attributable to shareholders by 529.5m shares (2005: 529.6m), being the weighted average number of ordinary shares in issue. There is no difference between diluted and basic earnings per share. Supplementary adjusted earnings per share figures are presented. These exclude the effects of the Demerger Award Plan charge and losses on disposal of property, plant and equipment. Year ended 31 January Year ended 31 January 2006 2005 Per share Per share Earnings amount Earnings amount £m pence £m pence Basic earnings per share Earnings attributable to ordinary shareholders 94.7 17.9 117.2 22.1Adjustments Demerger Award Plan charge 1.8 0.3 4.8 0.9Loss on disposal of plant, property and equipment 1.0 0.2 1.0 0.2Tax effect of adjustments (0.9) (0.2) (1.6) (0.3)Basic - adjusted earnings per share 96.6 18.2 121.4 22.9 7 Statement of changes in shareholders' equity Group 2006 2005 £m £m Profit attributable to shareholders 94.2 115.7Dividends (59.3) (54.4) Exchange differences Employee share schemes (2.5) (0.5)Available for sale assets - fair value gains net of tax 0.3 0.5- recycled and reported in net profit 2.3 Cash flow hedges - fair value gains net of tax (0.3) -- recycled and reported in net profit 2.8 -Investment in ESOP shares - -Net SORIE pension movement (0.5) -Opening shareholders' equity before adjustment for IAS 39 (10.2) (12.1)Adjustment for first time adoption of IAS 39 289.2 240.0 2.9 - Closing shareholders' equity 318.9 289.2 8 Cash flow from operating activities Group 2006 2005 £m £m Profit after tax 94.7 117.2Adjustments for: Tax 50.8 63.3Depreciation and amortisation 78.6 74.6Impairment of property, plant and equipment 1.3 1.4Reversal of impairment of property, plant and equipment (1.1) (0.4)Loss on disposal of property, plant and equipment (including write offs) 2.0 1.9Impairment of goodwill - 1.7Interest income (7.8) (10.5)Interest expense 24.4 24.1Share of results of joint venture before taxation (3.8) (5.0)Share of results of associates before taxation (6.5) (7.4)Changes in working capital: Increase in inventories (20.6) (22.3)(Increase)/decrease in trade and other receivables (3.8) 24.4Increase in payables 51.5 8.2 Net cash inflow from operating activities 259.7 271.2 Tax includes joint venture and associates tax of £2.2m (2005: £2.6m). 9 Reconciliation of net cash flow to movement in net debt Year ended 31 January 2006 Group At 31 Cash Exchange Transfers At 1 January flow difference and other February 2006 non-cash 2005 movements £m £m £m £m £m Cash at bank and in hand 62.6 3.6 (1.6) - 60.6Overdrafts (53.8) 36.6 0.3 - (90.7)Short-term deposits and investments 97.0 (115.9) (2.1) - 215.0 105.8 (75.7) (3.4) - 184.9 Borrowings falling due within one year (2.8) 41.5 0.8 - (45.1)Borrowings falling due after one year (347.0) 88.4 6.6 - (442.0)Finance leases (2.8) 1.7 0.1 (0.5) (4.1) (352.6) 131.6 7.5 (0.5) (491.2) Other deposits and investments 80.5 (14.1) (1.0) - 95.6 Total (166.3) 41.8 3.1 (0.5) (210.7) Year ended 31 January 2005 At 31 Cash Exchange Transfers At 1 January flow difference and other February 2005 non-cash 2004 movements £m £m £m £m £m Cash at bank and in hand 60.6 (3.2) 1.0 - 62.8Overdrafts (90.7) (11.1) (0.2) 21.1 (100.5)Short-term deposits and investments 215.0 26.4 4.6 - 184.0 184.9 12.1 5.4 21.1 146.3 Borrowings falling due within one year (45.1) 1.9 (0.8) (21.1) (25.1)Borrowings falling due after one year (442.0) 44.0 (5.7) - (480.3)Finance leases (4.1) 1.4 - (0.3) (5.2) (491.2) 47.3 (6.5) (21.4) (510.6) Other current and investments 95.6 2.8 2.0 - 90.8 Total (210.7) 62.2 0.9 (0.3) (273.5) 10 Reconciliation of cash flow to movement in net debt Group 2006 2005 £m £mGroup Net cash (outflow)/inflow from cash and cash equivalents (75.7) 12.1Cash outflow from increase in borrowings and lease financing 131.6 47.3Cash (outflow)/inflow from decrease in other current investments (14.1) 2.8 Change in net debt resulting from cash flows 41.8 62.2 Translation differences 3.1 0.9New finance leases (0.5) (0.3) Movement in net debt in the year 44.4 62.8 Net debt at start of year (210.7) (273.5)Net debt at end of year (166.3) (210.7) 11 Pension commitments Group The amounts recognised in the balance sheet are determined as follows: 2006 2005 UK France Total UK France Total £m £m £m £m £m £m Present value of defined benefit obligations 280.6 39.4 320.0 227.1 40.0 267.1Fair value of plan assets (185.9) (15.3) (201.2) (146.0) (14.5) (160.5)Unrecognised prior service costs - 0.9 0.9 - (3.2) (3.2) Net liability recognised in the balance sheet 94.7 25.0 119.7 81.1 22.3 103.4 12. Additional information Group The consolidated income statement and consolidated cash flow statement for theyear ended 31 January 2006 and the consolidated balance sheet at 31 January 2006do not constitute statutory accounts as defined by section 240 of the CompaniesAct 1985. They are extracted from the full statutory accounts for the year ended31 January 2006, which have been approved by a duly constituted Committee of theBoard of Directors on 22 March 2006, but which have not been delivered to theRegistrar of Companies. The report of the auditors on those accounts isunqualified and does not contain a statement under either section 237 (2) orsection 237 (3) of the Companies Act 1985. A copy of the information to be provided to financial analysts is available onrequest from the Company Secretary, 22 - 24 Ely Place, London, EC1N 6TE. It isalso on Kesa's website, www.kesaelectricals.com. 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